Working Capital Management on Cadila Healthcare Limited.

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Working Capital Management on Cadila Healthcare Limited.
Submitted to
Gujarat University for the degree of
Master in Commerce
Faculty: Commerce
Subject: Working Capital Management on Cadila Healthcare
Limited.
By
Moin A. Panja .
H. A .College of Commerce.
College Seat No. 36 Year 2014.
Exam Seat No. Year 2014.
Under the guidance of
Prof. P. C. Raval
H. A. College of Commerce.

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A first for the nation...
Cadila Healthcare Limited

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H. A. College of Commerce.
Near Law Garden,
Ahmedabad
CERTIFICATE
This is to certify that Mr. Moin A. Panja has worked and completed
his Project Work for the degree of MASTER IN COMMERCE in the
faculty of COMMERCE in the subject of ACCOUNTANCY on Title
of project work to be written “ Working Capital Management on
Cadila Healthcare Limited .” under my supervision. It is his own
work and facts reported by his personal findings and investigations.
Name & Signature of Guide Date of submission:
Name & Signature of Professor in Charge/ Director/Principal of the
Institute
Stamp of the Institute with date

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Declaration by student
I the undersigned Mr. Moin A. Panja here by, declare that this
project work entitled “Working Capital Management on Cadila
Healthcare Limited “is a result of my own research work and has not
been previously submitted to any other University for any other
examination.
I here by further declare that all information of this document has
been obtained and presented in accordance with academic rules and
ethical conduct.
College Seat No . 36 Year 2014 .
Exam Seat No. 784 Year 2014 .
Date Name & Signature
Moin A. Panja
Place : Ahmedabad ResearchScholar

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PREFACE
To start any business, First of all we need finance and the success of that business
entirely depends on the proper management of day-to-day finance and the
management of this short-term capital or finance of the business is called Working
capital Management.
Working Capital is the money used to pay for the everyday trading activities carried
out by the business - stationery needs, staff salaries and wages, rent, energy bills,
payments for supplies and so on.
I have tried to put my best effort to complete this task on the basis of skill that I have
achieved during the study of M.com in the institute.
I have tried to put my maximum effort to get the accurate statistical data. However
I would appreciate if any mistakes are brought to my by the reader.

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ACKNOWLEDGEMENT
In course of M.com my college had given me opportunity to prepare financial report
on Cadila Healthcare Limited. Therefore I was asked to prepare a project report on
Working Capital Management at Cadila Healthcare Limited.. Moreover by this way I
got an opportunity to be financial management practically. While preparation of this
report many people given me help and support. I would be happy to appreciate all of
them and give my thanks to all who help and give them support during preparation of
the report.
I thankful to the faculty that provide such great opportunity to get practical knowledge
about financial management and guide us in preparation of project so I would like to
thank Prof. P.C. Raval to provide us guideline for preparation of project report .
Date : 31-03-2014 Moin A. Panja
Place: Ahmedabad

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Chapter No. Title of Chapter Page No.
Chapter :- 1 Introduction 9
1.1 History of Indian Pharmaceutical industry 10
Chapter :- 2 Introduction to Cadila Healthcare Limited 22
2.1 History and development 24
2.2 Company profile 40
2.3 Stock performance history 44
2.4 Products plants 46
2.5 Products 47
Chapter :- 3 Research Methodology 50
3.1 Research Objective 51
3.2 Scope of Research 51
3.3 Data Type 51
3.4 Data Sources 51
3.5 Research Design 51
3.6 Tools used for analysis 51
3.7 Literature review 52
3.8 Limitations for the study 52
Chapter :- 4
Theoretical Framework of Working Capital
Management 53
4.1 Working capital Management 54
4.2 Concept of Working Capital 56
4.3 Classification of working capital 57
4.4 Importance or Advantage the Working Capital 59
4.5 Factors determining the working capital requirements 60
4.6 Sources of working capital 61

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4.7 Different aspects of Working capital management 64
4.8 Working capital analysis 70
Chapter :- 5 Data Analysis and interpretation 75
5.1 Working Capital Statement 76
5.2 Liquidity position 80
5.3 Comparative balance sheet statement 81
5.4 Trend Percentage 88
5.5 Ratio Analysis 91
Findings 106
Suggestion 106
Conclusion 107
Bibliography 108
Annexure
Balance sheet for Cadila Healthcare limited. 109
Profit and loss account of Cadila Healthcare limited 111
Cash flow statement 113

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CHAPTER :- 1
INTRODUCTION :
HISTORY OF INDIAN PHARMACEUTICAL INDUSTRY

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1.1 History of Indian Pharmaceutical industry
Industry Definition:-
“The Indian pharmaceutical industry is a success story providing employment for
millions and ensuring that essential drugs at affordable prices are available to the vast
population of this sub-continent.”
Richard Gerster
The Pharmaceutical industry in India is the world's third-largest in terms of volume.
According to Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers,
the total turnover of India's pharmaceuticals industry between 2008 and September
2009 was US$21.04 billion, while the domestic market was worth US$12.26 billion.
The industry holds a market share of $14 billion in the United States.
According to Brand India Equity Foundation, the Indian pharmaceutical market is
likely to grow at a compound annual growth rate (CAGR) of 14-17 per cent in
between 2012-16. India is now among the top five pharmaceutical emerging markets
of the world.
Exports of pharmaceuticals products from India increased from US$6.23 billion in
2006–07 to US$8.7 billion in 2008–09 a combined annual growth rate of 21.25%.
According to PricewaterhouseCoopers (PWC) in 2010, India joined among the league
of top 10 global pharmaceuticals markets in terms of sales by 2020 with value
reaching US$50 billion.
The government started to encourage the growth of drug manufacturing by Indian
companies in the early 1960s, and with the Patents Act in 1970. However, economic
liberalization in 90s by the former Prime Minister P.V. Narasimha Rao and the then
Finance Minister, Dr. Manmohan Singh enabled the industry to become what it is
today. This patent act removed composition patents from food and drugs, and though
it kept process patents, these were shortened to a period of five to seven years.

