INTRODUCTION

This chapter deals with the introduction of the companies- Ranbaxy Laboratories Limited
and Alembic Pharmaceuticals Limited which includes nature of the organization, the
areas of operations, product range, vision and mission, organization structure and the
turnover of the company. It also deals with the objectives and scope of the study, the
methodology used to collect the data for the study and the methodology used for
analyzing the data as well as framing of hypothesis for the study.

1.1 Profile of the Company

1.11Ranbaxy Laboratories Limited

(a)Nature of the Organization

Ranbaxy Laboratories Limited is an Indian multinational pharmaceutical company that

was incorporated in India in 1961.It is a research based international pharmaceutical
company serving customers in over 150 countries. Ranbaxy is a member of the Daiichi
Sankyo Group. Daiichi Sankyo is a leading global pharma innovator, headquartered in
Tokyo, Japan. Ranbaxy exports its products to 125 countries with ground operations in
43 and manufacturing facilities in eight countries.

Ranbaxy is a vertically integrated company that develops, manufactures and markets

Generic, Branded Generic, Value-added and Over-the-Counter (OTC) products, Anti-
retrovirals (ARVs), Active Pharmaceutical Ingredients (APIs), and Intermediates. It has a
large portfolio of over 500 molecules that cover multiple dosage forms including tablets,
capsules, injectables, inhalers, ointments, creams and liquids. Its presence extends across
therapies and includes Anti-infectives, Cardiovascular, Pain management, Central
Nervous System (CNS), Gastrointestinal, Respiratory, Dermatology, Orthopaedics,
Nutritionals and Urology. Biotech and Vaccines are two new segments they are planning
to invest in.

Ranbaxy covers all the top 25 pharmaceutical markets of the world and have a robust
presence across both developed and emerging markets. Through unique hybrid business

1
model involving Daiichi Sankyo, the company introduces innovator products in markets
around the world.

(b)Companys Vision & Mission

(i) Vision

"Our vision is to be a leading pharmaceutical company in India and to become a

significant global player by providing high quality, affordable and innovative solutions in
medicine."

(ii) Mission

Enriching lives globally, with quality and affordable pharmaceuticals.

(c) Product Range of the Company

Brand Name Generic Name

Revital Ginseng, Vitamins and Minerals

Revital Liquid Ginseng, Vitamins and Minerals
Revital women Ginseng, Vitamins and Minerals (specially
Formulated for womens)
Revital Senior Ginseng, Vitamins and Minerals
Isoflavones (Specially formulated for 50
years+)
Revitalite Protein Supplement
Volini Gel Pain relief Gel
Volini Spray Pain relief Spray
Volini Activ Spray Ayurvedic Pain relief Gel
Chericof Cough Syrup Complete Cough Syrup for family
Pepfiz Digestive enzymes
Garlic Pearls Garlic oil for all round health
Table No- 1.1: Product Range of Ranbaxy

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(d) Present Leadership

Directors Name Designation

Dr. Tsutomu Une Chairman
Arun Sawhney CEO & Managing Director
Dr. Kazunori Hirokawa Non Executive & Non Independent Director
Dr. Anthony H. Wild Independent Director
Rajesh V. Shah Independent Director
Akihiro Watanabe Independent Director
Percy K. Shroff Independent Director
Takashi Shoda Non Executive & Non Independent Director
Table No- 1.2: Present Leadership of Ranbaxy

(e) Size of the Organization

Manpower 10,000+
Turnover (16428.3) Lacs
Table No- 1.3: Size of the Organization of Ranbaxy

(f) SWOT Analysis

SWOT analysis is a structured planning method used to evaluate the Strengths,

Weaknesses, Opportunities and Threats involved in a business or in a project. SWOT
analysis can be carried out for a product, place or person. It involves specifying the
objective of the business venture or project and identifying the internal and external
factors that are favorable or unfavorable to achieve the objective.

Strengths and Weaknesses are internal factors and Opportunities and Threats are external
factors. Setting the objective should be done after the SWOT analysis has been
performed.

3
 Strengths
Weaknesses
Top 10 global generic Company with a It is heavily dependent upon generics
spread over 125 countries. for its revenue generation.
Strong presence in international market
with a major share and strong presence
in India.
It has operations in 43 countries and has Constantly regulated policies by the
8 manufacturing plants. government means operational
efficiency is affected.
High investment in R&D.

Opportunities Threats
Increasing health awareness. Exchange rate fluctuations.

Improvement in distribution network Only focuses on generic market and

and brand building. have less patented drugs.

Table No- 1.4: SWOT Analysis of Ranbaxy

1.12 Alembic Pharmaceutical Limited

(a)Nature of the Organization

Alembic Pharmaceuticals Limited was established in 1907. It is a leading pharmaceutical

company in India. It is functional in more than 75 countries all over the world. The
organization aims at improving the quality of life of people across the countries.
Providing the top healthcare facilities at economic cost is the major highlight of the
Alembic pharmacy. The Company is vertically integrated with the ability to develop,

4
manufacture and market pharmaceutical products, pharmaceutical substances and
Intermediates. Alembic is the market leader in the Macrolides segment of anti-infective
drugs in India. Its manufacturing facilities are located in Vadodara and Baddi in
Himachal Pradesh. The plant at Vadodara has the largest fermentation capacity in India.
The plant at Baddi, Himachal Pradesh manufactures formulations for the domestic and
non-regulated export market.

The Alembic company has been continuously raising its standard bar and has
successfully delivered service to mankind for more than a century now. The business of
the company is diverse and it provides healthcare products for both human beings as well
as animals. Its area of operations include active pharmaceutical ingredients, bulk pharma
chemicals, collaborated research services, herbal nutraceuticals, veterinary antibiotics and
specialty injectables.

Alembic pharmaceuticals specializes in finished dosage forms both in the section of

sterile and non-sterile forms.

(b)Companys Vision & Mission

(i) Vision
To become a knowledge-driven global pharmaceutical company with the highest level
of operational excellence in all spheres.

(ii) Mission
To provide access to the best healthcare products at affordable prices to everyone,
present anywhere in the world.

