FUNDAMENTAL AND TECHNICALNALYSIS OF INDIAN PHARMACEUTICAL INDUSTRY

INDUSTRY PROFILE

Introduction to industry

Finance and investment industry is a fairly broad ranging group of institutions that

provide various financial services. Examples of such institutions include commercial banks,

merchant (or investment) banks, insurance companies, brokerage firms, asset managers, and an

assortment of other institutions. Services provided range from money management for private

individuals to debt and equity underwriting for corporations to insurance of policies, and many

other services. In today’s global markets, this industry is the engine of the global economy,

enabling corporations and governments to grow and expand.

The financial service industry includes firms that are engaged in activities such as

investing, lending, insurance, securities trading and securities insurance. This is not an

exhaustive list, but these companies can be characterized as being in one or more of the

following lines of business.

Banking

Insurance

Securities brokerage

Investment banking

Securities trading

Investment management or money management

Securities analysis

Financial planning

Current investment scenario in India

Globalization and foreign direct investment form an integral part of all the developed as

well as developing economies. In fact, the growth of the underdeveloped economies is also

dependent on these key factors. These components equip any nations with new skills, new items

and provide smooth access to market and technology. Today, every nation across the globe is

looking for foreign and overseas investors. Whether it’s India or china. Everyone wants foreign

investments.

PG Department Of Business Administration-PACE, Mangalore

According to recent trends, India is only second to china in the league of favorite

investment destinations. India is considered the 2nd highest foreign employer in the United

Kingdom after the United States.

Global investment scenario

Along with India, the others who are participating in the race of investment among the

developing economies are china, Singapore, Malaysia, Russia, and Brazil.

Indian Stock market

A stock market or equity market is a public entity for the trading of company stock

(shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well

as those only traded privately. Stock markets refer to a market place where investors can buy and

sell stocks. The price at which each buying and selling transaction takes is determined by the

market forces (i.e. demand and supply for a particular stock).

The Indian Equity market is divided in to two parts Primary market - where the share is

first issued in the form of IPO (Initial Public Offering) and secondary market is the place where

after issuing the share it is listed on exchange and share is traded on exchange where shares can

be bought and sold. In India mainly there are two exchanges -NSE (National Stock Exchange)

BSE-Bombay Stock Exchange. The BSE is the oldest exchange in India(started in 1875).NSE

started operation on 1994.Before 2000, shares were held in Physical form But the main difficulty

with Physical shares is method of transaction which is open outcry system and process is not

transparent to investor also. Physical shares were prone to duplication and fraud. So in 2000 NSE

introduced the electronic screen based trading system, further with the introduction of

Dematerializations (Conversion of physical share in to electronic form) and depository (where

the electronic form of share is kept) which revolutionized the Indian Stock market. Currently

there are mainly two Depository (DP) -NSDL and CDSL and these Depositories are like bank of

share. Individual/Firm can deal through Broker (who is registered and having membership in

Exchanges and Depository) for buying and selling securities. Today NSE outpaced BSE in

volume of trade. Then what is the purpose of stock market? Stock market serves the company by

providing company the finance for long term needs and by providing an opportunity to the

investors to park their savings in corporate world and in turn to give their hand in Nation's

development.


To buy the shares, investor has to open a trading and demat account. So investor has to

approach a broker/sub broker who has member ship in Exchange (where the share is listed

mainly NSE and BSE) and depository(where share is kept in Demat form-Electronic

form[mainly CDSL and NSDL).

SENSEX and NIFTY are Index of BSE and NSE Blue chip share. SENSEX consist of 30

share and NIFTY 50 share (of top most companies) Index is the barometer of stock exchange

forex. In NSE there are about 1350 listed companies. INDEX is constructed by taking top

companies across different sector in different weightage and INDEX movement will reflect the

overall movement of market. So if NIFTY or SENSEX is up we can generally assume market is

up (does not mean all shares are up) and vice versa. Now there are index in some sectors which

can catch the movement of that sector like CNXIT-IT sector, BANKNIFTY-Banking sector etc.

General purpose of Stock Market is for Investment but bulk of activities done in market is day

trading. Day trading means BUYING/SELLING of shares and offsetting the position on same

day. Day traders serves the purpose of bringing the liquidity to market and they help the market

movement and more than 80% of the volume from market is coming from day trading.

Introduction of derivative market had made the day trading to grow more. The main tool

for Stock market investment/trading are Fundamental analysis -which studies about the

fundamental of companies and economy and Technical Analysis-which studies the market by

analyzing the past movement of share and market.

Financial product distribution

Financial products are investment avenues and if matched properly with investor needs

and risk profile, can serve the primary need to beat inflation and generate adequate returns after

adjusting for risk. In recent years, post liberalization of financial services industry, diverse

financial products have been introduced such as variety of open-ended and close-ended equity

and debt mutual fund schemes, life and non-life insurance schemes - ULIPs, Pension plans, PMS

schemes focusing on customized investment in stocks and corporate bonds/debentures.


FINANCIAL SYSTEM


Financial institutions

Financial market

Financial instruments

Financial service

Organized market Unorganized market

Primary market Secondary market

Capital market Money market

Equity market

Debt market

Derivative market

Treasury bill

Commercial bills

COMPANY PROFILE

The IIFL (India Info line) group, comprising the holding company, India Infoline Ltd

(NSE: INDIAINFO, BSE: 532636) and its subsidiaries, is one of the leading players in the

Indian financial services space. IIFL offers advice and execution platform for the entire range of

financial services covering products ranging from Equities and derivatives, Commodities,

Wealth management, Asset management, Insurance, Fixed deposits, Loans, Investment Banking,

goi bonds and other small savings instruments. IIFL recently received an in-principle approval

for Securities Trading and Clearing memberships from Singapore Exchange (SGX) paving the

way for IIFL to become the first Indian brokerage to get a membership of the SGX. IIFL also

received membership of the Colombo Stock Exchange becoming the first foreign broker to enter

Sri Lanka. IIFL owns and manages the website, www.indiainfoline.com, which is one of India’s

leading online destinations for personal finance, stock markets, economy and business.

IIFL has been awarded the ‘Best Broker, India’ by Finance Asia and the ‘Most improved

brokerage, India’ in the Asia Money polls. India Infoline was also adjudged as ‘Fastest Growing

Equity Broking House - Large firms’ by Dun & Bradstreet. A forerunner in the field of equity

research, IIFL’s research is acknowledged by none other than Forbes as ‘Best of the Web’ and

‘…a must read for investors in Asia’. Our research is available not just over the Internet but also

on international wire services like Bloomberg, Thomson First Call and Internet Securities where

it is amongst one of the most read Indian brokers.

A network of over 2,500 business locations spread over more than 500 cities and towns

across India facilitates the smooth acquisition and servicing of a large customer base. All our

offices are connected with the corporate office in Mumbai with cutting edge networking

technology. The group caters to a customer base of about a million customers, over a variety of

mediums viz. online, over the phone and at our branches.


1. Background and inception of the company

The India Infoline groups were founded in 1995 by Mr. Nirmal Jain (Chairman and

Managing Director) as an independent business research and information provider. Then

gradually evolved into a one-stop financial services solutions provider. The Strong management

team comprises competent and dedicated professionals.

Now they are a pan-India financial services organization across 1,361 businesses Locations

and a presence in 428 cities. Their global footprint extends across geographies with offices in

New York, Singapore and Dubai. We are listed on the Bombay Stock Exchange (BSE) and the

National Stock Exchange (NSE).

They now offer a wide range of services and products comprising broking (retail and

institutional equities and commodities), wealth management, credit and finance, Insurance, asset

management and investment banking. The India Infoline group registered with the BSE and the

NSE for securities trading, MCX, NCDEX and DGCX for commodities trading, CDSL and

NSDL as depository participants. We are registered as a Category I merchant banker and are a

SEBI registered portfolio manager. We also received the FII license in IIFL Inc. IIFL Securities

Pvt Ltd received approval from the Monetary Authority of Singapore to carry out corporate

advisory and dealing in securities operations. Two subsidiaries India Infoline Investment

Services and Moneyline Credit Limited are registered with RBI as non-deposit taking non-

banking financial services companies. India infoline Housing Finance Ltd, the housing finance

arm, is registered with the National Housing Bank.

India Infoline originally incorporated on October 18, 1995 as PROBITY RESEARCH AND

SERVICES PVT LTD. at Mumbai under the Companies Act,1956 with Registration No.

1193797.and became a public limited company on April 28,2000. The name of the Company

was changed to India Infoline.com Limited on May 23, 2000 and later to India Infoline Limited

on March 23, 2001. It is the first Company in India to foray into the online distribution of Mutual

Funds.


2. Nature of business carried

India infoline is a wealth management company. It is one stock shop for all investment

needs for the Indian retail investors, from advice to execution online as well as offline.

They deal with equity trading, all investment for products, tax saving, investment insurance

plan etc. from advice to execution in financial services.

3. Vision and mission

Vision

“Our vision is to be the most respected company in the financial services space"

Mission

“To become a full-edged financial services company known for its quality of ad-

vice, personalized services and cutting edge technology"

Quality policy

“Our values emphasize integrity, transparency, commitment to Excellence and team work.”


Commodities

Mutual funds

Insurance

Equities

Information and advice

Execution and service

4. Product/ service profile

India Infoline is a one-stop financial services shop, most respected for quality of its

advice, personalized service and cutting-edge technology.