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The lack of patent protection made the Indian market undesirable to the multinational
companies that had dominated the market, and while they streamed out. Indian
companies carved a niche in both the Indian and world markets with their expertise in
reverse-engineering new processes for manufacturing drugs at low costs. Although
some of the larger companies have taken baby steps towards drug innovation, the
industry as a whole has been following this business model until the present.
India's biopharmaceutical industry clocked a 17 percent growth with revenues of Rs.
137 billion ($3 billion) in the 2009–10 financial year over the previous fiscal. Bio-
pharma was the biggest contributor generating 60 percent of the industry's growth at
Rs. 88.29 billion, followed by bio-services at Rs. 26.39 billion and bio-agri at Rs.
19.36 billion.
In 2013, there were 4,655 pharmaceutical manufacturing plants in all of India,
employing over 345 thousand workers.
Pharmaceutical industry today:-
The number of purely Indian pharma companies is fairly less. Indian pharma industry
is mainly operated as well as controlled by dominant foreign companies having
subsidiaries in India due to availability of cheap labor in India at lowest cost. In 2002,
over 20,000 registered drug manufacturers in India sold $9 billion worth of
formulations and bulk drugs. 85% of these formulations were sold in India while over
60% of the bulk drugs were exported, mostly to the United States and Russia. Most of
the players in the market are small-to-medium enterprises; 250 of the largest
companies control 70% of the Indian market. Thanks to the 1970 Patent Act,
multinationals represent only 35% of the market, down from 70% thirty years ago.
Most pharma companies operating in India, even the multinationals, employ Indians
almost exclusively from the lowest ranks to high level management. Homegrown
pharmaceuticals, like many other businesses in India, are often a mix of public and
private enterprise.

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In terms of the global market, India currently holds a modest 1–2% share, but it has
been growing at approximately 10% per year. India gained its foothold on the global
scene with its innovatively engineered generic drugs and active pharmaceutical
ingredients (API), and it is now seeking to become a major player in outsourced
clinical research as well as contract manufacturing and research. There are 74 US
FDA-approved manufacturing facilities in India, more than in any other country
outside the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications
(ANDA) to the FDA are expected to be filed by Indian companies. Growth in other
fields notwithstanding, generics are still a large part of the picture. London research
company Global Insight estimates that India’s share of the global generics market will
have risen from 4% to 33% by 2007. The Indian pharmaceutical industry has become
the third largest producer in the world and is poised to grow into an industry of $20
billion in 2015 from the current turnover of $12 billion
Patent:-
As it expands its core business, the industry is being forced to adapt its business
model to recent changes in the operating environment. The first and most significant
change was the 1 January 2005 enactment of an amendment to India’s patent law that
reinstated product patents for the first time since 1972. The legislation took effect on
the deadline set by the WTO’s Trade-Related Aspects of Intellectual Property Rights
(TRIPS) agreement, which mandated patent protection on both products and
processes for a period of 20 years. Under this new law, India will be forced to
recognize not only new patents but also any patents filed after 1 January 1995. Indian
companies achieved their status in the domestic market by breaking these product
patents, and it is estimated that within the next few years, they will lose $650 million
of the local generics market to patent-holders.
In the domestic market, this new patent legislation has resulted in fairly clear
segmentation. The multinationals narrowed their focus onto high-end patients who
make up only 12% of the market, taking advantage of their newly bestowed patent

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protection. Meanwhile, Indian firms have chosen to take their existing product
portfolios and target semi-urban and rural populations.
Product development:-
Indian companies are also starting to adapt their product development processes to the
new environment. For years, firms have made their ways into the global market by
researching generic competitors to patented drugs and following up with litigation to
challenge the patent. This approach remains untouched by the new patent regime and
looks to increase in the future. However, those that can afford it have set their sights
on an even higher goal: new molecule discovery. Although the initial investment is
huge, companies are lured by the promise of hefty profit margins and has a legitimate
competitor in the global industry. Local firms have slowly been investing more
money into their R&D programs or have formed alliances to tap into these
opportunities.
Small and medium enterprises:-
As promising as the future is for a whole, the outlook for small and medium
enterprises (SME) is not as bright. The excise structure changed so that companies
now have to pay a 16% tax on the maximum retail price (MRP) of their products, as
opposed to on the ex-factory price. Consequently, larger companies are cutting back
on outsourcing and what business is left is shifting to companies with facilities in the
four tax-free states – Himachal Pradesh, Jammu & Kashmir, Uttaranchal and
Jharkhand. Consequently a large number of pharmaceutical manufacturers shifted
their plant to these states, as it became almost impossible to continue operating in
non-tax free zones. But in a matter of a couple of years the excise duty was revised on
two occasions, first it was reduced to 8% and then to 4%. As a result the benefits of
shifting to a tax free zone was negated. This resulted in, factories in the tax free zones,
to start up third party manufacturing. Under this these factories produced goods under
the brand names of other parties on job work basis.

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As SMEs wrestled with the tax structure, they were also scrambling to meet the 1 July
deadline for compliance with the revised Schedule M Good Manufacturing Practices
(GMP). While this should be beneficial to consumers and the industry at large, SMEs
have been finding it difficult to find the funds to upgrade their manufacturing plants,
resulting in the closure of many facilities. Others invested the money to bring their
facilities to compliance, but these operations were located in non-tax-free states,
making it difficult to compete in the wake of the new excise tax.
Challenges:-
Even after the increased investment, market leaders such as Ranbaxy and Dr. Reddy’s
Laboratories spent only 5–10% of their revenues on R&D, lagging behind Western
pharmaceuticals like Pfizer, whose research budget last year was greater than the
combined revenues of the entire Indian pharmaceutical industry. This disparity is too
great to be explained by cost differentials, and it comes when advances in genomics
have made research equipment more expensive than ever. The drug discovery process
is further hindered by a dearth of qualified molecular biologists. Due to the disconnect
between curriculum and industry, pharma in India also lack the academic
collaboration that is crucial to drug development in the West and so far.
Relationship between pharmaceuticals and biotechnology:-
Unlike in other countries, the difference between biotechnology and pharmaceuticals
remains fairly defined in India. Bio-tech there still plays the role of pharma’s little
sister, but many outsiders have high expectations for the future. India accounted for
2% of the $41 billion global biotech market and in 2003 was ranked 3rd in the Asia-
Pacific region and 11th in the world in number of biotech. In 2004-5, the Indian
biotech industry saw its revenues grow 37% to $1.1 billion. The Indian biotech
market is dominated by bio pharmaceuticals; 75% of 2004–5 revenues came from bio-
pharmaceuticals, which saw 30% growth last year. Of the revenues from bio-
pharmaceuticals, vaccines led the way, comprising 47% of sales. Biologics and large-