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(c) Product Range of the Company
Brand Name Generic Name
Azithral Anti Infective
Althrocin Anti Infective
Roxid Anti Infective
Wikoryl Cough & Cold
Ulgel Antacid and Anti Flatulant
Zeet/Bro-Zeet Cough & Cold
Tellzy Cardiology
Gestofit Gynecology
Sharkoferrol Tonic
Tetan Cardiology
Livfit Hepaprotectives
Glisen Anti Diabetic
Glycodin Anti Diabetic
Zofix Anti Infective
Revas Cardiology
Table No 1.5: Product Range of Alembic

(d) Present Leadership

Directors Name Designation

Mr. Chirayu R. Amin Chairman & Managing Director
Mr. Pranav Amin Director & President International Business
Mr. Shaunak Amin Director & President Domestic Formulations
Business
Mr. Raj Kumar Baheti Director , President - Finance & Company
Secretary
Mrs. Malika C. Amin Non-Executive Non-Independent Director
Mr. Ashok Tulankar Non-Executive Non-Independent Director
Mr.R.M.Kapadia Non-Executive Independent Director

6
Mr.Milin Mehta Non-Executive Independent Director
Mr. C.P.Buch Non-Executive Independent Director
Mr. R. C. Saxena Non-Executive Independent Director
Table No- 1.6: Present Leadership of Alembic

(e) Size of the Organization

Manpower 1000-5000
Turnover 12053.51 Lacs
Table No- 1.7: Size of the Organization of Alembic

(f) SWOT Analysis

Strengths
Weaknesses
Has a strong workforce of 5000 Strong competition from international
employees. and domestic giants means limited
market share.
Foremost player in finished dosage Strict government regulations and
forms both in the section of sterile and policies affect operational efficiency.
non-sterile forms.

Opportunities
Develop cost effective ways of new drug
development to improve business in
emerging markets.
Threats
Increasingly stringent regulations for
new drug development.
Preliminary investment for drug
discovery is very high.

Table No- 1.8: SWOT Analysis of Company

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Working capital (abbreviated WC) is a financial metric which represents operating
liquidity available to a business, organization or other entity, including governmental
entity. Along with fixed assets such as plant and equipment, working capital is
considered a part of operating capital. Gross working capital is equal to current assets.
Net working capital (NWC) is calculated as current assets minus current liabilities. If
current assets are less than current liabilities, an entity has a working capital deficiency,
also called a working capital deficit.

A company can be endowed with assets and profitability but short of liquidity if its assets
cannot readily be converted into cash. Positive working capital is required to ensure that a
firm is able to continue its operations and that it has sufficient funds to satisfy both
maturing short-term debt and upcoming operational expenses. The management of
working capital involves managing inventories, accounts receivable and payable, and
cash. To understand the working capital position of the company various ratios are
calculated.

Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic
use of ratio to interpret the financial statements so that the strengths and weaknesses of a
firm as well as its historical performance and current financial condition can be
determined. The term ratio refers to the numerical or quantitative relationship between
two items /variables.

The Financial ratio analysis is the calculation and comparison of ratios, which are derived
from the information in a companys financial statements. The level and historical trends
of these ratios can be used to make inferences about a companys financial condition, its
operations and attractiveness as an investment.

Ratio analysis is a technique of analysis and interpretation of financial statements. It is

the process of establishing and interpreting various ratios for helping in making certain
decisions. It is only a means of understanding the financial strengths and weaknesses of a
firm. There are number of ratios which can be calculated from the information given in
the financial statements.

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2.21 Analysis of Ratio

(a) Liquidity Ratio

(i) Current Ratio

This ratio explains the relationship between the current assets and current liabilities. The
current ratio of a firm measures short term solvency of the firm. The current ratio in a
way is a measure of margin of safety to the creditors. It indicates the availability of
current assets in rupees for every one rupee of current liability. This ratio also indicates
the extent of the soundness of the current financial position of an undertaking and the
degree of safety provided to the creditors. A ratio of 2:1 is considered satisfactory as a
rule of thumb.

Current Ratio = Current Asset

Current Liabilities

(ii) Liquid Ratio

The Acid-test or quick ratio or liquid ratio measures the ability of a company to use
its near cash or quick assets to extinguish or retire its current liabilities immediately.
While calculating quick ratio, inventories are excluded from current assets, since inventories can
be converted into cash in short time without loss of values. It is a refined tool to measure the
liquidity of an organization. A company with a Quick Ratio of less than 1 cannot currently
pay back its current liabilities.

Liquid Ratio = Liquid Asset

Current Liabilities

Liquid Assets = Current Assets stock prepaid expenses

(iii) Cash Position Ratio

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This ratio explains the relationship between the available cash both at bank and cash in
hand and current liabilities. It is an extreme liquidity ratio since only cash and cash equivalents
are compared with the current liabilities. It measures the ability of a business to repay its current
liabilities by only using its cash and cash equivalents and nothing else. A ratio of 1:1 is
considered to be a good ratio but a rate of 0.75:1 is also good. Such a ratio would imply
that the firm has enough cash on hand to meet all the current liabilities.

Cash Position Ratio = Cash

Current Liabilities

(b) Profitability Ratio

(i) Gross Profit Margin

Gross profit ratio (GP ratio) is a profitability ratio that shows the relationship between gross profit
and total net sales revenue. It is a popular tool to evaluate the operational performance of the
business. Gross Profit Margin is a financial metric used to assess a firm's financial health
by revealing the proportion of money left over from revenues after accounting for the
cost of goods sold. Gross profit margin serves as the source for paying additional
expenses and future savings.

Gross Profit Margin = Gross Profit

Net Sales

Gross Profit = Sales cost of goods sold

(ii) Net Profit Margin

The net profit margin is the ratio of after-tax profits to net sales. It reveals the remaining
profit after all costs of production, administration, and financing have been deducted
from sales, and income taxes recognized. Net profit is not an indicator of cash flows,
since net profit incorporates a number of non-cash expenses, such as accrued expenses,
amortization, and depreciation.

Net Profit Margin = Net Profit

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 Net Sales

(iii) Cost of Goods Sold Ratio

This ratio shows the relationship between cost of goods sold and sales. It is also known as
cost of sales to revenue ratio. It is the part of ratio analysis for checking the efficiency of
business because cost of goods sold is the main part of total business expenses. COGS are
the costs that go into creating the products that a company sells; therefore, the only costs
included in the measure are those that are directly tied to the production of the products.

Cost of Goods Sold Ratio = COGS

Sales

(iv) Operating Profit Ratio

The operating profit is profit earned from a firm's normal core business operations. This
value does not include any profit earned from the firm's investments (such as earnings
from firms in which the company has partial interest) and the effects of interest and taxes.
It is also known as "earnings before interest and tax" (EBIT) or "operating income".
Operating net profit ratio is calculated by dividing the operating net profit by sales. This
ratio helps in determining the ability of the management in running the business.

