Project Report_Dr Reddy's Laboratories

8/8/2019 Project Report_Dr Reddy's Laboratories

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Course Instructor

Prof. Manju Jaiswal

Team Members

Jaideep Singh (272/47)

Pankaj Gangwani (209/47)

Kanupriya Sharda (260/47)

Sanjay Kumar Sah (245/47)

Financial Analysis of Dr Reddys

Laboratories Ltd


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Corporate Financial Reporting and Analysis, 2010 Page 2

CHIEF EXECUTIVE NAME : Mr G V Prasad

SECRETARY NAME : Mr Sandeep Poddar

BOARD OF DIRECTORS Mr. G V Prasad

Mr. Ravi Bhoothalingam

Dr. K Anji Reddy

Ms. Kalpana Morparia

Dr. Omkar Goswami

Mr. Anupam Puri

Dr. Ashok S Ganguly

Mr. Satish Reddy

Dr. Bruce L A Carter

Dr. J P Moreau

LISTED IN : NATIONAL STOCK EXCHANGE OF INDIA LTD

NEW YORK STOCK EXCHANGE

THE STOCK EXCHANGE, MUMBAI


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1. BRIEF COMPANY BACKGROUND

Dr. Reddy's Laboratories is India's leading pharmaceutical company with presence in over 100

countries. Dr Reddy's manufactures a range of products such as Active Pharmaceutical Ingredients,

Generic & Branded Finished Dosages, Specialty Pharmaceuticals, and Biopharmaceuticals. Dr. Reddy's

Laboratories was founded in 1984 by Dr Anji Reddy. In 1986, Dr. Reddy's went public and entered

international markets with exports of Methyldopa. In 1987, Dr. Reddy's obtained its first USFDA

approval for Ibuprofen API and started its formulations operations. In 1988, Dr. Reddy's acquired

Benzex Laboratories Pvt. Limited to expand its Bulk Actives business. In 1990, Dr. Reddy's, entered a

new territory when it, for the first time in India, exported Norfloxacin and Ciprofloxacin to Europe and

Far East. In 1993, Dr. Reddy's Research Foundation was established and the company started its drug

discovery programme. In 1994, Dr. Reddy launched a GDR issue of US$ 48 million. In 1995, the

company set up a joint venture in Russia. In 1997, Dr. Reddy's became the first Indian pharmaceutical

company to out-license an original molecule when it licensed anti-diabetic molecule, DRF 2593

(Balaglitazone), to Novo Nordisk. In 1998, Dr. Reddy's licensed anti-diabetic molecule, DRF 2725

(Ragaglitazar), to Novo Nordisk. In 1999, the company acquired American Remedies Limited, apharmaceutical company based in India. In the year 2000, became the first Asia Pacific pharmaceutical

company, outside Japan, to be listed on the New York Stock Exchange. In 2001, Dr. Reddy's

Laboratories became India's third largest pharmaceutical company with the merger of Cheminor Drugs

Limited, a group company. In 2002, Dr. Reddy's made its first overseas acquisition - BMS Laboratories

Limited and Meridian Healthcare in UK. In 2003, Dr. Reddy's launched Ibuprofen, first generic product

to be marketed under the "Dr. Reddy's" label in the US. In 2006, Dr. Reddy's achieved a revenue of US$

1 Billion. In the same year, Dr. Reddy's acquired Betapharm- the fourth-largest generics company in

Germany. In 2008, the company has acquired Jet Generici Srl, a company engaged in the sale of generic

finished dosages in Italy. The deal has been completed via Dr Reddy's Italian subsidiary. The company

proven research capabilities and vertically integrated with a presence across the pharmaceutical value

chain and it conducts research in the areas of diabetes, obesity, cardiovascular diseases, anti-infectives

and inflammation. To help people lead healthier lives by delivering affordable and accessible

medication to all parts of the world and discovering, developing and commercializing innovative

medicines that satisfy unmet medical needs are the two parallel objectives of Dr. Reddy's Laboratories

Limited, and it is sustain path of the company to survive. The appreciation and recognition is a role to

boost, as part the company has received plenty of awards and applications already, continued that, the

company got Pharma Excellence Awards 2006-07 under the category of Sustained Growth by The

Indian Express, Dun & Bradstreet American Express in Corporate Awards 2007, Best Corporate Social

Responsibility Initiative 2007 by BSE - India and Amity Leadership Award for Best Practices in HR in

Pharmaceutical Sector. Today, Dr. Reddy's Laboratories is leading pharmaceutical company in India in

terms of turnover and profitability.


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2. BRIEF INDUSTRY OUTLOOK

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 Indian Pharmaceutical Industry today is in the front rank of Indias science-based industries with

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

organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about

8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and

range of medicines manufactured. From simple headache pills to sophisticated antibiotics and

complex cardiac compounds, almost every type of medicine is now made indigenously.

Playing a key role in promoting and sustaining development in the vital field of medicines, Indian

Pharma Industry boasts of quality producers and many units approved by regulatory authorities in

USA and UK. International companies associated with this sector have stimulated, assisted and

spearheaded this dynamic development in the past 53 years and helped to put India on the

pharmaceutical map of the world.

The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has

expanded drastically in the last two decades. The leading 250 pharmaceutical companies control

70% of the market with market leader holding nearly 7% of the market share. It is an extremely

fragmented market with severe price competition and government price control.

The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs,

drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles.

There are about 250 large units and about 8000 Small Scale Units, which form the core of the

pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the

complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients

and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of

pharmaceutical formulations.

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.


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3. BROAD ANALYSIS OF FINANCIAL STATEMENTS

A. Balance Sheet and Profit & Loss Analysis

Sales

Gross sales increased by 37% to Rs. 68,428 million in 2008-09 and to Rs.70,626 million in 2009-10 .One of the reasons was an increase in Gross sales of Global Generics which grew by 50% to Rs.

49,802 million. Gross sales decreased by 24 percent to Rs. 50,476 million in 200708. This was

because previous year sales included revenues from sales of Authorized Generics products, which

did not materialize in 200708. Revenues from Betapharm have suffered due to pricing pressures in

the German generics market as well as supply chain problems. No launches during FY08 and end of

exclusivity period for simvastatin and finasteride led to drop in prices. Gross sales increased by 165

per cent to Rs. 66,035 million in 200607. Exceptional performance in FY07 was on account of four

generic launches in the US. During FY07, simvastatin and finasteride contributed INR 15.8 billion or

24% of DRLs total revenues.