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molecule drugs tend to be more expensive than small-molecule drugs, and India hopes
to sweep the market in bio-generics and contract manufacturing as drugs go off patent
and Indian companies upgrade their manufacturing capabilities.
Most companies in the biotech sector are extremely small, with only two firms
breaking 100 million dollars in revenues. At last count there were 265 firms registered
in India, over 75% of which were incorporated in the last five years. The newness of
the companies explains the industry’s high consolidation in both physical and
financial terms. Almost 50% of all biotech are in or around Bangalore, and the top ten
companies capture 47% of the market. The top five companies were homegrown;
Indian firms account for 62% of the bio-pharma sector and 52% of the industry as a
whole.[4,46] The Association of Biotechnology-Led Enterprises (ABLE) is aiming to
grow the industry to $5 billion in revenues generated by 1 million employees by 2009,
and data from the Confederation of Indian Industry (CII) seem to suggest that it is
possible.
Comparison with the US:-
The Indian biotech sector parallels that of the US in many ways. Both are filled with
small start-ups while the majority of the market is controlled by a few powerful
companies. Both are dependent upon government grants and venture capitalists for
funding because neither will be commercially viable for years. Pharmaceutical
companies in both countries have recognised the potential effect that biotechnology
could have on their pipelines and have responded by either investing in existing start-
ups or venturing into the field themselves. In both India and the US, as well as in
much of the globe, biotech is seen as a hot field with a lot of growth potential.
Relationship with IT:-
Many analysts have observed that the hype around the biotech sector mirrors that of
the IT sector. Biotech colleges have been popping up around the country eager to
service the pools of students that want to take advantage of a growing industry. The

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International Finance Corporation, the private investment arm of the World Bank,
called India the "centerpiece of IFC’s global biotech strategy." Of the $110 million
invested in 14 biotech projects investment globally, the IFC has given $43 million to
4 projects in India. According to Dr. Manju Sharma, former director of the
Department of Biotechnology, the biotech industry could become the "single largest
sector for employment of skilled human resource in the years to come". British Prime
Minister Tony Blair was similarly impressed, citing the success of India’s biotech
industry as the reason for his own country’s own biotech opportunities. Malaysia is
also looking to India as an example for growing its own biotech industry.
Support Indian Government:-
The Indian government has been very supportive. It established the Department of
Biotechnology in 1986 under the Ministry of Science and Technology. Since then,
there have been a number of dispensations offered by both the central government and
various states to encourage the growth of the industry. India’s science minister
launched a program that provides tax incentives and grants for biotech start-ups and
firms seeking to expand and establishes the Biotechnology Parks Society of India to
support ten biotech parks by 2010. Previously limited to rodents, animal testing was
expanded to include large animals as part of the minister’s initiative. States have
started to vie with one another for biotech business, and they are offering such
goodies as exemption from VAT and other fees, financial assistance with patents and
subsidies on everything ranging from investment to land to utilities.
Foreign investment:-
The government has also taken steps to encourage foreign investment in its biotech
sector. An initiative passed earlier this year allowed 100% foreign direct investment
without compulsory licensing from the government. In April, a delegation headed by
the Kapil Sibal, the minister of science and technology and ocean development,
visited five cities in the US to encourage investment in India, with special emphasis

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on biotech. Just two months later, Sibal returned to the US to unveil India’s biotech
growth strategy at the BIO2005 conference in Philadelphia.
Challenges:-
The biotech sector faces some major challenges in its quest for growth. Chief among
them is a lack of funding, particularly for firms that are just starting out. The most
likely sources of funds are government grants and venture capital, which is a
relatively young industry in India. Government grants are difficult to secure, and due
to the expensive and uncertain nature of biotech research, venture capitalists are
reluctant to invest in firms that have not yet developed a commercially viable product.
The government has addressed the problem of educated but unqualified candidates in
its Draft National Biotech Development Strategy. This plan included a proposal to
create a National Task Force that will work with the biotech industry to revise the
curriculum for undergraduate and graduate study in life sciences and biotechnology.
The government’s strategy also stated intentions to increase the number of PhD
Fellowships awarded by the Department of Biotechnology to 200 per year. These
human resources will be further leveraged with a "Bio-Edu-Grid" that will knit
together the resources of the academic and scientific industrial communities, much as
they are in the US.
Development In India :-
The Indian Pharmaceutical Industry today is in the front rank of India’s science-based
industries with wide ranging capabilities in the complex field of drug manufacture and
technology.
Facts about the Role of Pharmaceutical Industry in Indian Gross Domestic Product
(GDP):
Indian Pharmaceutical Industry ranks fourth in the world, pertaining to the volume of
sales.

