Working Capital Management On Zydus Cadila Healthcare Limited

5/8/2016 WorkingCapitalManagementonZydusCadilaHealthcareLimited
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http://www.slideshare.net/ShwetaChandel/workingcapitalmanagementonzyduscadilahealthcarelimited2?qid=3853d66840bb4eab9e43fcc8f6316cb5 10/141
35ZydusCadilareceivesapprovalfromtheUSFDAtomarkettheantihypertensivedrug,Atenolol,andan
antiinfectived...
36ZydusCadilatoacquireNutraliteIndia'slargestsellingcholesterolfreemargarineSarabhaiZydustoroll
outimm...
38ZydusscoreswithfirstdaylaunchofVenlafaxineHydrochlorideintheUS2009ZydusCadilaannounces
researchcollab...
39CadilaHealthcaregetsUSFDAnodforAripiprazoleorallydisintegratingtablets2013ZydusCadila
receivestentative...
40ZydusCadilahascompletedthesingleascendingdose(SAD)rangeZyduslaunchesSoviHepthe
breakthroughtherapyfo...
412.2CompanyProfile:Founder:LateMr.RamanbhaiB.Patel.KeyExecutives:Chairmen&Managing
Director:Pankaj...
42IDBIBankStandardCharteredBankStatBankofIndiaAuditors:MukeshMShah&Co.Registeredand
CorporateOffices:...
43Wewilldiscover,developandsuccessfullymarketpharmaceuticalproductstoprevent,diagnose,alleviate
andcuredis...
44
45Logo:
46StockPerformance:LastoneyearstockperformanceofCadilaHealthcareLimitedandcomparisonwith
SunPharmaStock...
47PharmaceuticalCompanyrankwise:AsperformancewiseCadilaHealthcareLimitedison5thrankfrom
theothercompeti...
48AboveChartshowingCadilaHealthcareisstableincompetitiontoothercompetitorandnetprofitisalso
stablethan...
492.4ProductPlants:FromNinePharmaceuticalsproductioninIndiaaswellasaZydusCadiladevelopand
manufacturea...
50GoaPlantsTheCompanysplantsatPondainthesouthernIndianstateofGoadoformulationworkas
wellasmanufactu...
51Zydus.ZydusBSV(SEZ,Matoda)Zydus'sJVwithBharatSerumandVaccineLtd.'sPlantisanother
facilitylocatedint...
522.5Products:Tablets:TabletsBulkDrugsInjectionsCapsulesDryPowderInjectiblesLiquidsProcessing
ChargesOintmen...
53CHAPTER:3RESEARCHANDMETHODOLOGY
543.1RESEARCHOBJECTIVE:Objectiveofresearchistoanalysesfinancialpositionandperformanceof
CadilaHealthcareLi...
553.7LITERATUREREVIEW:Theideaofthetopicoftheresearchwasdrawnfromthevariousmediums
whichIgonethrougha...
56CHAPTER:4THEORETICALFRAMEWORKOFWORKINGCAPITALMANAGEMENT
574.1WorkingCapitalManagement:Workingcapitalreferstothatpartofthefirmscapitalwhichisrequired
forfinanc...
58Definition:AccordingtoPark&GladsonTheexcessofcurrentassetsofabusiness(i.e.cash,accounts
receivables,...
594.2CONCEPTOFWORKINGCAPITAL:Therearetwoconceptsofworkingcapital:1.Grossworking
capital2.Networkingcap...
60Inanarrowsense,thetermworkingcapitalreferstothenetworking.Networkingcapitalistheexcessof
currentass...
4.3CLASWorkingcaOnOnOnthebasinetworkingAmountoCapTemporaryPermanentTimeTime
SSIFICATapitalmaybthebas...
62PERMANENTFIXEDWORKINGCAPITAL:Permanentorfixedworkingcapitalisminimumamount
whichisrequiredtoensureeffe...
63Adequateworkingcapitalleadstohighsolvencyandcreditstandingcanarrangeloansfrombanksandother
oneasyand...
64otherhandthetradingandfinancialfirmsrequireslessinvestmentinfixedassetsbuthavetoinvestlarge
amt.ofwo...
65longtermmeansoffinancing.Financingthroughlongtermmeansprovidesstability,reducesriskor
paymentandincreas...
66onlytheperiodneeded.Ithasthebenefitsof,lowcostandestablishescloserrelationshipswithbanker.
Somesources...
67SOURCESOFADDITIONALWORKINGCAPITAL:Sourcesofadditionalworkingcapitalincludethe
following1.Existingcashre...
68MANAGEMENTOFINVENTORY:Inventoriesconstitutethemostsignificantpartofcurrentassetsofa
largemajorityofcom...
69
70Needtoholdinventories:Maintaininginventoriesinvolvestryingupofthecompanysfundsand
incurrenceofstorage...
71Nature:Thetermcreditpolicyisusedtorefertothecombinationofthreedecisionvariables:1.Credit
standards:I...
72FactorsofCashManagement:Cashmanagementisconcernedwiththemanagingof1.Cashflowsintoand
outofthefirm2...
73MANAGEMENTOFWORKINGCAPITAL:Managementofworkingcapitalisconcernedwiththe
problemthatarisesinattemptingt...
74ComparativesizestatementsTrendanalysisCashflowstatementRatioanalysisAdetaildescriptionofthese
methodsis...
75Quickratio:Liquidassets/CurrentliabilitiesLiquidassets=CurrentassetsStockPrepaidexpenses
LeverageorC...
76AveragePaymentPeriod:Creditors+B/P/Creditpurchaseperday.FixedAssetsTurnoverratio:Costof
goodssold/Net...
77CHAPTER:5DATAANALYSISANDINTERPRETATION
785.1WorkingCapitalStatementofCadilaHealthcareLimitedofLastFiveYear(inRs.Cr).Theaveragesize
ofworkingc...
00.10.20.30.40.50.60.70.80.9ComponePercenta_________InterpretAbovetablcapital.Itpercentage
Year2010201...
80InTheyear2010inventorytonetworkingcapitalratiois0.73i.e.whichchangeeachyearduetochangein
theamount...
815.2LIQUIDITYPOSITION:Liquiditypositionmeasurestheabilityofthefromtomeetsitscurrent
obligationliquidityp...
82Talkingtheyear2010asthebaseyear,workingcapitalofthecompanyisincreasingintheyear2011&
2012similarly...
83ComparativeStatementofBalanceSheetfor20112012(InRs.Cr.)Particulars20112012Increase/
DecreaseChangein%...
84Interpretation:Totalcurrentassetsandloanadvanceofthecompanyin201112Areincreasedby484.90cr
withcompar...
86Interpretation:Totalcurrentassetsandloanadvanceofthecompanyin20122013areincreasedby
331.60crwithcompa...
88Interpretation:Totalcurrentassetsandloanadvanceofthecompanyin20132014areincreasedby281.5
crwithcompa...
90Investments1557.72209.1651.441.8180651Inventories663.5804.3140.821.2207988SundryDebtors
7221056.1334.146....
91Interpretation:Totalcurrentassetsandloanadvanceofthecompanyin20142015areincreasedby402.6cr
withcompare...
925.4TRENDPERCENTAGES:Trendpercentagesareimmenselyhelpfulinmakingacomparativestudyof
financialstatementsf...
93StatementShowingTrendPercentageinAssetsDuring20102015(InRs.Cr)TrendPercentageParticulars
201011201112...
94AnalysisofTrendPercentages:Interpretation:Theabovetrendanalysisrevelsthattheinventorieshave
beenindecre...
5.5RATITheCurrenmeasureofThehighercurrentliabcurrentratiTableshowParticularCurrentACurrentL
CurrentR0...
96Interpretation:Thisratioattempts,tomeasuretheutilizationandeffectivenessoftheusecurrentassetsand
curren...
QuickRaAnindicatcompany'sthisreasonfollows:Quickra=(cashandCurrentLThequickrofcurrentl
liquidassetra...
98Interpretation:ItestablishestheItestablishestherelationshipbetweenquickorliquidassetsandliabilities.
An...
ParticuCashCurrenLiabiliCashRCashRatTheratioocurrentliabliquidity.Itshorttermdebt,ifanyThe
cashralia...
100Interpretation:Thisratioisalsoknownasabsoluteliquidratio.Thisratiowillrevealhowmuch
percentageofcur...
WorkingCapitalManagementonZydusCadilaHealthcareLimited
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1.1.1WorkingCapitalManagementonZydusCadilaHealthcareLtd.SubmittedtoGujaratUniversityfor
thedegreeofMasterinCommerceFaculty:CommerceSubject:WorkingCapitalManagementonZydus
CadilaHealthcareLtd.ByShwetaA.ChandelH.A.CollageofCommerceCollegeSeatNo.14Year2016
.ExamSeatNo.Year2016.UndertheguidanceofProf.P.C.RavalH.A.CollageofCommerce
2.2.2
3.3.3H.A.CollageofCommerce.NearLawGarden,AhmadabadCERTIFICATEThisistocertifythatMs.
ShwetaA.Chandelhasworkedandcompletedher/hisProjectWorkforthedegreeofMASTERIN
COMMERCEinthefacultyofCOMMERCEinthesubjectofACCOUNTANCYonTitleofproject
worktobewrittenWorkingCapitalManagementonCadilaHealthcareLimitedundermysupervision.
Itisherownworkandfactsreportedbyherpersonalfindingsandinvestigations.Name&Signatureof
GuideDateofsubmission:Name&SignatureofProfessorinCharge/Director/PrincipaloftheInstitute
StampoftheInstitutewithdate
4.4.4DeclarationbystudentItheundersignedMiss.ShwetaA.Chandelhereby,declarethatthisproject
workentitledWorkingCapitalManagementonCadilaHealthcareLimitedisaresultofmyown
researchworkandhasnotbeenpreviouslysubmittedtoanyotherUniversityforanyotherexamination.I
herebyfurtherdeclarethatallinformationofthisdocumenthasbeenobtainedandpresentedin
accordancewithacademicrulesandethicalconduct.CollegeSeatNo.14.Year2016.ExamSeatNo.
Year.DateName&SignatureShwetaA.ChandelPlace:AhmedabadResearchScholar
5.5.5PREFACETostartanyBusiness,FirstofallweneedFinanceandthesuccessofthatbusiness
entirelydependsonthepropermanagementofdaytodayfinanceandthemanagementofthisshortterm
capitaloffinanceofthebusinessiscalledWorkingCapitalManagement.WorkingCapitalisthemoney
usedtopayfortheeverydaytradingactivitiescarriedoutbythebusinessstationeryneeds,staffsalaries
andwages,rent,energybills,paymentsforsuppliesandsoon.Ihavetriedtoputmybesteffortto
completethistaskonthebasisofskillthatIhaveachievedduringthestudyofM.Comintheinstitute.I
havetriedtoputmymaximumefforttogettheaccuratestatisticaldata.HoweverIwouldappreciateif
anymistakesarebroughttomybythereader
6.6.6ACKNOWLEDGENIENTIncourseofM.commycollegehadgivenmeopportunitytoprepare
financialreportonCadilaHealthcareLimited.ThereforeIwasaskedtoprepareaprojectreporton
WorkingCapitalManagementatCadilaHealthcareLimited..MoreoverbythiswayIgotanopportunity
tobefinancialmanagementpractically.Whilepreparationofthisreportmanypeoplegivenmehelpand
support.Iwouldbehappytoappreciateallofthemandgivemythankstoallwhohelpandgivethem
supportduringpreparationofthereport.Ithankfultothefacultythatprovidesuchteatopportunitytoget
practicalknowledgeaboutfinancialmanagementandguideusinpreparationofprojectsoIwouldliketo
thankProf.P.C.Ravaltoprovideusguidelineforpreparationofprojectreport.Date:ShwetaA.Chandel
Place:Ahmedabad
7.7.7
8.8.8ChapterNo.TitleofChapterPageNo.Chapter:1Introduction91.1HistoryofIndian
PharmaceuticalIndustry10Chapter:2IntroductiontoCadilaHealthcareLimited232.1Historyand
development242.2CompanyProfile382.3Stockperformancehistory432.4Productsplants462.5
Products49Chapter:3ResearchMethodology503.1ResearchObjective513.2ScopeoofResearch51
3.3DataType.5114DataSources513.5ResearchDesign513.6Tootsusedforanalysis513.7
Literaturereview523.8Limitationsforthe!gutty52Chapter:4TheoreticalFrameworkofWorking
CapitalManagement534.1WorkingcapitalManagement544.2ConceptofWorkingCapital564.3
Classificationofworkingcapital584.4ImportanceorAdvantagetheWorkingCapital594.5Factors
determiningtheworkingcapitalrequirements604.6Sourcesofworkingcapital61
9.9.94.7DifferentaspectsofWorkingcapitalmanagement644.8Workingcapitalanalysis70Chapter:5
DataAnalysisandinterpretation745.1WorkingCapitalStatement755.2Liquidityposition785.3
Comparativebalancesheetstatement795.4TrendPercentage895.5RatioAnalysis92Findings111
Suggestion111Conclusion112Bibliography113AnnexureBalancesheetforCadilaHealthcarelimited.