Operating profit

Operating profit ratio =

Net sales

Operating Profit = Operating Revenue - COGS - Operating Expenses - Depreciation

& Amortization

(c) Working Capital Ratio

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(i) Inventory to Working Capital Ratio

This ratio tells how much of a company's funds are tied up in inventory. It shows the
percentage measure of a firms capability to finance its inventories from its available
cash. Numbers lower than 100 are preferable as they indicate high liquidity. Numbers
higher than 100 suggest that the inventories are too large in relation to the
firm's financial strength.

Inventory

Inventory to Working Capital Ratio =

Working Capital

(ii) Sales to Working Capital Ratio

This ratio helps to measure the efficiency of the utilization of net working capital. This
ratio helps management to maintain adequate level of working capital. It signifies that for
an amount of sales, a relative amount of working capital is needed. A high ratio indicates
efficient utilization of working capital. But a very high ratio is not a good indication of
any firm, which may be due to over trading.

Sales

Sales to Working Capital ratio =

Working Capital

(d)Activity Ratio

(i) Inventory Turnover Ratio

Inventory turnover is the ratio of sales to its average inventory during a given accounting
period. It is an activity ratio measuring the number of times per period; a business sells
and replaces its entire batch of inventory again.

Inventory Turnover Ratio = Sales

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 Average Inventory

Average Inventory = Opening Stock + Closing Stock

(ii) Current Asset Turnover Ratio

This ratio indicates efficiency with which current assets turn into sales. A higher ratio
implies by and large a more efficient use of funds. Thus, a high turnover rate indicates
reduced lockup of funds in current assets. An analysis of this ratio over a period of time
reflects working capital management of a firm.

Sales

Current Assets Turnover Ratio =

Current Assets

Under this chapter the researcher understood the various work done under the same head
by number of authors and understood the gap lying. This chapter also developed the
linkage between the theoretical concepts and the applications of the concepts in the real
world.

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 1.2 OBJECTIVES OF THE STUDY

The objectives of the study are:

To analyze and compare the working capital position of the companies.

To analyze the liquidity position of the companies.

1.3 SCOPE OF THE STUDY

The scope of the study is limited to collection of financial data of two companies:
Ranbaxy Laboratories Limited and Alembic Pharmaceutical Limited for two years (2012-
2013 and 2013 - 2014).

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 1.4 RESEARCH METHODOLOGY

1.41 Methodology used for Data Collection: For the study, the data has been collected
from secondary sources i.e. the companies balance sheet and profit and loss account for
two years (2012- 2013 and 2013 - 2014). The financial statements are analyzed by
computing the following working capital ratios:

Parameter Ratios Formula Applied

Current Ratio Current Asset / Current Liability
Liquidity Ratio Liquid Ratio Liquid Asset / Current Liability
Cash Ratio Cash And Cash Equivalents /
Current Liability
Gross Profit Ratio Gross Profit / Net Sales
Net Profit Ratio Net Profit / Net Sales
Profitability Ratio Cost of Goods Sold Ratio COGS / Net Sales
Operating Profit Ratio Operating Profit / Net Sales
Inventory to Working Inventory / Working Capital
Working Capital Capital Ratio
Ratio Sales to Working Capital Sales / Working Capital
Ratio
Inventory Turnover Ratio Sales / Average Stock
Activity Ratio Current Asset Turnover Sales / Current Asset
Ratio
Table No -1.9: Accounting Ratios

15
1.42 Methodology used for Data Analysis

In order to analyze the data collected from the financial statements of two companies-
Ranbaxy Laboratories Limited and Alembic Pharmaceuticals Limited for two years
(2012-2013 and 2013-2014), various ratios are used to understand the current position of
the company

Such as -

Liquidity ratio
Cash ratio
Cost of goods sold ratio
Operating profit ratio
Working profit ratio
Cash ratio

This chapter briefly explained the Ranbaxy and Alembic in terms of their nature of
organization, its vision and mission, size of organization, product range and many more.
Here, the researcher has also highlighted the multiple objectives for undertaking the study
along with the method used for collection and analysis of data. And, it also includes the
formulation of hypothesis for the study.

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1.5. Limitations
The study suffers from certain limitations which are stated as follows:

(a) The study is limited to Pharmaceutical sector only.

(b) As the study is based on secondary information, the data is available only from

balance sheet and profit and loss account.

(c) The limitations of the financial statements were the limitations of study itself.

(d) The study has been conducted over a very short period of two years only.

(e) The study is based on financial statements of the selected companies, which may

leave some grounds of error.

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 CHAPTER - 2

LITERATURE REVIEW

This chapter focuses on research findings of earlier studies and the brief theoretical
description of concepts, tools and techniques used as well as the various formulae applied
in the project.

Lazaridis and Tryfonidis (2008) investigated the relationship of corporate profitability

and working capital management. The purpose of their paper is to establish a relationship
that is statistically significant between profitability, the cash conversion cycle and its
components for listed firms in the ASE. The results of their research showed that there is
statistical significance between profitability, measured through gross operating profit, and
the cash conversion cycle. Moreover managers can create profits for their companies by
handling correctly the cash conversion cycle and keeping each different component
(accounts receivables, accounts payables, inventory) to an optimum level.

Raheman and Nasr (2009) In this research , they selected a sample of 94 Pakistani firms
listed on Karachi Stock Exchange for a period of 6 years from 1999-2006. They found a
negative relationship between net operating profitability and average collection period,
inventory turnover in days, average payment period and cash conversion cycle for a
sample of Pakistani firms listed on Karachi Stock Exchange. These results suggested that
managers can create value for their shareholders by reducing the number of days
accounts receivable and inventories to a minimum. The negative relationship between
accounts payable and profitability is consistent with the view that less profitable firms
wait longer to pay their bills.

Nimalathasan (2012) The main purpose of the study conducted was to identify the
impact of working capital management on profitability of selected listed manufacturing
companies from year 2005 -2009. ROA was used for the purpose of measuring
profitability. Balasundaram stated that managers can increase profitability of
manufacturing firms by reducing the number of days of inventories and account
receivable.