Profit/ (loss) after Tax

PAT decreased from Rs. 4,373 million in 2007-08 to Rs. (9,172) million in 2008-09 primarily due toBetapharm impairment of intangibles of Rs 3,167 million and goodwill of Rs. 10,856 million. During

the year 2009-10, the comparable numbers were Rs. 3,456 million and Rs. 5,147 million leading to

PAT of Rs. 3515 million which is relatively low compared to 2007-08 and 2006-07. This was caused

by the German generics market is transiting to a lowest-price tender model. State Healthcare

Insurance Fund companies issued tenders for generics supply where the lowest bidder for each in a

local geography wins. The lower PAT in 2008-09 as compared to 2009-10 can also be attributed to an

expense of Rs. 916 million in 2008-09 on account of liquidated damages paid to Eli Lilly arising out of

an unfavourable court decision relating to patent of olanzapine in Germany.

PAT decreased by 55% from Rs. 9,655 million in 200607 to Rs. 4,373 million in 200708. As outlined

above, this was because previous year sales included revenues from sales of Authorized Generics

products, which did not materialize in 200708.

Operating and Other Expenses

The increase in operating expenses year on year has some common causes - higher advertisement

costs, rise in power and fuel consumption and costs, and repairs and maintenance expenses due to

increase in production and commissioning of two new manufacturing plants; increase in number of

employees and increase in carriage outwards because of higher sales volumes.

Personnel costs rose by 19% to Rs. 11,634 million in 2009-10. This was on account of annual

increments and increase in number of employees. As a share of total income, personnel costs

increased to 17% in 2009-10, from 15% in 2008-09.

Selling expenses have grown over the years on account of symposiums, media expenses, salesdevelopment costs and higher field expenses.

Depreciation and Amortization

Depreciation and amortization decreased by 17% to Rs. 4,131 million in 2009-10 due to lower

amortization charge on betapharm intangibles, resulting from impairment charge recorded in 2008-

09.


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Depreciation and amortization increased by 24% to Rs. 4,977 million in 2008-09 and by 6 percent to

Rs. 4,018 million in 200708 because of increase in gross block and intangibles. Additional

investments were incurred towards normal capital expenditure as well as new projects in PSAI and

Global Generics. Amortization grew from Rs. 436 million in 200506 to Rs. 2,369 million in 200607

due to write down of intangible assets in Trigenesis.

Cash and Bank Balances

We see a decrease in cash and bank balances over the five years which is a positive sign as more

investments are being made to grab business opportunities. However, this decrease can also be

attributed to increased operational expenses over the years.

Income Tax

We see an increasing trend in income tax over the years owing to increasing sales and income of the

company. Even though DLR has recorded aggregate non-cash impairment charge amounts to Rs.

14,023 million in 2008-09 and Rs 8693 million in 2009-10, there was an increase in Income Tax

Impairment does not figure in the calculation of Taxable Income. FY 2007 saw much higher tax, due

to extraordinarily high sales ad discussed before.

B. Cash Flow Statement AnalysisOverall

An over study of the cash flow statement shows the company is doing well. Positive cash flow from

operating activities over the years, despite unforeseen expenditures, shows that the companys

operations are profitable. Negative cash flow from investing and financing activities is a good sign of

growth and expansion and a measure of its credibility in the market. It is favourable for potential

investors.

Inorganic Growth

DRL since the past few years has been vying for high growth through inorganic route through

acquisitions in the international arena. The same can be inferred from the cash flow statement.

company has been on a spree of acquisitions and has recorded huge inorganic growth in recent

years. During the year 2005-2006 they raised huge amounts of debt to fund their acquisition of

Roches API business, its order books and plant in Mexico for US $61 million and of Betapharm,

Germanys 4th largest pharma company for EUR 483 million.

In 2008-09, the company continued its inorganic Growth by acquiring a portion of Dowpharma Small

Molecules business associated with its United Kingdom sites in Mirfield and Cambridge, BASF

Corporations manufacturing facility at Shreveport in Louisiana, USA and Jet Generici SRL, a company

engaged in the sale of generic finished dosages in Italy.

Cash Flow from Operating Activities

Net Profit before Taxation:

This displays a steady increase over the years due to the accompanying steady increase in revenue

which can be accounted to increased business with owing to high organic growth and thus increased


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sales. However, we see a net loss Rs 6563 million for the year 2008-09 which was due to Betapharm

impairment. The surge in PBT in 2006-07 is due to exceptionally high sales on the account of 4

generic launches in the US each enjoying an exclusivity period. During 200607, simvastatin and

finasteride contributed INR 15.8 bn or 24% of DRLs total revenues. This increased sales 176% and

PAT was up by 558%. The increased sales resulted in increased net operating cash flow by 10.5%.

The Betapharm impairment was triggered by adverse market conditions such as decrease in marketprices and an increasing trend of State Healthcare Insurance Fund companies in Germany to adopt a

lowest price tender supply model. Products awarded to the Company under a big tender from the

German State Health Fund SHI, did not include many of the key products. As a result the

Company tested carrying value of betapharm intangibles for impairment. With the market having

moved to tender-based supplies, the goodwill also had to be evaluated for impairment.

Profit/Loss due to Foreign Exchange Rate:

The year 200708 saw exceptional fluctuations in the Indian rupee-US dollar exchange rate. The

average daily US dollar value for 200708 was Rs. 40.28 compared to Rs. 45.24 during the previous

year. While the Company took adequate foreign exchange cover against its exports, depreciation ofthe US dollar adversely affected realizations. This resulted in huge unrealized losses to the tune of

Rs. 224 million. The dollar strengthened in the following year leading to a reversal of the previous

effect and resulted in huge unrealized foreign exchange gains to the tune of Rs. 485 million.

However, USD deteriorated once again in 2009-10 leading to a forex loss of Rs. 807 million.