114ProfitandlossaccountofCadilaHealthcarelimited116Cashflowstatement118
10.10.10CHAPTER:1INTRODUCTION:HISTORYOFINDIANPHARMACEUTICALINDUSTRY
11.11.11HistoryofIndianPharmaceuticalindustryIndustryDefinition:Globally,Indiaranks3rdintermsof
volumeand14thintermsofvalue.AccordingtoDepartmentofPharmaceuticals,MinistryofChemicals
andFertilizers,thetotalturnoverofIndia'spharmaceuticalsindustrybetween2008andSeptember2009
wasUS$21.04billion.Hyderabad,Mumbai,BangaloreandAhmedabadarethemajorpharmaceutical
hubsofIndia.WhilethedomesticmarketisworthUS$13.8billionasof2013,andisexpectedtoreach
US$49billionby2020[3]Thegovernmentstartedtoencouragethegrowthofdrugmanufacturingby
Indiancompaniesintheearly1960s,andwiththePatentsActin1970.However,economicliberalization
in90sbytheformerPrimeMinisterP.V.NarasimhaRaoandthethenFinanceMinister,Dr.Manmohan
Singhenabledtheindustrytobecomewhatitistoday.Thispatentactremovedcompositionpatentsfrom
foodanddrugs,andthoughitkeptprocesspatents,thesewereshortenedtoaperiodoffivetoseven
years.ThelackofpatentprotectionmadetheIndianmarketundesirabletothemultinationalcompanies
thathaddominatedthemarket,andwhiletheystreamedout.Indiancompaniescarvedanicheinboththe
Indianandworldmarketswiththeirexpertiseinreverseengineeringnewprocessesformanufacturing
drugsatlowcosts.Althoughsomeofthelargercompanieshavetakenbabystepstowardsdrug
innovation,theindustryasawholehasbeenfollowingthisbusinessmodeluntilthepresent.India's
biopharmaceuticalindustryclockeda17percentgrowthwithrevenuesofRs.137billion($3billion)in
the200910financialyearoverthepreviousfiscal.Biopharmacywasthebiggestcontributorgenerating
60percentoftheindustry'sgrowthatRs.8,829crore,followedbybioservicesatRs.2,639croreandbio
agriatRs.1,936crore.India'shealthcaresectorisestimatedtoreach$197billionby201718Pharma
StatisticsTop10PubliclyListedpharmaceuticalcompaniesinIndiabyMarketCapitalizationasofJuly
2015.
12.12.12RankCompanyMarketCapitalization2015(INRcrores)1SunPharmaceutical2,17,6362Lupin
Ltd84,1933Dr.Reddy'sLaboratories63,7794Cipla52,0815AurobindoPharma42,4546Cadila
Healthcare38,6777GlenmarkPharmaceuticals29,0478GlaxoSmithKlinePharmaceuticalsLtd28,5879
DivisLaboratories24,84710TorrentPharmaceuticals22,320Overview:Exportsofpharmaceuticals
productsfromIndiaincreasedfromUS$6.23billionin200607toUS$8.7billionin200809acombined
annualgrowthrateof21.25%.AccordingtoPricewaterhouseCoopers(PWC)in2010,Indiajoinedamong
theleagueoftop10globalpharmaceuticalsmarketsintermsofsalesby2020withvaluereachingUS$50
billion.[8]SomeofthemajorpharmaceuticalfirmsincludingSunPharmaceutical,CadilaHealthcareand
PiramalEnterprises.
13.13.13Pharmaceuticalindustrytoday:ThenumberofpurelyIndianpharmacompaniesisfairlylow.
Indianpharmaindustryismainlyoperatedaswellascontrolledbydominantforeigncompanieshaving
subsidiariesinIndiaduetoavailabilityofcheaplaborinIndiaatlowestcost.In2002,over20,000
registereddrugmanufacturersinIndiasold$9billionworthofformulationsandbulkdrugs.85%ofthese
formulationsweresoldinIndiawhileover60%ofthebulkdrugswereexported,mostlytotheUnited
StatesandRussia.Mostoftheplayersinthemarketaresmalltomediumenterprises250ofthelargest
companiescontrol70%oftheIndianmarket.Thankstothe1970PatentAct,multinationalsrepresent
only35%ofthemarket,downfrom70%thirtyyearsago.MostpharmacompaniesoperatinginIndia,
eventhemultinationals,employIndiansalmostexclusivelyfromthelowestrankstohighlevel
management.Homegrownpharmaceuticals,likemanyotherbusinessesinIndia,areoftenamixofpublic
andprivateenterprise.Intermsoftheglobalmarket,Indiacurrentlyholdsamodest12%share,butit
hasbeengrowingatapproximately10%peryear.Indiagaineditsfootholdontheglobalscenewithits
innovativelyengineeredgenericdrugsandactivepharmaceuticalingredients(API),anditisnowseeking
tobecomeamajorplayerinoutsourcedclinicalresearchaswellascontractmanufacturingandresearch.
Thereare74USFDAapprovedmanufacturingfacilitiesinIndia,morethaninanyothercountryoutside
theU.S,andin2005,almost20%ofallAbbreviatedNewDrugApplications(ANDA)totheFDAare
expectedtobefiledbyIndiancompanies.Growthsinotherfieldsnotwithstanding,genericsarestilla
largepartofthepicture.LondonresearchcompanyGlobalInsightestimatesthatIndiasshareofthe
globalgenericsmarketwillhaverisenfrom4%to33%by2007.TheIndianpharmaceuticalindustryhas
becomethethirdlargestproducerintheworldandispoisedtogrowintoanindustryof$20billionin
2015fromthecurrentturnoverof$12billionPatent:Asitexpandsitscorebusiness,theindustryis
beingforcedtoadaptitsbusinessmodeltorecentchangesintheoperatingenvironment.Thefirstand
mostsignificantchangewasthe1January2005enactmentofanamendmenttoIndiaspatentlawthat
14.14.14reinstatedproductpatentsforthefirsttimesince1972.Thelegislationtookeffectonthedeadline
setbytheWTOsTradeRelatedAspectsofIntellectualPropertyRights(TRIPS)agreement,which
mandatedpatentprotectiononbothproductsandprocessesforaperiodof20years.Underthisnewlaw,
Indiawillbeforcedtorecognizenotonlynewpatentsbutalsoanypatentsfiledafter1January1995.
Indiancompaniesachievedtheirstatusinthedomesticmarketbybreakingtheseproductpatents,anditis
estimatedthatwithinthenextfewyears,theywilllose$650millionofthelocalgenericsmarketto
patentholders.Inthedomesticmarket,thisnewpatentlegislationhasresultedinfairlyclear
segmentation.Themultinationalsnarrowedtheirfocusontohighendpatentswhomakeuponly12%of
themarket,takingadvantageoftheirnewlybestowedpatentprotection.Meanwhile,Indianfirmshave
chosentotaketheirexistingproductportfoliosandtargetsemiurbanandruralpopulations.Product
development:Indiancompaniesarealsostartingtoadapttheirproductdevelopmentprocessestothenew
environment.Foryears,firmshavemadetheirwaysintotheglobalmarketbyresearchinggeneric
competitorstopatenteddrugsandfollowingupwithlitigationtochallengethepatent.Thisapproach
remainsuntouchedbythenewpatentregimeandlookstoincreaseinthefuture.However,thosethatcan
affordithavesettheirsightsonanevenhighergoal:newmoleculediscovery.Althoughtheinitial
investmentishuge,companiesareluredbythepromiseofheftyprofitmarginsandthusalegitimate
competitorintheglobalindustry.LocalfirmshaveslowlybeeninvestingmoremoneyintotheirR&D
programsorhaveformedalliancestotapintotheseopportunities.Smallandmediumenterprises:As
promisingasthefutureisforawhole,theoutlookforsmallandmediumenterprises(SME)isnotas
bright.Theexcisestructurechangedsothatcompaniesnowhavetopaya16%taxonthemaximumretail
price(MRP)oftheirproducts,asopposedtoontheexfactoryprice.Consequently,largercompaniesare
cuttingbackonoutsourcingandwhatbusinessisleftisshiftingtocompanieswithfacilitiesinthe
15.15.15fourtaxfreestatesHimachalPradesh,Jammu&Kashmir,UttaranchalandJharkhand.
Consequently,alargenumberofpharmaceuticalmanufacturersshiftedtheirplanttothesestates,asit
becamealmostimpossibletocontinueoperatinginnontaxfreezones.Butinamatterofacoupleof
yearstheexcisedutywasrevisedontwooccasions,firstitwasreducedto8%andthento4%.Asaresult,
thebenefitofshiftingtoataxfreezonewasnegated.Thisresultedin,factoriesinthetaxfreezones,to
startupthirdpartymanufacturing.Underthisthesefactoriesproducedgoodsunderthebrandnamesof
otherpartiesonjobworkbasis.AsSMEswrestledwiththetaxstructure,theywerealsoscramblingto
meetthe1JulydeadlineforcompliancewiththerevisedScheduleMGoodManufacturingPractices
(GMP).Whilethisshouldbebeneficialtoconsumersandtheindustryatlarge,SMEshavebeenfindingit
difficulttofindthefundstoupgradetheirmanufacturingplants,resultingintheclosureofmanyfacilities.
Othersinvestedthemoneytobringtheirfacilitiestocompliance,buttheseoperationswerelocatedin
nontaxfreestates,makingitdifficulttocompeteinthewakeofthenewexcisetax.
16.16.16CorporateCatalyst:MultinationalPharmaceuticalCompaniesrankedasperactivepresenceof
sales,marketingandbusinessinIndiaPfizerGlaxoSmithKlineSanofiAventisMerckJohnsonand
JohnsonAmgenNovartisRocheBristolMyersSquibbWyethEliLillyScheringPloughAbbottTakeda
BoehringerIngelheimAstellasChallenges:Evenaftertheincreasedinvestment,marketleaderssuchas
RanbaxyandDr.ReddysLaboratoriesspentonly510%oftheirrevenuesonR&D,laggingbehind
WesternpharmaceuticalslikePfizer,whoseresearchbudgetlastyearwasgreaterthanthecombined
revenuesoftheentireIndianpharmaceuticalindustry.Thisdisparityistoogreattobeexplainedbycost
differentials,anditcomeswhenadvancesingenomicshavemaderesearchequipmentmoreexpensive
thanever.Thedrugdiscoveryprocessisfurtherhinderedbyadearthofqualifiedmolecularbiologists.
Duetothedisconnectbetweencurriculumandindustry,pharmainIndiaalsolacktheacademic
collaborationthatiscrucialtodrugdevelopmentintheWestandsofar.
17.17.17RelationbetweenpharmaandBiotech:Unlikeinothercountries,thedifferencebetween
biotechnologyandpharmaceuticalsremainsfairlydefinedinIndia.Biotechtherestillplaystheroleof
pharmaslittlesister,butmanyoutsidershavehighexpectationsforthefuture.Indiaaccountedfor2%of
the$41billionglobalbiotechmarketandin2003wasranked3rdintheAsiaPacificregionand13thin
theworldinnumberofbiotech.In20045,theIndianbiotechindustrysawitsrevenuesgrow37%to$1.1
billion.TheIndianbiotechmarketisdominatedbybiopharmaceuticals76%of20045revenuescame
frombiopharmaceuticals,whichsaw30%growthlastyear.Oftherevenuesfrombiopharmaceuticals,
vaccinesledtheway,comprising47%ofsales.Biologicsandlargemoleculedrugstendtobemore
expensivethansmallmoleculedrugs,andIndiahopestosweepthemarketinbiogenericsandcontract
manufacturingasdrugsgooffpatentandIndiancompaniesupgradetheirmanufacturingcapabilities.
Mostcompaniesinthebiotechsectorareextremelysmall,withonlytwofirmsbreaking100million
dollarsinrevenues.Atlastcounttherewere265firmsregisteredinIndia,over92%ofwhichwere
incorporatedinthelastfiveyears.Thenewnessofthecompaniesexplainstheindustryshigh
consolidationinbothphysicalandfinancialterms.Almost30%ofallbiotechareinoraroundBangalore,
andthetoptencompaniescapture47%ofthemarket.ThetopfivecompanieswerehomegrownIndian
firmsaccountfor72%ofthebiopharmasectorand52%oftheindustryasawhole.TheAssociationof
BiotechnologyLedEnterprises(ABLE)isaimingtogrowtheindustryto$5billioninrevenuesgenerated
by1millionemployeesby2009,anddatafromtheConfederationofIndianIndustry(CII)seemto
suggestthatitispossible
18.18.18Top20BiotechnologycompaniesinIndia,asof2013.ComparisonwiththeUS:TheIndian
biotechsectorparallelsthatoftheUSinmanyways.Botharefilledwithsmallstartupswhilethe
majorityofthemarketiscontrolledbyafewpowerfulcompanies.Botharedependentupongovernment
grantsandventurecapitalistsforfundingbecauseneitherwillbecommerciallyviableforyears.