Equities

IIFL is a member of BSE and NSE registered with NSDL and CDSL as a depository

participant and provides broking services in the cash, derivatives and currency segments, online

and offline. IIFL is a dominant player in the retail as well as institutional segments of the market.

It recently became the first Indian broker to get a membership of the Colombo Stock Exchange

and is also the first Indian broker to have received an in-principle approval for membership of

the Singapore Stock Exchange. IIFL’s Trader Terminal, its proprietary trading platform, is

widely acknowledged as one of the best available for retail investors. Investors opt for IIFL

given its unique combination of superior Service, cutting-edge proprietary Technology, Advice

powered by world-acclaimed research and its unparalleled Reach owing to its over 2500 business

locations across over 500 cities in India.

IIFL received the BQ1 broker grading (highest grading) from CRISIL. The assigned

grading reflects an effective external interface, robust systems framework and strong risk

management. The grading also reflects IIFL’s healthy regulatory compliance track record and

adequate credit risk profile.

IIFL’s analyst team won Zee Business’ ‘India’s best market analysts awards – 2009’ for

being the best in the Oil and Gas and Commodities sectors and a finalist in the Banking and IT

sectors. IIFL has rapidly emerged as one of the premier institutional equities houses in India with

a team of over 25 research analysts, a full-fledged sales and trading team coupled with an

experienced investment banking team.

Commodities

IIFL offers commodities trading to its customers wide its membership of the MCX and

the NCDEX. Our domain knowledge and data based on in depth research of complex paradigms

of commodity kinetics, offers our customers a unique insight into behavioral patterns of these


markets. Our customers are ideally positioned to make informed investment decisions with a

high probability of success.

Credit and finance

IIFL offers a wide array of secured loan products. Currently, secured loans (mortgage

loans, margin funding, loans against shares) comprise 94% of the loan book. The Company has

discontinued its unsecured products. It has robust credit processes and collections mechanism

resulting in overall NPAs of less than 1%. The Company has deployed proprietary loan-

processing software to enable stringent credit checks while ensuring fast application processing.

Recently the company has also launched Loans against Gold.

Insurance

IIFL entered the insurance distribution business in 2000 as ICICI Prudential Life

Insurance Co. Ltd’s corporate agent. Later, it became an Insurance broker in October 2008 in

line with its strategy to have an ‘open architecture’ model. The Company now distributes

products of major insurance companies through its subsidiary India Infoline Insurance Brokers

Ltd. Customers can choose from a wide bouquet of products from several insurance companies

including Max New York Life Insurance, MetLife, Reliance Life Insurance, Bajaj Allianz Life,

Birla Sunlife, Life Insurance Corporation, Kotak Life Insurance and others.

Wealth Management Service

IIFL offers private wealth advisory services to high-net-worth individuals (HNI) and

corporate clients under the ‘IIFL Private Wealth’ brand. IIFL Private Wealth is managed by a

qualified team of MBAs from IIMs and premier institutes with relevant industry experience. The

team advises clients across asset classes like sovereign and quasi-sovereign debt, corporate and

collateralised debt, direct equity, ETFs and mutual funds, third party PMS, derivative strategies,

real estate and private equity. It has developed innovative products structured on the fixed

income side.


Investment Banking

IIFL’s investment banking division was launched in 2006. The business leverages upon its

strength of research and placement capabilities of the institutional and retail sales teams. Our

experienced investment banking team possesses the skill-set to manage all kinds of investment

banking transactions. Our close interaction with investors as well as corporate helps us

understands and offer tailor-made solutions to fulfill requirements. The Company possesses

strong placement capabilities across institutional, HNI and retail investors. In FY10, the team

advised and managed more than 10 transactions including four IPOs and four Qualified

Institutions Placements

5. Area of operations

The company provides its services through a network of 758 business locations including

607 branches and 151 franchisees in 346 cities in India. The company’s key area of operations

includes India, Singapore, New York, Srilanka, and Dubai. The company is headquartered in

Mumbai, India.

The address: India Infoline Ltd, 75, Nirlon Complex, off W E

Highway, Goregaon(E), Mumbai- 63.Tel:(91-22) 6677 5900 ,

: Fax- (91-22) 2685 0451. In Kolkata the area office is 5th floor, AC

Market, 1-Shakespeare Sarani, Kolkata- 700 071, Tel-(033)

44006954/4007 6512

India

India Infoline Ltd. and subsidiaries- Registered with the BSE and the NSE for

securities trading (cash and derivatives segment), with MCX/SX and NSE for currency

derivatives segment, with MCX, NCDEX and DGCX for commodities trading and with

CDSL and NSDL as depository participants. It also registered as a Category I merchant

banker and as a portfolio manager with SEBI.

New York

IIFL Inc. - Regulated by the Financial Industry Regulatory Authority (for Broker Dealer)

and by the Securities & Exchange Commission (for RIA). It is also a SEBI-registered FII.


Dubai

India Infoline Commodities DMCC - Broking member of the Dubai Gold and

Commodities Exchange (DGCX).

Srilanka

IIFL Securities Ceylon (Pvt) Ltd - Received in-principle membership of the Colombo

Stock Exchange.

Singapore

IIFL Securities Pvt Ltd – Capital Market Services license issued by the Monetary

Authority of Singapore and received inprinciple approval for the membership of

Singapore Stock Exchange as Trading and Clearing member.

IIFL Capital Pvt Ltd – Exempt Financial Advisor regulated by the Monetary Authority

of Singapore.

6. Ownership pattern

a. promoter’s share

b. institutional investor share

c. foreign instructional investor’s share

d. share of retail investor

e. government’s share

f. others

Promoters and their promoter together hold 36.35% of post issue equity shares. as a result

of their shareholding they will have the ability to influence most matters, which require the

approval of our share holders.

7. Competitors’ information

Indian financial market has many leaders providing best of their financial services. this

includes the public as well as private organizations. Even the nationalized banks have started

different financial services to compete with the players of the private sector. The competitors are

like:

o KARVY FINANCIAL SERVICES

o BAJAJ CAPITAL


o GEOJIT

o ING VYSYA

o INDIA BULLS

All these cover almost the whole financial market of India providing services like mutual

funds, company deposit, insurance policies, etc.

Bajaj capital is third amongst all the leaders with a 28% share and is growing with a

steady peace. it is difficult for the service providers to compete in the market when the Bajaj

capital is on the top of the list.

8. Infrastructural facilities

online trading software

surveillance and risk management

client administration

back office software

communication link and VSAT network

networking and hardware

security

9. Achievements and awards

Company won the golden mouse award in India Internet World 2000 for the best finance

site.

In may 2001, IIFL website was included in the top 200 best of the web list by Forbes

Global under the Asia investing category.

IIFL research is also disseminated electronically through Bloomberg, investext, first

call/Thomson financial and internet securities.

India infoline was the first company to offer many of the services in the country

transaction services include mutual funds, personal loans and online broking.

Achievement in 2009-2010

Revenues grew 28.1% from Rs. 8.8 bn in 2008-09 to Rs. 11.2 bn in 2009-10

EBIDTA grew 49.6% from Rs. 2.9 bn in 2008-09 to Rs. 4.4 bn in 2009-10

Profit after tax grew 60.2% from Rs. 1.4 bn in 2008-09 to Rs. 2.3 bn in 2009-10


Increased average daily trading volumes during the year to Rs. 35 billion, up 57% on a

year-on year basis.

Sole book-running lead manager for Cox & Kings (Rs. 6.1 bn) and Talwalkars (Rs. 744.4

mn)

Scaled up Wealth management business with assets under advice have crossed Rs. 50 bn

Financing book grew to Rs. 16.3 bn

Received an in-principle approval for securities trading and clearing membership from

the Singapore Exchange for IIFL Securities Pvt Ltd, our Singapore-based subsidiary.

Conducted our first Global Investors’ Conference – ‘Enterprising India’ – in Mumbai,

drawing the participation of more than 450 fund managers, more than 70 corporate as

well as world-renowned economists and thought leaders.

Changed Group identity from India Infoline to IIFL.

Bought out the stake of a private equity partner in the Credit and finance and Insurance

distribution businesses

Awards (2009-2010)


Rated by Asia Money in 2009 among thecountry’s top three brokerages.

Received BQ1 broker grading fromCRISIL, reflecting a superior quality ofoperations and services

10. Workflow model

A workflow consists of a sequence of connected steps. It is a depiction of a sequence of

operations, declared as work of a person, a group of persons, an organization of staff, or one or

more simple or complex mechanisms. Workflow may be seen as any abstraction of real work.

For control purposes, workflow may be a view on real work under a chosen aspect, thus serving

as a virtual representation of actual work.

The work flow model is used to describe the trading, clearing, and settlement process of

equities trading in the market. It is also known as end to end model which is given below.


Chairman Nirmal Jain ranked secondamong ‘India’s Most Valuable CEOs’ by Businessworld in November 2009

Awarded at the ‘India’s best marketanalysts awards – 2009’ by ZeeBusiness for being the best in the ‘Oiland Gas’ and ‘Commodities’ sectors andfinalists in the ‘Banking’ and ‘IT’ sectors

Collecting leads from different servers(Kiosks, Events, Web)

Contacting the leads(Via Telephone, Mail, Direct)

Providing him the Demat Account kit(Contains Security Token, Manual Cd, Pin and User Id)

Facilitate with the demo trading(Have to use security token in Internet)

Connecting with a franchisee for further trading

Explaining him / her about the essential documents(Identity Proof, Address Proof, Pan Card)

Explaining the features of products(Low Cost, Upfront, Brokerage)


11. Company’s future growth and prospects

The asset base will continue to grow at an annual rate of about 30% to 35% over the next

few years, as the investor’s shift their assets from banks and other traditional avenues. Some of

the older public and private sector players will either close shop or be broken over.

