2. Discover, develop and successfully
market innovative products to
prevent and cure diseases, to ease
suffering and to enhance the quality
of life.
NOVARTIS
3. COMPANY PROFILE
and HISTORY
Novartis was created in 1996 through the merger of Ciba-
Geigy and Sandoz, two companies with a rich and diverse
corporate history. Headquartered in Basel, Switzerland
Novartis has been in India since 1947. The Group operates
in India through four entities namely Novartis India
Limited, Novartis Healthcare Private Limited, Sandoz
Private Limited and Chiron-Behring Vaccine Private
Limited.
4. In India Novartis have a presence in pharmaceuticals,
generics Vaccines, OTC (over-the-counter medicines), eye
care and Animal Health.
Novartis is among top 20 best performing companies
worldwide in carbon emissions from 2005 to 2012 out of
100 companies analyzed, Novartis ranked 18th across all
industries, 4th in the healthcare sector and 1st in
Switzerland.
Continued…
5. PRODUCT PROFILE
Novartis is the only company with leading
positions in each of these key areas:-
1) Pharmaceuticals: innovative patent-protected medicines
2) Alcon: global leader in eye care with surgical,
ophthalmology and consumer products
3) Sandoz: affordable, high-quality generic medicines and
biosimilars
4) Consumer Health: self-medication products and
treatments for animals
5) Vaccines and Diagnostics: vaccines and diagnostic tools
to protect against life-threatening diseases
6. SWOT Analysis
SWOT Analysis
Strength
1.Has a global reach in over 140 countries
2.Core businesses in pharmaceuticals, vaccines, consumer health,
generics and animal health
Weakness
1. Controversies regarding their advertising of certain products
affected brand image
Opportunity
1. Broad-based medical innovation, in technologies and
businesses across the spectrum of health care
2. Venture into health needs in under-developed and poor countries
Threats 1. Competition from peers
7. Financial and Ratio Analysis
Financial Analysis is the process of determining the operating &
financial characteristics of a firm from accounting data & financial
statement. The goal of such analysis is to determine efficiency &
performance of the firm management.
Financial analysis is undertaken to fulfil the following objectives.:-
such as,
To estimate the earning capacity
To know the financial position and financial performance of the
firm
To determine the long terms liquidity of the funds as well as
solvency
To decide about the future prospective of the firm
8. Financial Ratio analysis:-
A ratio may be defined as a fixed relationship in
degree or number between two numbers.
The ratio analysis is one of the most powerful tools
of financial analysis. It is use as a device to analysis
and interprets the financial health of enterprise.
Ratio analysis is very helpful in financial
forecasting. Ratio relating to the past sales, profits
& financial position from the basis for setting
future trends.
9. Types of Financial Ratios:-
Liquidity Ratio
Current ratio Liquid ratio
Leverage Ratio
Debt equity Total Assets Proprietary Capital Interest
Ratio to Debt Ratio Gearing Coverage
Turnover Ratio
Stock Debtors Creditors Fixed assets working capital
Turnover turnover turnover turnover turnover
Profitability Ratio
Gross Operating Net profit
Profits Ratio Ratio
Profitability Ratio based on investment
Return on Return on Return on equity Earning Per
Capital Shareholder fund shareholder fund Share
Employed
10. Total Share Capital 15.98 15.98
Equity Share Capital 15.98 15.98
Share Application Money 0 0
Preference Share Capital 0 0
Reserves 801.89 687.01
Revaluation Reserves 0 0
Networth 817.87 702.99
Secured Loans 0 0
Unsecured Loans 0.14 0.2
Total Debt 0.14 0.2
Total Liabilities 818.01 703.19
Mar '12 Mar '11
12 mths 12 mths
Application Of Funds
Gross Block 23.37 24.15
Less: Accum. Depreciation 13.26 16.2
Net Block 10.11 7.95
Capital Work in Progress 0.1 0.73
Investments 0.03 0.04
Inventories 79.01 53.61
Sundry Debtors 69.95 60.38
Cash and Bank Balance 5.22 6.15
Total Current Assets 154.18 120.14
Loans and Advances 1,551.62 672.89
Fixed Deposits 80.06 82.31
Total CA, Loans & Advances 1,785.86 875.34
Deffered Credit 0 0
Current Liabilities 142.9 114.46
Provisions 835.19 66.43
Total CL & Provisions 978.09 180.89
Net Current Assets 807.77 694.45
Miscellaneous Expenses 0 0
Total Assets 818.01 703.17
11. Profit and Loss Account of Novartis india:-
31 march 2013 31 march 2012
Revenue:-
Revenue from Operations (Gross) 9,065.0 8,468.0
Less: Excise Duty 31.4 25.1
Revenue from Operations (Net) 9,033.6 8,442.9
Other Income 831.9 840.1
Total Revenue 9,865.5 9,283.0
Expenses:-
Cost of Materials Consumed 403.6 313.9
Purchases of Stock-in-Trade 3,579.3 3,023.8
Changes in Inventories of Finished
Goods and Stock-in-Trade (266.4) (222.9)
Employee Benefits Expense 1,623.0 1,376.8
Finance Costs 2.2 5.4
Depreciation Expense 35.9 26.7
Other Expenses 2,793.7 2,512.4
Total Expenses 8,171.3 7,036.1
Profit before Tax 1,694.2 2,246.9
Tax Expense
For the year
Current Tax 570.0 745.0
Deferred Tax 10.5 (15.0)
580.5 730.0
For earlier years
Current Tax (Net) (73.7) (3.3)
Fringe Benefits Tax (9.9) —
496.9 726.7
Profit for the year 1,197.3 1,520.2
12. Liquidity Ratio
Liquidity ratios are generally based on the relationship between current
assets and current liabilities . Liquidity ratio refers to the ability of the
firm to meet its short term obligations.