Pharmaceuticalcompaniesinbothcountrieshaverecognizedthepotentialeffectthatbiotechnologycould
haveontheirpipelinesandhaverespondedbyeitherinvestinginexistingstartupsorventuringintothe
fieldthemselves.InbothIndiaandtheUS,aswellasinmuchoftheglobe,biotechisseenasahotfield
withalotofgrowthpotential.RankCompany1SerumInstituteofIndia2Biocon3NuziveeduSeeds
PrivateLimited4NovoNordisk5SyngeneInternational6RelianceLifeSciences7EliLillyand
Company8BharatSerums9BiologicalE.Limited10FortisClinicalResearch11NovozymesSouth
Asia12AnkurSeeds14IndianImmunologicalsLimited15GlaxoSmithKlinePharmaceuticalsLtd13
BharatBiotechInternational16TulipGroup17HafkineBiopharmaceutical18Mahyco19Advanced
Enzymes20RaasiSeeds
19.19.19RelationshipwithIT:Manyanalystshaveobservedthatthehypearoundthebiotechsector
mirrorsthatoftheITsector.Biotechcollegeshavebeenpoppinguparoundthecountryeagertoservice
thepoolsofstudentsthatwanttotakeadvantageofagrowingindustry.TheInternationalFinance
Corporation,theprivateinvestmentarmoftheWorldBank,calledIndiathe"centerpieceofIFCsglobal
biotechstrategy."Ofthe$110millioninvestedin14biotechprojectsinvestmentglobally,theIFChas
given$43millionto4projectsinIndia.AccordingtoDr.ManjuSharma,formerdirectorofthe
DepartmentofBiotechnology,thebiotechindustrycouldbecomethe"singlelargestsectorfor
employmentofskilledhumanresourceintheyearstocome".BritishPrimeMinisterTonyBlairwas
similarlyimpressed,citingthesuccessofIndiasbiotechindustryasthereasonforhisowncountrysown
biotechopportunities.MalaysiaisalsolookingtoIndiaasanexampleforgrowingitsownbiotech
industry.SupportofIndianGovernment:TheIndiangovernmenthasbeenverysupportive.Itestablished
theDepartmentofBiotechnologyin1986undertheMinistryofScienceandTechnology.Sincethen,
therehavebeenanumberofdispensationsofferedbyboththecentralgovernmentandvariousstatesto
encouragethegrowthoftheindustry.Indiasscienceministerlaunchedaprogramthatprovidestax
incentivesandgrantsforbiotechstartupsandfirmsseekingtoexpandandestablishestheBiotechnology
ParksSocietyofIndiatosupporttenbiotechparksby2010.Previouslylimitedtorodents,animaltesting
wasexpandedtoincludelargeanimalsaspartoftheministersinitiative.Stateshavestartedtoviewith
oneanotherforbiotechbusiness,andtheyareofferingsuchgoodiesasexemptionfromVATandother
fees,financialassistancewithpatentsandsubsidiesoneverythingrangingfrominvestmenttolandto
utilities
20.20.20Foreigninvestment:Thegovernmenthasalsotakenstepstoencourageforeigninvestmentinits
biotechsector.Aninitiativepassedearlierthisyearallowed100%foreigndirectinvestmentwithout
compulsorylicensingfromthegovernment.InApril,adelegationheadedbytheKapilSibal,theminister
ofscienceandtechnologyandoceandevelopment,visitedfivecitiesintheUStoencourageinvestment
inIndia,withspecialemphasisonbiotech.Justtwomonthslater,SibalreturnedtotheUStounveil
IndiasbiotechgrowthstrategyattheBIO2005conferenceinPhiladelphia.DevelopmentinIndia:The
Indianpharmaceuticalsmarketisthethirdlargestintermsofvolumeandthirteenthlargestintermsof
value,asperareportbyEquityMaster.Brandedgenericsdominatethepharmaceuticalsmarket,
constitutingnearly70to80percentofthemarket.Indiaisthelargestproviderofgenericdrugsglobally
withtheIndiangenericsaccountingfor20percentofglobalexportsintermsofvolume.Oflate,
consolidationhasbecomeanimportantcharacteristicoftheIndianpharmaceuticalmarketastheindustry
ishighlyfragmented.Indiaenjoysanimportantpositionintheglobalpharmaceuticalssector.Thecountry
alsohasalargepoolofscientistsandengineerswhohavethepotentialtosteertheindustryaheadtoan
evenhigherlevel.TheUNbackedMedicinesPatentPoolhassignedsixsublicenceswithAurobindo,
Cipla,Desano,Emcure,HeteroLabsandLaurusLabs,allowingthemtomakegenericantiAIDS
medicineTenofovirAlafenamide(TAF)for112developingcountries.MarketSize:AccordingtoIndia
Ratings,aFitchcompany,theIndianpharmaceuticalindustryisestimatedtogrowat20percent
compoundannualgrowthrate(CAGR)overthenextfiveyears.TheIndianpharmaindustry,whichis
expectedtogrowover15percentperannumbetween2015and2020,willoutperformtheglobalpharma
industry,
21.21.21whichissettogrowatanannualrateof5percentbetweenthesameperiod1.Presentlythemarket
sizeofthepharmaceuticalindustryinIndiastandsatUS$20billion.AsonMarch2014,Indian
pharmaceuticalmanufacturingfacilitiesregisteredwiththeUSFoodandDrugAdministration(FDA)
stoodat523,highestforanycountryoutsidetheUS.Indianpharmaceuticalfirmsareeyeingacquisition
opportunitiesinJapan'sgrowinggenericmarketastheJapanesegovernmentaimstoincreasethe
penetrationofgenericdrugsto60percentofthemarketby2017from30percentin2014,duetoageing
populationandrisinghealthcosts.India'sbiotechnologyindustrycomprisingbiopharmaceuticals,bio
services,bioagriculture,bioindustryandbioinformaticsisexpectedgrowatanaveragegrowthrateof
around30percentayearandreachUS$100billionby2025.Biopharma,comprisingvaccines,
therapeuticsanddiagnostics,isthelargestsubsectorcontributingnearly62percentofthetotalrevenues
atRs12,600crore(US$1.9billion).Investments:TheUnionCabinethasgivenitsnodforthe
amendmentoftheexistingForeignDirectInvestment(FDI)policyinthepharmaceuticalsectorinorder
toallowFDIupto100percentundertheautomaticrouteformanufacturingofmedicaldevicessubjectto
certainconditions.ThedrugsandpharmaceuticalssectorattractedcumulativeFDIinflowsworthUS$
13.32billionbetweenApril2000andSeptember2015,accordingtodatareleasedbytheDepartmentof
IndustrialPolicyandPromotion(DIPP).SomeofthemajorinvestmentsintheIndianpharmaceutical
sectorareasfollows:CiplaannouncedtheacquisitionoftwoUSbasedcompanies,InvaGen
PharmaceuticalsInc.andExelanPharmaceuticalsInc.,forUS$550million.
22.22.22GlaxosmithklinePharmaceuticalshasstartedworkonitslargestgreenfieldtabletmanufacturing
facilityinVemgalinKolardistrict,Karnataka,withanestimatedinvestmentofRs1,000crore(US$150
million).LupinhasacquiredtwoUSbasedpharmaceuticalfirms,GavisPharmaceuticalsLLCandNovel
LaboratoriesInc,inadealworthatUS$880million.CadilaHealthcareLtdannouncedthelaunchofa
biosimilarforAdalimumabforrheumatoidarthritisandotherautoimmunedisorders.Thedrugwillbe
marketedunderthebrandnameExemptiaatonefifthofthepriceforthebrandedversionHumira.
Cadilasbiosimilaristhefirstinclassandanexactreplicaoftheoriginalintermsofsafety,purityand
potencyoftheproduct,claimsthecompany.TorrentPharmaceuticalsenteredintoanexclusivelicensing
agreementwithRelianceLifeSciencesformarketingthreebiosimilarsinIndiaRituximab,
AdalimumabandCetuximab.GovernmentInitiatives:TheAddendum2015oftheIndianPharmacopoeia
(IP)2014,publishedbytheIndianPharmacopoeiaCommission(IPC)onbehalfoftheMinistryofHealth
&FamilyWelfare,isexpectedtoplayasignificantroleinenhancingthequalityofmedicinesthatwould
inturnpromotepublichealthandacceleratethegrowthanddevelopmentofpharmaceuticalsector.The
GovernmentofIndiaunveiled'PharmaVision2020'aimedatmakingIndiaagloballeaderinendtoend
drugmanufacture.Approvaltimefornewfacilitieshasbeenreducedtoboostinvestments.Further,the
governmentintroducedmechanismssuchastheDrugPriceControlOrderandtheNational
PharmaceuticalPricingAuthoritytodealwiththeissueofaffordabilityandavailabilityofmedicines.
RomaniaiskeentotieupwiththeIndianpharmaceuticalcompaniesforresearchanddevelopnewdrugs.
"RomaniawillcollaboratewithIndiaforlicenseacquisitiontosaleIndia'sdrugsinEurope,"saidMr.
MarioCrute,CounsellorinMinistryofhealth
23.23.23inRomaniaatGCCI.ThecountrywilltieupwiththeIndianpharmaceuticalcompaniesfor
researchanddevelopnewdrugs.Someofthemajorinitiativestakenbythegovernmenttopromotethe
pharmaceuticalsectorinIndiaareasfollows:CHAPTER:2INTRODUCTIONTOCADILA
HEALTHCARELIMITED:
24.24.24History:1995TheCompanywasincorporatedasCadilaHealthcarePrivateLtd.onMay15,
underthecompanyact,1956andsubsequentlytheCompanywasConvertedintoapubliccompanyand
thenrenamedasCadilaHealthcareLtd.effectivefromJuly17,1996.ThenameCadilashallbeused
onlyforCadilaHealthcareLimited(ZydusCadila),CadilaPharmaceuticalsLimited(CPL)andCadila
LaboratoriesLimited(CLL).TheCompanyisflagshipcompanyofZydusCadilaGroup.The
Company'soperationsincludepharmaceuticals(humanformulations,veterinaryformulationsandbulk
drugs)diagnostics,herbalproducts,skincareproductsandotherOTCproducts.TheCompanyhas6
subsidiariesIndonHealthcareLtd.,ZydusPharmaceuticalsLtd.,ZudusAqrovetLtd.,ZoomProperties
Pvt.Ltd.,ZydusInternationalPvt.Ltd.,IrelandandZydusHealthcareS.A.(Pvt)Ltd.,SouthAfrica.
ZydusCadilasignedanagreementwithAndaBiologicals,France,forMarketinganddistributionof
diagnostickits.Andatoappointamax.oftwodistributorsinIndia.1996ZydusCadilasignedan
agreementwithCenteonL.L.C.,USAandCenteonPharamaGMBH,GermanyforExclusiverightstosell
anddistributeplasmaproductsinIndiaandNepal.InMay,ZydusCadilasignedanagreementwithActa
ServicesSrl.,
25.25.25RomefordistributionofDiagnosticinstrumentActo1Analysermanu.ByActa.InJune,Zydus
CadilasignedanagreementwithChinaResourcesGulinPharma,Works,China,forexclusivesupplyof
ArtesunateGranulestoZydusCadila.InJuly,ZydusCadilasignedanagreementwithShimizu
ChemicalCorporation,Japan,forMarketingofspecifiedproductsbyZydusCadilainIndia.1997A
SchemeofArrangementandAmalgamationwassanctionedbyhonorableHighCourtofGujaratbyorder
passedonMay2issuedonAugust16th.ZydusCadilawouldissued1,48,423fullypaidupequityshares
ofRs10/eachtotheshareholdersofPatelGroupinexchangefortheassetstransferredtothemof
Transferorcompanies.ZydusCadilahasalsotiedupwithRegionalResearchLaboratoryJammu,to
developEnzymaticResolutionforParoxetineHCLandsomeotherEnzymaticproducts.1998In
February,ZydusCadilasignedanagreementwithApotexSAPty.Ltd.formanufacturerofAmoxycillin,
Ampicillin,Cotrimoxazole,paracetamol.ZydusCadilahasalsoenteredintoajointventurewith
KoreaGreenCrossCorporation,Korea,tomanufactureandmarketrecombinantHepatitisBvaccinein
India.
26.26.261999InApril,ZydusCadilasignedanagreementwithEthicalHoldingsPlc,BetaPharma,and
EthicalPharmaSouthAmericaS.A.forKnowhowLicenceAgreementtomanufacture,marketingand
selltransdermalpharmaceuticalformulations.InSeptember,ZydusCadilasignedanagreementwith
CherryValleyFarmsLtd.,UKforsupplyofvaccineeggs.ZydusCadilahasenteredintoa50:50joint
venturewithBykGuldenofGermany,arenowned,researchorientedPharmacompanyofGermanyand
theworldwidepatentholderofthenovelprotonpumpinhibitor,Pantoprazole.Duringtheyearunder
report,theCompanyhadissued2,00,00012%CumulativeRedeemablePreferencesharesofRs.100/
eachfullypaidtothemembersoftheCompany,whichareredeemableatparon1stJuly,2001.During
theyearunderreport,IndonHealthcareLimitedandZydusAqrovetLimited,havebecomewhollyowned
subsidiariesofthecompany.Duringtheyearunderreport,theCompanyhasundertakentosetupanew
projectformanufacturingthebulkdrugLosartanatAnkleshwar.TheCompanylaidthefoundationfora
newfeedsupplementplant,atVatwa.Thefeedsupplementforpoultryandcattlehasbeendevelopedby
TieCompanysR&Dbiotechdepartment.TheCompanyhassetupajointventurecompanyto
manufacturethebreakthroughmoleculePantoprazole.TheCompanyisalsoundertaking
27.27.27discoveryresearchprojectswithBykGuldenasapanoftheJointVenture.TheCompanyhas
enteredintoatechnicalcummarketingtieupwiththeSwissSerumandVaccineInstitute,Berne,
InstitutetolauncharangeofvaccinesinIndia.TheCompanyhasenteredintoajointventurewiththe
Haffkineinstitutetoundertakeresearchinthefieldofhumanvaccineandequinesera.AnewStateof
ArtResearch&DevelopmentcentrebeingsetupwiththecapitalcostofapproximatelyRs.25.00crores
intheVillage:Moraiya.Taluka:Sanand,Dist.:Ahmedabad.DuringtheyearunderreporttheCompany
haslaunchedseveralnewproductsinthemarket:VacTyph,HBVac,Xylodac,Losartan,Losacarwasthe
firsttobelaunchedinIndia&MatergamP.TheCompanyhassetupmanufacturingpremisesto
manufacturethefeedsupplementImprovalatGIDCVatwa.ShirPranlalBhogilalwasappointedasan
additionalDirectoroftheCompanywitheffectfrom15thDecember,1998pursuanttoSection260ofthe
CompaniesAct,1956.ShriMukeshM.PatelDirectoroftheCompanyretiresbyrotationandheis
eligibleforreappointment.AnewwelfarepolicyhasbeenintroducedforemployeesoftheCompany.
2000TheCompanyissettingupwhollyownedsubsidiariesabroadand
28.28.28planstoacquireoverseascompaniestomarketproducts.TheCompanyhasenteredintoLicense
AgreementforphasedmanufactureandtechnicalknowhowtransferwithSwissSerumandVaccine
Institute,SwitzerlandforthemanufactureofPurifiedCuckEmbroyVaccine.TheCountry'sfifthlargest
pharmaceuticalcompany,isconsideringofferingstockstoitsemployeesthroughanemployees'stock
optionscheme.TheCompanyhaslaunchedtwodrugsforthetreatmentofhumanimmunodeficiency
virus.TheBulkDrugsatAnkleshwarinGujarathasanISO9002certificationforthemanufactureand
supplyofanumberofmolecules.PublicIssueof1,48,86,000No.ofEquityshares(Issue)ofRs5/each
issuedforcashatapremiumofRs[]pershareaggregatingRsmillion.TheIssueincludesaBookBuilt
Portionof1,33,97,400No.ofequitysharesandaFixedpriceportionof14,88,600No.ofEquityShares
AuthorisedsharecapitaloftheCompanyisRs500milliondividedinto9,00,00,000No.ofEquityShares
ofRs5/eachand5,00,000PreferenceSharesofRs100/each.Duringtheyearunderreport,the
CompanyhasbeenrecogniseasaPrestigiousUnitandgrantedadhoceligibilityforSalesTaxdeferment
bytheIndustriesCommissionerate,Gandhinagar,underNewIncentivePolicyCapitalInvestment
IncentivetoPremier/Prestigiousunitscheme19952000.