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The estimated worth of the Indian Pharmaceutical Industry is US$ 6 billion.
The growth rate of the industry is about 13% per year.
Almost most 70% of the domestic demand for bulk drugs is catered by the Indian
Pharma Industry.
The Pharma Industry in India produces around 20% to 24% of the global Generic
drugs.
The Indian Pharmaceutical Industry is one of the biggest producers of the Active
Pharmaceutical Ingredients (API) in the international arena.
The Indian Pharma sector leads the science-based industries in the country.
Around 40% of the total pharmaceutical produce is exported.
55% of the total exports constitute of formulations and the other 45% comprises of
bulk drugs.
The Indian Pharma Industry includes small scaled, medium scaled, large scaled
players, which totals nearly 300 different companies.
As per the present growth rate, the Indian Pharma Industry is expected to be a US$ 20
billion industry by the year 2015.
The Indian Pharmaceutical sector is also expected to be among the Top Ten Pharma
based markets in the world in the next ten years
The sales of the Indian Pharma Industry would worth US$ 43 billion within the next
decade.
The multinational companies, investing in research and development in India may
save up to 30% to 50% of the expenses incurred

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The cost of hiring a research chemist in the US is five times higher than its Indian
counterpart.
The manufacturing cost of pharmaceutical products in India is nearly half of the cost
incurred in US.
The cost of performing clinical trials in India is one tenth of the cost incurred in US.
The cost of performing research in India is one eighth of the cost incurred in US.
Following the de-licensing of the pharmaceutical industry, industrial licensing for
most of the drugs and pharmaceutical products has been done away with.
Manufacturers are free to produce any drug duly approved by the Drug Control
Authority. Technologically strong and totally self-reliant, the pharmaceutical industry
in India has low costs of production, low R&D costs, innovative scientific manpower,
strength of national laboratories and an increasing balance of trade. The
Pharmaceutical Industry, with its rich scientific talents and research capabilities,
supported by Intellectual Property Protection regime is well set to take on the
international market.
ADVANTAGE IN INDIA :-
Competent workforce: India has a pool of personnel with high managerial and
technical competence as also skilled workforce. It has an educated work force and
English is commonly used. Professional services are easily available.
Cost-effective chemical synthesis: Its track record of development, particularly in
the area of improved cost-beneficial chemical synthesis for various drug molecules is
excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk
drugs.

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Legal & Financial Framework: India has a 53 year old democracy and hence has a
solid legal framework and strong financial markets. There is already an established
international industry and business community.
Information & Technology: It has a good network of world-class educational
institutions and established strengths in Information Technology.
Globalization: The country is committed to a free market economy and globalization.
Above all, it has a 70 million middle class market, which is continuously growing.
Consolidation: For the first time in many years, the international pharmaceutical
industry is finding great opportunities in India. The process of consolidation, which
has become a generalized phenomenon in the world pharmaceutical industry, has
started taking place in India.
THE GROWTH SCENARIO:-
India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14 percent
per year. It is one of the largest and most advanced among the developing countries.
Over 20,000 registered pharmaceutical manufacturers exist in the country. The
domestic pharmaceuticals industry output is expected to exceed Rs260 billion in the
financial year 2002, which accounts for merely 1.3% of the global pharmaceutical
sector. Of this, bulk drugs will account for Rs 54 bn (21%) and formulations, the
remaining Rs 210 bn (79%). In financial year 2001, imports were Rs 20 bn while
exports were Rs87 bn.

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The above graph shows the percentage of pharmaceutical products export by various
countries.
(SOURCE Competitiveness of the Indian pharmaceutical industry in the new product
patent regime a report by FICCI)

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CHAPTER :- 2
INTRODUCTION TO CADILA HEALTH CARE
LIMITED

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A first for the nation...
Cadila Healthcare Limited

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2.1 History and Development :-
The company history sections lists out major chronological events that happened to
the company.
1995
The Company was incorporated as Cadila Healthcare Private Ltd. on May 15, under
the company act, 1956 and subsequently the Company was converted into a public
company and then renamed as Cadila Healthcare Ltd. effective from Juy 17, 1996.
The name "Cadila" shall be used only for "Cadila Healthcare Limited" (Zydus
Cadila), "Cadila Pharmaceuticals Limited" (CPL) and "Cadila Laboratories Limited"
(CLL).
The Company is flagship company of Zydus Cadila Group.
The Company's operations include pharmaceuticals (human formulations, veterinary
formulations and bulk drugs); diagnostics, herbal products, skin care products and
other OTC products.
- The Company has 6 subsidiaries Indon Healthcare Ltd., Zydus Pharmaceuticals Ltd.,
Zudus Aqrovet Ltd., Zoom Properties Pvt. Ltd., Zydus International Pvt. Ltd., Ireland
and Zydus Healthcare S.A. (Pvt) Ltd., South Africa.
- Zydus Cadila signed an agreement with Anda Biologicals, France, for Marketing
and distribution of diagnostic kits. Anda to appoint a max. of two distributors in India.
1996
- Zydus Cadila signed an agreement with Centeon L.L.C., USA and Centeon Pharama
GMBH, Germany for Exclusive rights to sell and distribute plasma products in India
and Nepal.
- In May, Zydus Cadila signed an agreement with Acta Services Srl., Rome for
distribution of Diagnostic instrument Acto 1 Analyser manu. By Acta.

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- In June, Zydus Cadila signed an agreement with China Resources Gulin Pharma,
Works, China, for exclusive supply of Artesunate Granules to Zydus Cadila.
- In July, Zydus Cadila signed an agreement with Shimizu Chemical Corporation,
Japan, for Marketing of specified products by Zydus Cadila in India.
1997
- A Scheme of Arrangement and Amalgamation was sanctioned by honorable High
Court of Gujarat by order passed on May 2 issued on August 16th.
- Zydus Cadila would issued 1,48,423 fully paid-up equity shares of Rs 10/- each to
the shareholders of Patel Group in exchange for the assets transferred to them of
Transferor companies.
- Zydus Cadila has also tied-up with Regional Research Laboratory Jammu, to
develop Enzymatic Resolution for Paroxetine HCL and some other Enzymatic
products.
1998
- In February, Zydus Cadila signed an agreement with Apotex SA Pty. Ltd. for
manufacturer of Amoxycillin, Ampicillin, Co - trimoxazole, paracetamol.
- Zydus Cadila has also entered into a joint venture with Korea Green Cross
Corporation, Korea, to manufacture and market recombinant Hepatitis B vaccine in
India.
1999
- In April, Zydus Cadila signed an agreement with Ethical Holdings Plc, Beta Pharma,
and Ethical Pharma South America S.A. for Know-how Licence Agreement to
manufacture, marketing and sell transdermal pharmaceutical formulations.
- In September, Zydus Cadila signed an agreement with Cherry Valley Farms Ltd.,
UK for supply of vaccine eggs.