Actual results may differ materially from those suggested by the forward looking

statements due to risks or uncertainties associated with our expectations with respect to, but not

limited to, our ability to successfully implement our strategy, our growth and expansion,

technological changes, our exposure to market risks, general economic and political conditions in

India which have an impact on our business activities or investments, the monetary and interest

policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange

rates, equity prices or other rates or prices, the performance of the financial markets in India and

globally, changes in domestic and foreign laws, regulations and taxes and changes in competition

in the industry.

All forward looking statements are subject to risks, uncertainties and assumptions about

us that could cause actual results to differ materially from those contemplated by the relevant

forward-looking statement. Important factors that could cause actual results to differ materially

from our expectations include but are not limited to:

1. General economic and business conditions in India;

2. Our ability to successfully implement our growth strategy and expansion plans;

3. Our ability to respond to technological changes;

4. Changes in laws and regulations relating to the industry in which we operate;

5. Changes in political and social conditions in India;

6. Our ability to successfully launch the new products;


MCKENSY’S 7S FRAME WORK

The 7-S frame work was developed by the consultants at the Mckensey Company, a very

well known management consultancy firm in U.S.A, towards the end of 1970’s to diagnose the

cause of organizational problems and to formulate programmes for improvement developed the

7-S frame work.

The Mckensey 7-S model involves seven interdependent factors which are categorized as

either hard or soft elements:

“Hard” elements are easier to define or to identify, and management can directly

influence them.

“Soft” elements on other hand, can be more difficult to describe, and are less tangible and

more influenced by culture. However, these soft elements are as important as the hard elements.

Hard elements Soft elementsStrategy

Structure

System

Shared valve

Skills

Style

Staff


Strategy: the plan devised to maintain and build competitive advantage over the competition.

Structure: the way the organization is structured and who reports to whom.

Systems: the daily activities and procedures that staff members engaged in to, to get the job

done.

Shared values: called “super ordinate goals” when the model was first developed, these are the

core values of the company that are evidenced in the corporate culture and the general work

ethic.

Style: the style of leadership adopted.

Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of the employees working for the company.

Placing the shared values in the middle of the model emphasizes that these valves are

central to the development of all the other critical elements. The company’s strategy, structure,

system, style, staff, and skill all stem from why the organization was originally created, and what

it stands for. The original vision of the company was formed from the values of the creator. As

the valves change, so do all the other elements.

Strategy

A strategy is a plan of action designed to achieve a particular goal. Strategy refers to the

systematic action and allocation of resources to achieve the companies aim, the integrated vision

and direction of the company as well as the manner, which it drives, articulate, communicates

and implements that vision and direction. It can also be defined as the choice of direction and

action that the company adopts to achieve its objectives in a competitive situation.

As per the vision and mission statement of the company, the main strategy of India

infoline is to gain competitive advantage over the rivals not by letting the others down but by

taking its own standards to a higher level through better services and customer satisfaction. Their

strategic goal is to excel in its service with integrity, diligence and transparency in satisfying the

customers’ investment needs and to build itself as the trusted and a world class financial service

provider.


The element of our strategy includes:

“one stop shop” form advice to transaction

multichannel delivery model

expand our retail net work

leverage our content advantage for value added offering

acquisition and takeover

System

The daily activities and procedures that staff members engage in to get job done. System

comprises of the main system that run the organization like the finance or the human resource

systems.

They manage the risk associated with their broking operations through use of internally

developed credit algorithms implemented through fully automated risk management software

and selective direct monitoring of certain operating parameters. Their automated risk

management procedures rely primarily on internally developed risk management system and

systems provided by their vendors.

They have developed a team of customer relationship managers across India to handle

key customer accounts. These people are experienced in financial service and have undergone in-

house training. This allows them to offer unbiased advice on not only equities but also on other

investment products like mutual funds and insurance. Apart from advice, they are trained to

customer queries as they ensure that the customer has a single point contact with us.

Structure

Business needs to be organized in a specific form of shape that is generally referred as

organizational structure. Organizations are structured in a variety of ways, dependent on their

objectives and culture. The structure of the company often dictates the way it operates and

performs.



Nirmal Jain

Chairman &Managing Director

S.Sriram

Head-Technology

Harshad Apte

Head-Marketing

Kalpesh Shah

Head-Risk/Compliance

Seshadri Bharathan

Head Distribu&Insurance

Dhrmesh Pandya

Head Commodities

Mukesh Singh

VP-Broking

Anil Mascarenhas

Head-News

Sandeepa Vig Arora

VP-PMS&Institutional

Toral Munshi

VP-Research

Sanjay Nayak

Head-Back Office Depository service

Upendra Jaiswal

Head-Accounts

Komal Parikh

Company Secretary

R.Venkataraman

Exeutive Director

South Indians organization structure


K.Shridhar

South India Manager

Tamil Nadu Manager

Kerala Manager

Karnataka Manager

Andra pradesh Manager

Divisional Manager, Eranakulam

Rest Of Kerala Manager

Kerala Head

Territory Manager

Branch Manager

Assistant Manager

Front Office Executive

Back Office Executive

Shared values

Shared values are the core values of the company that are evidenced in the corporate

culture and the general work ethics. The valves of India infoline are its core foundation for its

excellence in its day to day business operations which drives it towards the success. They are:

Integrity

Transparency

Commitment to excellence

Team work.

Style

Style of leadership refers to the manner in which an individual uses his or her talent,

valves, knowledge, judgment, and attitudes to lead and relate to others. Styles express the

person’s character. Style is the leadership approaches of top management and the organization’s

overall operating approach; also the way in which the organizations employees present

themselves to the outside world, to suppliers and customers.

The company follows a top-down style of management where in the top level managers

would give instructions and the same is followed the lower levels. However, at India infoline

they have a very pleasant and cooperative culture where everyone’s ideas are respected and

considered. All are participative when it comes to working at the office so as to reach the targets

and meet the organizational goals jointly in the least possible time.

Staff

Organizations are made up of people and it’s the people who makes the real differences

to the success of the organization in the increasingly knowledge based society. The importance

of human resource as thus got the central position in the strategy of the organization, away from

the traditional model of capital and land.

The people working in India infoline have technical skills that are required for the day to

day operations in the company. They believe that key to their continued growth lies in

unleashing the entrepreneurial energy of their employees. People are highly driven and work

hard towards increasing India infoline’s brand and market share across product line.


Skills

Skills deals with the strongest skills,, actual skills and competencies of the employees

working for the company and how they are monitored. A skill is the ability, knowledge,

undertaking, and judgment to accomplish a task. Skills may be defined as what the company

does best; the distinctive capabilities and competencies that reside in the organization.

India Infoline has variety of skills in carrying out business. The company has its

distinctive competency in providing excellent investment service and known for its strong and

long standing relationship with investors, other companies and its clients.

The company also has potential and proficient, technical and fundamental analysis who

help to analyze the market carefully and correctly before any investment. The dealers at India

Infoline are also well qualified and fully trained. Thus, the skills which are the dominant

capabilities and core competencies possessed by the organization are very much in parallel to

organizational strategy, structure, systems, and the culture.


SWOT AnalysisSWOT Analysis is a strategic planning tool used to evaluate the strengths, weaknesses,

opportunities, and threats for a business entity. It involves specifying the objective of the

business venture or project and identifying the internal and external factors that are favorable and

unfavorable to achieving that objective. The technique is credited to Albert Humphrey, who led a

research project at Stanford University in the 1960s and 1970s using data from fortune

500companies.

Strengths: Attributes of the organization which are helpful to achieve the objective.

Weaknesses: Attributes of the organization which are harmful to achieve the objective.

Opportunities: External conditions which are helpful to achieve the objective.

Threats: External conditions which could damage the business performance.

Strengths

Customization

It understands the dreams, needs, aspirations, concerns and resources are unique and this

is reacted in every move they do for the sake of individual customer. This is the greatest

value it provide online trading products like Smart Invest and Smart Trade.

Expertise

India Infoline Ltd brings within the customers reach their institutional expertise and the

ability to effectively combine an invaluable understanding of the financial markets, with

an intention of building a long-term partnership.

One-stop-shop for all the investment needs

India Infoline Ltd gives all the types of services and products an individual investor can

dream and think off. All the financial products and services are under one-roof.

Unbiased and objective advice

The teams of expert investment advisors customize plans to suit the needs of investors.

Extensive research

India Infoline Ltd makes sure that they are always accessible to customers through a host

of mediums. A customer can contact them either through website or through their

branches and channel partners of more than 300 offices across India.


Brand image

India Info line Ltd as such is a well known brand in industry.

Competitive pricing

It charges less brokerage compared to its competitors.

Weaknesses

Expensive products

Some of the products like Smart Trade are quite expensive. An annual charge for Smart

Trade is Rs. 3000.

Tedious procedures

Tedious procedures and delays in processing the data and documents of new customers.

Fund transfer

It has tie-ups with only 5 banks for online fund transfer, where as other competitors have

more tie-ups.