Cash Flow from Investing Activities

Purchase/Sale of fixed assets:

We observe a steady trend of increasing outflow of cash over the years, indicating some amount of

organic growth of the company. Investing activities includes investment in property, plant and

equipment of Rs. 9,665 million to meet the business growth, compared to Rs. 6,419 million in 2008-

09. Compared to purchases, sale of fixed assets is small indicating utilisation of assets for operations.

Purchase/Sale of Current Investments:

Investment in mutual funds net of proceeds from sale amounted to Rs. 3,009 million in 2009-10

compared to Rs. (4379) in 2008-09 and Rs. 3,382 million in 2007-08. Details of investment make it

clear that most of the sales are the sale of the companys investment in different mutual funds and

equity of other companies. Greater sale than purchase of current assets in 2008-09 led to a decrease

in interest income by 37% in 2009-10

Acquisition of Companies:

There has been outflow of cash over the years to acquire new companies, leading to high inorganicgrowth as discussed before. During the year 2005-06 they raised huge amounts of debt to fund their

acquisition. An outflow of Rs 27026 million in 1005-06 shows they used their entire cash flow from

operating activities and financing activities to fund these acquisitions leaving the company with net

cash of Rs.9796 million of previous year. The cash position at the end of year 2006-2007 increased

by 90% to Rs. 18,000 million. These huge cash reserves have been useful in allowing the company to

make investments in inorganic growth over 2007-08 and 2008-09, even in the face of slowing sales

and profit growth.


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2009-10 did not see any acquisitions owing to huge losses due to impairment charges at German

subsidiary Betapharm and withdrawal of one lot each of its four generic drugs citalopram,

fexofenadine, risperidone and pravastatin which led to a 55% drop of its sales in the US.

Cash Flow from Financing Activities

Issue of Shares:

With its exceptional sales in 2006-07, the company was able to cover all of its financing activities

through cash generated by operating activities. It still went ahead with issuing Rs. 10,000 million

worth of equity shares. This could be due to forecasts of turbid market conditions in US and

emerging signs of global recession.

Long-term/Short-term Borrowings:

During the year 2005-2006 they raised huge amounts of long-term debt to fund their acquisition of

Roches API business, its order books and plant in Mexico for US $61 million and of Betapharm,

Germanys 4th largest pharma company for EUR 483 million. In 2007-08, the company also paid back

a large amount of unsecured loan. This has to be compared with the fact that the previous year, thecompany borrowed money through commercial papers to meet its short-term requirements.

Dividends:

We see an increase in the amount of dividend paid over the years with the payment being Rs 1232

million in 2009-10. This is a sign of growth and profitability and is justified considering the excess

cash with the company despite having exploited investment opportunities.

4. SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The financial statements of Dr. Reddys Laboratories Limited (DRL) are presented in accordance withIndian Generally Accepted Accounting Principles (GAAP). The financial statements are rounded off to

the nearest million.

Fixed assets and depreciation

Fixed assets are carried at the cost of acquisition or construction less accumulated depreciation. Depreciation on fixed assets is done using the straight-line method at the rates specified in

Schedule XIV to the Companies Act, 1956 or based on the useful life of the assets as estimated

by Management, whichever is higher.

Individual assets costing less than Rs. 5,000/- are depreciated fully in the year of acquisition.Intangible assets and amortisation

Intangible assets are amortised over their estimated useful l ives on a straight-line basis, startingfrom the date the asset is available to the Company for use.


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Inventories

Inventories are valued at the lower of cost and net realisable value. Cost of inventoriescomprises all cost of purchase, cost of conversion and other costs incurred in bringing the

inventories to their present location and condition.

The methods of determining cost of various categories of inventories are as follows: Raw materials First-in-first-out (FIFO); stores and spares and packing materials Weightedaverage method; work-in-process and finished goods (manufactured) FIFO and including an

appropriate share of production overheads; Finished goods (traded) Specific identification

method

Investments

Long-term investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount is

reversed when there is a rise in the value of the investment or if the reasons for the reduction

no longer exist.

Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.

Foreign currency transactions and balances

Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. The resultant exchange differences are recognised in the Profit and

Loss Account.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date,are translated at year end rates. Non-monetary assets are recorded at the rates prevailing on

the date of the transaction.

Income and expenditure items at representative offices are translated at the respective monthlyaverage rates.

Derivative instruments and hedge accounting

DRL uses foreign exchange forward contracts and options to hedge its movements in foreignexchange rates and does not use the foreign exchange forward contracts and options for trading

or speculative purposes.

The exchange differences relating to options not designated as cash flow hedges are recognisedin the Profit and Loss Account as they arise.

Revenue Recognition

Revenue from sale of goods is recognised when significant risks and rewards in respect ofownership of products are transferred to customers. Revenue from domestic sales of genericproducts is recognized upon delivery of products to stockists by clearing and forwarding agents

of the Company. Revenue from domestic sales of active pharmaceutical ingredients and

intermediates is recognized on delivery of products to customers, from the factories of the

Company.


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Revenue from export sales is recognized when the significant risks and rewards of ownership ofproducts are transferred to the customers, which is based upon the terms of the applicable

contract.

Dividend income is recognised when the unconditional right to receive the income isestablished.

Income-tax expense

The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.

Deferred tax assets are recognised only to the extent there is reasonable certainty that theassets can be realised in future; however, where there is unabsorbed depreciation or carry

forward of losses, deferred tax assets are recognised only if there is a virtual certainty of

realisation of such assets

Earnings per share

The basic earnings per share (EPS) is computed by dividing the net profit after tax for the yearby the weighted average number of equity shares outstanding during the year.

For diluted earnings per share, net profit after tax for the year and the weighted averagenumber of shares outstanding during the year are adjusted for the effects of all dilutive potential

equity shares.

Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may

be impaired.

If any such indication exists, the Company estimates the recoverable amount of the asset. If suchrecoverable amount of the asset or the recoverable amount of the cash generating unit to which

the asset belongs is less than its carrying amount, the carrying amount is reduced to itsrecoverable amount. The reduction is treated as an impairment loss and is recognised in the

Profit and Loss Account.

If at the balance sheet date there is an indication that if a previously assessed impairment lossno longer exists, the recoverable amount is reassessed and the asset is reflected at the

recoverable amount subject to a maximum of depreciated historical cost.

Leases

Assets taken on lease where the company acquires substantially the entire risks and rewardsincidental to ownership are classified as finance leases. The rental obligations, net of interest

charges, are reflected as secured loans.

Leases that do not transfer substantially all the risks and rewards of ownership are classified asoperating leases and recorded as expense as and when the payments are made over the lease

term.