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- Zydus Cadila has entered into a 50:50 joint venture with Byk Gulden of Germany, a
renowned, research-oriented Pharma company of Germany and the world-wide patent
holder of the novel proton pump inhibitor, "Pantoprazole".
- During the year under report, the Company had issued 2,00,000 12% Cumulative
Redeemable Preference shares of Rs. 100/- each fully paid to the members of the
Company, which are redeemable at par on 1st July, 2001.
- During the year under report, Indon Healthcare Limited and Zydus Aqrovet Limited,
have become wholly owned subsidiaries of the company.
- During the year under report, the Company has undertaken to set up a new project
for manufacturing the bulk drug-Losartan at Ankleshwar.
- The Company laid the foundation for a new feed supplement plant, at Vatwa. The
feed supplement for poultry and cattle has been developed by tie company's R & D
bio-tech department.
- The Company has set up a joint venture company to manufacture the break-through
molecule Pantoprazole. The Company is also undertaking discovery research projects
with Byk Gulden as a pan of the Joint Venture.
- The Company has entered into a technical-cum-marketing tie-up with the Swiss
Serum and Vaccine Institute, Berne, Institute to launch a range of vaccines in India.
- The Company has entered into a joint venture with the Haffkine institute to
undertake research in the field of human vaccine and equine sera.
- A new State-of-Art Research & Development centre being set-up with the capital
cost of approximately Rs. 25.00 crores in the Village: Moraiya. Taluka:Sanand, Dist.:
Ahmedabad.
- During the year under report the Company has launched several new products in the
market : Vac Typh, HB Vac, Xylodac, Losartan, Losacar was the first to be launched
in India & Matergam P.

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- The Company has set up manufacturing premises to manufacture the feed
supplement - Improval at GIDC Vatwa.
- Shir Pranlal Bhogilal was appointed as an additional Director of the Company with
effect from 15th December, 1998 pursuant to Section 260 of the Companies Act,
1956.
- Shri Mukesh M. Patel Director of the Company retires by rotation and he is eligible
for reappointment.
- A new welfare policy has been introduced for employees of the Company.
2000
- The Company is setting up wholly owned subsidiaries abroad and plans to acquire
overseas companies to market products.
- The Company has entered into License Agreement for phased manufacture and
technical know-how transfer with Swiss Serum and Vaccine Institute, Switzerland for
the manufacture of Purified Cuck Embroy Vaccine.
- The Country's fifth largest pharmaceutical company, is considering offering stocks
to its employees through an employees' stock option scheme.
- The Company has launched two drugs for the treatment of human
immunodeficiency virus.
- The Bulk Drugs at Ankleshwar in Gujarat has an ISO 9002 certification for the
manufacture and supply of a number of molecules.
- Public Issue of 1,48,86,000 No. of Equity shares ("Issue") of Rs 5/- each issued for
cash at a premium of Rs [] per share aggregating Rs [] million. The Issue includes a
Book Built Portion of 1,33,97,400 No. of equity shares and a Fixed price portion of
14,88,600 No. of Equity Shares.

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- Authorised share capital of the Company is Rs 500 million divided into 9,00,00,000
No. of Equity Shares of Rs 5/- each and 5,00,000 Preference Shares of Rs 100/- each.
- During the year under report, the Company has been recognise as a "Prestigious
Unit" and granted adhoc eligibility for Sales Tax deferment by the Industries
Commissionerate, Gandhinagar, under New Incentive Policy - Capital Investment
Incentive to Premier/ Prestigious unit scheme 1995-2000.
- During the year under report Zydus Pharmaceuticals Limited and Zoom Properties
Limited have become Wholly Owned Subsidiaries of the Company.
- The Company has formed a JV Company in the name of Zydus Byk Healthcare
Limited with an equal participation in collaboration with Byk Gulden Lomberg
Chemische Fabrik GmbH, Germany, for manufacturing of Bulk Drugs, Formulations
and R & D.
- The Company has also formed a JV Company in the name of Sarabhai Zydus
Animal Health Ltd. in collaboration with Ambalal Sarabhai Enterprises Ltd., Baroda,
with an equal participation to carry on the business of animal health segments.
- The company has also entered into a technical collaboration with Ethical Holdings
of U.K. to manufacture and market transdermal patches in India.
- The Company launched block-buster molecules Atorvastatin (Atorva), Lamivudine
(Lamidac 100) and Celecoxib (Zycel), Meloxicam (Mel-OD) and Carvedilol (Carvil)
during the year.
- The company was the first to launch the anti-hypertensive drug Losartan in India.
- Currently ranked 6th largest pharmaceutical company in India, Cadila Healthcare is
one of the fastest growing pharmaceutical companies in the country.
- It has also entered into a technical collaboration with Ethical Holdings of the UK to
manufacture and market transdermal patches in India.

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29
- Zydus Cadilla has also entered into a technical collaboration with Ethical Holdings
of the UK to manufacture and market transdermal patches in India.
- Cadlia Healthcare (CHL) has signed an MoU with Rs 54 crore Recon Limited,
whereby it will acquire all the 8 formulation brands of the Bangalore based comapny,
as well as its distribution network.
- The new company, `Recon Healthcare Ltd' is now a subsidiary of Zydus Cadila with
Zydus holding 90 per cent stake.
- Cadila Healthcare Ltd is setting up wholly owned subsidiaries abroad and plans to
acquire overseas companies to market products.
- Cadila also launched zidovudine, which is imported and marketed under the brand
name Zydowin. Zidovudine, commonly called AZT, is an AIDS-retardant drug made
by Glaxo Wellcome.
- Zydus Alidac, the marketing arm of Cadila Healthcare Ltd., has launched
www.penegra.org.
-The Ahmedabad-based Cadoila Healthcare has completed the phase-III clinical trials
and the bioequivalence study of the wonder drug sildenafil citrate (Viagra).
2001
- Cadila Healthcare has signed a three year collaborative R&D agreement with Danish
biotech company Pantheco in the field of anti-bacterials.
- The neurosciences division launched by the company has introduced anxiolytic
paroxetine for the first time in the country.
- Cadila Healthcare Ltd has posted a 14.75 per cent increase in net profit at Rs 21.86
crore for the quarter ended September 30, 2001.YEAR EVENTS 1995