Attrition

High attrition rates in trainees category.

Unattractive offers

Some offers of the company like Advance Subscription Plan with a deposit of Rs.50,000

to avail low brokerage charges. The low brokerage charges will be effective for the

clients for a minimum turnover of Rs. 50 Core p.a.

Opportunities

Indian economy seems to be out of recession. This is the right time for inventers to re-

enter the market. The company should adopt some strategies to increase the business

through existing clients.

The increasing number of management graduates helps to get sales force at trainee levels

at less salaries or commission basis. It reduces the salaries and extra expenses of the

company. The company can tie up with reputed B Schools for trainees.

Huge untapped market in rural areas and towns of India can be concentrated to increase

the business.

Many a banks are offering fund transfer services. The company can increase the tie-ups

for fund transfers to attract customers of different banks.


Threats

Stiff competition from existing players in the market, threat of new entrants which has

lead to cut throat competition in terms of brokerage charges and exposure.

Increasing awareness of mutual funds and ULIPs created by Domestic Institutional

Investors has reduced the direct investment in to stock market to some extent. This

automatically reduces the business of stock brokers.

Changing economic scenario in India and changes in government policies will have great

impact on the revenue of this company

Many a investors burnt their figures during the bearish market conditions which has

turned many a trading accounts inoperative.


ANALYSIS OF FINANCIAL STATEMENT

Balance sheet

(Amount in Rupees)

Schedule As at 31.03.2010 As at 31.03.2009SOURCES OF FUNDS

Shareholders' Fund

Share Capital A 570,429,550 566,800,000

Share Application Money 4,021,350 -

Reserves and Surplus B 10,506,695,485 9,801,314,902

Equity Share Warrants C - 11,081,146,385 113,700,000 10,481,814,902

Loan Funds

Secured Loans D 11,672,560 17,044,854

Unsecured Loans E 4,965,829,409 4,977,501,969 1,031,242 18,076,096

Total 16,058,648,354 10,499,890,998

APPLICATION OF FUNDSFixed Assets (Including Intangibles)

F

Gross Block 1,088,334,787 1,436,768,398

Less : Accumulated depreciation and amortisation

(606,325,123) (449,446,945)

Net Block 482,009,664 987,321,453

Capital-Work-In-Progress 17,511,161 499,520,825 45,134,564 1,032,456,017

Investments G 11,042,244,111 8,693,123,758

Deferred Tax Assets 96,396,623 38,154,037

Current Assets, Loans and Advances

H

Sundry Debtors 5,775,030,452 1,035,288,204

Cash and Bank Balances 5,618,364,349 4,302,493,074

Stock On Hand 537,590,262 5,609,032

Loans and Advances 5,070,671,411 2,405,913,981

17,001,656,474 7,749,304,291

Less : Current Liabilities & Provisions

I

Current Liabilities 10,258,096,541 5,526,753,387

Provisions 2,323,073,138 1,486,393,718

12,581,169,679 7,013,147,105

Net Current Assets 4,420,486,795 736,157,186

Total 16,058,648,354 10,499,890,998


Profit and loss account

(Amount in Rupees)

Schedule 2009-2010 2008-009INCOMEEquity brokerage & related income

6,125,493,009 4,516,852,265

Mutual Funds distribution,etc

146,687,721 87,827,926

Merchant banking income 387,731,280 23,262,564Other income J 321,998,621 293,362,605

6,981,910,631 4,921,305,360EXPENDITUREDirect cost K 1,463,955,099 683,582,429Employee cost L 1,641,491,422 1,434,218,601Administration & other expense

M 1,122,287,419 954,676,174

Interest 102,456,419 78,456,609Depreciation & amortization

F 318,646,716 255,613,981

4,648,837,075 3,406,547,794Profit before tax 2,333,073,556 1,514,757,566Less: Provision for taxation - Current

831,593,975 480,757,044

- Deferred tax (58,242,586) (12,260,101)- Fringe benefit tax - 10,341,846- Short/(Excess) Provision of Income Tax

39,558,672 (22,335,012)

Net profit after tax 1,520,163,495 1,058,253,789Net profit after tax for available Appropriations

1,520,163,495 1,058,253,789

AppropriationsDividend- Interim Dividend 851,982,000 794,488,993Dividend distribution tax 144,794,341 135,023,404Transfer to General Reserve

152,016,352 105,825,379

Balance of Profit brought forward from previous year

1,252,058,659 1,229,142,646

Balance of Profit carried forward

1,623,429,461

1,252,058,659

Earning Per Share-Basic 5.36 3.71 -Diluted 4.49 3.48Face Value Per Share 2 2


LEARNING EXPERIENCE Had an opportunity to watch live dealings and trading procedures in stock market.

Got an idea, about the way to behave and respond to the problems and situation

handling in an organization.

Learned business etiquettes

Had a deep study about the stock market behave and was able to make analysis and

interpretations.

Came to know about India info line’s position among its competitors.

Learned the applications of theoretical aspect in practical world.

Learned how to motivate customers in the investment avenues.

Came to know the applicability of secondary data and prime data.

Created awareness of various financial products.

Learned the trading and settlement procedures of commodity markets.

Learned to correlate the stock along with the index.

Learned how an index is an indicator, which shows various fluctuations in stock market.

Noticed performance of different sectors on a specified duration.

Was curious to know the future and compare the predictions with the live market.


GENERAL INTRODUCTION

Pharmaceutical Industry in India is one of the largest and most advanced among the

developing countries. It provides employment to millions and ensures that essential drugs at

affordable prices are available to the vast population of India. Indian Pharmaceutical Industry has

attained wide ranging capabilities in the complex field of drug manufacture and technology.

From simple pain killers to sophisticated antibiotics and complex cardiac compounds, almost

every type of drug is now made indigenously.

Indian Pharma Industry is playing a key role in promoting and sustaining development in

the vital field of medicines. Around 70% of the country's demand for bulk drugs, drug

intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and vaccines are

met by Indian pharmaceutical industry. A number of Indian pharmaceutical companies adhere to

highest quality standards and are approved by regulatory authorities in USA and UK.

Indian Pharma Industry is playing a key role in promoting and sustaining development in

the vital field of medicines. Around 70% of the country's demand for bulk drugs, drug

intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and vaccines is

met by Indian pharmaceutical industry. A number of Indian pharmaceutical companies adhere to

highest quality standards and are approved by regulatory authorities in USA and UK.

The future of Indian pharmaceutical sector looks extremely positive. Indian pharma

companies are vying for the branded generic drug space to register their global presence. Several

Indian pharmaceutical companies have acquired companies in the US and Europe and many

others are raising funds to do so. For example, Ranbaxy acquired Romania's Terapia, Ethimed

NV of Belgium and GSK's generic business Allen Spa in Italy. Dr Reddy's acquired German

generic drug maker Betapharm. Companies like Glen mark Pharma, Lupin, Aurobindo and

Jubilant Organosys are on the lookout for lucrative acquisitions.


COMPANIES OF THE INDUSTRY TAKEN FOR THE STUDY:-

Dr. REDDY’S LABORATORIES Ltd:-

Dr. Reddy’s Laboratories Ltd trading as Dr. Reddy's, founded in 1984 by Dr. K. Anji Reddy,

has become India’s biggest pharmaceutical company. Dr. Anji Reddy had worked in the

publicly-owned Indian Drugs and Pharmaceuticals Ltd. Reddy's manufactures and markets a

wide range of pharmaceuticals in India and overseas. The company has more than 190

medications ready for patients to take, 60 active pharmaceutical ingredients for drug

manufacture, diagnostic kits, critical care and biotechnology products.

CIPLA:-

CIPLA (Chemical, Industrial & Pharmaceutical Laboratories) was established by Khwaja

Abdul Hamied in 1935 who gave it an upstart giving access to his intellectual property rights in

drug formulations and manufacture. It is one of the oldest pharmaceutical companies in India. It

is India’s second largest pharmaceutical firm and has recently displaced Glaxo SmithKline in its

upward journey. CIPLA is a leading player in manufacture of anti-infective, anti-asthmatic

formulations, steroids and hormones. In 1968, it became the first Indian company to manufacture

Ampicillin in collaboration with the National Chemical Laboratory, it synthesized 2 anti-cancer

drugs Vinblastine and Vincristine in the year 1983 from the Rose, Vinca Rosea.Later in the year

1993, and it pioneered the manufacture of the anti-retroviral drug zidovudine in association with

the Indian Institute of Chemical Technology.

LUPIN PHARMACEUTICALS Ltd:-

Lupin Pharmaceuticals, Inc. is the U.S. wholly owned subsidiary of Lupin Limited,

which is among the top six pharmaceutical companies in India. Through our sales and marketing

headquarters in Baltimore, MD, Lupin Pharmaceuticals, Inc. is dedicated to delivering high-

quality, branded and generic medications trusted by healthcare professionals and patients across

geographies.


Lupin Limited, headquartered in Mumbai, India, is strongly research focused. It has a

program for developing New Chemical Entities. The company has a state-of-the-art R&D center

in Pune and is a leading global player in Anti-TB, Cephalosporin’s (anti-infective) and

cardiovascular drugs (ACE-inhibitors and cholestrol reducing agents) and has a notable presence

in the areas of diabetes, anti-inflammatory and respiratory therapy. They are building on their

parent company’s strengths of vertical integration in discovery research, process chemistry,

active pharmaceutical ingredient production, formulation development and regulatory filings.