18
Quayyum (2013) This paper was an attempt to investigate the effects of working capital
management efficiency as well as maintaining liquidity on the profitability of
corporations. For this purpose, corporations enlisted with the cement industry of Dhaka
Stock Exchange had been selected and the analysis for a period from year 2007 to 2011
was done. The study recommended that the firms should forecast their sales and hold
enough cash according to their projected sales level, so that they are able to take
advantage of the bargaining position while making purchases and thus reduce cost. It also
suggested that firms in the cement industry in Bangladesh have enough scope to enhance
their profitability by handling their working capital in more efficient ways and if
inventory turnover is handled efficiently can produce a significant positive impact on
profitability of the firm.

Mittal and Joshi et.al (2013) investigated the impact of working capital management on
the performance of Indian cement industry. They noted that Indian cement industry has
low level of profitability due to mismanagement of current assets and current liabilities.
The result of the study showed that there is no significant relationship between working
capital and total assets as well as between working capital and sales.

Rahman (2013) investigated the Profitability and Working Capital position of Textiles
Industries, correlation between them and whether the profitability is affected by Working
Capital Management. Ratio Analysis, Correlation Matrix and Regression Analysis have
been used to show Profitability, Working Capital position, correlation between them and
the impact of Working Capital on Profitability respectively. The results of their study
showed that there was positive correlation between working capital efficiency and
profitability ratios of the selected textiles with some exceptions where the correlation was
negative.

Joshi and Ghosh (2014) undertook a study during the period 2006-05 to 2010-09. The
study showed that financial ratios are applied in measuring the working capital
performance and statistical as well as econometric techniques are employed in order to
assess the behavior of the selected ratios. It shows that except cash and bank balances, the
selected performance indicators have shown positive and significant trend growth rate
during the period under study. On contrary, there is a need for further improvement in

19
working capital turnover ratio as well as in the current assets turnover ratio in order to
generate liquidity efficiently.

Panigrahi (2014) used Pearsons simple correlation coefficients, multiple correlation

analysis and multiple regression analysis to assess the impact of working capital
management on profitability during the period 1999-2000 to 2011-10.The results
represented that there is a moderate relationship. Also, firms can reduce their financing
cost and/or increase the funds available for expansion projects by minimizing the amount
of investment tied up in current assets.

Lingesiya and Nalini The study assessed profitability in terms of return on total assets
and relationship between working capital management and profitability for a sample of
30 listed manufacturing companies for the period of 2008- 2012. The study concluded
that working capital management very much influences on profitability of manufacturing
companies and increase of cash conversion cycle leads to less profitability. And, current
and quick ratios were positively related to the profitability.

Bose (2015) undertook the study to examine the management of finance. The dependent
variable, return on total asset was used as a measure of profitability and the relation
between working capital management was investigated for six major sectors such as Auto
ancillaries, Sugar, Pharmaceuticals, Engineering, Fertilizers and Electric equipment. The
study reflected that there was disproportionate and inadequate increase in the profitability

O.N and Ramanan (2015) presented a paper to analyze the impact of working capital
management on the profitability of manufacturing firms. The data analysis was carried
out for 1198 manufacturing firms for a period of 5 years. The study represented a positive
relationship between return on assets and debtors days and inventory days and a negative
relationship with the creditors days. The study suggested that longer account payable
time leaves the firm with a low level of profitability and vice versa.

Singh (2015) undertook a study to investigate whether management of working capital

changes across different industries in India. Singh studied financials of different
companies belonging to seven industries: Automobile, Cement, Steel, IT, Telecom,
Fertilizer and Chemicals and Petrochemicals. The data analysis was carried out for 1198

20
manufacturing firms for a period of 5 years. The data analysis was carried out for 63
companies from seven industries chosen randomly to find out whether the components of
working capital changes across different industries. The study suggested that there is no
significant variations for various measures of working capital management and
profitability across the industries as the variations are as a result of chance within the
industry only.

Ebenezer and Asiedu The study examined the effect of working capital management on
the profitability of companies listed on the Ghana Stock Exchange. Secondary data from
the Ghana Stock Exchange on manufacturing companies was used to examine whether
working capital management influence the profitability of manufacturing companies in
the country. The study found out that, the major component of working capital
management such as inventory days, account payable and cash conversion cycle have
influence on the profitability of manufacturing companies.

In research paper presented by Arshad and Gondal (2015), they selected a sample of 21
listed cement companies in Karachi stock exchange for a period of 6 years from 2006-
2012 .The research reflects that current ratio and net current ratio on total ratio have
significantly positive effects on firm profitability which means that while accounts
receivables and inventory periods lengthens, profitability increases or vice versa. The
other variable quick ratio has a negative impact on firm profitability which means
increase in stock leads decrease in profits.

Makori and Jagongo (2015) This paper analyzed the effect of working capital
management on firms profitability in Kenya for the period 2005 to 2014. For this
purpose, balanced panel data of five manufacturing and construction firms each which
are listed on the Nairobi Securities Exchange (NSE) is used. Pearsons correlation and
Ordinary Least Squares regression models were used to establish the relationship
between working capital management and firms profitability. The study finds a negative
relationship between profitability and number of days accounts receivable and cash
conversion cycle, but a positive relationship between profitability and number of days of
inventory and number of days payable.

21
Although, lot of studies has been carried out in the area of working capital management,
few studies have been carried out in the pharmaceutical industry. Hence, the present
study is an attempt to contribute to the existing literature.

22
 CHAPTER 3

DATA ANALYSIS & INTERPRETATION

For the purpose of the study, Balance sheet and Profit and Loss Account of the two
companies is compared for two years (2012-2013 and 2013-2014) through ratio analysis.

3.1Data Presentation

The data obtained from the financial statements of the two companies for the period
2012-2013 and 2013- 2014 has been presented under the four parameters: Liquidity,
Profitability, Working Capital and Solvency.

3.11 Liquidity Ratio

Liquidity ratios are the ratios that measure the ability of a company to meet its short term
debt obligations. These ratios measure the ability of a company to pay off its short-term
liabilities when they fall due. They show the number of times the short term debt
obligations are covered by the cash and liquid assets. Investors often take a close look at
liquidity ratios when performing fundamental analysis on a firm. Since a company that is
consistently having trouble meeting its short-term debt is at a higher risk of bankruptcy,
liquidity ratios are a good measure of whether a company will be able to comfortably
continue as a going concern.

For the purpose of the study, three ratios are covered under the liquidity parameter:
Current ratio, Liquid ratio and Cash ratio.