29.29.29DuringtheyearunderreportZydusPharmaceuticalsLimitedandZoomPropertiesLimitedhave
becomeWhollyOwnedSubsidiariesoftheCompany.TheCompanyhasformedaJVCompanyinthe
nameofZydusByHealthcareLimitedwithanequalparticipationincollaborationwithByGulden
LombergChemischeFabrikGmbH,Germany,formanufacturingofBulkDrugs,FormulationsandR&
D.TheCompanyhasalsoformedaJVCompanyinthenameofSarabhaiZydusAnimalHealthLtd.in
collaborationwithAmbalalSarabhaiEnterprisesLtd.,Baroda,withanequalparticipationtocarryonthe
businessofanimalhealthsegments.Thecompanyhasalsoenteredintoatechnicalcollaborationwith
EthicalHoldingsofU.K.tomanufactureandmarkettransdermalpatchesinIndia.TheCompany
launchedblockbustermoleculesAtorvastatin(Atorva),Lamivudine(Lamidac100)andCelecoxib
(Zycel),Meloxicam(MelOD)andCarvedilol(Carvil)duringtheyear.Thecompanywasthefirstto
launchtheantihypertensivedrugLosartaninIndia.Currentlyranked6thlargestpharmaceutical
companyinIndia,CadilaHealthcareisoneofthefastestgrowingpharmaceuticalcompaniesinthe
country.IthasalsoenteredintoatechnicalcollaborationwithEthicalHoldingsoftheUKto
manufactureandmarkettransdermalpatchesinIndia.
30.30.30ZydusCadillahasalsoenteredintoatechnicalcollaborationwithEthicalHoldingsoftheUKto
manufactureandmarkettransdermalpatchesinIndia.CadliaHealthcare(CHL)hassignedanMoUwith
Rs54croreReconLimited,wherebyitwillacquireallthe8formulationbrandsoftheBangalorebased
comapny,aswellasitsdistributionnetwork.Thenewcompany,`ReconHealthcareLtd'isnowa
subsidiaryofZydusCadilawithZydusholding90percentstake.CadilaHealthcareLtdissettingup
whollyownedsubsidiariesabroadandplanstoacquireoverseascompaniestomarketproducts.Cadila
alsolaunchedzidovudine,whichisimportedandmarketedunderthebrandnameZydowin.Zidovudine,
commonlycalledAZT,isanAIDSretardantdrugmadebyGlaxoWellcome.ZydusAlidac,the
marketingarmofCadilaHealthcareLtd.,haslaunchedwww.penegra.org.
31.31.31TheAhmedabadbasedCadoilaHealthcarehascompletedthephaseIIIclinicaltrialsandthe
bioequivalencestudyofthewonderdrugsildenafilcitrate(Viagra).2001CadilaHealthcarehassigneda
threeyearcollaborativeR&DagreementwithDanishbiotechcompanyPanthecointhefieldofanti
bacterials.Theneurosciencesdivisionlaunchedbythecompanyhasintroducedanxiolyticparoxetine
forthefirsttimeinthecountry.CadilaHealthcareLtdhasposteda14.75percentincreaseinnetprofit
atRs21.86croreforthequarterendedSeptember30,2001.YEAREVENTS1995TheCompanywas
incorporatedasCadilaHealthcarePrivateLtd.onMay15,underthecompanyact,1956andsubsequently
theCompanywasconvertedintoapubliccompanyandthenrenamedasCadilaHealthcareLtd.effective
fromJuy17,1996.ThenameCadilashallbeusedonlyforCadilaHealthcareLimited(ZydusCadila),
CadilaPharmaceuticalsLimited(CPL)andCadilaLaboratoriesLimited(CLL).TheCompanyis
flagshipcompanyofZydusCadilaGroup.TheCompany'soperationsincludepharmaceuticals(human
formulations,veterinaryformulationsandbulkdrugs)diagnostics,herbalproducts,skincareproducts
andotherOTCproducts.
32.32.32TheCompanyhas6subsidiariesIndonHealthcareLtd.,ZydusPharmaceuticalsLtd.,Zudus
AqrovetLtd.,ZoomPropertiesPvt.Ltd.,ZydusInternationalPvt.Ltd.,IrelandandZydusHealthcare
S.A.(Pvt)Ltd.,SouthAfrica.ZydusCadilasignedanagreementwithAndaBiologicals,France,for
Marketinganddistributionofdiagnostickits.Andatoappointamax.oftwodistributorsinIndia.Cadila
HealthcareLtdhasinformedBSEthatatthemeetingoftheBoardofDirectorsofthecompanyheldon
August20,2002ithasbeendecidedtoissue/allotSecuredRedeemableNonConvertibleDebenturesfor
anaggregatefacevalueofRs700millionbyprivateplacementbasisataninterestrateof8.40%p.a.
2003Mr.UpenShahhasbeendesignatedastheCompanySecretaryandComplianceOfficerofCadila
HealthcareLtd.ZydusCadila,theahmedabadbasedhealthcarehasbaggedglobalmarketingrightsofan
antirabiesvaccineofvaxirabaswisscompanyBernaBiotech.CadilaHealthcarereceivesMumbaiHigh
courtapprovalfortheschemeofamalgamationwithGermanRemediesLtdandZoomPropertiesLtd.
33.33.33CadilaHealthcareLtdhasacquiredUSbaseAlpharmaInc'sFrenchSubsidiaryAlpharmaSAS
FranceforaconsiderationofEuro5.5million.Mr.H.K.Bilpodiwala,Mr.H.DhanarajgirandMr.A.S
Diwanjihavebeenappointedastheadditionaldirectorsontheboardofthecompany.ZydusCadila
HealthcareLtdhassignedapactwithScheringAG,GermanywhichallowstheIndianPharmaceuticals
majortomarketSchering'spatentedproductsinIndia.DupharInterfran,asubsidiaryofFermenta
BiotechLtdsignedanagreementwithCadilaLtdforthesaleofFBL'sglobalpatentsofChiralBuilding
blocksandprocessteechnologyforthemanufactureofLisinoprilandBenazepril.Zydusforges
marketingpactwithSchering2004ZydusCadilasetsupZydusPharmaceuticalsUSA,IncZydus
CadilainksstrategicpactwithBoehringerIngelheimZyndusAltanaHealthcaretheJVbetweenAltana
PharmaAGandZyndusCadila,hasbeenaccreditedwiththeISO90012000certificate.2005
34.34.34
35.35.35ZydusCadilareceivesapprovalfromtheUSFDAtomarkettheantihypertensivedrug,Atenolol,
andanantiinfectivedrug,Clindamycinon31Janand1Feb.ZydusCadilaunveils'Pitavastatin'to
controlcholesterolonFebruary21,2005CadilatiesupwithTycounittosellgenericdrugsinUS
LaunchesNuPatchIndia'sfirstindigenouslymanufacturedDiclofenactransdermalpatchforpainrelief.
CadilaHealthcare&MaynesignsagreementtosetupJVCtomanufacturespecialtyoncologyproducts
CadilaHealthcareGermanRemedieslaunchesFludaraOralforLymphocyticLeukaemiaZydusCadila
receivestentativeapprovalforDivalproexSodiumDRTabletsfromUSFDACadilaHealthcarereceives
approvalforPromethazineTabletsfromUSFDACadilaHealthcareentersintoJVwithBSVL2006
ZydusCadilaforgesalliancewithFrenchfirmZydusCadilareceivesUSFDAapprovalforSimvastatin
Tablets
36.36.36ZydusCadilatoacquireNutraliteIndia'slargestsellingcholesterolfreemargarineSarabhai
ZydustorolloutimmunodiagnosticskitsCadilaHealthcarehasgiventheBonusintheRatioof1:1
2007CadilaHealthcareLtdonApril19,2007hasannouncedtheacquisitionofNipponUniversal
PharmaceuticalLtd.CadilaHealthcareLtdhasannouncedthatitssecondoverseasacquisitionthisyear,
theCompanysignedanagreementtoacquire100%stakeinQuimicaeFarmaceuticaNikkhodoBrasil
Ltda.ZydusCadilaacquiresNipponUniversal,strengthensitspresenceinJapanZydusCadila,thefirst
tolaunchrevolutionaryantiobesitydrugSlimonainIndiaZydusCadilaacquiresBrazilianCompany
Nikkho2008ZylusCadila,KaroBiotojointlydevelopnewdrugsZydusCadila&KaroBioofSweden
signresearchagreementforanoveldrugtotreatinflammatorydiseasesZydusCadilaacquiresEtna
Biotech,asubsidiaryofCrucellN.V.
37.37.37
38.38.38ZydusscoreswithfirstdaylaunchofVenlafaxineHydrochlorideintheUS2009ZydusCadila
announcesresearchcollaborationtodiscoveranddevelopnewcardiovascularmedicinesZydusResearch
CentreReceivesAAALACAccreditation2010CHLannouncesBonusSharesintheratioof1:2India
unveileditsfirstindigenousH1N1vaccine,whichwasdevelopedbydrugfirmCadilaHealthcareandthis
vaccinewillprovideimmunityfromtheH1N1virusstrainforoneyear.2011Companyhassignedan
AgreementwithBayerHealthCaretosetup50:50JointVentureCompanyinthenameofBayerZydus
PharmaCadilagetsUSFDAnodfordiabetesdrugtrialCadilaHealthacquiresBremerPharmafrom
ICICIVenture2012CadilaHealthcareentersintoasettlementandlicenseagreementwithSomaxonfor
Silenor
39.39.39CadilaHealthcaregetsUSFDAnodforAripiprazoleorallydisintegratingtablets2013Zydus
CadilareceivestentativeapprovalforDoxepinHcltabletsZydusandIDRIsignagreementforthe
developmentofIDRIsVaccineCandidateforVisceralLeishmaniasis(KalaAzar)ZydusandPierisSign
BroadCoDevelopmentAllianceforNovelAnticalinTherapeuticsZydusPharmaceuticals(USA)Inc
agreementwithWarnerChilcottCompanyLLC2014Zydusandgileadenterintoagenericlicensing
agreementtomanufacturebreakthroughtreatmentforhepatitiscZyduslaunchesworldsfirstbiosimilar
ofAdalimumabCadilaHealthcarLipaglynIndia'sfirstNCElaunchedinthemarketZydusandIDRI
signagreementforthedevelopmentofIDRI'sZydusandPierisSignBroadCoDevelopmentAlliance
forNovel2015
40.40.40ZydusCadilahascompletedthesingleascendingdose(SAD)rangeZyduslaunchesSoviHep
thebreakthroughtherapyforHepatitisCinalliancewithGileadSciencesCadilaHealthcareLtdhas
purchasedtheremaining50percentsharesofitsjointventurefirm,ZydusBSVPharmaPvtLtd(Zydus
BSV)CadilaHealthcareLtdhasreceivedthefinalapprovalfromUSFDAforPyridostigmineBromide
TabletsCadilaHealthcareLtdhasreceivedthemarketauthorisationfromtheUnitedStatesFoodand
DrugAdministrationtomarketdrugforthetreatmentofchronicpainorcancerrelatedpain.Cadila
HealthcareLtdhasreceivedfinalapprovalfromtheUSFDAtomarketAmilorideHydrochlorideTablets
USP,5mgZyduslaunches'Tenglyn',themostaffordablegliptinfordiabeticsinIndia
41.41.412.2CompanyProfile:Founder:LateMr.RamanbhaiB.Patel.KeyExecutives:Chairmen&
ManagingDirector:PankajR.PatelDeputyManagingDirector:SharvilPPatelDirector:MukeshM.
PatelDirector:HDhanrajgirBordofDirectores:Chairmen&ManagingDirector:PankajRPatel
DeputyManagingDirector:SharvilPPatelDirector:MukeshM.PatelDirector:HDhanrajgirAS
DiwanjiCompanySecretory:UpenHShahDirector:NitinRaojibhaiDesaiBankers:BankofBaroda
BNPParibasCitibankNACreditAgricoleCor&InvExportImportBkofIndiaHDFCBankLtd
ICICIBankLtd
42.42.42IDBIBankStandardCharteredBankStatBankofIndiaAuditors:MukeshMShah&Co.
RegisteredandCorporateOffices:RegisterAddress:ZydusTowerSateliteCrossRoad,,Sarkhej
GandhinagarHighwayAhmedabadGujarat380015Tel:07926868100Fax:07926862365,079
26862366Email:investor.grievance@zyduscadila.comWebsite:http://www.zyduscadila.comGroup:
ZydusCadillaGroupRegistrarsShareproServices(India)Pvt.Ltd.13AB,SamhitaWarehousing
Complex,2ndFloor,SakinakaTelephoneExchangeLane,OffAndheriKurlaRoad,Mumbai400072
MaharashtraMisson:ZydusCadilaisDedicatetolife.InallitsdimensionsOurWorldisshapedby
apassionforinnovationcommitmenttopartnersandconcernforpeopleinanefforttocreatehealthier
communities,globally.
43.43.43Wewilldiscover,developandsuccessfullymarketpharmaceuticalproductstoprevent,diagnose,
alleviateandcurediseases.Weshallprovidetotalcustomersatisfactionandachieveleadershipinchosen
markets,productsandservicesacrosstheglobe,throughexcellenceintechnology,basedonworldclass
researchanddevelopment.Weareresponsibletothesociety.Weshallbegoodcorporatecitizensandwill
bedrivenbyhighethicalstandardsinourpractices.Vision:Ourvisionistobealeading
pharmaceuticalcompanyinIndiaandtobecomeasignificantglobalplayerbyprovidinghighquality,
affordableandinnovativesolutionsinmedicineandtreatment.
44.44.44
45.45.45Logo:
46.46.46StockPerformance:LastoneyearstockperformanceofCadilaHealthcareLimitedand
comparisonwithSunPharmaStockperformanceCadilaHealthcareLimitedofLastyearandcompareit
withSunPharmaCadilaHealthcarehasgivecompletelyupsideofstockperformanceinlastyear.
47.47.47PharmaceuticalCompanyrankwise:AsperformancewiseCadilaHealthcareLimitedison5th
rankfromtheothercompetitor.PeerCompetition:CompanyNameNetSales(Rs.Cr.)NetProfit(Rs.