1.Current ratio:-
this is used to evaluate short term financial position of the business concern.
It compares the current assets and current liabilities of the firm.
Current ratio = current assets
Current liabilities
2012 2011
1785.86/978.09=1.9
i. e. 1.9:1
875.34/180.89=4.8
i.e. 4.8:1
Interpretation:-
Ideal current ratio should be
2:1. So, we can say that the
company’s financial position
is satisfactory in year 2011
and not satisfactory in year
2012
13. Liquid Ratio: -It is very useful in measuring liquidity position of a
firm. It measures the firm’s capacity to pay off current
obligations. It is used as complimentary ratio to the current ratio.
Quick ratio = liquid assets
Current liabilities.
2012 2011
1706.85/978.09=1.8
i. e. 1.8:1
821.73/180.89=4.5
i. e. 4.5:1
Interpretation:-
Liquid ratio of 1:1 is considered satisfactory. If quick assets are
equal to current liabilities, then the concern may be able to meet
its short term obligations. Here in both the years liquid asset is
greater than the current liabilities, hence the company is much
liquid in meeting its short term obligations during both the years.
14. Leverage ratios
Leverage ratios analyze the long term solvency that help us judge
the ability of a firm to pay the interest regularly
1.Debt equity ratio: shows a relationship between long term debt and
shareholder’s fund. This ratio indicates the relation between outsider’s
fund and shareholder’s fund. Also called external internal equity ratio
Debt equity ratio= debt or long term debt
Equity shareholder’s fund
.
2012 2011
0.14/817.87=0.00017 0.2/702.99=0.00028
Interpretation:-
A ratio of 1:1 is usually considered
to be satisfactory. This ratio is
calculated to know about the
organization’s repayment
capacity of long term debts.
Here the ratio obtained for both
the years is satisfactory.
15. 2.Proprietary ratio: this establishes the relationship between
shareholder’s funds to assets of the firm. It is important for determining
long term solvency of the firm. Also known as equity ratio or net worth to
total assets ratio.
Proprietary ratio= Equity
Total assets
2012 2011
817.87/818.01=0.99 702.99/703.17=0.99
Interpretation:
Higher the ratio, dependency on external sources and loans for working
capital will be less and financial condition of the organization will be sound.
Here in both the years the ratio is same i. e. o.99 or 99% and very much
sound as it is much higher.
16. Turnover ratios
They indicate the rapidity with which the resources available to the
concern are being used to produce sales. In other words, they measure
the efficiency and rapidity of resources of the company
1. Stock turnover Ratio:- inventory ratio. This ratio indicates
relationship between cost of goods sold during the year and
average stock kept during that year.
Stock turnover ratio= cost of goods sold
Average stock
2012 2011
843.61/66.31=12.72 742.71/52.49=14.14
Interpretation:-
This ratio indicates whether stock
has been efficiently used or not
,the number of times the stock is
turned into sales during the year.
The higher the ratio, the better it
is, since it indicates that stock is
selling quickly. STR is much
higher in year 2011 compared to
2012, hence in 2011 the company's
stock has been turned into sales
efficiently.
17. 2. Fixed assets turnover ratio: This ratio indicates relationship
between costs of goods sold and fixed assets during a year.
Fixed assets turnover ratio= cost of goods sold
Net fixed assets
.
2012 2011
845.61/154.18=5.47 742.71/120.14=6.18
Interpretation:-
This ratio reveals how efficiently the fixed assets are being utilized. If
there is increase in ratio, it indicates that there is better utilization of
fixed assets , here in year 2011 the fixed assets have been utilized
efficiently compared to year 2012.
18. 3. Working capital turnover ratio: This ratio indicates relationship
between sales and working capital.
Working capital turnover ratio = cost of goods sold or sales
Working capital
2012 2011
845.61/807.77=1.04 742.71/694.45=1.06
Interpretation:-
This ratio reveals how efficiently working capital has been
utilized in making sales. A high working turnover ratio shows
efficient use of working capital. Here we find that working
capital of Novartis pharmaceuticals in year 2011 was efficiently
utilized to make sales.
19. CONCLUSION
After the overall financial ratio analysis of Novartis
pharmaceuticals , it is found that the financial
performance and management of company was sound
and efficient enough in year 2011 as compared to
2012,as the company was very much liquid during 2011 ,
current ratio was satisfactory , stock and working
capital was efficiently used.