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5. GENERIC RATIO ANALYSIS

Liquidity ratios Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

Current Ratio 1.89 2.27 2.64 3.34 2.50

Quick Ratio 1.48 1.69 1.87 3.05 2.34

Financial Slack 12.55 10.18 11.52 28.68 18.89

Efficiency Ratios Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

Overall Efficiency 1.34 1.18 0.79 1.13 0.65

Fixed Assets Turnover 2.16 1.82 1.24 1.77 1.08

Working Capital Turnover 3.53 3.39 2.20 3.09 1.64

Inventory (FG & WIP) Turnover 4.08 4.50 4.63 6.95 3.46

Average Inventory Holding Period 88 80 78 52 104

Debtors Collection Period 68 56 53 36 69

Creditors Payment Period 8 7 7 5 13

Profitability Ratios Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

Operating Profit Margin 16.92% 16.72% 11.76% 21.79% 10.18%

Net Profit Margin 5.03% -13.37% 8.81% 14.82% 6.23%

Return on Total Assets (ROTA) 12.47% 26.74% 7.23% 18.94% 4.72%

Return on Capital Employed (ROCE) or ROI 12.89% 27.66% 7.49% 19.10% 4.83%

Return on Net Worth (RONW) 9.31% -26.01% 9.72% 24.15% 7.09%

Dividend Per Share (DPS) 11.27 6.26 3.76 5.15 5.01

Pay-out Ratio 0.54 -0.11 0.14 0.07 0.26

Basic Earning Per Share (EPS) 20.84 N/A 26.02 78.95 19.15

Long-term Solvency ratios Mar-10 Mar-09 Mar-08 Mar-07 Mar-06Debt-Equity Ratio (D/E) 0.39 0.57 0.44 0.62 1.51

Debt Ratio 0.28 0.36 0.30 0.38 0.60

Interest Coverage Ratio 10.13 -7.48 5.28 7.08 3.15


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Market based ratios Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

Price Earning (P/E) 61.62 -8.70 22.70 9.22 37.07

Price to Book Value ( P/B) 3.67 1.52 2.06 2.79 2.41

Market Cap/Sales 3.10 1.16 2.00 1.88 2.31

6. TREND ANALYSIS

i. Liquidity ratios

Current Ratio & Quick Ratio:

Liquidity ratios indicate how well a company manages its short-term obligations. Here both current

and quick ratios are greater than 1 over the 5 years, indicating that the firm leads in cash. A relative

decrease in current ratio over the years shows that the firm is putting extra cash into investmentsindicating good liquidity management. The increase in the difference between quick and current

ratios over time shows that the firm has increased its inventory over the years.


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ii. Efficiency Ratios

Fixed Assets Turnover & Working Capital Turnover:

Overall efficiency of the firm has increased over the five year period from 0.65 to 1.34. Fixed Asset

Turnover sales revenue per rupee of fixed assets, therefore an increase in the ratio over the years as

seen above indicates more efficient use of assets. Working Capital Turnover shows how many times

the working capital is revolved to generate sales an increase from 1.64 in FY 06 to 3.53 in FY 10

shows better utilization of working capital over time.

Inventory Holding Period, Debtors Collection Period & Creditors Payment Period:

Inventory Holding Period for the firm shows slight increase over the years except in FY 07 which

shows a great dip which is because of increased sales in that year with the launch of the 4 Generics

in the US as discussed before. The firm has relatively high Debtors Collection Period compared to

Creditors Payment period indicating a liberal credit policy of the firm for its buyers but a relatively

stringent payment policy with its suppliers. This greatly increases the requirement of working capital


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which explains high inventory holding period. However, the firm should try to maximize its payment

period to enjoy better bargaining power in the market.

iii. Profitability Ratios

Operating Margin & Net Profit Margin:

Operating Margin indicates profitability from a firms main operating activities. Operating profits and

sales are relatively similar in FY 10 and FY 09 which is evident from relatively similar Operating

Margins. However, we can see a significant fall in Operating Margin by 37% in 2008 as compared to

the previous year which is due to a fall in revenues by 23%, which in turn was caused by a fall in the

sales of authorized generics (AG) in FY 08 which had contributed 48 percent of this segments

revenues in FY 07. Also, revenues from Betapharm suffered due to pricing pressures in the German

generics market.

Net Profit Margin denotes overall profitability from both operations as well as from non-operating

activities. The increase in Net Profit Margin in FY 07 is due to increased sales in 2007 on account of

four generic launches in the US as outlined under Sales. Net Profit Margin fell in FY 09 by 250% from

FY 08 even though Net Sales increased, because of a 310% fall in PAT caused by Betapharm

Impairment which has been discussed above in the Cash Flow Analysis. As PAT became positive

again in FY 10, Net Profit Margin increased but is still low compared to previous years.


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Return on Total Assets, Return on Capital Employed & Return on Net Worth

ROTA shows the profitability on total assets of the firm. We see a rise in ROTA from FY 06 to FY 07 by

300% and then a fall in FY 08 by 61% which is both due to high operating profits in FY 07 owing to

increased sales with the launch of the four Generics in the US which could not be sustained in FY 08

after the exclusivity period ended. As sales rose again in FY 09 and 10, DLR saw an increase in ROTA.

ROCE follows a similar trend but is slightly higher than ROTA which indicates better profitability of

assets engaged within the business.

RONW shows residual return to shareholders. The difference between ROCE and RONW shows the

impact of financing charges and other income. In the first 3 years higher RONW compared to ROCE

indicates low borrowing costs but in FY 09, we see a large negative RONW which was due to a net

loss owing to Betapharm impairment.

iv. Long-term Solvency Ratios

This explains the long-term financing plans of the company. Too much dependency on loans may

severely impact profitability and liquidity whereas presence of debt provides incentive for better

performance.

Long-term Solvency ratios Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

Debt-Equity Ratio (D/E)0.39 0.57 0.44 0.62 1.51

Debt Ratio0.28 0.36 0.30 0.38 0.60

Interest Coverage Ratio 10.13 -7.48 5.28 7.08 3.15

In FY 06 the firm had greater debt than shareholder funding. However over the years, it has achieved

a good mix of debt and equity as reflected by the Debt-Equity Ratio. A high Interest Coverage Ratio

over the years shows the firms ability to meet its interest requirements except in FY 09 when ICR is

negative implying a net loss or negative PAT.


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v. Market-based Ratios

Price Earning & Price to Book Value:

High P/E over the years indicates good future earnings for the firm and that the market is willing to

put a high premium on the firms earnings which is true for DRL except in 2009 where P/E multiple

goes negative which is again due to huge Betapharm impairments that year. However, as FY 10 goes

back to being profitable, we see a steep rise in P/E.