Cr.)TotalAssets(Rs.Cr.)Cipal10,131.781,181.0912,251.91DrReddyLabs10,011.001,679.40
13,658.70Lupin9,752.472,397.358,875.88CadilaHealthCare5,284.401,271.105,741.30Torrent
Pharma3,475.49623.184,640.62
48.48.48AboveChartshowingCadilaHealthcareisstableincompetitiontoothercompetitorandnetprofit
isalsostablethanotherbyconsideringnetassetsandnetsales.Itissignofgoodandefficient
managementofCadilaHealthcareLimited.Dividend0200040006000800010000120001400016000
CipalaDrReddyLabsLupinCadilaHealthCareTorrentPharma
49.49.492.4ProductPlants:FromNinePharmaceuticalsproductioninIndiaaswellasaZydusCadila
developandmanufacturealargerangeofpharmaceuticalsaswellasdiagnosis,herbalproducts,skin
careproductsandotherOTCproducts.Thecompanymakesactivepharmaceuticalsingredientsatthree
sitesinIndia:AnkleshwarPlantsZydusCadilasplantcomplexatAnkleshwarinBharuchDistrictof
Gujarat,hasbeenproducingdrugmaterialsince1972.Therearearound12plantsinthecomplex,which
isISO9002andISO14001certifiedapprovedbytheU.S.Foodanddrugadministration(FDA).Total
plantcapacityinAnkleshwarisaround180milliontones.VadodaraPlantsZydusCadilasPlantat
Dhabhasa,inVadodaraDistrictsPadrataluka(intheeasternpartofthedistrict)inGujarat,was
commissionedin1997byacompanycalledBanyanChemicals,andacquiredbyZydusCadilain2002.
Theplanthasa90milliontonescapacity.itisapprovedbytheU.S.FDAandisalsoapprovedtoWorld
HealthOrganization(WHO)goodmanufacturingpractice(GMP)guidelines.PatalgangaplantsZydus
CadilaacquiredanAPIplantatPatalgangainMaharashtraState,70kmfromMumbai,about859km
fromNagpur,inthe2001GermanRemediesdeal.thisplantoperatestoWHOGMPstandards.Others
NaviMumbaiplantsThisoperationin,NaviMumbaiinMaharashtra,isa50/50jointventurewith
NycomedPharmaofUS,makesintermediatesofthedrugpantoprazole.MumbaiBusinessOfficeThis
officehousesBusinessunitIndia2orGermanRemedies.ThisofficebelongtoGermanRemedies(I)
Ltd.ThisCompanywasacquiredin2000.ThiswasthebiggesttakeoverintheHistoryofIndian
PharmacologicalIndustry.GermanisnowaRegisteredTrademarkofCadilaHealthcareLtd.
50.50.50GoaPlantsTheCompanysplantsatPondainthesouthernIndianstateofGoadoformulation
workaswellasmanufactureoncologydrugsandaherballaxativebrandedAgiolaxbasedonPsyllium
seeds.ThisplantbelongedtoGermanRemedies(I)Ltd.tooandnowarepartofBusinessUnit
ManufacturingoftheCompany.BaddiPlantIn2004Zyduscommissionedatformulationplantat
Baddi,inHimachalPradeshstateofnorthernIndia.TheBaddiplantmakessolidoralpharmaceuticals.
SikkimPlantIn2008ZyduscommissionedatformulationplantatMajhitar,inSikkimstateofeastern
India.TheSikkimplantmakessolidoralpharmaceuticalsandhormones.Thisplantnowcatersalmostall
DomesticFormulationneedsofthecompany.InGujarat,IndiaZydusPlant(Changodar)ZydusCadila
PlantatChangodar,20kilometersfromAhmedabadonthecity'soutskirts,manufacturesfinechemicals.
ZydusiscurrentconstructingafacilityatChangodartomakevaccinesforhepatitisBandrabies.Zydus
ResearchCentre(ZRC)(Changodar)Zydus'sNCE,NME,MBEresearchfacilityisthelargestofitskind
inIndian,withmorethan500postgraduatescientistsitisworkingtowardstheprosperousfutureofthe
companyandIndianPharmaceuticalIndustry.ZydusHospiraOncologyPvt.Ltd.(SEZ,Matoda)
Zydus'sJVventurewithHospiraInc.ofUSmanufacturesAntiCancerInjectablesatthisplant.Thisplant
isalsoU.S.FDAapprovedandsituatedinSpecialEconomyZone,about25kilometersfromAhmedabad.
ThisSEZisdevelopedbyZydusInfrastructurePvt.Ltd.,anothergroupcompanyof
51.51.51Zydus.ZydusBSV(SEZ,Matoda)Zydus'sJVwithBharatSerumandVaccineLtd.'sPlant
isanotherfacilitylocatedinthesameSEZ.ZydusTechnologiesLtd.(SEZ,Matoda)Zydus'sJVwith
NoveltechInc.PlantisanotherworldclassfacilitylocatedinthesameSEZforNovelDrugDelivery
Systems.NutraliteManufacturingFascility(Changodar)Zydusmanufacturesandsells,Nutralitea
health,buttersubstitute.ThisplantcomesunderthebannerofZydusWellnessLtd.Thiscompanyalso
manufacturesandsales,popularbrandsasSugraFree,Everyouth,EveryouthMen'zandD'lite.Corporate
control:ZydusCadila'smajorshareholderremainsthePatelfamily.PankajPatel(born1951),sonofthe
founder,isCEO.In2004PankajPatelwasincludedbyForbesmagazineinitsannualListofIndia's
richestpeople.ForbesestimatedPatel'snetworthatUS$510m,makinghimIndia's26thrichestperson.[2]
Howeverin2005PateldroppedofftheForbeslistduetoafallinthestockpriceofCadilaHealthcare.
Moreover,thereisateamofnineseniorlevelexecutives,knownastheExecutiveCommittee,whoare
headsofdifferentoperationslookaftertheoverallmanagementprocesses.Noneofthemembersexcept
PankajPatelareontheBoardofDirectors.TheIndianpharmaceuticalindustryhasbecomethethird
largestproducerintheworldandispoisedtogrowintoanindustryof$20billionin2015fromthe
currentturnoverof$12billion.
52.52.522.5Products:Tablets:TabletsBulkDrugsInjectionsCapsulesDryPowderInjectiblesLiquids
ProcessingChargesOintmentsDrySyrup,Powder&InjectiblesOtherFiscalBenefitsSuppositories
OthersCosmetics
53.53.53CHAPTER:3RESEARCHANDMETHODOLOGY
54.54.543.1RESEARCHOBJECTIVE:Objectiveofresearchistoanalysesfinancialpositionand
performanceofCadilaHealthcareLimitedbyAnalyzingworkingcapitalmanagement.3.2SCOPEOF
RESEARCH:Ihavestudiedworkingcapitalmanagement,inventorymanagementandcashmanagement
oftheCadilaHealthcareLimitedbyAnalyzingtheirprofitandlossaccountandbalancesheetsforthe
yearlastfouryear.3.3DATATYPE:SecondaryData3.4DATASOURCES:Internet,ReferenceBooks,
AnnualReports,AuditReports3.5RESEARCHDESIGN:ExploratoryResearch.3.6TOOLSUSED
FORANALYSIS:WorkingcapitalrequirementAnalysisFinancialRatiosLiquidityposition
55.55.553.7LITERATUREREVIEW:Theideaofthetopicoftheresearchwasdrawnfromthevarious
mediumswhichIgonethroughareasfollows:Ihavegonethroughthevariousbooksproviding
guidanceregardingworkingcapitalandinventorymanagementlikePandeyI.M.,Khan&Jainand
PrasannaChandra.ThevariousprojectreportswhichIhaveundergonenamelyworkingcapitaland
inventorymanagementofAmul,FinancialanalysisofHetroPharmaceuticals,Financialanalysisof
RanbaxylabandFinanacialanalysisofVRNCeramicltd.3.8LIMITATIONSFORTHESTUDY:No
properresponsefromthetradeassociations.PrimarydataislimitedItisnotpossibletogetcentpercent
correctinformation.Theresearchwasmadeaccordingtotheinformationavailablefromrelated
departmentsandthroughannualreportspublished.
56.56.56CHAPTER:4THEORETICALFRAMEWORKOFWORKINGCAPITALMANAGEMENT
57.57.574.1WorkingCapitalManagement:Workingcapitalreferstothatpartofthefirmscapitalwhichis
requiredforfinancingshorttermorcurrentassetssuchascash,marketablesecurities,debtors&
inventories.Funds,thus,investedincurrentasstskeeprevolvingfastandarebeingconstantlyconverted
intocashandthiscashflowsoutagaininexchangeforothercurrentassets.Hence,itisalsoknownas
revolvingorcirculatingcapitalorshorttermcapital.Workingcapitalmanagementisconcernedwiththe
problemsariseinattemptingtomanagethecurrentassets,thecurrentliabilitiesandtheinterrelationship
thatexistbetweenthem.Thetermcurrentassetsreferstothoseassetswhichinordinarycourseof
businesscanbe,or,willbe,turnedintocashwithinoneyearwithoutundergoingadiminutioninvalue
andwithoutdisruptingtheoperationofthefirm.Themajorcurrentassetsarecash,marketablesecurities,
accountreceivableandinventory.Currentliabilitieswarethoseliabilitieswhichintendedattheir
inceptiontobepaidinordinarycourseofbusiness,withinayear,outofthecurrentassetsorearningsof
theconcern.Thebasiccurrentliabilitiesareaccountpayable,billpayable,bankoverdraft,and
outstandingexpenses.Thegoalofworkingcapitalmanagementistomanagethefirmscurrentassetsand
currentliabilitiesinsuchwaythatthesatisfactorylevelofworkingcapitalismentioned.
58.58.58Definition:AccordingtoPark&GladsonTheexcessofcurrentassetsofabusiness(i.e.cash,
accountsreceivables,inventories)overcurrentitemsownedtoemployeesandothers(suchassalaries&
wagespayable,accountspayable,taxesownedtoGovernment).Capitalrequiredforabusinesscanbe
classifiedundertwomaincategoriesvia,1)FixedCapital2)WorkingCapitalEverybusinessneedsfunds
fortwopurposesforitsestablishmentandtocarryoutitsdaytodayoperations.Longtermsfundsare
requiredtocreateproductionfacilitiesthroughpurchaseoffixedassetssuchasp&m,land,building,
furniture,etc.Investmentsintheseassetsrepresentthatpartoffirmscapitalwhichisblockedon
permanentorfixedbasisandiscalledfixedcapital.Fundsarealsoneededforshorttermpurposesforthe
purchaseofrawmaterial,paymentofwagesandotherdaytodayexpensesetc.
59.59.594.2CONCEPTOFWORKINGCAPITAL:Therearetwoconceptsofworkingcapital:1.Gross
workingcapital2.NetworkingcapitalThegrossworkingcapitalisthecapitalinvestedinthetotal
currentassetsoftheenterprisescurrentassetsarethoseassetswhichcanconvertintocashwithinashort
periodnormallyoneaccountingyear.CONSTITUENTSOFCURRENTASSETS:1)Cashinhandand
cashatbank2)Billsreceivables3)Sundrydebtors4)Shorttermloansandadvances5)Inventoriesof
stockas:a.Rawmaterialb.Workinprocessc.Storesandsparesd.Finishedgoods6)Temporary
investmentofsurplusfunds.7)Prepaidexpenses8)Accruedincomes.9)Marketablesecurities.
60.60.60Inanarrowsense,thetermworkingcapitalreferstothenetworking.Networkingcapitalisthe
excessofcurrentassetsovercurrentliability,or,say:NETWORKINGCAPITAL=CURRENTASSETS
CURRENTLIABILITIES.Networkingcapitalcanbepositiveornegative.Whenthecurrentassets
exceedsthecurrentliabilitiesaremorethanthecurrentassets.Currentliabilitiesarethoseliabilities,
whichareintendedtobepaidintheordinarycourseofbusinesswithinashortperiodofnormallyone
accountingyearoutofthecurrentasstsortheincomebusiness.CONSTITUENTSOFCURRENT
LIABILITIES:1.Accruedoroutstandingexpenses.2.Shorttermloans,advancesanddeposits.3.
Dividendspayable.4.Bankoverdraft.5.Provisionfortaxation,ifitdoesnotamt.toapp.ofprofit.6.
Billspayable.7.Sundrycreditors.
61.61.4.3CLASWorkingcaOnOnOnthebasinetworkingAmountoCapTemporaryPermanentTime
TimeSSIFICATapitalmaybthebasisothebasisoisofconcepgcapital.OofWorkingpitalcapital
CapitalIONOFWbeclassifiedofConceptoftimeptworkingcnthebasisPermanTemporgl
WORKINGdintwowaytcapitalcanoftime,wonentorfixedraryorvariaGCAPITAys:beclassifie
orkingcapitadworkingcableworkinAL:edasgrosswalmaybeccapital.ngcapitalworkingcap
classifiedaspitaland:61
62.62.62PERMANENTFIXEDWORKINGCAPITAL:Permanentorfixedworkingcapitalisminimum
amountwhichisrequiredtoensureeffectiveutilizationoffixedfacilitiesandformaintainingthe
circulationofcurrentassets.Everyfirmhastomaintainaminimumlevelofrawmaterial,working
process,finishedgoodsandcashbalance.Thisminimumlevelofcurrentassetsiscalledpermanentor
fixedworkingcapitalasthispartofworkingispermanentlyblockedincurrentassets.TEMPORARYOR
VARIABLEWORKINGCAPITAL:Temporaryorvariableworkingcapitalistheamountofworking
capitalwhichisrequiredtomeettheseasonaldemandsandsomespecialexigencies.Variableworking
capitalcanfurtherbeclassifiedasseasonalworkingcapitalandspecialworkingcapital.Thecapital
requiredtomeettheseasonalneedoftheenterpriseiscalledseasonalworkingcapital.Specialworking
capitalisthatpartofworkingcapitalwhichisrequiredtomeetspecialexigenciessuchaslaunchingof
extensivemarketingforconductingresearch,etc.4.4IMPORTANCEORADVANTAGEOF
ADEQUATEWORKINGCAPITAL:SOLVENCYOFTHEBUSINESS:Adequateworkingcapital
helpsinMaintainingthesolvencyofthebusinessbyprovidinguninterruptedofproduction.Goodwill:
Sufficientamountofworkingcapitalenablesafirmtomakepromptpaymentsandmakesandmaintain
thegoodwill.Easyloans:
63.63.63Adequateworkingcapitalleadstohighsolvencyandcreditstandingcanarrangeloansfrombanks
andotheroneasyandfavorableterms.CashDiscounts:Adequateworkingcapitalalsoenablesaconcern
toavailcashdiscountsonthepurchasesandhencereducescostRegularSupplyofRawMaterial:
Sufficientworkingcapitalensuresregularsupplyofrawmaterialandcontinuousproduction.Regular
PaymentOfSalaries,WagesAndOtherDayTODayCommitments:Itleadstothesatisfactionofthe
employeesandraisesthemoraleofitsemployees,increasestheirefficiency,reduceswastageandcosts
andenhancesproductionandprofits.AbilitytoFaceCrises:Aconcerncanfacethesituationduringthe
depression.4.5FACTORSDETERMININGTHEWORKINGCAPITALREQUIREMENTS:1.