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(a) Current Ratio

1.4
CURRENT RATIO
1.2

0.8
Ratio Ranbaxy
1.3 1.23
0.6
Alembic
0.4 0.82 0.86

0.2

0
2012-2013 2013-2014
Years

Figure No- 3.1: Current Ratio of 2 years

Interpretation:

The current ratio of the firm measures the short term solvency. It indicates the rupees of
current asset available for each rupee of current liabilities. The figure no. 3.1 shows an
increasing trend in Ranbaxy from the F.Y. 2012-2013 to F.Y. 2013-2014. In the F.Y.
2013-14 it shows current ratio of 0.86:1 which is not higher than the standard ratio i.e.
2:1.

In ALEMBIC the current ratio is 1.23:1 in 2013-2014. It means that for one rupee of
current liabilities, the current assets of 123 rupee are available to them. In other words,
the current assets are 1.23 times the current liabilities. There is a decline in Current Ratio
of the company in past two years. The reason for decrease in Current Ratio is due to the
continuous increase in the current liabilities as compared to increased in current assets.
Thus, the current ratio throws light on the companys ability to pay its current liabilities
out of its current assets

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(b)Liquid Ratio

0.76
LIQUID RATIO
0.74
0.72
0.7
0.68
Ratio 0.66
0.74 Ranbaxy
0.64 0.72
Alembic
0.62
0.6 0.65
0.63
0.58
0.56
2012 - 2013 2013 2014
Years

Figure No- 3.2: Liquid Ratio of 2 years

Interpretation:

The liquid or quick ratio indicates the liquid financial position of an enterprise. It shows
the companys ability to meet its immediate obligations promptly. The above graph
indicates the decline trend from the F.Y. 2012-13 to F.Y. 2013-14 for both the
companies. In both years the quick ratio of the company was below standard that means
large part of current asset of the firm is tie up in slow moving and unsellable investment
which is not a positive sign. This ratio also indicates that the dependence on the long-
term liabilities & creditors are more & the company is following an aggressive working
capital policy. Liquid ratio of Company is not favorable because the quick assets of the
company are less than the current liabilities.

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(c) Cash Ratio

CASH RATIO
0.4

0.35

0.3

0.25
Ranbaxy
Ratio 0.2
0.36 Alembic
0.15

0.1 0.2

0.05
0.003 0.05
0
2012 - 2013 2013 - 2014
Years

Figure No- 3.3: Cash Ratio of 2 years

Interpretation:

This ratio is also known as super quick ratio or absolute liquidity ratio. From the figure
no. 3.3, it is clear that the ratio has risen from F.Y 2012-13 to F.Y 2013-14 for the
companies. For Ranbaxy in F.Y 2012-13 the ratio is 0.2 which is below the ideal ratio of
1:1 and it further increased in the year 2013-14 to 0.36. In the year 2012-2013 the cash
ratio of ALEMBIC is 0.003. The ratio increased in the year 2013-2014 to 0.05. This
shows that the companies are making efforts to have enough cash and bank balance to
meet any contingency. Though, both companies are maintaining the cash ratio below the
standard ratio.

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3.12 Profitability Ratio

Profitability ratios measure a companys ability to generate earnings relative to sales,

assets and equity. These ratios assess the ability of a company to generate earnings,
profits and cash flows relative to some metric, often the amount of money invested. They
highlight how effectively the profitability of a company is being managed.

For the purpose of the study, four ratios are covered under the profitability parameter:
Gross Profit ratio, Net Profit ratio and Cost of Goods Sold ratio and Operating Profit
ratio.

(a)Gross Profit Ratio

GROSS PROFIT RATIO

80.00%
70.00%
60.00%
50.00%
Ratio 40.00% 76.18% 75.10%
30.00% 62.91% 61.74%
Ranbaxy
20.00% Alembic
10.00%
0.00%
2012 - 2013 2013- 2014
Years

Figure No- 3.4: Gross Profit Ratio of 2 years

Interpretation:

The gross profit is the profit made on sale of goods. It is the profit on turnover. The figure
3.4 shows a declining trend in the gross profit ratio of RANBAXY and ALEMBIC. In the
year 2012-2013 the gross profit ratio is 76.18% for Ranbaxy and 62.91% for Alembic. It
has decreased to 75.10% and 61.74% in the year 2013- 2014. Thus, the calculated ratios
show a downward movement in gross profits of the company.

27
(b)Net Profit Ratio

NET PROFIT RATIO

20.00%

10.00%
6.95% 8.73%
0.00%
2012 - 2013 -2.64%
2013 2014
Ranbaxy
-10.00%
Ratio Alembic
-20.00% -40.72%

-30.00%

-40.00%

-50.00%
Years

Figure No- 3.5: Net Profit Ratio of 2 years

Interpretation:

Net profit margin is the percentage of revenue remaining after all operating expenses,
interest, taxes and preferred stock dividends (but not common stock dividends) have been
deducted from a company's total revenue. The figure no. 3.5 indicates that the Net Profit
Ratio of Ranbaxy is in negative. But at the same time it is showing a positive sign that the
company is making efforts to move towards positive net profit.

However, the profitability ratio of Alembic shows upward trend in last 2 years
Companys sales have increased in 2 years. In the year 2012-2013 the net profit ratio is
6.95%. It has increased to 8.73% in the year 2013-2014 due to increase in sales with
corresponding more increase in net Profit.

28
(c) Cost of Goods Ratio

COST OF GOODS SOLD RATIO

45.00%
40.00%
35.00%
30.00%
25.00%
Ratio
20.00%
37.09% 38.26% Ranbaxy
15.00% Alembic
23.81% 24.90%
10.00%
5.00%
0.00%
2012 - 2013 2013 2014
Years

Figure No- 3.6: Cost of Goods Sold Ratio of 2 years

Interpretation:

This ratio shows the rate of consumption of raw material in the process of production. In
the year 2013-2014 the cost of goods sold ratio is 24.90% and in 2012-2013 it was
23.81%. The ratio represents an upward trend for RANBAXY.

In the year 2013-2014 the cost of goods sold ratio of Alembic is 38.26%. It also indicates
that in 2012-2013, 37.09% of raw material is consumed in the process of production.
During the two years the rate of cost of goods sold ratio is increased.