Lupin. Pharmaceuticals, Inc. is committed to achieving its vision and mission of becoming an

innovation led transnational pharmaceutical company.

SUN PHARMACEUTICALS Ltd:-Sun Pharmaceuticeuticals is an international pharmaceutical company based in Mumbai,

India. It makes many generic and brand name drugs that are distributed in the United States,

Europe, Asia and worldwide. Sun manufactures both pharmaceuticals and active pharmaceutical

ingredients (API), in essence, ingredients to be used in finished pharmaceutical products. Its

products are in several therapeutic areas, including psychiatry, neurology, cardiology,

diabetology, gastroenterology, respiratory, and orthopedics.

Established in 1983, Sun Pharma was a start-up company with five products. Since 1996,

Sun has grown largely through a combination of internal growth, and acquisition of other

pharmaceutical companies. For example, it bought US-based Caraco Pharm Labs, and ICN

Hungary.

DIVIS LABORATORIES Ltd:-

Established in the year 1990, with Research & Development as its prime fundamental,

Divis Laboratories focused on developing new processes for the production of Active Pharma

Ingredients (APIs) & Intermediates. The company in a matter of short time expanded its breadth

of operations to provide complete turnkey solutions to the domestic Indian pharmaceutical

industry.

A Vision to excel to maintain leadership in custom synthesis of APIs and Intermediates

for health care and life sciences industry and to be one of the top companies’ world-wide in the

domain. To develop generic APIs for the late life cycle needs of the Industry.


STATEMENT OF THE PROBLEM:-

The performance of the Indian pharmaceutical industries is evaluated by Fundamental

and Technical analysis. Fundamental analysis of the business involves analyzing its financial

statements and health, its management and competitive advantages, its competitor and markets.

Technical analysis is a process of identifying trend reveals at an earlier stage to formulate the

buying and selling strategy. The study based on secondary data collected from the business

journals, companies’ websites, books and internet.

The following are the companies of the pharmaceutical industry of which the study is

been held:-

Dr. Reddy’s Laboratories

Cipla ltd

Sun Pharmaceuticals ltd

Lupin pharmaceuticals.ltd

Divis laboratories ltd

OBJECTIVES OF THE STUDY:-

To know the financial status of the companies in the Pharmaceutical industry.

To know the performance Indian pharmaceutical industry

To know the growth prospects of the Indian pharmaceutical industry

SCOPE OF THE STUDY

The scope of the study is confined only to five representative companies and their

respective industry.


Different charts and diagrams are used to show the relationship between the company

performance and its price.

The analysis is made based on the available data considering it is connect and accurate

RESEARCH METHODOLOGY:-

Secondary method is used:

The study was made through literature collected from the secondary data which available through different media’s which are as follows.

Internet

Annual reports of companies

News papers

Journals

Text books

Websites

NCFM books

LIMITATION OF THE STUDY:-

All the data collected are secondary, there is no primary data

The time confined for the study is limited which does not enable make the

comprehensive study.


CONCEPTUAL FRAME WORK, ANALYSIS AND

INTERPRETATION

FUNDAMENTAL ANALYSIS:-

ECONOMIC ANALYSIS:-

The level of economic activity has an impact on investment in many ways. If the

economy grows rapidly, the industry can also be expected to show rapid growth vice versa.

When the level of economic activity is low, stock prices are low and when the level of economic

activity is high, stock prices are high reflecting the prosperous outlook for sales and profits of the

firms. The analysis of macroeconomic is essential to understand the behavior of the stock prices.

INDUSTRY ANALYSIS:-

An industry is a group of firms that have similar technological structure of production

and produce similar products. some other factors also they are following.

Growth of the Industry

Structure of the Industry

Nature of the Product


Demand of the Product

Competition

Government policy

Research and Developments

SWOT Analysis

FINANCIAL ANALYSIS THROUGH RATIOS:-

Financial ratio provides numerical relationship between two relevant financial data.

Financial ratios are calculated from the balance sheet and profit and loss account. The

relationship either expressed as a percent or as a quotient.

Ratios summaries the data for easy understanding, comparison and interpretation. Financial

ratios may be divided into three groups. They are following.

1. Liquidity Ratios:-

Liquidity means the ability to meet its short term obligations. Current ratio and acid test

ratios are the most popular ratios used to analyse the liquidity. The liquidity ratio indicates the

liquidity in a rough fashion and the adequacy of the working capital.

Current Ratio = Current Assets

Current Liability

Acid Test Ratio = Current Assets – Inventories

Current Liability


2. Profitability Ratios:-

Profitability ratios relate the firms profit with factors that generate the profits. The

investor is very particular in knowing net profits to sales, net profit to total assets and net profit

to equity. The profitability measure the overall efficiency of the firm.

Net Profit Margin Ratio = P A T

Sales

This ratio indicates the net profit per rupee of sales revenue.

Operating profit margin ratio= EBIT

Sales

The operating profit margin ratio is a measure of overall operating efficiency, incorporating all

of the expenses of ordinary, daily business activity.

Return on Assets = Net Income

Total Assets

The return of assets measures the overall efficiency of capital invested in business.

3. Valuation of shares:-

The shareholders are interested in assessing the value of the share depends on the

performance of the firm and the market factors. The performance of the firm in turn depends on a

host of factors. Hence, the valuation of ratio provides a comprehensive measure of the

performance itself. Some of the valuation ratios are following.


Earning per share:- Earning after tax

No of shares outstanding

According to the model earning per share is affected by the some of the factors they are

utilization assets of the company, margin of sales, effective cost of the borrowed funds, debt-

equity ratio, equity base of the company and effective tax paid by the company.

Pay out Ratios:- Dividend per share

Earning per share

Dividend payout ratio is the fraction of net income a firm pays to its stockholders in dividends

Price Earning Ratios:- Market price per share

Earning per share

One of the most common financial parameters used in the stock market is the price

earning ratio. It related the share price with earning per share. The P/E ratio is the multiplying

factor that the market is willing to offer to the company’s future earnings.


TECHNICAL ANALYSIS

It is a process of identifying trend reveals at an earlier stage to formulate the buying and

selling strategy. With the help of several indicators they analyse the relationship between price-

volume and supply –demand for the overall market and the individual stock. Volume is favorable

on the upswing that is the number of shares traded dwindles.

Assumptions:-

The market value of the scrip is determined by the interaction of supply and demands.

The market discounts everything. The price of the security quoted represents the hopes, fears

and inside information received by the market players.

The market always moves in trend true to the stock market. In the rising market investors

psychology has up beats and they purchase the shares in greater volume, driving the prices

higher. At the same time, in the down trend they may be very eager to get out of the market

by selling them and thus plunging the share price further. The market technicians assume that

past prices predict the future.


HISTORY OF TECHNICAL ANALYSIS:-

The technical analysis is based on the doctrine given by Charles. H. Dow in 1084, in

the wall of street journal. He wrote series of articles in the Wall Street Journal. A. J. Nelson,

close friend of Charles Dow formalized the Dow Theory of the economic forecasting. The

analyst used charts of individual stocks and moving averages in the early 1920’s. Later on, with

the aid of calculators, sophisticated technique came to vogue.

FUNDAMENTAL ANALYSIS

ECONOMIC ANALYSIS

The purpose of analyze economic condition of the country in fundamental analysis to asses

the general economic situation both within the country and inter nationally. The economy is like

the tide and the various industry groups and individual companies are like boats. When economy

expands most industry groups and companies benefits and grows. When the economy decline,

most sectors and companies usually suffer. The stock market does not operate in a vacuum it is

an integral part of the whole economy of a country, more so in a free economy that of United

States and to some extent in mixed economy like ours.

The following are some important factors which should be taken into account while doing

fundamental analysis:

Gross Domestic Product

Savings and Investments

Inflation

Budget


Gross Domestic Product:-

GDP indicates the growth rate of economy. GDP represents the aggregate value of the goods

and service produced in the economy. GDP consists of personnel consumption expenditure,

gross private domestic investment and government expenditure on goods and services and net

export of goods and services.

The Economy of India is the eleventh largest in the world by nominal GDP and the fourth

largest by purchasing power parity (PPP). The country's per capita GDP (PPP) is $3,290 (IMF,

127th) in 2010. Following strong economic reforms from the socialist inspired economy of a

post-independence Indian nation, the country began to develop a fast-paced economic growth,

as free market principles were initiated in 1990 for international competition and foreign

investment.] Economists predict that by 2020, India will be among the leading economies of the

world. India's top five trade partners are UAE, China, USA, Saudi Arabia and Germany.

The Gross Domestic Product (GDP) in India expanded 8.90 percent in the third quarter of

2010 over the previous quarter. From 2004 until 2010, India's average quarterly GDP Growth

was 8.40 percent reaching an historical high of 10.10 percent in September of 2006 and a record

low of 5.50 percent in December of 2004. India's diverse economy encompasses traditional

village farming, modern agriculture, handicrafts, a wide range of modern industries, and a

multitude of services. Services are the major source of economic growth, accounting for more

than half of India's output with less than one third of its labor force. The economy has posted an

average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10

percentage points.

India's large service industry accounts for 57.2% of the country's GDP while the industrial

and agricultural sector contribute 28% and 14.6% respectively. Agriculture is the predominant

occupation in India, accounting for about 52% of employment. The service sector makes up a

further 34%, and industrial sector around 14%. The labour force totals half a billion workers.