NATUREOFBUSINESS:Therequirementsofworkingisverylimitedinpublicutilityundertakings
suchaselectricity,watersupplyandrailwaysbecausetheyoffercashsaleonlyandsupplyservicesnot
products,andnofundsaretiedupininventoriesandreceivables.Onthe
64.64.64otherhandthetradingandfinancialfirmsrequireslessinvestmentinfixedassetsbuthavetoinvest
largeamt.ofworkingcapitalalongwithfixedinvestments.2.SIZEOFTHEBUSINESS:Greaterthesize
ofthebusiness,greateristherequirementofworkingcapital.3.PRODUCTIONPOLICY:Ifthepolicyis
tokeepproductionsteadybyaccumulatinginventoriesitwillrequirehigherworkingcapital.4.LENTH
OFPRDUCTIONCYCLE:Thelongerthemanufacturingtimetherawmaterialandothersupplieshave
tobecarriedforalongerintheprocesswithprogressiveincrementoflaborandservicecostsbeforethe
finalproductisobtained.Soworkingcapitalisdirectlyproportionaltothelengthofthemanufacturing
process.4.6Sourcesofworkingcapital:Thecompanycanchoosetofinanceitscurrentassetsby1.Long
termsources2.Shorttermsources3.AcombinationofthemLongtermsourcesofpermanentworking
Capitalincludesequityandpreferenceshares,retainedearnings,debenturesandotherlongtermdebts
frompublicdepositsandfinancialinstitution.Thelongtermworkingcapitalneedsshouldmeetthrough
65.65.65longtermmeansoffinancing.Financingthroughlongtermmeansprovidesstability,reducesrisk
orpaymentandincreasesliquidityofthebusinessconcern.Varioustypesoflongtermsourcesofworking
capitalaresummarizedasfollow:1.Issueofshares:Itistheprimaryandmostimportantsourcesof
regularorpermanentworkingcapital.Issuingequitysharesasitdoesnotcreateandburdenonthe
incomeoftheconcern.Northeconcernisobligedtorefundcapitalshouldpreferablyraisepermanent
workingcapital.2.Retainedearnings:Retainearningaccumulatedprofitsareapermanentsourcesof
regularworkingcapital.Itisregularandcheapest.Itcreatesnotchargeonfutureprofitsofthe
enterprises.3.Issueofdebentures:Itcreatesafixedchargeonfutureearningsofthecompany.Company
isobligedtopayinterest.Managementshouldmakewisechoiceinprocuringfundsbyissueof
debentures.ShorttermsourcesoftemporaryworkingcapitalTemporaryworkingcapitalTemporary
WorkingCapitalisrequiredtomeetthedaytodaybusinessexpenditures.Thevariableworkingcapital
wouldfinancefromshorttermsourcesoffunds.And
66.66.66onlytheperiodneeded.Ithasthebenefitsof,lowcostandestablishescloserrelationshipswith
banker.Somesourcesoftemporaryworkingcapitalaregivenbelow:1.Commercialbank:Acommercial
bankconstitutessignificantsourcesforshorttermortemporaryworkingcapital.Thiswillbeintheform
ofshorttermloans,cashcredit,andoverdraftandthoughdiscountingthebillsofexchanges.2.Public
deposits:Mostofthecompaniesinrecentyearsdependonthissourcetomeettheirshorttermworking
capitalrequirementsrangingfromsixmonthtothreeyears.3.Variouscredits:Tradecredit,business
creditpapersandcustomercreditareothersourcesofshorttermworkingcapital.Creditfromsuppliers,
advancesfromcustomers,billsofexchanges,etchelpstoraisetemporaryworkingcapital4.Reservesand
otherfunds:Variousfundsofthecompanylikedepreciationfund.Provisionfortaxandotherprovisions
keptwiththecompanycanbeusedastemporaryworkingcapital.Thecompanyshouldmeetitsworking
capitalneedsthroughbothlongtermandshorttermfunds.
67.67.67SOURCESOFADDITIONALWORKINGCAPITAL:Sourcesofadditionalworkingcapital
includethefollowing1.Existingcashreserves2.Profits(whenyousecureitascash)3.Payables(credit
fromsuppliers)4.Newequityorloansfromshareholder5.Bankoverdraftslineofcredit6.Longterm
loansIfwehaveinsufficientworkingcapitalandtrytoincreasesales,wecaneasilyoverstretchthe
financialresourcesofthebusiness.Thisiscalledovertrading.Earlywarningsignsinclude1.Pressureon
existingcash2.Exceptionalcashgeneratingactivities.Offeringhighdiscountsforclearcashpayment3.
Bankoverdraftexceedsauthorizedlimit4.Seekinggreateroverdraftsorlinesofcredit5.Partpaying
suppliersortherecreditor.6.Managementpreoccupationwithsurvivingratherthanmanaging.
4.7DifferentAspectsofWorkingCapitalManagement:ManagementofInventoryManagementof
Receivables/DebtorsManagementofCashManagementofPayables/Creditors
68.68.68MANAGEMENTOFINVENTORY:Inventoriesconstitutethemostsignificantpartofcurrent
assetsofalargemajorityofcompanies.Onanaverage,inventoriesareapproximately60%ofcurrent
assets.Becauseoflargesize,itrequiresaconsiderableamountoffund.Theinventorymeansandincludes
thegoodsandservicesbeingsoldbythefirmandtherawmaterialorothercomponentsbeingusedinthe
manufacturingofsuchgoodsandservices.NatureofInventory:Thecommontypeofinventoriesformost
ofthebusinessfirmsmaybeclassifiedasrawmaterial,workingprogress,finishedgoods.Rawmaterial:
itisbasicinputsthatareconvertedintofinishedproductsthroughthemanufacturingprocess.Raw
materialsinventoriesarethoseunitswhichhavebeenpurchasedandstoredforfutureproductions.Work
inprocess:Workingprocess:Itissemimanufacturedproducts.Theyrepresentproductsthatneedmore
workbeforethembecomefinishedproductsforsale.Finishedgoods:Thesearecompletelymanufactured
productswhicharereadyforsale.Stocksofrawmaterialsandworkingprocessfacilitateproduction,
whilestockoffinishedgoodsisrequiredforsmoothmarketingoperations.Sooperatingcyclecanbe
knownasfollowing:
69.69.69
70.70.70Needtoholdinventories:Maintaininginventoriesinvolvestryingupofthecompanysfundsand
incurrenceofstorageandholdingcosts.Therearethreegeneralmotivesforholdinginventories:
TransactionsMotive:ITemphasizestheneedtomaintaininventoriestofacilitatesmoothproductionand
salesoperation.PrecautionaryMotive:Itnecessitatesholdingofinventoriestoguardagainsttheriskof
unpredictablechangesindemandandsupplyforcesandotherfactors.SpeculativeMotive:Itinfluences
thedecisiontoincreaseorreduceinventorylevelstotakeadvantageofpricefluctuations.Managementof
Receivables/Debtors:TheReceivables(includingthedebtorsandthebills)constituteasignificant
portionoftheworkingcapital.Thereceivablesemergewhenevergoodsaresoldoncreditandpayments
aredeferredbycustomers.Apromiseismadebythecustomertopaycashwithinaspecifiedperiod.The
customersfromwhomreceivableorbookdebtshavetobecollectedinthefuturearecalledtradedebtors
andrepresentsthefirmsclaimorassets.Thus,receivableisstypeofloanextendedbythesellertothe
buyertofacilitatethepurchaseprocess.ReceivableManagementmaybedefinedascollectionofsteps
andprocedurerequiredtoproperlyweightthecostsandbenefitsattachedwiththecreditpolicy.The
ReceivableManagementconsistofmatchingthecostofincreasingsales(particularlycreditsales)with
thebenefitsarisingoutofincreasedsaleswiththeobjectiveofmaximizingthereturnoninvestmentof
thefirm.
71.71.71Nature:Thetermcreditpolicyisusedtorefertothecombinationofthreedecisionvariables:
1.Creditstandards:Itisthecriteriatodecidethetypeofcustomerstowhomgoodscouldbesoldon
credit.Ifafirmhasmoreslowpayingcustomers,itsinvestmentinaccountsreceivablewillincrease.
Thefirmwillalsobeexposedtohigherriskofdefault.2.Creditterms:Itspecifiesdurationofcreditand
termsofpaymentbyCustomerInvestmentinaccountsreceivablewillbehighifcustomersareallowed
extendedtimeperiodformakingpayments.3.Collectionefforts:Itdeterminetheactualcollection
period.Thelowerthecollectionperiod,thelowertheinvestmentinaccountsreceivableandviceversa.
ManagementofCash:Cashmanagementreferstomanagementofcashbalanceandthebankbalanceand
alsoincludestheshorttermsdeposits.Cashistheimportantcurrentassetfortheoperationsofthe
business.Cashisthebasicinputneededtokeepthebusinessrunningonacontinuousbasis.Itisalsothe
ultimateoutputexpectedtoberealizedbysellingtheserviceorproductmanufacturedbythefirm.The
termcashincludescoins,currency,andchequeheldbythefirmandbalanceinthebankaccounts.
72.72.72FactorsofCashManagement:Cashmanagementisconcernedwiththemanagingof1.Cashflows
intoandoutofthefirm2.Cashflowswithinthefirmand3.Cashbalanceheldbythefirmatapointof
timebyfinancingdeficitorinvestingsurpluscash.Salesgeneratecashwhichhastobedisbursedout.The
surpluscashhastobeinvestedwhiledeficithastoborrow.Cashmanagementseekstoaccomplishthis
cycleataminimumcostanditalsoseekstoachieveliquidityandcontrol.Managementof
Payables/Creditors:Creditorsareavitalpartofeffectivecashmanagementandshouldbemanaged
carefullytoenhancethecashposition.Purchasinginitiatescashoutflowsandanoverzealouspurchasing
functioncancreateliquidityproblems.ConsidertheFollowing:Whoauthorizespurchasinginour
companyisittightlymanagedorspreadamongaNumberofpeople?Arepurchasequantitiesgearedto
demandforecasts?Doweuseorderquantitieswhichtakeaccountofstockholdingandpurchasingcosts?
Doweknowthecosttothecompanyofcarryingstock?Dowehavealternativesourceofsupply?How
manyofoursuppliershaveareturnspolicy?Areweinapositiontopassoncostincreasesquickly
throughpriceincrease?
73.73.73MANAGEMENTOFWORKINGCAPITAL:Managementofworkingcapitalisconcernedwith
theproblemthatarisesinattemptingtomanagethecurrentassets,currentliabilities.Thebasicgoalof
workingcapitalmanagementistomanagethecurrentassetsandcurrentliabilitiesofafirminsuchaway
thatasatisfactorylevelofworkingcapitalismaintained,i.e.itisneitheradequatenorexcessiveasboth
thesituationsarebadforanyfirm.Thereshouldbenoshortageoffundsandalsonoworkingcapital
shouldbeideal.WORKINGCAPITALMANAGEMENTPOLICESofafirmhasagreatonits
probability,liquidityandstructuralhealthoftheorganization.Soworkingcapitalmanagementisthree
dimensionalinnatureasItconcernedwiththeformulationofpolicieswithregardtoprofitability,
liquidityandrisk.Itisconcernedwiththedecisionaboutthecompositionandlevelofcurrentassets.Itis
concernedwiththedecisionaboutthecompositionandlevelofcurrentliabilities.4.8WORKING
CAPITALANALYSIS:Asweknowworkingcapitalisthelifebloodandthecentreofabusiness.
Adequateamountofworkingcapitalisverymuchessentialforthesmoothrunningofthebusiness.And
themostimportantpartistheefficientmanagementofworkingcapitalinrighttime.Theanalysisof
workingcapitalcanbeconductedthroughanumberofdevices,suchas:1.Ratioanalysis2.Fundflow
analysis.3.Budgeting.METHODSOFWORKINGCAPITALANALYSISTherearesomanymethods
foranalysisoffinancialstatementsbutFollowingtechniquesareusedmost.:
74.74.74ComparativesizestatementsTrendanalysisCashflowstatementRatioanalysisAdetail
descriptionofthesemethodsisasfollows:COMPARATIVESIZESTATEMENTS:Whentwoormore
thantwoyearsfiguresarecomparedtoeachotherthanwecalledcomparativesizestatementsinorderto
estimatethefutureprogressofthebusiness,itisnecessarytolookthepastperformanceofthecompany.