29
(d) Operating Profit Ratio

OPERATING PROFIT RATIO

15

10

13.77
5
7.02
Ratio Ranbaxy
1.04
0 Alembic
2012 - 2013 2013 - 2014
-4.58
-5

-10
Years

Figure No- 3.7: Operating Profit Ratio of 2 years

Interpretation:

Operating profit ratio shows the relationship between operating profit & the sales. The
operating profit is equal to gross profit minus all operating expenses or sales less cost of
goods sold and operating expenses. From the figure no.3.7 it is clear that operating profit
ratio of RANBAXY is 13.77%. It indicates that average operating margin of Rs.13.77 is
earned on sale of Rs. 100. This amount of Rs. 13.77 is available for meeting non
operating expenses. During the last 2 years there is a great variation in operating profit
ratio. This reflects that the company does not have great efficiency in managing all its
operations of production, purchase, inventory, selling and distribution. Thus, company is
not having large margin to meet non-operating expenses and earn net profit. For
ALEMBIC, the operating profit ratio is in negative in 2013-2014.

30
3.13 Working Capital Ratio

The working capital ratio is the same as the current ratio. It is the relative proportion of
an entity's current assets to its current liabilities, and is intended to show the ability of a
business to pay for its current liabilities with its current assets. A working capital ratio of
less than 1.0 is a strong indicator that there will be liquidity problems in the future, while
a ratio in the vicinity of 2.0 is considered to represent good short-term liquidity.

For the purpose of the study, two ratios are covered under the working capital parameter:
Inventory to Working Capital ratio, Sales to Working Capital ratio.

(a) Inventory to Working Capital Ratio

INVENTORY TO WORKING CAPITAL RATIO

3

1 1.85 2.18
Ratio Ranbaxy
0
Alembic
2012 - 2013
-0.96 2013 2014
-1.54
-1

-2
Years

Figure No- 3.8: Inventory to Working Capital Ratio of 2 years

Interpretation:

This ratio shows the extent of funds blocked in stock. The figure 3.8 depicts that
inventory to working capital ratio for Ranbaxy represents a negative trend while for
Alembic it shows a positive move. In the year 2012 2013 the ratio was -0.96 which
further increased to -1.54 for RANBAXY. On the other hand, the amount of stock is
increasing from the year 2012-2013to 2013-2014 for ALEMBIC.

31
(b)Sales to Working Capital Ratio

SALES TO WORKING CAPITAL RATIO

14
12
10
8
6 11.65
9.89
4
Ratio Ranbaxy
2
Alembic
0
-2 2012 - 2013 2013 2014
-4.36 -5.46
-4
-6
-8
Years

Figure No- 3.9: Sales to Working Capital Ratio of 2 years

Interpretation:

It measures the number of times sales is achieved to working capital. The higher the ratio
the better is the utilization of working Capital. The Figure no. 3.9 shows that the sales to
working capital ratio of the Ranbaxy is in negative as the current assets of the company
are less than the current liability, consequently resulting in negative working capital and
ratio.

For Alembic, the sales values have increased in last two years. This also consequently
decreased the current assets, along with lessened the working capital. So the working
capital turnover ratio is increasing. Higher ratio implies the efficient working capital
management.

32
3.14 Activity Ratio

Activity ratios, sometimes referred to as operating ratios or management ratios, measure

the efficiency with which a business uses its assets, such as inventories, accounts
receivable, and fixed (or capital) assets.

For the purpose of the study, two ratios are covered under the Activity parameter:
Inventory Turnover ratio, Current Asset Turnover ratio.

(a)Inventory Turnover Ratio

INVENTORY TURNOVER RATIO

8

Ratio 4
5.78 Ranbaxy
2 4.775.05
3.63
Alembic
0
2012 - 2013 2013 2014
Years

Figure No- 3.10: Inventory Turnover Ratio of 2 years

Interpretation:

Stock/ Inventory turnover ratio shows the relationship between the sales & stock. It
means how stock is being turned over into sales. The Figure no.3.10 shows a declining
trend in the inventory ratio of the Ranbaxy. The figure 3.10 shows that the ratio of
company has fallen from 4.77 in F.Y 2012-11 to 3.63 in F.Y 2013-12. Its indicates a
falling sales trend for Ranbaxy.

Alembics stock turnover ratio in 2013-2014 was 5.78 times which indicates that the
stock is being turned into sales 5.78 times during the year. Thus, the stock of the
company is moving fast in the market

33
(b)Current Asset Turnover Ratio

CURRENT ASSET TURNOVER RATIO

2.5 2.31
2.21

1.5
Ratio
0.94 0.92 Ranbaxy
1
Alembic
0.5

0
2012 - 2013 2013 2014
Years

Figure No- 3.11: Current Assets Turnover Ratio of last 2 years

Interpretation:

As there is no ideal standard for analysis of current assets turnover ratio, this ratio just
shows the efficiency of management of funds. The figure no 3.11 represents a declining
trend in the ratio. The ratio for RANBAXY has decreased from 0.94 to 0.92 in 2013
2014 which means that company is not able to manage its current assets well.

Similarly, by taking into consideration the nature of business of ALEMBIC, it can be said
that it does not shows efficient management of current assets in 2 years.

34
 CHAPTER 4

FINDINGS, RECOMMENDATIONS AND

CONCLUSIONS

This chapter deals with the findings of the study drawn on the basis of data presented and
analyzed in earlier chapter, the limitations of the study and the scope for further study
that can be undertaken in future.

4.1. Findings of the Study

(a) It has been observed from the research that the current ratio for both the companies
always remained below the standard norm (2:1) during all the years under study. Hence,
the performance of the companies was not satisfactory in terms of current ratio under the
study period.

(b) It has been analyzed that the performance of the company in terms of liquid ratio was
also not satisfactory since, the ratio remained below the standard norm of 1:1 during all
the years under study.

(c) Except that both the companies are maintaining their cash ratio below the standard
ratio of 1:1. But they represented an increasing trend which depicts that they are making
efforts to have enough cash on hand to retire their current liabilities.

(d) Both the Gross Profit ratio and Operating Profit ratio showed a negative trend during
the study period for both the companies.

(e) It has been observed from the research that the net profit ratio for Ranbaxy has taken a
negative route while it has moved in positive direction for Alembic under the study
period.

(f) Both the inventory to working capital ratio and sales to working capital ratio
represented negative trend for Ranbaxy under the period of study while it was positive for
Alembic.

(g) It has been analyzed from the research that the inventory turnover ratio showed a

35
falling trend for Ranbaxy but for Alembic it showed a positive trend representing fast
movement of stock in the market.

(h) The current assets turnover ratio showed a falling trend for both the companies
Ranbaxy and Alembic.

(i) In relation to the hypothesis testing, it has been observed that there is no significant
difference between the liquidity position of the two companies as well as there is no
significant difference between the working capital positions of the two companies.