P/B denotes the price market is willing to put on its assets. Even though there is a dip in the P/B

multiple in 2009, overall its greater than 1 over the years implying market confidence in the firm and

high goodwill.

vi. Du-pont Analysis

Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

Operating Margin (1) 16.921844 16.71549 11.76281 21.79454 10.18463

Asset Turnover (2) 1.3394538 1.184209 0.793122 1.125109 0.650679

Leverage Impact (3) 3.3644381 -1.25055 1.33501 1.470353 1.634524

Equity Ratio (4) 0.6998467 0.692294 0.678699 0.523887 0.554062

ROE = 1*2/(3*4) 9.626313 -22.8642 10.29649 31.8334 7.317494

The Du- point analysis tries to show the breakup of the ROE in terms of the four factors mentioned

above. We see that the Profitability Ratio of the firm has increased over the past 3 years and shows

that the company is able to pay for its fixed costs, such as interest on debt. The efficiency Ratio

Asset Turnover is also increasing over the last 3 years showing that the firm is operating efficientlyand is effectively utilizing its fixed assets to generate Sales (Note:- There were exceptionally high

sales in FY 2007 due to high sales because of the launch of 4 generic drugs in the US).The leverage.

Lastly the Leverage impact is negative in FY 2009 because of impairment losses due to beta-pharm

as discussed earlier.


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7. QUARTERLY PERFORMANCE ANALYSIS

Q on Q Variation:

Quarter Jun-10 Mar-10 Dec-09 Sep-09 Jun-09 Mar-09 Dec-08

Gross Sales 3.20 -6.85 -5.48 1.84 -7.61 6.85 13.70

Excise Duty -100.00 7.92 1.29 0 -100.00 -9.93 -42.96Net Sales 3.73 -6.92 -5.51 1.42 -7.26 6.92 14.21

Other Operating Income -100.00 57.60 10.41 0 -100.00 -4.11 -16.01

Other Income -385.22 -173.38 -68.74 537.77 -73.23 90.96 -3.24

Total Income 3.85 -7.24 -6.37 3.49 -8.36 7.26 13.85

Total Expenditure -0.75 -26.26 22.35 8.62 -52.83 95.00 8.95

PBIDT 25.49 -534.03 -117.03 -12.42 -147.50 -363.01 40.56

Interest 354.87 -52.61 19.97 -49.30 -34.45 -25.30 4.98

PBDT 20.96 -480.80 -119.49 -11.26 -145.06 -391.48 44.69

Depreciation -1.24 -11.59 12.47 -12.33 -15.12 8.20 0.55

Tax -54.68 68.28 9.51 -41.11 -56.23 267.21 163.56

Reported Profit After Tax 98.06 -145.39 -197.17 -1.89 -119.48 -888.51 83.70

Extra-ordinary Items 0 -100.00 0 0 -100.00 0 0

Adj. Profit 98.06 -40.68 -25.64 -1.89 17.62 30.59 83.70

EPS (Unit Curr.) 0 0 -100.00 -2.00 0 -100.00 83.50

Equity 0.18 0.01 0.05 0.05 0.12 0.02 0.01

Variation Of Quarterly Net Sales and PAT:


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Y on Y Variation:

Quarter Q1 Q4 Q3 Q2

Gross Sales -7.47 -17.16 -4.98 14.30

Excise Duty 13.58 -5.21 -46.62

Net Sales -7.47 -17.28 -4.98 14.85

Other Operating Income 0 103.42 23.76 -5.85

Other Income 317.25 -139.16 1.90 215.44

Total Income -6.65 -17.63 -4.76 15.81

Total Expenditure -2.75 -53.78 22.23 8.84

PBIDT -18.78 -130.74 -118.63 53.79

Interest 31.12 -81.10 -70.21 -73.94

PBDT -20.35 -129.67 -122.71 68.63

Depreciation -13.91 -26.00 -9.45 -19.04

Tax -50.82 -52.50 3.65 149.45

Reported Profit After Tax -14.28 -108.43 -246.44 176.84

Dr Reddy's Laboratories net profit on consolidated basis for the quarter ended June 2010 declined

by 14% to Rs 209.55 crore on 7% fall in the income from operations to Rs 1683.13 crore. The fall in

revenues and profits was on a higher base as it marketed authorized generic Sumatriptan in US

market in Q1 FY'09. Excluding the revenues from Sumatriptan in the Q1 FY'09, the base business

rose by 4%. Despite launching two OTC products in US market, the sales from US market plunged by

35% due to lower penetration of these drugs.

Dr Reddy's Laboratories came out with pale performance for the quarter ended March 2010. Net

sales plummeted by 17.28% to Rs 1622.56 crore on a higher base as it supplied authorized generic

version of Sumatriptan before patent expiration in US market in Q4 FY'09. The price of drug was

eroded as patent expired in the mid of August 2009 and more players started supplying the drug inUS market. Net profits rose to Rs 105.80 crore as compared to a huge net loss of Rs 1255.00 crore in

Q4 FY'09 due to expenses of Rs 1462.84 crore in the corresponding previous period on the account

of writeoff of goodwill (Rs 1376.60 crore) and impairment on some of the product related

intangibles (Rs 85.24 crore)..

Dr Reddy's Laboratories reported net loss of Rs 233.07 crore for the quarter ended December 2009

as compared to net profit of Rs 159.16 crore in the corresponding previous period. Net loss during

the quarter under review was on the back of expenses booked amounting to Rs 458.28 crore on the

account of impairment goodwill and intangibles for its German subsidiary. Net sales declined by 6%

to Rs 1703.55 crore due to price erosion in authorized generic Sumatriptan.