Savings and Investments:-


http://en.wikipedia.org/wiki/Labour_in_India

http://en.wikipedia.org/wiki/Industrial_sector

http://en.wikipedia.org/wiki/Service_(economics)

http://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_India

http://en.wikipedia.org/wiki/Economy_of_India#cite_note-economist.com-8

http://en.wikipedia.org/wiki/Free_market

http://en.wikipedia.org/wiki/Economic_growth

http://en.wikipedia.org/wiki/IMF

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

http://en.wikipedia.org/wiki/Per_capita_GDP

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)



http://en.wikipedia.org/wiki/Gross_domestic_product

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

With savings rate touching 34% and investments having exceeded 36% of the GDP, the

country can achieve 9% growth in a sustained way. Despite the financial crisis, the economy

grew at an average pace of 8.5% between 2005-06 and 2009-10. This clearly represented

acceleration in the pace of growth and marks a distinct break from any previous five year period.

Per capita GDP grew by an average 7% in these five years. While growth is expected to touch

9% again in 2011-12, the constraints that may come in the way should be removed. Managing

inflation risks, particularly food grains price inflation is the biggest challenge. In the past few

days, there has been some volatility in capital markets, led by continued selling pressure from the

FIIs. While the stock market has its own mind and it takes cues from developments around the

world.

Rolling out numbers, the finance minister said GDP for 2009-10 has been revised up to 8 per

cent from 7.4 per cent estimated earlier and GDP for the previous year has been raised to 6.8 per

cent from 6.7 per cent calculated earlier. “More importantly, both savings and investment rates

have shown a strong rebound in 2009-10 over the preceding year. This augurs well for sustaining

high growth of the economy in the medium to long term.

Inflation

Inflation is no stranger to the Indian economy. In fact, till the early nineties Indians were

used to double-digit inflation and its attendant consequences. But, since the mid nineties

controlling inflation has become a priority for policy framers.

The natural fallout of this has been that we, as a nation, have become virtually intolerant

to inflation. While inflation till the early nineties was primarily caused by domestic factors

(supply usually was unable to meet demand, resulting in the classical definition of inflation of

too much money chasing too few goods), today the situation has changed significantly.

Inflation today is caused more by global rather than by domestic factors. Naturally, as the

Indian economy undergoes structural changes, the causes of domestic inflation too have

undergone tectonic changes.

Needless to emphasize, causes of today's inflation are complicated. However, it is indeed

intriguing that the policy response even to this day unfortunately has been fixated on the

traditional anti-inflation instruments of the pre-liberalization era.

Asia Pulse - Royal Bank of Scotland has said inflation will be the biggest headwind for

the Indian economy in 2011 as increasing income, coupled with more government spending and


rising crude prices, will keep pressure on the price front, neutralizing Reserve Bank of India

(RBI)'s efforts to contain it. Though both headline inflation and food price numbers have been

heading south since the recent months, soaring prices of some food articles like onions, tomatoes

and garlic pushed food inflation to a 10-week high of 14.44 per cent for December 18 -- an

upward march for the fifth week in row. But this is still lower from the 21.29 per cent a year ago.

The recent Rs 3 hike in petrol price also impacted the inflation.

Budget

India is among the first few countries in the world to implement a broad-based counter-

cyclic policy package to respond to the negative fallout of the global slowdown. The Advance

Estimate for Gross Domestic Product (GDP) growth for 2009-10 is pegged at 7.2 per cent. The

final figure is expected to be higher when the third and fourth quarter GDP estimates for 2009-10

become available. The growth rate in manufacturing sector in December 2009 was 18.5 per cent

– the highest in the past two decades. Pranab Mukherjee, Finance Minister is optimistic that the

2010-11 budgets will contribute in enhancing the private investment which in turn will bring

back the economy to a 9% growth.

An analysis of the components of aggregate demand in recent years indicates that it has

been driven Predominantly by a sharp increase in domestic consumption (C) and private and

public investment (I). During the current fiscal however, private consumption has been a drag on

GDP growth. Out of 1 percentage point decline in GDP growth at factor cost this fiscal, a

reduction of 0.7 percentage points is expected to come from the slowdown in private

consumption growth. In contrast, a decline of only 0.2 percentage points in GDP growth will

come from investment.

Improving Investment Environment

Foreign Direct Investment

Number of steps taken to simplify the FDI regime.

Methodology for calculation of indirect foreign investment in Indian companies has been

clearly defined.

Complete liberalization of pricing and payment of technology transfer fee and trademark,

brand name and royalty payments.


INDUSTRY ANALYSIS

Growth of the Industry

The industry has witnessed healthy growth in the recent past and investment in

pharmaceutical industry is continuing. The product out put also increasing and operational and

business management efficiency also seem to have improved. A surge in growth is expected to

take place between 2006 and 2010, attributable to the opportunities presented by contract

research and manufacturing sourcing (CRAMS). MNCs have a modest representation among the

top 20 companies in the Indian pharmaceutical industry. The re-introduction of the patent regime

in 2005 has forced many smaller Indian companies to exit the industry, while others have been

forced to re-evaluate existing corporate strategies.

Structure of the Industry

Pharmaceutical industry adopts high technology and produces high value added products.

The process is very complex in nature. The processes are classified into primary and secondary.

The primary process requires uninterrupted power supply, maintaining of condition under which

the molecules reacts and yield a new product, excellent manufacturing conditions and well


trained personnel. Specific plants cost less but, they risk of obsolescence. Multipurpose plants

are expensive and have no risk obsolescence but, they have the risk of cross contamination.

Nature of the Product

The products of the pharmaceutical industry are broadly classified in to bulk drugs,

formulations and intravenous fluids. Bulk drugs are like Ciprofloxacin, Ibuprofen, Ranitidine,

Ethanbutol, etc. The major manufacturing products are Ranbaxy, Cipla, Cadilla, Dr.Reddy’s lab

and Lupin. Some companies manufacture formulations from bulk drugs and market them under

brands. Companies also manufacture formulations from other companies. Some of the

companies in the formulation segments are Ranbaxy, Cipla, Wockhardt, Lupin. Etc.

Demand for the Product

The size of the Indian pharmaceutical industry is estimated at $8,790 million. The Indian

pharmaceutical industry contributes 8 percent in volume but only 1 percent in value terms to the

global pharmaceutical sales. Of the total market, pharmaceutical formulations account for 78

percent and bulk drugs for the balance 22 percent. A study by the Indian Commission for Health

in India indicates that 56 percent of the Indian health expenditure in on drugs equivalent to

around $17.9 billion in 2004 but most of this is on traditional medicines rather than allopathic

drugs.

This highly fragmented industry has resulted in with no players controlling more than 7

percent of the retail formulation market. However, similar to the global trends, mergers and

acquisitions in the Indian pharmaceutical industry has resulted in the 10 top formulation firms

accounting for 37 percent of the retail formulation market.

Competition


The industry having 2400 players within the organized sector, and around 15,000 in the

small-sector. Apart from internal competition, the industry is facing international competition

too. There is large import of bulk drug from china. The Chinese products are significant

competitors for the Indian pharmaceutical industry. Multinational Corporation like Pfizer, Abbot

Labs, Novartis also pose threat to the local producers.

Government policy

The drug companies operate in a highly politicized environment. The product

development, prices, safety, and regulated by the government. The pharmaceutical industry

functions under Drug Price Control Order. The prices of drug are regulated to make them

available to the masses at affordable prices. The DPCO is issued from time to time to keep

the policy in tune with the changing demands. The patent law in India provides patent only

for process and there is no product payment. But, with signing of GATT, India is required to

amend the patent law. Once the product patent comes into force, the reverse engineering rout

to introduce new molecules will not be available to Indian companies.

Research and Development

Both the Indian central and state governments have recognized R&D as an important

driver in the growth of their pharmaceutical businesses and conferred tax deductions for

expenses related to research and development. They have granted other concessions as well, such

as reduced interest rates for export financing and a cut in the number of drugs under price

control. Government support is not the only thing in Indian pharma’s favor, though; companies

also have access to a highly-developed IT industry that can partner with them in new molecule

discovery.

The average sum spent by the 15 largest Indian pharmaceutical companies for Research

and Development is around 2 percent of turnover. This is drastically low and research mainly

concentrated towards the area of process development rather than on new molecular searching.


FINANCIAL ANALYSIS THROUGH RATIOS

A. LIQUIDITY RATIOS:-

CURRENT RATIOS :

TABLE 1.1 :- CURRENT RATIO

2010 2009 2008 2007 2006DIVIS

Current assets 833.02 793.10 580.72 432.12 354.64Current liability

313.38 260.23 236.76 156.14 159.08

Current ratio 2.66 3.05 2.45 2.77 2.23CIPLA


2524.77 1568.71 1396.86 1053.91 1006.15

Current ratio 2.17 2.82 2.68 2.69 2.28


DR. REDDYSCurrent assets 3647.30 3870.40 3348.01 4028.55 2398.87Current liability

1883.20 1458.10 1387.74 1254.93 798.95

Current ratio 1.94 2.65 2.41 3.21 3.00LUPIN


747.99 914.57 546.65 422.07 339.12

Current ratio 2.99 1.97 3.16 3.49 3.88SUN PHAMACEUTICALS


730.93 1038.44 1108.52 352.93 395.0

Current ratio 2.32 2.64 2.63 6.21 5.71

CHART1.1 :- CURRENT RATIO

2010 2009 2008 2007 20060

1

2

3

4

5

6

7

CIPLADIVISDr.REDDYLUPINSUN PHRMA

INTERPRETATION

Here the current ratio of the companies almost equal in those five companies except in

2006 & 2007 Sun Pharmaceutical shows high current ratio position, but the last two years the

company current ratios favorable.