Thesestatementsshowtheabsolutefiguresandalsoshowthechangefromoneyeartoanother.TREND
ANALYSIS:Toanalyzemanyyearsfinancialstatementsusesthismethod.Thisindicatesthedirection
onmovementoverthelongtimeandhelpinthefinancialstatements.CASHFLOWSTATEMENT:Cash
flowstatementsarethestatementsofchangesinthefinancialpositionpreparedonthebasisoffunds
definedincashorcashequivalents.Inshortcashflowstatementsummariesthecashinflowsand
outflowsofthefirmduringaparticularperiodoftime..RATIOANALYSIS:Ratioanalysisisthe
processofthedeterminingandpresentingtherelationshipoftheitemsandgroupofitemsinthe
statements.Typesofratio:Liquidityratio:Theyindicatethefirmsabilitytomeetitscurrentobligation
outofcurrentresources.Currentratio:Currentassets/Currentliabilities
75.75.75Quickratio:Liquidassets/CurrentliabilitiesLiquidassets=CurrentassetsStockPrepaid
expensesLeverageorCapitalstructureratio:Thisratiodisclosesthefirmsabilitytomeettheinterest
costsregularlyandlongtermsolvencyofthefirm.Debtequityratio:Longtermloans/Shareholders
fundsornetWorthDebttototalfundratio:Longtermsloans/shareholderfunds+longtermloan
Proprietaryratio:Shareholdersfund/shareholdersfund+longtermloanActivityratioorTurnoverratio:
Theyindicatetherapiditywithwhichtheresourcesavailabletotheconcernarebeingusedtoproduce
sales.Stockturnoverratio:Costofgoodssold/Averagestock(Costofgoodssold=Netsales/Gross
profit,Averagestock=Openingstock+closingstock/2)Debtorsturnoverratio:Netcreditsales/Average
debtors+AverageB/RAveragecollectionperiod:Debtors+B/R/Creditsalesper(Creditsalesper
day=Netcreditsalesoftheyear/365)CreditorsTurnoverRatio:Netcreditpurchases/AverageCreditors
+AverageB/P
76.76.76AveragePaymentPeriod:Creditors+B/P/Creditpurchaseperday.FixedAssetsTurnoverratio:
Costofgoodssold/NetfixedAssets(NetFixedAssets=FixedAssetsdepreciation)WorkingCapital
TurnoverRatio:Costofgoodssold/WorkingCapital(Workingcapital=currentassetscurrentliability)
ProfitabilityRatiosorIncomeratios:Themainobjectiveofeverybusinessconcernistoearnprofits.A
businessmustbeabletoearnadequateprofitinrelationtotheriskandcapitalinvestedinit.Grossprofit
ratio:Grossprofit/NetSales*100(Netsales=SalesSalesreturn)NetprofitRatio:Netprofit/Net
sales*100(OperatingNetProfit=operatingnetprofit/NetSales*100oroperatingNetprofit=gross
profitoperatingexpenses)OperatingRatio:Costofgoodssold+Operatingexpenses/NetSales*100
(Costofgoodssold=NetSalesGrossprofit,Operatingexpenses=officeadministrationexpenses+
Sellingdistributionexpenses+discount+baddebts+interestonshorttermloans)Earningsper
share(E.P.S.):NetProfitdividendonpreferenceshare/No.ofequitysharesDividendpershare
(D.P.S.):DividendpaidtoequityshareHolders/No.ofequityshares*100.DividendPayoutratio(D.P.)
:D.P.S./E.P.S.*100
77.77.77CHAPTER:5DATAANALYSISANDINTERPRETATION
78.78.785.1WorkingCapitalStatementofCadilaHealthcareLimitedofLastFiveYear(inRs.Cr).The
averagesizeofworkingcapitalofthefirmsincelastfiveyearsis960.16crorewhichshowsthesound
situationofthefirm.Theaveragecurrentratioofthefirmsincelastfiveyearis1.98inapproxwhichis
betterasreviewsoftheTondoncommittee.Theliquidratioofthefirmalsoshowsthebetterpositionof
thefirmforshorttermfuturealso.Thecompanysresultshowsonanaverageof6%returnonthe
investmentofthecurrentassetswhichshowstheworstresultofthefirmandshowstheineffectiveoutput
ofthecurrentassets.Theaverageworkingcapitalhasbeenutilizedfromthegenerationofrevenueatonly
11%whichshowsdissatisfactoryresult.AmtinCroreCurrentAssets200910201011201112201213
201314Stock380.8464.5501.2587.2663.5Debtors400.8475.1581.2683722CashBalance&Bank
Balance7.614.1118.391.689.4FixedDeposits20.628.3000Advances395.9537.2799.6947.4
1115.8TotalCurrentAssets1205.71519.22000.32309.22590.7CurrentLiabilitiesCurrentLiabilities
531.2654884.9781904.5Provision151.7180.4227.1212297.5TotalCurrentLiabilities682.9834.4
11129931202NetWorkingCapitalRequired522.8684.8888.31316.21388.7CurrentRatio1.771.82
1.82.332.16
79.79.00.10.20.30.40.50.60.70.80.9ComponePercenta_________InterpretAbovetablcapital.It
percentageYear201020112012201320140234567892010entsOfge:__________tation:e
depictsthshowsthainworkingInventWorkiCapita0.730.680.560.450.48201120Work__________
heproportioateachcogcapitaltorytoingalDewoca0.70.60.50.40.40122013kingCap
__________onofcompomponentoebtorstoorkingapital776956454832014pitalRe__________
onentsofcuofcurrentoCashBankWorkingCapital0.0150.0210.1330.0700.064InveDebtCashCapi
LoanWorspective__________urrentassetsassetscont&togLoaAdv0.760.780.900.720.80ntory
ToWortorsToWorkih&BankToWitalns&AdvancerkingCapital_________sinthenetwtribute
howns&vances68020rkingCapitalingCapitalWorkingesToworkingwmany79
80.80.80InTheyear2010inventorytonetworkingcapitalratiois0.73i.e.whichchangeeachyeardueto
changeintheamountofinventoryto0.67,0.560.45,0.48intheyear2011,2012,2013&2014
respectivelySimilarly,thecontributionofdebtorsinworkingcapitalishighestintheyear2013is0.77
lowestin2010is0.52.Thischangetakesplaceduetochangeinamountofdebtorseveryyear.Talking
aboutcashbankbalancetoworkingcapital,itis0.01,0.02,0.13,0.07and0.06respectivelyin2010,
20112012.2013and2014marginallyfluctuationduetochangeinamountofcashbankbalanceLikewise,
loansadvanceshowshighestcontributiontonetworkingcapitalintheyear2010its0.76,intheyear
2011itsmarginallygoesupwith0.78,intheyear2012itsgoesup0.90andintheyear2013itscomes
downto0.72.year2014itsgoesup0.80Thisshowsthatinthecurrentyearcompanyhasreducedtheir
inventory,butdebtorsofthecompanyhasincreasedmaintainingcashbalanceinapropermannerbecause
itshowsreductionincashbalanceintheyear2012
81.81.815.2LIQUIDITYPOSITION:Liquiditypositionmeasurestheabilityofthefromtomeetsits
currentobligationliquiditypositionestablishedrelationshipbetweencurrentassetsandcurrentliabilities
ofthecompanyInterpretation:Theabovetableshowsliquiditypositionofthecompanyforthedifferent
years.Itshowsthatcurrentassetsofthecompanyarecontinuouslyincreasingeveryyear.Similarly
currentliabilitiesofthecompanyarealsoincreasing.Butcomparingcurrentassetsandcurrentliabilities
thecurrentassetsofthecompanyismorethanitscurrentliabilities.Thecurrentassetsofthecompanyis
increasingatafasterthanitscurrentliabilitieswhichcanbeknownfromthemeanoftheboth.Itshows
goodliquiditypositionofthecompany.Tablealsoexplainsthecompanyinthenetworkingcapitalofthe
company.YearCurrentAssetsCurrentLiabilitiesNetWorkingCapitalAmount20101205.7682.9522.8
20111519.2834.4684.816220122000.31112888.3203.520132309.29931316.2427.920142590.7
12021388.772.5Total9625.14824.34800.8865.9Mean1925.02964.86960.16173.18Growth20%
20%20%20%
82.82.82Talkingtheyear2010asthebaseyear,workingcapitalofthecompanyisincreasingintheyear
2011&2012similarlyitalsoincreasesintheyear2013andintheyear2014ascomparedtoprevious
year.Itshowsthatcompanyismaintainingitsworkingcapitalaswhenrequired.5.3COMPARATIVE
BALANCESHEETSTATEMENTS:Theeffectsoftheconductofabusinessarereflectedinitsbalance
sheetbyincreaseordecreaseinassets,liabilitiesandproprietarycapital.Thesechangescanbeknownby
acomparisonofthebalancesheetsoftwoormoredifferentdatesofpreviousyears.Knowledgeofthese
changesisofconsiderablevalueinframinganoperationregardingtheprogressofthebusinessunit.
Whileasinglebalancesheetrevealsthefinancialstatusataspecificpointoftime,acomparativebalance
sheetanalysisshowsthechangesinit.Thesechangesmayberesultoperations,theconversionofassets
andliabilitiesandcapitalformsintootherandthevariousinteractionsamongassets,liabilitiesand
capital.Inthecomparativebalancesheetsnotonlyabsolutechange(intermsofrupees)butalsorelative
changes(inpercentageasrateofchange)wouldbestudiedinfacttherelativechangearemoreimportant
thantheretotheanalyst.Informationregardingrelativechangesmustmodifytheanalysisoperationbased
onabsolutechanges.Inthecomputationofpercentagesitshouldbenotedthatifascertainitemshasa
valueinoneyearanddoesnotexistthenextyearthepercentageofdecreaseis100%Butiftheitemhas
novalueinthefirstyearandhasanvalueinthesecondnopercentagecanbeshownbecauseifannumber
isdividedzerothequotientisinfinity.
83.83.83ComparativeStatementofBalanceSheetfor20112012(InRs.Cr.)Particulars20112012Increase
/DecreaseChangein%SourcesOfFundsTotalShareCapital102.4102.400EquityShareCapital
102.4102.400ShareApplicationMoney000PreferenceShareCapital000Reserves1,987.50
2,454.70467.2023.5069182Networth2,089.902,557.10467.2022.3551366SecuredLoans499749.2
250.250.1402806UnsecuredLoans25.1346.6321.51280.87649TotalDebt524.11095.8571.7
109.082236TotalLiabilities2,614.003,652.901,038.9039.7436878Mar'11Mar'1212moths12moths
ApplicationOfFundsGrossBlock1,485.401,749.80264.4017.7999192Less:RevaluationReserves00
0Less:Accum.Depreciation448.8532.183.318.5606061NetBlock1,036.601,217.70181.10
17.4705769CapitalWorkinProgress233.7311.77833.3761232Investments698.81212.2513.4
73.4688037Inventories464.5501.236.77.90096878SundryDebtors475.1581.2106.122.3321406
CashandBankBalance42.4118.375.9179.009434TotalCurrentAssets9821200.7218.722.2708758
LoansandAdvances510.7776.9266.252.124535FixedDeposits000TotalCA,Loans&Advances
1,492.701,977.60484.9032.4847592DeferredCredit000CurrentLiabilities661.9839.2177.3
26.7865236Provisions185.9227.141.222.1624529TotalCL&Provisions847.81066.3218.5
25.7725879NetCurrentAssets644.9911.3266.441.30873MiscellaneousExpenses000TotalAssets
2,614.003,652.901,038.9039.7436878ContingentLiabilities602.61256.6654108.529705BookValue
(Rs)102.07124.8922.8222.3572058
84.84.84Interpretation:Totalcurrentassetsandloanadvanceofthecompanyin201112Areincreasedby
484.90crwithcomparetopreviousyearandtotalcurrentliabilitiesandprovisionsareincreasedby
218.50crwithcomparetopreviousyear.ItshowsnetpositiveworkingCapitalincreasedby1038.90cr
withcomparetopreviousyearsothatitseenthattheworkingcapitalpositionofthecompanyis
satisfactorybutlongterminvestmentonfixedassetsisnotpossiblefromworkingcapitalfund.The
liquiditypositionofthecompanyinalsosatisfactoryasallcurrentassetshasincreasedin20112012
85.85.85ComparativeStatementofBalanceSheetfor20122013(InRs.Cr.)Particulars20122013
Increase/DecreaseChangein%SourcesOfFundsTotalShareCapital102.4102.400EquityShare
Capital102.4102.400ShareApplicationMoney000PreferenceShareCapital000Reserves2,454.70
2,809.10354.4014.44Networth2,557.102,911.50354.4013.86SecuredLoans749.21052.5303.3
40.48318206UnsecuredLoans346.6593246.471.09059435TotalDebt1095.81645.5549.7
50.16426355TotalLiabilities3,652.904,557.00904.1024.75Mar'12Mar'1312moths12moths
ApplicationOfFundsGrossBlock1,749.802,125.50375.7021.47Less:RevaluationReserves000
Less:Accum.Depreciation532.1628.496.318.09810186NetBlock1,217.701,497.10279.4022.94
CapitalWorkinProgress311.7463.8152.148.79692012Investments1212.21279.967.75.584886982
Inventories501.2587.28617.15881883SundryDebtors581.2683101.817.5154852CashandBank
Balance118.391.626.722.569738TotalCurrentAssets1200.71361.8161.113.41717332Loansand
Advances776.9947.4170.521.94619642FixedDeposits000TotalCA,Loans&Advances1,977.60
2,309.20331.6016.77DeferredCredit000CurrentLiabilities839.278158.26.93517636Provisions
227.121215.16.64905328TotalCL&Provisions1066.399373.36.87423802NetCurrentAssets
911.31316.2404.944.43103259MiscellaneousExpenses000TotalAssets3,652.904,557.00904.10
24.75
86.86.86Interpretation:Totalcurrentassetsandloanadvanceofthecompanyin20122013areincreased
by331.60crwithcomparetopreviousyearandtotalcurrentliabilitiesandprovisionsaredecreasedby
73.3crwithcomparetopreviousyear..ItshowsnetpositiveworkingCapitalincreasedby904.10cr
withcomparetopreviousyear.sothatitseenthattheworkingcapitalpositionofthecompanyis
satisfactorybutlongterminvestmentonfixedassetsisnotpossiblefromworkingcapitalfund.Inthe
year20122013currentliabilitiesandprovisionisdecreasedandcurrentassetsandadvancesisincrease
soliquiditypositionofcompanyisalsosatisfactory.ContingentLiabilities1256.61238.118.5
1.47222664BookValue(Rs)124.89142.217.3113.86019697
Capital102.4102.400ShareApplicationMoney000PreferenceShareCapital000Reserves2809.1