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30
- The Company was incorporated as Cadila Healthcare Private Ltd. on May 15, under
the company act, 1956 and subsequently the Company was converted into a public
company and then renamed as Cadila Healthcare Ltd. effective from Juy 17, 1996.
- The name "Cadila" shall be used only for "Cadila Healthcare Limited" (Zydus
Cadila), "Cadila Pharmaceuticals Limited" (CPL) and "Cadila Laboratories Limited"
(CLL).
- The Company is flagship company of Zydus Cadila Group.
- The Company's operations include pharmaceuticals (human formulations, veterinary
formulations and bulk drugs); diagnostics, herbal products, skin care products and
other OTC products.
- The Company has 6 subsidiaries Indon Healthcare Ltd., Zydus Pharmaceuticals Ltd.,
Zudus Aqrovet Ltd., Zoom Properties Pvt. Ltd., Zydus International Pvt. Ltd., Ireland
and Zydus Healthcare S.A. (Pvt) Ltd., South Africa.
- Zydus Cadila signed an agreement with Anda Biologicals, France, for Marketing
and distribution of diagnostic kits. Anda to appoint a max. of two distributors in India.
1996
- Zydus Cadila signed an agreement with Centeon L.L.C., USA and Centeon Pharama
GMBH, Germany for Exclusive rights to sell and distribute plasma products in India
and Nepal.
- In May, Zydus Cadila signed an agreement with Acta Services Srl., Rome for
distribution of Diagnostic instrument Acto 1 Analyser manu. By Acta.
- In June, Zydus Cadila signed an agreement with China Resources Gulin Pharma,
Works, China, for exclusive supply of Artesunate Granules to Zydus Cadila.
- In July, Zydus Cadila signed an agreement with Shimizu Chemical Corporation,
Japan, for Marketing of specified products by Zydus Cadila in India.

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31
1997
- A Scheme of Arrangement and Amalgamation was sanctioned by honorable High
Court of Gujarat by order passed on May 2 issued on August 16th.
- Zydus Cadila would issued 1,48,423 fully paid-up equity shares of Rs 10/- each to
the shareholders of Patel Group in exchange for the assets transferred to them of
Transferor companies.
- Zydus Cadila has also tied-up with Regional Research Laboratory Jammu, to
develop Enzymatic Resolution for Paroxetine HCL and some other Enzymatic
products.
1998
- In February, Zydus Cadila signed an agreement with Apotex SA Pty. Ltd. for
manufacturer of Amoxycillin, Ampicillin, Co - trimoxazole, paracetamol.
- Zydus Cadila has also entered into a joint venture with Korea Green Cross
Corporation, Korea, to manufacture and market recombinant Hepatitis B vaccine in
India.
1999
- In April, Zydus Cadila signed an agreement with Ethical Holdings Plc, Beta Pharma,
and Ethical Pharma South America S.A. for Know-how Licence Agreement to
manufacture, marketing and sell transdermal pharmaceutical formulations.
- In September, Zydus Cadila signed an agreement with Cherry Valley Farms Ltd.,
UK for supply of vaccine eggs.
- Zydus Cadila has entered into a 50:50 joint venture with Byk Gulden of Germany, a
renowned, research-oriented Pharma company of Germany and the world-wide patent
holder of the novel proton pump inhibitor, "Pantoprazole".

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32
- During the year under report, the Company had issued 2,00,000 12% Cumulative
Redeemable Preference shares of Rs. 100/- each fully paid to the members of the
Company, which are redeemable at par on 1st July, 2001.
- During the year under report, Indon Healthcare Limited and Zydus Aqrovet Limited,
have become wholly owned subsidiaries of the company.
- During the year under report, the Company has undertaken to set up a new project
for manufacturing the bulk drug-Losartan at Ankleshwar.
- The Company laid the foundation for a new feed supplement plant, at Vatwa. The
feed supplement for poultry and cattle has been developed by tie company's R & D
bio-tech department.
- The Company has set up a joint venture company to manufacture the break-through
molecule Pantoprazole. The Company is also undertaking discovery research projects
with Byk Gulden as a pan of the Joint Venture.
- The Company has entered into a technical-cum-marketing tie-up with the Swiss
Serum and Vaccine Institute, Berne, Institute to launch a range of vaccines in India.
- The Company has entered into a joint venture with the Haffkine institute to
undertake research in the field of human vaccine and equine sera.
- A new State-of-Art Research & Development centre being set-up with the capital
cost of approximately Rs. 25.00 crores in the Village: Moraiya. Taluka:Sanand, Dist.:
Ahmedabad.
- During the year under report the Company has launched several new products in the
market : Vac Typh, HB Vac, Xylodac, Losartan, Losacar was the first to be launched
in India & Matergam P.
- The Company has set up manufacturing premises to manufacture the feed
supplement - Improval at GIDC Vatwa.

`
33
- Shir Pranlal Bhogilal was appointed as an additional Director of the Company with
effect from 15th December, 1998 pursuant to Section 260 of the Companies Act,
1956.
- Shri Mukesh M. Patel Director of the Company retires by rotation and he is eligible
for reappointment.
- A new welfare policy has been introduced for employees of the Company.
2000
- The Company is setting up wholly owned subsidiaries abroad and plans to acquire
overseas companies to market products.
- The Company has entered into License Agreement for phased manufacture and
technical know-how transfer with Swiss Serum and Vaccine Institute, Switzerland for
the manufacture of Purified Cuck Embroy Vaccine.
- The Country's fifth largest pharmaceutical company, is considering offering stocks
to its employees through an employees' stock option scheme.
- The Company has launched two drugs for the treatment of human
immunodeficiency virus.
- The Bulk Drugs at Ankleshwar in Gujarat has an ISO 9002 certification for the
manufacture and supply of a number of molecules.
- Public Issue of 1,48,86,000 No. of Equity shares ("Issue") of Rs 5/- each issued for
cash at a premium of Rs [] per share aggregating Rs [] million. The Issue includes a
Book Built Portion of 1,33,97,400 No. of equity shares and a Fixed price portion of
14,88,600 No. of Equity Shares.
- Authorised share capital of the Company is Rs 500 million divided into 9,00,00,000
No. of Equity Shares of Rs 5/- each and 5,00,000 Preference Shares of Rs 100/- each.