QUICK RATIOS:

TABLE 1.2 :- QUICK RATIO

2010 2009 2008 2007 2006DIVIS

Quick assets 351.64 394.04 303.9 221.33 170.77Current liability

313.38 260.23 236.76 156.14 159.08

Quick ratio 1.12 1.52 1.28 1.42 1.07CIPLA


2524.77 1568.71 1396.80 1053.91 1006.15

Quick ratio 1.12 1.80 1.88 1.76 1.33DR. REDDYS


1883.20 1458.10 1357.74 1254.93 798.95

Quick ratio 1.45 2.13 1.71 2.79 1.95


LUPINQuick assets 1600.61 1087.83 1102.10 1073.46 1003.8Current liability

774.99 914.57 546.65 422.07 339.12

Quick ratio 2.07 1.19 2.02 2.54 2.96SUN PHAMACEUTICALS


730.93 103.44 1108.52 352.93 395.80

Quick ratio 1.52 2.17 2.18 6.03 5.04

CHART 1.2:- QUICK RATIO

2010 2009 2008 2007 20060

1

2

3

4

5

6

7

CIPLADIVISDr.REDDYLUPINSUN PHRMA

INTERPRETATIONS

Here the quick ratios of the five pharmaceutical companies are almost

equal except 2006 & 2007 Sun Pharmaceutical shows high current ratio position.


B. PROFITABILITY RATIOS

NET PROFIT MARGIN RATIOS:-

TABLE 2.1 :- NET PROFIT MARGIN RATIO

2010 2009 2008 2007 2006DIVIS

PAT 345.09 458.42 372.63 193.51 71.60Sales 929.28 1191.11 1033.22 754.40 381.46Net profit margin (%)

37.14 38.49 36.60 25.65 18.77

CIPLAPAT 1038.09 1006.37 631.42 633.13 533.42Sales 5359.52 4960.60 3997.90 3438.24 2891.36Net profit margin (%)

19.37 20.29 15.79 18.41 18.45

DR. REDDYSPAT 773.40 598.40 433.08 1207.48 206.36Sales 4469.80 4158.90 3365.20 3955.66 2005.85Net profit margin (%)

16.41 14.34 12.9 30.52 10.29

LUPINPAT 648.93 416.97 443.38 302.06 182.72Sales 3632.19 2899.15 2523.63 1962.96 1596.54Net profit margin (%)

17.87 14.38 17.57 15.37 11.44

SUN PHAMACEUTICALSPAT 929.45 1238.92 1000.51 571.93 428.21


Sales 2522.75 3866.45 3151.92 2243.18 1680.34Net profit margin (%)

36.84 32.04 31.74 25.49 25.48

CHART 2.1:- NET PROFIT MARGIN RATIO

2010 2009 2008 2007 20060

5

10

15

20

25

30

35

40

45

CIPLA

DIVIS

Dr.REDDY

LUPIN

SUN PHARMA

INTERPRETATION

Here net profit margin ratio indicates that the net profit per rupee of sales

revenue. Above five companies making adequate profit last five years. Comparing five years for

the last three years Divis and Sunpharma shows good net profit margin.


OPERATING PROFIT MARGIN RATIO

TABLE 2.2:- OPERATING PROFIT MARGIN RATIO

2010 2009 2008 2007 2006DIVIS

EBIT 391.99 499.74 412.34 238.87 114.07

Sales 929.28 1191.11 1033.22 754.40 381.46Operating profit margin (%)

42.18 41.96 39.91 31.66 29.90

CIPLA

EBIT 1309.89 1183.10 786.40 784.24 651.69


24.44 23.85 19.67 22.81 22.54

DR. REDDYS

EBIT 1028.10 794.40 556.65 1448.42 283.63


23.00 19.10 16.54 36.61 14.14

LUPIN

EBIT 773.27 511.51 629.67 329.51 274.14

Sales 3632.19 2899.15 2523.63 1962.96 1596.54

Operating profit margin (%)

21.29 17.64 24.95 16.77 17.17

SUN PHAMACEUTICALS


EBIT 480.40 1271.81 1043.73 592.34 466.83


19.04 32.89 33.11 26.41 27.78

CHART2.2;- OPERATING PROFIT MARGIN RATIO

2010 2009 2008 2007 20060

5

10

15

20

25

30

35

40

45

CIPLA

DIVIS

Dr.REDDY

LUPIN

SUN PHARMA

INTERPRETATION

Here operating profit margin ratio indicates that the net profit per rupee of

sales revenue. Above five companies making adequate profit last five years. Comparing five

years for the last three years Divis shows a good operating profit margin.


RETURN ON ASSETS

TABLE 2.3; - RETURN ON ASSETS

2010 2009 2008 2007 2006DIVIS

Net income 344.20 424.41 353.56 191.75 70.47Total assets 1574.92 1314.43 960.07 696 491Return on assets (%)

21.85 32.29 36.82 27.55 14.35

CIPLANet income 1081.49 776.81 701.43 668.03 607.64Total assets 5910.19 5282.02 4327.38 3350.88 2442.86Return on assets (%)

18.3 14.71 16.21 19.93 24.87

DR. REDDYSNet income 846.00 560.80 473.67 1168.66 211.11Total assets 6477.80 5899.40 5274.11 4703.26 3186.01Return on assets (%)

13.06 9.51 8.98 24.85 6.63

LUPINNet income 654.89 419.76 353.04 213.72 185.04Total assets 3437.36 2320.21 2282.60 1752.96 1556.55Return on assets (%)

19.05 18.09 15.47 12.19 11.89

SUN PHAMACEUTICALSNet income 898.65 1276.99 1014.04 628.88 461.29Total assets 5747.47 5175.02 4310.14 3517.64 3210.76Return on assets (%)

15.63 24.67 23.53 17.88 14.37


CHART2.3:- RETURN ON ASSETS

2010 2009 2008 2007 20060

5

10

15

20

25

30

35

40

CIPLADIVISDr.REDDYLUPINSUNPHARMA

INTERPRETATION

Here return on assets measures the overall efficiency of capital invested in business.

Looking five years charts of the five pharmaceuticals companies’ shows that these

pharmaceutical companies good efficiency capital investment in business. But year 2008 and

2009 divis shows a high return on assets.


C. VALUATION OF SHARES

EARNING PER SHARE RATIOS

TABLE 3.1:- EARNING PER SHARE

2010 2009 2008 2007 2006DIVIS

EAT 344.20 424.41 353.56 191.75 70.47Number of shares outstanding 1321.44 647.58 645.57 129.11 128.19

EPS 26.05 65.54 54.77 148.51 54.98CIPLA


EPS 13.47 9.99 9.02 8.59 20.26DR. REDDYS


EPS 50.11 33.29 28.26 70.09 27.53LUPIN

EAT 654.89 419.76 353.04 213.72 185.04Number of shares outstanding

889.44 828.20 820.81 803.45 401.41

EPS 73.63 50.68 43.01 26.6 46.09SUN PHAMACEUTICALS

EAT 898.65 1276.99 1014.04 628.88 461.29


Number of shares outstanding 2071.16 2071.16 2071.16 1934.02 1857.32

EPS 43.39 61.66 48.96 32.52 24.83

CHART 3.1:- EARNING PER SHARE

2010 2009 2008 2007 20060

20

40

60

80

100

120

140

160


INTERPRETATION

Here earning per share is the earning after tax divided by the no of equity shares. Above

charts showing that there is fluctuating happing in earning per share of the companies.

.


PAY OUT RATIOS

TABLE 3.2:- PAY OUT RATIO

2010 2009 2008 2007 2006DIVIS

DPS 6 6 4 10 10

EPS 26.05 65.54 54.77 148.51 54.98

Pay out ratio 23.03 9.15 7.30 6.73 18.19

CIPLA

DPS 2 2 2 2 2

EPS 13.47 9.99 9.02 8.59 20.26

Pay out ratio 14.85 20.00 22.17 23.28 9.87

DR. REDDYS

DPS 11.25 6.25 3.75 3.75 5

EPS 50.11 33.29 28.26 70.09 27.53

Pay out ratio 22.45 18.77 13.27 5.35 18.16

LUPIN

DPS 13.5 12.5 10 5 6.5

EPS 73.63 50.68 43.01 26.6 46.09

Pay out ratio 18.33 24.66 23.25 18.8 14.10

SUN PHAMACEUTICALS

DPS 13.75 13.75 10.5 6.75 5.5

EPS 43.39 61.66 48.96 32.52 24.83

Pay out ratio 31.69 22.3 21.45 20.76 22.15


CHART 3.2:- PAY OUT RATIO

200 2009 2008 2007 20060

5

10

15

20

25

30

35


INTERPRETATION

Here the pay out ratio is fluctuating dividend giving by the companies varying in every

year. Low pay out may be company reserve for future expansion. High growth firm sometimes

having low or zero growth rates, these like companies suitable for long term investors.