Dr Reddy's Laboratories came out with robust results and above the expectation of market for thequarter ended September 2009. Net profit spurted by 177% to Rs 239.85 crore on the back of

moderate growth of 15% in income from operation to Rs 1858.04 crore. The growth in revenues for

the quarter is mainly driven by good growth in North America, Russia and Indian markets. The prices

of Sumatriptan have been corrected as generic versions were launched by the generic players after

expiring the patent in the mid of August 2009


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8. COMPARATIVE ANALYSIS

Company Dr Reddy's Cipla Ranbaxy

Year 2010 2009 2010 2009 2010 2009

Net Sales 69886 68619 53595.2 49606 75412.01 73337.4

Net Sales Increase (%) 1.85 - 8.04 - 2.83 -

Market Capitalization 21,684.8 - 24,424.8 - 21,199.7 -

Equity Dividend 1901.1 1054.0 1605.8 1554.6 0 0

Cap-ex 250.7 - 1,562.7 - 47.15 -

Debt-Equity Ratio (x) 0.39 0.57 0.09 0.18 0.91 1.17

Current Ratio (x) 1.89 2.27 2.36 1.89 1.38 1.37

Fixed Assets (x) 2.16 1.82 1.94 2.06 1.21 1.25

Inventory (x) 4.08 4.50 3.72 3.99 3.97 4.08

Interest Cover Ratio (x) 10.13 -7.48 47.86 18.15 15.21 -6.3

Operating Profit Margin (%) 16.92 16.72 28.11 21.9 17.84 -13.75Return On Capital Employed (%) 12.89 27.66 24.22 19.82 12.9 0

Return On Net Worth (%) 9.31 -26.01 21.14 19.07 7.03 0

Profitability vs Sales Growth

For DRL, net sales grew by 1.8% in FY 10 over FY 09 and 38% in FY 09 compared to the previous year,

while the operating profit margin increased from 16.72% to 16.92%. In comparison, Ranbaxy

witnessed a topline growth of 2.83% in FY 10, while its operating profit margin declined from -

13.75% in FY 09 to 17.84% in FY 10. Meanwhile, for Cipla, net sales increased by 8.04% in 2009-10,

while the operating profit margin increased from 21.9% to 28.11%. Thus industry wide, though there

was a growth in both sales and profits in the last financial year, Cipla achieved a much higher topline

growth. The relatively smaller increase in sales of DRL can be attributed to a higher base in FY 09 due

to high sales of sumatriptan.

Efficiency vs Profitability

Ranbaxy had a fixed asset efficiency ratio of around 2.16 in FY 10, while the fixed asset efficiency

ratio for Cipla stood at 1.94 and for Ranbaxy at 1.21. DRL saw an increase in asset efficiency while

Cipla and Ranbaxy saw a decrease indicating better utilisation of assets byDRL. However, the

operating profit margin was highest for Cipla at 28.11%, followed by Ranbaxy at 17.84% and DRL at

16.92%. Even though DRL was able to achieve a higher sale as a multiple of its fixed assets compared

to Cipla and Ranbaxy, its profitability was the lowest.

Liquidity vs Profitability

DRL had a current ratio of 1.89 in FY 10 decreased from 2.27 in FY 09, which indicates investment of

lead cash, thus better liquidity management. Ranbaxys current ratio was 1.38 and 1.37 in the

financial years which is a good level of liquidity. In contrast, Cipla saw an increase in its current ratio

from 1.89 in FY 09 to 2.36 in FY 10 which shows an excess of current assets. We see that Ranbaxy has


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the best liquidity management, DRL has improved in the last year but Cipla must invest its excess

current assets for further growth.

Sales Growth vs Market Valuation

Ciplas market capitalization stands at Rs. 24,424.8 crore, compared to Rs. 21,199 crore of Ranbaxyand Rs. 21,683 crore of DRL. Cipla also saw the highest sales growth of 8.04% compared to Ranbaxys

sales growth of 2.83% and DRLs 1.85%. Overall Cipla has a higher market value compared to DRL

and Ranbaxy due to consistently better performance in departments of profitability and liquidity as

well a better future earning potential.

Dividend Payout vs Capital Expenditure

DRL has a proposed dividend payout of Rs 190 crore for 2009-10, while that for Cipla is Rs. 160.5

crore. Ranbaxy, on the other hand, has not proposed any dividends in FY 10 and FY 09 owing to its

net loss in FY 09. Ciplas capital expenditure stood at 1,562.7 crore in FY 10, compared to 250.7 crore

for DRL and only 47.15 crore increase for Ranbaxy. Even though Cipla has a much higher Capital

Expenditure, DRL has proposed higher dividends to i ts shareholders.

All the above comparisons show that Cipla has had the best financial growth over the last financial

year, compared to the other major competitors in the industry.

9. KEY INDICATOR FOR INDUSTRY

The pharmaceutical industry has two distinct functions: research and development (R&D), and

manufacturing. Some firms are primarily engaged in R&D, while others concentrate on

manufacturing. The largest and best-known pharmaceutical firms, like DLR and its rivals Cipla and

Ranbaxy, do both.

DLR invests heavily into R&D every year. Two main areas of focus are i) Global Generics and ii)Pharmaceutical Services and Active Ingredients. As a share of the total revenue, the R&D

expenditure of the company was 5% in FY 10 and 6% in FY 09. The other competitors in the industry

are also spending 5% or more on R&D. This is essential to support the new product pipe-line of these

companies and is responsible for driving future revenue growth.

Benefits of R&D expenditure include: commercial production of the new products; modification of

existing manufacturing processes for some of the products and

significant savings in cost of production; modification of existing manufacturing processes to reduce

the time cycle; Indian patents and US patents filings for protection of Intellectual Property generated

during R&D.

Traditionally, DRL has had a higher R&D expenditure as compared to Ranbaxy as the former is largely

involved in developing new drugs, while the later specialized in Novel Drug Delivery System (NDDS).NDDS leads to lower risk and R&D expenditure as well as faster turn-out times, but the product life

cycle and pay-offs are much smaller as compared to the development of new drugs.

Thus, a high expenditure on Research and Development is a good indicator that captures the

pharmaceutical industry.


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10. OVERALL FINANCIAL HEALTH

2009-10 has been a financially satisfactory year for Dr Reddys Laboratories. Consolidated revenues

for 2009-10 were Rs. 70,277million. Excluding revenues from sumatriptan DRLs Authorized

Generic version of Imitrex which was launched in 2008-09 revenue grew by 9%. The Companys

revenue has been rising at a CAGR of 23% over the last decade. That is a creditable performance by

any standard.DRLs EBITDA of Rs. 15,828 million in 2009-10 was the highest among pharmaceutical companies in

India. Return on Capital Employed (RoCE) in 2009-10 was 17%, as against 14% in 2008-09.

DRL made some noticeable achievements in 2009-10. It entered the list of top 10 generic companies

in the US. In Russia, the companys revenues grew by 25% in 2009-10 versus an overall market

growth of 8%. In the Indian market, DRLs revenues increase by 20% in 2009-10 to Rs. 10,158 million

thus crossing the Rs. 1,000 crore landmark.

The company aims to earn a return on capital employed between 18% to 22%, in line with the goal

of reaching 25% by 2012-13.