3527.5718.425.5740273Networth2911.53629.9718.424.6745664SecuredLoans1052.5888.4164.1
15.5914489UnsecuredLoans593522.870.211.8381113TotalDebt1645.51411.2234.3
14.2388332TotalLiabilities45575041.1484.110.623217Mar'13Mar'1412moths12moths
ApplicationOfFundsGrossBlock2125.52288.9163.47.68760292Less:RevaluationReserves000
Less:Accum.Depreciation628.4724.896.415.3405474NetBlock1497.11564.1674.47531895
CapitalWorkinProgress463.8530.666.814.4027598Investments1279.91557.7277.821.7048207
Inventories587.2663.576.312.9938692SundryDebtors683722395.71010249CashandBank
Balance91.689.42.22.40174672TotalCurrentAssets1361.81474.9113.18.30518431Loansand
Advances947.41115.8168.417.7749631FixedDeposits000TotalCA,Loans&Advances2309.2
2590.7281.512.190369DeferredCredit000CurrentLiabilities781904.5123.515.8130602Provisions
212297.585.540.3301887TotalCL&Provisions993120220921.0473313NetCurrentAssets1316.2
1388.772.55.50828142MiscellaneousExpenses000TotalAssets45575041.1484.110.623217
ContingentLiabilities1238.11242.24.10.33115257BookValue(Rs)142.2177.2935.0924.676512
88.88.88Interpretation:Totalcurrentassetsandloanadvanceofthecompanyin20132014areincreased
by281.5crwithcomparetopreviousyearandtotalcurrentliabilitiesandprovisionsareincreasedby209
crwithcomparetopreviousyear..ItshowsnetpositiveworkingCapitalincreasedby484.1crwith
comparetopreviousyear.sothatitseenthattheworkingcapitalpositionofthecompanyissatisfactory
butlongterminvestmentonfixedassetsisnotpossiblefromworkingcapitalfund.Theliquidityposition
ofthecompanyinalsosatisfactoryasallcurrentassetshasincreasedin201314
Capital102.4102.400ShareApplicationMoney000PreferenceShareCapital000Reserves3527.5
4423895.525.3862509Networth3629.94525.4895.524.6701011SecuredLoans888.4737.4151
16.996848UnsecuredLoans522.8525.830.57383321TotalDebt1411.21263.214810.487528Total
Liabilities5041.15788.6747.514.8281129Mar'14Mar'1512moths12mothsApplicationOfFunds
GrossBlock2288.92714425.118.5722399Less:RevaluationReserves000Less:Accum.Depreciation
724.8945.9221.130.5049669NetBlock1564.11768.120413.0426443CapitalWorkinProgress530.6
366.9163.730.851866
90.90.90Investments1557.72209.1651.441.8180651Inventories663.5804.3140.821.2207988Sundry
Debtors7221056.1334.146.2742382CashandBankBalance89.4129.44044.7427293TotalCurrent
Assets1474.91989.8514.934.9108414LoansandAdvances1115.81003.5112.310.064528Fixed
Deposits000TotalCA,Loans&Advances2590.72993.3402.615.5402015DeferredCredit000
CurrentLiabilities904.51148.8244.327.0093975Provisions297.5400102.534.4537815TotalCL&
Provisions12021548.8346.828.8519135NetCurrentAssets1388.71444.555.84.01814647
MiscellaneousExpenses000TotalAssets5041.15788.6747.514.8281129ContingentLiabilities
1242.21420.4178.214.345516BookValue(Rs)177.29221.0243.7324.6658018
91.91.91Interpretation:Totalcurrentassetsandloanadvanceofthecompanyin20142015areincreasedby
402.6crwithcomparetopreviousyearandtotalcurrentliabilitiesandprovisionsareincreasedby346.8
crwithcomparetopreviousyear..ItshowsnetpositiveworkingCapitalincreasedby747.5crwith
comparetopreviousyear.sothatitseenthattheworkingcapitalpositionofthecompanyissatisfactory
butlongterminvestmentonfixedassetsisnotpossiblefromworkingcapitalfund.Theliquidityposition
ofthecompanyinalsosatisfactoryasallcurrentassetshasincreasedin201415
92.92.925.4TRENDPERCENTAGES:Trendpercentagesareimmenselyhelpfulinmakingacomparative
studyoffinancialstatementsforseveralyears.Themethodofcalculatingtrendpercentagesinvolvesthe
calculationofpercentagesrelationshipsthateachitembearstothesameiteminbaseyear.Anyyearmay
betakenasthebaseyear.Itisusuallytheearliestyear.Anyinterveningyearmayalsobetakenasthe
baseyear.Eachitemofbaseyearistakenas100andthepercentagesforeachoftheitemsofeachofthe
yearsarecalculatedthesepercentagescanalsobetakenasindexnumbersshowingrelativechangesinthe
financialdataresultingwithpassageoftime.Themethodoftrendpercentagesisusefulanalyticaldevices
forthemanagementsincebysubstitutionofpercentagesforlargeamountsthebrevityandreadabilityare
achieved.Howeverpercentagesarenotcalculatedforalltheitemsinthefinancialstatements.Theyare
usuallycalculatedonlyformajoritemssincethepurposeistohighlightimportantchanges.Butthereisa
dangerofoveremphasisbeinggiventopercentages.Inthecasewherethebaseisasmallnumberalight
changemightbegreatlyexaggeratedbypercentagesofchange.StatementShowingTrendPercentagein
AssetsDuring20102015(InRs.Cr)TrendPercentageParticulars2010112011122012132013
14201415201011201112201213201314201415CurrentAssets9821200.71361.81474.91989.8
100122.271113.417108.305134.911Inventories464.5501.2587.2663.5804.3100107.901117.159
112.994121.221SundryDebtors475.1581.26837221056.1100122.332117.515105.71146.274Cash
&BankBalance42.4118.391.689.4129.4100279.00977.430397.5983144.743LoansAndAdvances
510.7776.9947.41115.81003.5100152.125121.946117.77589.9355FixedDeposits0000010000
00Investments698.81212.21279.91557.72209.1100173.469105.585121.705141.818
93.93.93StatementShowingTrendPercentageinAssetsDuring20102015(InRs.Cr)TrendPercentage
Particulars201011201112201213201314201415201011201112201213201314201415
CurrentAssets9821200.71361.81474.91989.8100122.271113.417108.305134.911Inventories
464.5501.2587.2663.5804.3100107.901117.159112.994121.221SundryDebtors475.1581.2683
7221056.1100122.332117.515105.71146.274Cash&BankBalance42.4118.391.689.4129.4100
279.00977.430397.5983144.743LoansAndAdvances510.7776.9947.41115.81003.5100152.125
121.946117.77589.9355FixedDeposits000001000000Investments698.81212.21279.91557.7
2209.1100173.469105.585121.705141.818
94.94.94AnalysisofTrendPercentages:Interpretation:Theabovetrendanalysisrevelsthattheinventories
havebeenindecreasingtrendandthepercentageincreaseisthehighestin201415at121.221when
comparedwith.201314debtorshasalsobeenincreasingtrendexceptintheyear201213&201314.
Thepercentagedecreasein2014is105.71.Cashandbankbalancesareincreasein201112percentage
increasein201112ishighestat279.009Thishasalsoregisteredhighestpercentageincreasein
comparisonwithalltheothercurrentassets.Loansandadvancesisalsoanincreasingtrendandthe
highestpercentageincreasein201213is121.946Currentliabilitiesandprovisionhavebeenincreasing
trendexceptintheyear2013thepercentagein2013is93.0648.Capitalhasincreased100in2011and
100in2012and100in2013and100in2014and100in2015itshowsforthatthecompanydidntgofor
additionalcapital.Thereservesofthecompanyarealsoonanincreasingtrenditshowsahealthy
profitabilitypositionofthecompany,thepercentageincreaseinreservesishighestin201314&201415
125.574&125.386times.
95.95.5.5RATITheCurrenmeasureofThehighercurrentliabcurrentratiTableshowParticularCurrentA
CurrentLCurrentR00.20.40.60.811.21.41.61.8IOANALntRatioistfthefirmsshrthecurren
bilityconvenomayindicwingthederAssetsLiabilitiesRatioLYSISCUtheratioofhorttermsont
ratiothentionallyacativeofslaetailsofCu20102982661.91.48CurrentRatioURRENTtotalCurre
olvencyi.e.largerthecurrentratioackmanagemrrentRatio20112011208391.43oRATIO:entassets
to,itsabilityamountofoof2isconment.oinRs.Cr11122000.7139.27831.7ototalcurreto
meetshorupeesavansideredsat:0121320361.8148190741.2010220112201222013220142
entliabilitieorttermobliailableforrtisfactory.A013142474.904.5.6320112012201320142015s.
Itisaigations.rupeeofAhigher2014151989.81148.81.7395
96.96.96Interpretation:Thisratioattempts,tomeasuretheutilizationandeffectivenessoftheusecurrent
assetsandcurrentliabilities.Thisratiorevealstherelation.tipbetweenthecurrentassetsandcurrent
liabilities.Intheyear2011thisratiowas1.48timesbutintheyear2012itcomedownto1.43times.In
year2013thisratiowasincrease1.74timesandinyear2014ithasdecreasedto1.63times,andinyear
20151.73ithasincreasethiswasduetoincreaseincurrentliabilities.Generally,companieswouldaimto
maintainacurrentratioofatleast1toensurethatthevalueoftheircurrentassetscoveratleastthe
amountoftheirshorttermobligations.However,acurrentratioofgreaterthan1providesaddition.
Cushionagainstunforeseeablecontingenciesthatmayariseintheshortterm,HereisCurrentratiois
morethanoneanditsmaintainbyCadilaHealthcarelimited.From20112012currentratioisina
decreasingmildinthecurrentratiomaysuggestadeterioratingliquiditypositionofthebusinessora
leanerworkingcapitalcycleofthecompanythroughtheadoptionofmoreefficientmanagementpractices
In2015,Currentratioisincrease1.63to1.73whichsuggestsimprovedliquidityofthecompanyora
moreconservativeapproachtoworkingcapitalmanagement.Thisratioisstablewithminorfluctuations.
Ithasmarginallyimprovedbutnotsatisfactorily.
97.97.QuickRaAnindicatcompany'sthisreasonfollows:Quickra=(cashandCurrentLThequickrof
currentlliquidassetratio,thebor"quickaTableShoParticQuickatio:torofacabilitytomn,the
ratiotio=(currdequivaleniabilitiesratiomeasuliabilities.Ttsavailableetterthecossetsratio."owing
thecularsRatiocompany'smeetitsshoexcludesinrentassetsnts+markeurestherupeThus,aquice
tocovereompanysliq"detailsofQ201020111.23shorttermorttermobnventoriesfinventorie
etablesecureeamountockratioofeach1.1ofquidityposQuickrati12011201.31liquidity.ligations
wfromcurrenes)/currenrities+ofliquidass1.5meanstfcurrentliaition.Alsoio:01220121.7The
quickwithitsmosntassets,anntliabilitiesaccountsetsavailablthatacompabilities.Thknownast
201320173QuickRatioratiomeastliquidassndiscalcus,ortsReceleforeachppanyhasRshe
higherththeacidte1320141.6oasuresasets.Forulatedaseivable)/payments.1.50ofhequickest
ratio"201420151.4197
98.98.98Interpretation:ItestablishestheItestablishestherelationshipbetweenquickorliquidassetsand
liabilities.Anassetisliquidifitcanbeconvenedintocashimmediatelywithoutloss.Aratio1:1is
consideredideal.Intheyear2011,thisratiowas1.23thiswasmarginallyincreasedto1.31intheyear
2012andhadincreasedin2013andreached1.31andintheyear2013,itcomesdownin1.6.HereQuick
ratioisincreasingmanneroverperiodoftimewhichshowsefficiencyofmanagement.QuickRatiois
satisfactory
99.99.ParticuCashCurrenLiabiliCashRCashRatTheratioocurrentliabliquidity.Itshorttermdebt,if
anyThecashraliabilitiesthaccountsrepanofmanbutsimply051015ularsnttiesRatiotio:ofa
companbilities.Thetcantherefdebt.Astry,theywoulatioisgenerhanmanyoeceivablearny
companieasonefacto20102011FormulaCashCurrentLiabilitinystotalcecashratioforedeterm
rongcashradbewillingrallyamoreotherliquidreleftoutoes,thisratioorindeterm20112012a20/
tes42666.4cashandcaoismostcoineif,andatioisusefgtoextendteconservativdityratios.Tof
theequatoshouldnominingliquid2012201301020112.461.941ashequivaleommonlyuhowquickl
fultocredittotheaskinvelookataThisisduetion.Sincetotbeusedindity.2013201420112012
118.3839.214.10entstoitssedasamly,thecomtorswhendgparty.acompanystothefactthesetwo
andetermini201420152012201391.678111.73measureofcmpanycanrdecidinghosabilitytoc
thatinventaccountsareingcompan5Cash2013201489.4904.59.88companyrepayitswmuchcover
itstoryandealargenyvalue,hRatio20142015129.41148.811.26998
100.100.100Interpretation:Thisratioisalsoknownasabsoluteliquidratio.Thisratiowillrevealhow
muchpercentageofcurrentliabilitiesisheldincash.3%or6.41isconsideredasideal.Intheyear2011
company'scashratiowas14.10,Intheyear2012,itslightlydecreasedto11.73In2013and2014is9.88
and2015is11.26Company'scashratioissatisfactoryandisstable.Improvementwasseen.ACTIVITY
RATIOS:WORICINGCAPITALTURNOVERRATIO:WorkingCapitalTurnoverRatioindicatesthe
velocityofutilizationofnetworkingcapital.ItindicatesthenumberoftimesW.C,isturnedoverinthe
courseofayear.Itisameasureofthefirm'sefficiencytoutilizeitsworkingcapital.Ahigherratio
indicatesefficientutilizationofworkingcapitalandalowratioindicatesotherwise.Howeveraveryhigh
ratioisnotagoodsituationforanyfirmandhencecaretn.betakenwhileinterpretingtheratio.
ParticularsFormula2010201120112012201220132013201420142015SalesSales/Working
Capital2920.33150.83675.74042.15284.4WorkingCapitalTurnoverRatio522.8684.8888.31316.2
1388.7Ratios5.594.604.143.073.81
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Working Capital Management On Zydus Cadila Healthcare Limited

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