36
4.2 Recommendations of the study

(a) The companies should work on their current ratio as it showing a decreasing trend due
to continuous increase in current liabilities as compared to current assets.
(b) It should also work on its liquid ratio as it is also negative which represents that large
part of current asset is tied up in slow moving and unsellable investment.
(c) The companies should take into consideration its Gross Profit, Net Profit and
Operating Profit ratio which shows a falling trend during the study period except for the
net profit ratio of Alembic which is increasing during the same period.
(d) It is suggested that Ranbaxy should take some steps to improve its inventory to
working capital ratio as it represents that a large amount of funds are blocked in stocks.
(e) The sales to working capital ratio and current asset turnover ratio are low and
therefore indicate low utilization of working capital during all the years under study for
Ranbaxy.

This chapter details the various recommendations made by the researcher which the
company may follow to improve its performance in the long run.

37
4.3 CONCLUSION

The present study is limited to the extent of two companies however the further study can
be conducted by taking more companies. Also there is a wider scope for further study as
very little work has been done in the field of pharmaceutical industry. The researcher has
conducted study for Pharmaceutical sector only however the same may be done for other
industries which would have increased the scope of the study. It has been done only for
two companies and for a period of two years which was a major limitation.. The
researcher raised the scope by including various other financial ratios.

This chapter explained that there is no significant difference between the liquidity
position of the two companies as well as there is no significant difference between the
working capital positions of the two companies. It also stated the various limitations to
which the study was exposed as well as the scope for the further study.

38
 BIBLIOGRAPHY

Journals
1. Arshad, Zubair and Gondal, Muhammad Yasir (2015), Impact of Working
Capital Management on Profitability- A Case of the Pakistani Cement Industry,
Interdisciplinary Journal of Contemporary Research in Business, vol. 5, No. 2, pp
384-390.
2. Bose, Biswajit (2015), The impact of Working Capital Management Practices on
Firms Profitability, International Journal of Applied Research and Studies
(iJars), Vol. 2, Issue 6, pp 1-16.
3. Ebenezer, Agyemang Badu and Aseidu, Michael Kwame, The Relationship
between Working Capital Management and Profitability of Listed Manufacturing
Companies in Ghana, pp 25-34.
4. Joshi, Lalit Kumar and Ghosh, Sudipta (2014), Working Capital Management of
Cipla Limited: An Empirical Study, International Journal of Marketing,
Financial services and Management Research, vol. 1, issue 8, pp 170-186.
5. Lazaridis and Tryfonidis, The Relationship between Working Capital
Management and Profitability of Listed Companies in the Athens Stock Exchange
, pp 1-12.
6. Mittal, Sachin and Joshi, Nishant et.al (2014), Empirics on Working Capital
Management A Case of Indian Cement Industry, International Conference on
Humanities, Economics and Geography, pp 212-216.
7. Nimalathasan, Balasundaram (2012), Working Capital Management and its
impact on Profitability: A Study of selected listed manufacturing companies in Sri
Lanka, No.12.
8. O.N, Arunkumar and Ramanan, T. Radha (2015), Working Capital Management
and Profitability: A Sensitivity Analysis, vol. 2, issue I, pp 52-58.
9. Panigrahi, Ashok Kumar (2014),Impact of Working Capital Management on
Profitability- A Case Study of ACC Ltd., Asian J. Management, pp 210-218.
10. Quayyum, Sayeda Tahima (2013), Relationship between Working Capital
Management and Profitability in context of Manufacturing Industries in

39
 Bangladesh, International Journal of Business and Management, vol.7, No.1, pp
58-69.
11. Raheman, Abdul and Nasr, Mohamed (2009), Working Capital Management and
Profitability: A Case of Pakistani Firms, International Review of Business
Research Papers, vol. 3, No. 1, pp 279-300.
12. Rahman, Ashok Kumar (2013), Working Capital Management and Profitability:
A Study on Textiles Industry , ASA University Review, vol. 5, no.1, pp 115-
132.
13. Singh, D.P. (2015), Management of working capital across industries in India-
Empirical Study, Online International Interdisciplinary Research Journal, vol. III,
issue I, pp 78-88.
14. Y, Lingesiya and S, Nalini, Working Capital Management and Firms
Performance: An analysis of Sri Lankan Manufacturing Companies.
15. Makori, Daniel Mogaka and Jagongo, Ambrose (2015), Working Capital
Management and Firm Profitability: Empirical evidence from Manufacturing and
Construction firms listed on Nairobi Securities Exchange, Kenya, International
Journal of Accounting and Taxation, vol. 1, No.1, pp 1-14.
Books

1. Kothari, C.R. (2006). Research Methodology Methods and Techniques. : Wishwa

Prakashan
2. Prasanna Chandra, Financial Management, Tata Mc Graw Hill Education, 2008
3. Hrishikes Bhattacharya, Working Capital Management: Strategies and techniques,
PHI Learning Pvt. Ltd., 2012.

Websites

1. http://www.ranbaxy.com/india/, accessed 15 February 2014.

2. http://www.alembic-india.com/, accessed 17 February 2014.
3. http://www.investopedia.com/university/ratios , accessed 10 March 2014.

40
ANNEXURE 1
Ranbaxy Laboratories Limited
Parameters Ratios 2013 - 2014 2012 2013
Current Ratio 0.86 0.82
Liquidity Ratio Liquid Ratio 0.63 0.65
Cash Ratio 0.36 0.20
Gross Profit Ratio 75.10% 76.18%
Net Profit Ratio (2.64%) (40.72%)
Profitability Ratio Cost of Goods Sold 24.90% 23.81%
Ratio
Operating Profit 7.02 13.77
Ratio
Inventory to (1.54) (0.96)
Working Capital Working Capital
Ratio Ratio
Sales to Working (5.46) (4.36)
Capital Ratio
Inventory Turnover 3.63 4.77
Activity Ratio Ratio
Current Asset 0.92 0.94
Turnover Ratio

41
 ANNEXURE 2
Alembic Pharmaceuticals Limited
Parameters Ratios 2013 - 2014 2012 2013
Current Ratio 1.23 1.30
Liquidity Ratio Liquid Ratio 0.72 0.74
Cash Ratio 0.05 0.003
Gross Profit Ratio 61.74% 62.91%
Net Profit Ratio 8.73% 6.95%
Profitability Ratio Cost of Goods Sold 38.26% 37.09%
Ratio
Operating Profit (4.58) 1.04
Ratio
Inventory to 2.18 1.85
Working Capital Working Capital
Ratio Ratio
Sales to Working 11.65 9.89
Capital Ratio
Inventory Turnover 5.78 5.05
Activity Ratio Ratio
Current Asset 2.21 2.31
Turnover Ratio