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34
- During the year under report, the Company has been recognise as a "Prestigious
Unit" and granted adhoc eligibility for Sales Tax deferment by the Industries
Commissionerate, Gandhinagar, under New Incentive Policy - Capital Investment
Incentive to Premier/ Prestigious unit scheme 1995-2000.
- During the year under report Zydus Pharmaceuticals Limited and Zoom Properties
Limited have become Wholly Owned Subsidiaries of the Company.
- The Company has formed a JV Company in the name of Zydus Byk Healthcare
Limited with an equal participation in collaboration with Byk Gulden Lomberg
Chemische Fabrik GmbH, Germany, for manufacturing of Bulk Drugs, Formulations
and R & D.
- The Company has also formed a JV Company in the name of Sarabhai Zydus
Animal Health Ltd. in collaboration with Ambalal Sarabhai Enterprises Ltd., Baroda,
with an equal participation to carry on the business of animal health segments.
- The company has also entered into a technical collaboration with Ethical Holdings
of U.K. to manufacture and market transdermal patches in India.
- The Company launched block-buster molecules Atorvastatin (Atorva), Lamivudine
(Lamidac 100) and Celecoxib (Zycel), Meloxicam (Mel-OD) and Carvedilol (Carvil)
during the year.
- The company was the first to launch the anti-hypertensive drug Losartan in India.
- Currently ranked 6th largest pharmaceutical company in India, Cadila Healthcare is
one of the fastest growing pharmaceutical companies in the country.
- It has also entered into a technical collaboration with Ethical Holdings of the UK to
manufacture and market transdermal patches in India.
- Zydus Cadilla has also entered into a technical collaboration with Ethical Holdings
of the UK to manufacture and market transdermal patches in India.

`
35
- Cadlia Healthcare (CHL) has signed an MoU with Rs 54 crore Recon Limited,
whereby it will acquire all the 8 formulation brands of the Bangalore based comapny,
as well as its distribution network.
- The new company, `Recon Healthcare Ltd' is now a subsidiary of Zydus Cadila with
Zydus holding 90 per cent stake.
- Cadila Healthcare Ltd is setting up wholly owned subsidiaries abroad and plans to
acquire overseas companies to market products.
- Cadila also launched zidovudine, which is imported and marketed under the brand
name Zydowin. Zidovudine, commonly called AZT, is an AIDS-retardant drug made
by Glaxo Wellcome.
- Zydus Alidac, the marketing arm of Cadila Healthcare Ltd., has launched
www.penegra.org.
-The Ahmedabad-based Cadoila Healthcare has completed the phase-III clinical trials
and the bioequivalence study of the wonder drug sildenafil citrate (Viagra).
2001
- Cadila Healthcare has signed a three year collaborative R&D agreement with Danish
biotech company Pantheco in the field of anti-bacterials.
- The neurosciences division launched by the company has introduced anxiolytic
paroxetine for the first time in the country.
- Cadila Healthcare Ltd has posted a 14.75 per cent increase in net profit at Rs 21.86
crore for the quarter ended September 30, 2001.
2002
-Cadila Healthcare Ltd has informed BSE that at the meeting of the Board of
Directors of the company held on August 20, 2002 it has been decided to issue/allot

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36
Secured Redeemable Non Convertible Debentures for an aggregate face value of Rs
700 million by private placement basis at an interest rate of 8.40% p.a.
2003
-Mr.UpenShah has been designated as the Company Secretary and Compliance
Officer of Cadila Healthcare Ltd.
-Zydus Cadila, the ahmedabad based healthcare has bagged global marketing rights of
an anti-rabies vaccine of vaxirab a swiss company Berna Biotech.
-Cadila Healthcare receives Mumbai High court approval for the scheme of
amalgamation with German Remedies Ltd and Zoom Properties Ltd.
-Cadila Healthcare Ltd has acquired US base Alpharma Inc's French Subsidiary
Alpharma SAS France for a consideration of Euro 5.5 million.
-Mr.H.K.Bilpodiwala, Mr.H.Dhanarajgir and Mr.A.S Diwanji have been appointed as
the additional directors on the board of the company.
-Zydus Cadila Healthcare Ltd has signed a pact with Schering AG, Germany which
allows the Indian Pharmaceuticals major to market Schering's patented products in
India.
-Duphar Interfran, a subsidiary of Fermenta Biotech Ltd signed an agreement with
Cadila Ltd for the sale of FBL's global patents of Chiral Building blocks and process
teechnology for the manufacture of Lisinopril and Benazepril.
-Zydus forges marketing pact with Schering
2004
-Zydus Cadila sets up Zydus Pharmaceuticals USA, Inc
-Zydus Cadila inks strategic pact with Boehringer Ingelheim

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37
-Zyndus Altana Healthcare - the JV between Altana Pharma AG and Zyndus Cadila,
has been accredited with the ISO 9001-2000 certificate.
2005
- Zydus Cadila receives approval from the USFDA to market the anti-hypertensive
drug, Atenolol, and an anti-infective drug, Clindamycin on 31 Jan and 1 Feb.
-Zydus Cadila unveils 'Pitavastatin' to control cholesterol on February 21, 2005
-Cadila ties up with Tyco unit to sell generic drugs in US
- Launches NuPatch - India's first indigenously manufactured Diclofenac transdermal
patch for pain relief.
-Cadila Healthcare & Mayne signs agreement to set up JVC to manufacture specialty
oncology products
-Cadila Healthcare - German Remedies launches Fludara Oral for Lymphocytic
Leukaemia
-Zydus Cadila receives tentative approval for Divalproex Sodium DR Tablets from
US FDA
-Cadila Healthcare receives approval for Promethazine Tablets from USFDA
-Cadila Healthcare enters into JV with BSVL
2006
-Zydus Cadila forges alliance with French firm
-Zydus Cadila receives USFDA approval for Simvastatin Tablets
-Zydus Cadila to acquire Nutralite - India's largest selling cholesterol-free margarine