References

1) www.capitaline.com2) Dr Reddys Laboratories Annual Report 2010, 2009, 2008, 2007, 2006


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Appendix

1. BRIDGED BALANCE SHEET, P&L AND CASH FLOW FOR LAST FIVE

YEARS

A. Balance Sheet

(Rs Million)

Year Mar 10 Mar 09 Mar 08 Mar 07 Mar 06

SOURCES OF FUNDS :

Share Capital 844.0 842.0 841.0 839.6 383.5

Reserves Total 36924.0 34419.0 44128.0 39133.0 20305.3

Total Shareholders Funds 37768.0 35261.0 44969.0 39972.6 20688.8

Minority Interest 0.0 0.0 0.0 10.5 0.0

Secured Loans 269.0 386.0 642.0 6144.3 1779.7

Unsecured Loans 14571.0 19590.0 19042.0 18762.3 29389.4

Total Debt 14840.0 19976.0 19684.0 24906.6 31169.1

Total Liabilities 52608.0 55237.0 64653.0 64889.7 51857.9

APPLICATION OF FUNDS :

Gross Block 64468.0 65027.0 54878.0 47203.0 42012.8

Less: Accumulated Depreciation 40946.0 35757.0 15753.0 11848.8 8095.6Net Block 23522.0 29270.0 39125.0 35354.2 33917.2

Capital Work in Progress 7622.0 4296.0 2684.0 2897.8 1398.2

Investments 3580.0 523.0 4821.0 1341.2 1337.2

Current Assets, Loans & Advances

Inventories 13394.0 13250.0 11019.0 7471.5 6665.2

Sundry Debtors 11599.0 14406.0 6522.0 7810.4 5104.4

Cash and Bank 6600.0 5623.0 7447.0 18610.1 9796.2

Loans and Advances 6609.0 5519.0 5349.0 3600.4 5051.9

Total Current Assets 38202.0 38798.0 30337.0 37492.4 26617.7

Less : Current Liabilities and Provisions

Current Liabilities 16746.0 15118.0 10333.0 9853.5 8527.6

Provisions 3502.0 1994.0 1175.0 1375.4 2129.9

Total Current Liabilities 20248.0 17112.0 11508.0 11228.9 10657.5

Net Current Assets 17954.0 21686.0 18829.0 26263.5 15960.2

Deferred Tax Assets 1074.0 793.0 247.0 95.1 26.6

Deferred Tax Liability 1144.0 1331.0 1053.0 1062.1 781.5


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Net Deferred Tax -70.0 -538.0 -806.0 -967.0 -754.9

Total Assets 52608.0 55237.0 64653.0 64889.7 51857.9

Contingent Liabilities 901.0 1037.0 15041.0 1998.0 1310.5

B.

Profit And Loss Statement

(Rs Million)

Year 2010 2009 2008 2007 2006

Sales Turnover 70,626.0 69,428.0 50,476.0 66,035.4 24,766.1

Excise Duty -740 -809 -845 -896.6 -1215.9

Net Sales 69,886.00 68,619.00 49,631.0 65,138.8 23,550.2

Stock Adjustments -247 1341 2309 518.9 422.3

LESS EXPENDITURE:

Raw Materials 20,370.0 20,358.0 18,034.0 26,724.5 7817

Power & Fuel Cost 1415 1227 976 812.4 535.3

Other Manufacturing Expenses 5487 7060 4147 3285.8 1779.3Employee Cost 11,634.0 9716 7077 6251.3 3362.2

Selling and Administration Expenses 14,776.0 15,152.0 11,849.0 10,595.9 6463.3

Depreciation 4131 4977 4019 3791.1 1616.9

Operating Profit 11,826.0 11,470.0 5,838.0 14,196.7 2,398.5

Miscellaneous Expenses -6289 -17,946.0 -1417 -1371.6 -910.1

Other Income 1031 994 2051 1161.6 1208.5

Profit Before Interest & Tax 6,568.0 -5,482.0 6,472.0 13,986.7 2,696.9

Less: Interest & Financial Charges 385 1082 1022 1587.7 683.6

Profit Before Tax 6183 -6564 5450 12,399.0 2013.3

Less: Tax 2668 2608 1077 2743.7 545.9

Profit After Tax 3515 -9172 4373 9655.3 1467.4

Minority Interest(after tax) 0 0 -8 -3.6 0.1

Extraordinary Items -2183.9 -11,803.0 -8.8 36.8 223.8

Adjusted Net Profit 5698.9 2631 4389.8 9622.1 1243.5

Adjustments below Net Profit -326 0 -15 -81.8 0

P&L Balance brought forward 1036 12,001.0 8849 1185.4 366.6

Appropriations 3063 1793 1214 1913.8 648.5

Dividend 1900 1053 631 629.7 383.5

Preference Dividend 0 0 0 0 0

P&L Balance carried down 1162 1036 12,001.0 8848.7 1185.4


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C. Cash Flow Statement

Year ending Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

Cash Flow From Operating Activities

Net Profit before Tax & Extraordinary Items 6183.0 -6563.0 5450.0 12399.0 2013.4

Adjustment For:

Depreciation 4131.0 4977.0 4019.0 3791.1 1616.9

Interest (Net) 63.0 625.0 281.0 1027.4 -22.7

Dividend Received -47.0 -53.0 -110.0 0.0 0.0

P/L on Sales of Assets 24.0 -14.0 11.0 -46.0 -320.2

P/L on Sales of Invest 0.0 -87.0 0.0 -0.9 3.9

Prov. & W/O (Net) 1363.0 1210.0 792.0 256.5 171.8

P/L in Forex 807.0 -485.0 224.0 -120.6 99.5

Fin. Lease & Rental Chrgs 0.0 0.0 0.0 0.0 0.0

Others 4583.0 14628.0 17.0 86.6 48.0

Op. Profit before Working Capital Changes 17107.0 14238.0 10684.0 17393.1 3610.6

Adjustment For 0.0 0.0 0.0 0.0 0.0

Trade & other receivables 2467.0 -7790.0 859.0 -2944.8 -882.0

Inventories -1154.0 -2556.0 -3875.0 -783.4 -1646.5

Trade Payables 3997.0 5035.0 416.0 1282.1 2278.8

Loans & Advances -1076.0 -145.0 -1424.0 -528.7 -2065.1

Cash Generated from/(used in) Operations 21341.0 8782.0 6660.0 14418.3 1295.8

Direct Taxes Paid -2831.0 -2791.0 -1532.0 -1829.3 -190.8

Cash Flow before Extraordinary Items 18510.0 5991.0 5128.0 12589.0 1105.0

Gain on Forex Exch. Tran 246.0 -114.0 0.0 140.5 0.0

Net Cash from Operating Activities 18756.0 5877.0 5128.0 12729.5 1105.0

Cash Flow from Investing Activities

Investment in Assets :