42
 ANNEXURE 3
RANBAXY LABORATORIES LIMITED

Balance sheet as on December 31st, 2014

As at As at
December 31, December 31,
2014 2013
Rs.( in Millions) Rs.( in Millions)
EQUITIES AND LIABILITIES
Shareholders Funds
Share Capital 2114.57 2110.00
Reserves and Surplus 17095.10 17131.64
19,209.67 19,241.64
Share application money pending allotment 11.10 6.66
Non -current liabilities
Long term borrowings
Other long term liabilities 19,568.10 9,524.11
Long term provision 10,363.48 15,977.19
2,739.04 2,297.91

32,670.62 27,799.21
Current liabilities
Short term borrowings 28,067.95 29,310.02
Trade payables 8,588.11 9,856.37
Other current Liabilities 13,320.78 30,004.52
Short term provisions 27,831.11 26,990.83
77,807.95 96,161.74
TOTAL 129,699.34 143,209. 25

43
ASSETS
Non Current Assets
Fixed assets
Tangible fixed assets 19,308.43 17,882.55
Intangible fixed assets 626.85 787.42
Capital work in progress 1,465.37 2,004.93
Intangible fixed assets under development 130.59 86.31
Non -Current investment 31,281.37 34,081.47
Deferred tax assets(net) - -
Long term loans and advances 10,107.12 9,412.34
Other non-current assets 215.70 0.86
63,135.43 64,255.88
Current Assets
Current Investments 30.32 26.46
Inventories 17,318.39 16,552.31
Trade receivables 14,358.88 36,828.19
Cash and bank balances 28,347.73 19,379.53
Short term loans and advances 5,041.48 3,399.75
Other current assets 1,467.11 2,767.13
TOTAL 129,699.34 143,209. 25
Source: Annual Report (http://www.ranbaxy.com/investor-relations/financial
information/annual-report/)

44
 ANNEXURE 4
RANBAXY LABORATORIES LIMITED

Statement of Profit and Loss for the year ended December 31st, 2014

As at As at
December 31, 2014 December 31, 2013
Rs. Rs.
INCOME
Revenue from operations
Sale of products (gross) 61,403.57 74,949.44
Less: Excise Duty 279.14 190.48
Sale of products (net) 61,124.43 74,758.96
Other Operating revenues 1,911.01 3,231.61
63,035.44 77,990.57
Other Income 2,571.63 2,226.55

TOTAL REVENUE 65,607.07 80,217.12

EXPENSES
Cost of materials consumed 15,286.61 17,849.13
Purchase of Stock in trade 8,090.01 6,367.31
Changes in inventories of finished (492.45) (1,357.22)
goods, work in progress and stock-
in-trade
Employee benefit expenses 10,195.89 8,607.11
Finance costs 2,969.82 2,989.99
Depreciation and impairment 1,610.70 2,478.80
Amortization 250.91 262.03
Other expenses 25,526.16 35,783.82
Total Expense 63,437.65 72,980.97

45
Profit before exceptional items and Tax 2,169.42 7,236.15
Exceptional items:
Settlement provision - 26,480.00
Provision for other than temporary
Diminution in the value of non-
Current investment 1,030.00 -
Product recall 2,370.20 -
Loss on foreign currency option derivatives, net 412.05 11,242.85
( Other than on loans)
Loss before tax (1,642.83) (30,486.70)
Income tax expense
Current Tax (19.44) (33.07)
Deferred Tax - 66.86
Loss after tax for the year (1,623.39) (30,520.49)

46
 ANNEXURE 5
ALEMBIC PHARMACEUTICAL LIMITED

Balance sheet as on March 31st, 2014

As at As at
March 31, 2014 March 31, 2013
Rs. ( in Lacs) Rs. ( in Lacs)
EQUITIES AND LIABILITIES
Shareholders Funds
Share Capital 3770.32 3770.32
Reserves and Surplus 32315.92 23850.64
36,086.24 27,620.96
Non -current liabilities
Long term borrowings 9485.67 12848.37
Long term provisions 539.04 510.16
Other long term liabilities 1229.07 1184.17
Deferred tax liability (net) 952.90 537.46
12,206.69 15,080.16
Current liabilities
Short term borrowings 13945.77 14627.68
Trade payables 18192.75 13175.41
Other current Liabilities 15057.24 8490.05
Short term provisions 3566.34 2590.85
50762.10 38,883.99
TOTAL 99,055.02 81,585.11
ASSETS
Non Current Assets
Fixed assets
Tangible assets 26781.86 27198.54
Capital work in progress 5823.97 2650.30
Non -Current investment 335.42 335.42

47
Long term loans and advances 3499.13 654.47

36,440.38 30,838.73
Current Assets
Inventories 25874.15 21923.19
Trade receivables 18683.28 20197.39
Cash and bank balances 2572.47 128.80
Short term loans and advances 15484.75 8497.00
62,614.65 50,746.38
TOTAL 99,055.02 81,585.11
Source: Annual Report (http://www.alembic- india.com /upload/05Alembic% 20
Pharmaceuticals%20Limited%20Annual%20Report%202013-12.pdf)

48
 ANNEXURE 6
ALEMBIC PHARMACEUTICAL LIMITED

Statement of Profit and Loss for the year ended March 31st, 2014

As at As at
March 31, 2014 March 31, 2013
Rs. Rs.
Revenue from operations 138082.43 117258.58
Less: Excise Duty 554.00 766.00

137528.43 116492.58
Other Income 44.07 8.33
TOTAL REVENUE 137572.50 116500.91
EXPENSES
Cost of materials consumed 52823.76 43494.43
Purchase of Finished Goods 16779.29 12857.31
Changes in inventories of finished (6443.98) (472.19)
goods and work in progress
Employee benefit expenses
R&D expenses 16845.82 14921.43
Other expenses 5858.22 4713.18
30708.35 25405.73
TOTAL EXPENSES 116571.45 100919.89
Profit before interest, 21001.05 15581.02
depreciation and tax
Finance Cost 2621.34 2388.87
Depreciation 3364.58 2958.83

Profit before Tax 15015.13 10233.32

49
Tax Expense

Current Tax 3000 1800.52

Deferred Tax (38.38) 282.09
Profit for the year after tax 12053.51 8150.71

50