P/E RATIOS

TABLE 3.3:- P/E RATIO

2010 2009 2008 2007 2006DIVIS

Market price per share

706.22 969.99 1287.095 3103.86 1924.3

EPS 26.05 65.54 54.77 148.51 54.98P/E ratio 27.11 14.8 23.5 20.9 35

CIPLA


346.18 227.77 228.206 245.67 686.81

EPS 13.47 9.99 9.02 8.59 20.26P/E ratio 25.7 22.8 25.3 28.6 33.9

DR. REDDYS


1390.05 558.61 352.12 5169.14 2448.79

EPS 50.11 33.29 28.26 70.09 27.53P/E ratio 27.74 16.78 12.46 73.75 88.95

LUPIN


1693.49 724.72 404.29 438.9 1050.85

EPS 73.63 50.68 43.01 26.6 46.09

P/E ratio 23 14.3 9.4 16.5 22.8

SUN PHAMACEUTICALS



421.75 879.27 1435.02 1278.69 1026.47

EPS 43.39 61.66 48.96 32.52 24.83P/E ratio 9.72 14.26 29.31 39.32 41.34

CHART 3.3:- P/E RATIO

2010 2009 2008 2007 20060

10

20

30

40

50

60

70

80

90

100


INTERPRETATION

There are two thing will happen in case of P/E ratios that when it low it means it shares

are underpriced, when it higher it is overheated market. But while forecasting the future P/E ratio

should compare fundamental factors of the companies.


TECHNICAL ANALYSIS

CHART ANALYSIS

A price chart is a sequences of price plotted over a specific time period. On the chart

the Y- axis (vertical axis) represents the price scale and X-axis (horizontal axis) represents the

time scale. Prices plotted from left to right across the X-axis.

The use of the chart is limited to just technical analysis. Because charts provide an easy

to read graphical representation of a security price movement over a specific period of time, it

also is a great benefit to fundamental analysis.

TREND ANALYSIS

Trend is the direction of movement. The share prices can either increase or fall or remain

flat. The three direction of the share price movement are called as rising, falling, and flat trends.

It is important tool in technical analysis. The trend line are straight lines drawn connecting either

the tops or bottoms of the share price movement. To draw a trend line, the technical analyst has

two tops and two bottoms.

SUPPORT AND RESISTANCE LEVEL

One of the important tools of the chart analysis is identification of the support and

resistance level. Support levels are a barrier to price decline a resistance is barrier to price

advancement.


Support and resistance usually occur whenever the turnover of large number of shares

tends to concentrated at several price levels. When the stock touches certain level and then drops

this is called resistance and if the stock reaches down to certain level and then rises there exists a

support.

CIPLA LIMITED

TABLE 4.1:- PRICE MOVEMENT- CIPLA

year 2006 2007 2008 2009 2010

price 686.81 245.67 228.206 227.77 3461.18

CHART 4.1:- PRICE MOVEMENT- CIPLA

2006 2007 2008 2009 20100

500

1000

1500

2000

2500

3000

3500

4000

y-values

y-values

INTERPRETATION


Here chart considering the average price of the stock in these years. The stock prices after

the 2008 are growing. This up ward trend are reached up to 2010, so here we advice that both

short and long term investors can able invest in this shares.

DIVI’S LAB

TABLE 4.2:- PRICE MOVEMENT - DIVI’S

year 2006 2007 2008 2009 2010prices 1924.3 3103.86 1287.09 969.99 706.22

TABLE 4.2 :- PRICE MOVEMENT OF DIVI’S

2005.5 2006 2006.5 2007 2007.5 2008 2008.5 2009 2009.5 2010 2010.50

500

1000

1500

2000

2500

3000

3500

1924.3

3103.86

,1287.09, 969.99

706.22

Y-Values

INTERPRETATION


Here this chart showing year average price of the sun pharmaceuticals. There is a decline

in the 2008, 2009& up to 2010. So here we advice that long term investors can able invest in this

shares, considering the short term it high risky to invest but higher risk higher will be the return.

Dr. REDDY’S LABORATORIES LTD

TABLE 4.3:- PRICE MOVEMENT Dr. REDDY’S LAB

year 2006 2007 2008 2009 2010price 2448.79 5169.14 352.12 558.61 1390.05

CHART 4.3:- PRICE MOVEMENT Dr. REDDY’S LAB

2005.5 2006 2006.5 2007 2007.5 2008 2008.5 2009 2009.5 2010 2010.50

1000

2000

3000

4000

5000

6000

, 558.61

, 1390.05

, 2448.79

5169.14

, 352.12

Y-Values

Y-Values

INTERPRETATION


Here these chart showing average price of the Dr. Reddy’s Lab. It shows the volatility in

the price trend of the company. It also long term may be suitable, considering the short term it

high risky to invest but higher risk higher will be the return.

LUPIN LIMITED:-

TABLE 4.4:- PRICE MOVEMENT LUPIN LTD

YEAR 2006 2007 2008 2009 2010PRICES 1050.85 438.9 404.29 724.72 1693.49

CHART 4.4 :- PRICE MOVEMENT LUPIN LTD

2005.5 2006 2006.5 2007 2007.5 2008 2008.5 2009 2009.5 2010 2010.50

200

400

600

800

1000

1200

1400

1600

1800, 1693.49

724.72

1050.85

, 438.9

, 404.29

Y-Values

Y-Values

INTERPRETATION


Here this chart showing year average price of the Lupin. Chart considering the average

price of the stock in these years. The stock prices after the 2008 are growing. This up ward trend

are reached up to 2010, so here we advice that both short and long term investors can able invest

in this shares.

SUN PHARMACEUTICAL LIMITED:-

TABLE 4.5:- PRICE MOVEMENT SUN PHARMACEUTICALS LTD

YEAR 2006 2007 2008 2009 2010PRICES 1026.47 1278.69 1435.02 879.27 421.75

CHART 1.5:- PRICE MOVEMENT SUN PHARMACEUTICALS LTD

2005.5 2006 2006.5 2007 2007.5 2008 2008.5 2009 2009.5 2010 2010.50

200

400

600

800

1000

1200

1400

1600 1712.321575.7979

1222.05

1064.95

Y-Values

Y-Values

INTERPRETATION


Here the average price of the Sun Pharmaceutical Limited. This chart

showing last two years there is high growth in stock price of the company. According to above

chart long term investors may be suitable to invest but short term investors it may high risk.

FINDINGS OF THE STUDY

Pharmaceutical industry is defensive share, so this industry share withstands recession and

depression. Defensive stocks like pharma held by the investor for the income earning

purpose.

Clinical Research Outsourcing (CRO), a budding industry valued over US$ 118 million

per year in India, is estimated to grow to US$ 380 million by 2010, as MNCs are entering

the market with ambitious plans.

The government is trying to boost R&D in domestic pharma industry. It is giving tax

exemption for a period of ten years and relieving customs and excise duties of all the

drugs and material imported or exported for clinical trials to promote innovative R&D.

Considering the financial analysis of the five pharmaceutical companies in this industry

through ratios those companies having good favorable Liquidity ratios, Profit Margin

ratio sand Valuation ratios, company should always try to maintain a good relationship

with investors through keeping good EPS, Dividend per Share, Pay Out ratio and P/E

ratio.

Considering stock market performance of the pharmaceutical companies through

technical analysis. in technical analysis price movement chart and these showing a down

trend so it advising that in most of the pharma company cases investors should go for

long term investment rather than the short term investment.


SUGGESTIONS

Pharmaceutical companies have lots of room to grow; so invest in theses type of

industries helps the investors at long time.

Buy shares of reputed companies backed by top class management.

Do not invest in inactive shares generally it is difficult to encash them.

Before investing we should undertake a deep study on the net sales, net profits in

relations to equity capital employed & should attempt to forecast for the coming

years.

From the company point of view, the company should allow the investors to take

part in board of directors meeting & gives maximum dividend to the shareholders.

Do not over pay for growth.

Do not invest in unlisted shares.

The investors should become cautious while investing for very long time.

The investors should analyze the price movement

Economic performance is greatly affected to the performance of the industries of

the country, so investors should know economic performance of the country while

investing.


CONCLUSION

This is the final and most important stage of the entire project. The main objective of my

project ends with this stage. This part will indicate to the investor, creditors, and

shareholders each of the company’s overall operating efficiency and performance that

will help them to make the most efficient investment decision.

The final investment decision is not only give on the basis of ratio analysis but it is also

given on the basis of common size statement and trend analysis. Thus, it will highly

affect the investment decision.

From the analysis of pharmaceutical company, it is found that the financial position and

the capital structure of the sunpharma is stronger and comparatively higher than other

five companies.

But after that according to me it is not advisable for the investing money in dr.reddy lab

and cipla ltd. On the base of overall analysis. Compare to the other five companies this

companies are not stronger and capable.

And lastly I conclude that ratio analysis is the most important yardstick that provides

measure of comparison between different companies. It would be easier for the investor

to make the profitable decision so that they can earn much profit as possible out of their

investment.


BIBLOGRAPHY

ANNUAL REPORTS OF:-

CIPLA LIMITED

DIVI’S LABORATORIES

Dr. REDDY’S LABORATORIES

LUPIN PHARMACEUTICALS

SUN PHARMACEUTICALS

INDIAINFOLINE LTD

WEBSITE

www.indiainfoline.com

http://money.rediff.com

www.google.com

www.moneycontrol.com


http://www.google.com/

http://money.rediff.com/

http://www.indiainfoline.com/

FUNDAMENTAL AND TECHNICALNALYSIS OF INDIAN PHARMACEUTICAL INDUSTRY

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