Purchased of Fixed Assets -9665.0 -6419.0 -5092.0 -4621.4 -1894.3Sale of Fixed Assets 60.0 83.0 59.0 115.1 693.3

Financial/Capital Investment :

Purchase of Investments -24112.0 -12022.0 -15860.0 -400.8 -5344.3

Sale of Investments 21102.0 16401.0 12478.0 331.8 5274.9

Interest Received 233.0 368.0 655.0 493.2 682.5

Acquisition of Companies 0.0 -3461.0 -344.0 -66.7 -27026.0


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2. QUATERLY FINANCIAL RESULTS

Quarter Jun-10 Mar-10 Dec-09 Sep-09 Jun-09 Mar-09 Dec-08 Sep-08

Gross Sales 16,831.30 16,310.10 17,509.60 18,524.20 18,189.40 19,688.60 18,426.70 16,206.10

Excise Duty 0 84.5 78.3 77.3 0 74.4 82.6 144.8

Net Sales 16,831.30 16,225.60 17,431.30 18,446.90 18,189.40 19,614.20 18,344.10 16,061.30

Other Operating Income 0 232.3 147.4 133.5 0 114.2 119.1 141.8

Other Income 191.1 -67 91.3 292.1 45.8 171.1 89.6 92.6

Total Income 17,022.40 16,390.90 17,670.00 18,872.50 18,235.20 19,899.50 18,552.80 16,295.70

Total Expenditure 13,416.20 13,517.20 18,332.10 14,983.70 13,795.00 29,247.70 14,998.50 13,767.00

PBIDT 3606.2 2873.7 -662.1 3888.8 4440.2 -9348.2 3554.3 2528.7

Interest 177.4 39 82.3 68.6 135.3 206.4 276.3 263.2

PBDT 3428.8 2834.7 -744.4 3820.2 4304.9 -9554.6 3278 2265.5

Depreciation 976 988.3 1117.8 993.9 1133.7 1335.6 1234.4 1227.6

Tax 357.3 788.4 468.5 427.8 726.5 1659.8 452 171.5

Reported Profit After Tax 2095.5 1058 -2330.7 2398.5 2444.7 -12,550.00 1591.6 866.4

Extra-ordinary Items 0 0 -4114.3 0 0 -14,628.40 0 0

Adjusted Profit After Extra-ordinary item 2095.5 1058 1783.6 2398.5 2444.7 2078.4 1591.6 866.4

EPS (Unit Curr.) 124.1 0 0 142.2 145.1 0 94.5 51.5

Equity 845.7 844.2 844.1 843.7 843.3 842.3 842.1 842

Others -80.0 0.0 -433.0 0.0 65.8

Net Cash Used in Investing Activities -12462.0 -5050.0 -8537.0 -4148.8 -27548.1

Cash Flow From Financing Activities

Proceeds:

From issue of shares (incl share premium) 17.0 5.0 15.0 10029.6 73.6From other Long Term Borrowings 0.0 61.0 115.0 0.0 21622.8

From short Term Borrowings 7537.0 5596.0 3476.0 1147.5 6263.9

Payments:

Of the Long Tem Borrowings -3646.0 -1955.0 -7724.0 -1897.9 -9.9

Of the short term Borrowings -7672.0 -4549.0 -1941.0 -7071.8 -1.7

Interest Paid -321.0 -1071.0 -958.0 -1536.7 -628.0

Dividend Paid -1232.0 -738.0 -737.0 -437.5 -436.4

Net Cash Used in Financing Activities -5317.0 -2651.0 -7754.0 233.2 26884.3

Net Inc/(Dec) in Cash and Cash Equivalent 977.0 -1824.0 -11163.0 8813.9 441.2

Cash and Cash Equivalents at Beginning of the

year 5623.0 7447.0 18610.0 9796.2 9355.0

Cash and Cash Equivalents at End of the year 6600.0 5623.0 7447.0 18610.1 9796.2


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3. COMMON SIZE BALANCE SHEETS: COMPARATIVE ANALYSIS

Company Cipla Dr reddy RanbaxySOURCES OF FUNDS :

Share Capital 2.71% 1.60% 2.62%

Reserves Total 97.20% 70.19% 49.30%

Equity Share Warrants 0.00% 0.00% 2.19%

Equity Application Money 0.00% 0.00% 0.00%

Total Shareholders Funds 99.91% 71.79% 54.12%

Minority Interest 0.00% 0.00% 0.66%

Secured Loans 0.01% 0.51% 2.72%

Unsecured Loans 0.08% 27.70% 42.50%

Total Debt 0.09% 28.21% 45.22%

Total Liabilities 100.00% 100.00% 100.00%

APPLICATION OF FUNDS :

Gross Block 48.98% 122.54% 78.23%

Less: Accumulated Depreciation 14.98% 77.83% 22.28%

Net Block 34.00% 44.71% 55.95%

Lease Adjustment 0.00% 0.00% 0.00%

Capital Work in Progress 11.57% 14.49% 7.76%

Investments 4.17% 6.81% 6.74%

Current Assets, Loans & Advances 0.00% 0.00% 0.00%

Inventories 25.57% 25.46% 22.93%

Sundry Debtors 26.48% 22.05% 22.92%Cash and Bank 1.05% 12.55% 15.47%

Loans and Advances 20.73% 12.56% 13.53%

Total Current Assets 73.83% 72.62% 74.86%

Less : Current Liabilities and Provisions

Current Liabilities 16.87% 31.83% 40.51%

Provisions 3.66% 6.66% 10.72%

Total Current Liabilities 20.53% 38.49% 51.22%

Net Current Assets 53.30% 34.13% 23.64%

Miscellaneous Expenses not written off 0.00% 0.00% 0.00%

Deferred Tax Assets 0.00% 2.04% 9.86%Deferred Tax Liability 3.03% 2.17% 3.95%

Net Deferred Tax -3.03% -0.13% 5.91%

Total Assets 100.00% 100.00% 100.00%

Project Report_Dr Reddy's Laboratories

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Transcript of Project Report_Dr Reddy's Laboratories