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38
-Sarabhai Zydus to roll out immuno-diagnostics kits
-Cadila Healthcare has given the Bonus in the Ratio of 1:1
2007
-Cadila Healthcare Ltd on April 19, 2007 has announced the acquisition of Nippon
Universal Pharmaceutical Ltd.
- Cadila Healthcare Ltd has announced that its second overseas acquisition this year,
the Company signed an agreement to acquire 100% stake in Quimica e Farmaceutica
Nikkho do Brasil Ltda.
-Zydus Cadila acquires Nippon Universal, strengthens its presence in Japan
-Zydus Cadila, the first to launch revolutionary anti-obesity drug Slimona in India
-Zydus Cadila acquires Brazilian Company Nikkho
2008
-Zylus Cadila, Karo Bio to jointly develop new drugs
-Zydus Cadila & Karo Bio of Sweden sign research agreement for a novel drug to
treat inflammatory diseases
-Zydus Cadila acquires Etna Biotech, a subsidiary of Crucell N.V.
-Zydus scores with first day launch of Venlafaxine Hydrochloride in the US
2009
-Zydus Cadila announces research collaboration to discover and develop new
cardiovascular medicines
-Zydus Research Centre Receives AAALAC Accreditation

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39
2010
-CHL announces Bonus Shares in the ratio of 1:2
- India unveiled its first indigenous H1N1 vaccine, which was developed by drug firm
Cadila Healthcare and this vaccine will provide immunity from the H1N1 virus strain
for one year.
2011
-Company has signed an Agreement with Bayer HealthCare to set up 50:50 Joint
Venture Company in the name of "Bayer Zydus Pharma
-Cadila gets USFDA nod for diabetes drug trial
-Cadila Health acquires Bremer Pharma from ICICI Venture
2012
-"Cadila Healthcare enters into a settlement and license agreement with Somaxon for
Silenor"
-Cadila Healthcare gets USFDA nod for Aripiprazole orally disintegrating tablets

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40
2.2 COMPANY PROFILE :-
Founder :- Late Mr. Raman Bhai B. Patel .
Key Executives :-
Chairman & Managing Director :- Pankaj R Patel
Deputy Managing Director :- Sharvil P Patel
Director :- Mukesh M Patel
Director :- H Dhanrajgir
Board Of Directors:-
Chairman & Managing Director :- Pankaj R Patel
Deputy Managing Director :- Sharvil P Patel
Director :- Mukesh M Patel
Director :- H Dhanrajgir
A S Diwanji
Company Secretary :- Upen H Shah
Director :- Nitin Raojibhai
Desai

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41
Bankers :-
Bank of Baroda
BNP Paribas
Citibank N A
Credit Agricole Cor & Inv
Export-Import Bk of India
HDFC Bank Ltd
ICICI Bank Ltd
IDBI Bank
Standard Chartered Bank
State Bank of India
Auditors :-
Mukesh M Shah & Co
Registered and corporate Offices :-
Registered Address :-
"Zydus Tower",
Satellite Cross Roads,,Sarkhej Gandhinagar Highway
Ahmedabad
Gujarat
380015
Tel: 079-26868100
Fax: 079-26862365 079-26862366
Email: investor.grievance@zyduscadila.com
Website: http://www.zyduscadila.com
Group: Zydus Cadilla Group
Registrars:
Sharepro Services India P Ltd
Samhita Complex
Plot No 13 AB
Saki Naka Andheri(E)
Mumbai-400072
Mission :-
A mission to create healthier communities
Zydus Cadila is dedicated to life…
In all its dimensions. Our world is shaped by a passion for innovation, commitment to
partners and concern for people in an effort to create healthier communities, globally.

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42
Vision :-
A vision that unleashes value
To be a leading global healthcare provider with a robust product pipeline;
Stepping beyond the billion, we shall achieve sales of over $3bn by 2015 and be a
research-driven pharmaceutical company by 2020.

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44
2.3 Stock performance history :-
Last one year stock performance of Cadila healthcare limited and
comparison with Ranbaxy and sun pharma .
Stock performance Cadila healthcare limited of last one year and compare it with
ranbaxy lab and sun pharma
Cadila Health care has give completely upside of stock performance in last one year .
Pharmaceuticals company rank wise :-
Name
Last
Price Market Cap. Sales Net Profit
Total
Assets
(Rs. cr.) Turnover
Sun Pharma 630 130,483.33 1,657.78 133.25 7,832.01
Dr Reddys
Labs 2,624.40 44,643.37 8,434.01 1,265.47 9,372.50
Lupin 973.4 43,644.90 7,122.51 1,260.43 5,402.00
Cipla 401 32,197.15 8,202.42 1,507.11 9,835.33
Cadila Health 1,015.35 20,789.14 3,364.22 466.64 4,557.00
Ranbaxy Labs 467.35 19,805.31 5,612.92 -1,776.85 6,685.68

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45
As performance wise Cadila Healthcare limited is on 4th
rank from other competitors
.
Peer Competition :-
Company Name Net Sales (Rs. Cr ) Net Profit (Rs. Cr ) Total Assets (Rs. Cr)
Dr Reddys Labs 8,434.00 1,265.47 9,372.50
Cipla 8,202.42 1,507.11 9,835.33
Lupin 7,122.51 1,260.43 5,402.00
Ranbaxy Labs 6,303.54 -1,776.85 6,685.68
Aurobindo
Pharm 5,425.10 495.99 5,714.06
Cadila Health 3,675.70 466.64 4,557.00
Sun Pharma 2,432.14 133.25 7,832.01
-4000
-2000
0
2000
4000
6000
8000
10000
12000
Net Sales
Net Profit
Total Assets
Above Chart showing Cadila health care is stable in competition to other compeititor
and net profit is also higher than others by considering net assets and net sales . It is
sign of good and efficient management of Cadila Healthcare limited .
Dividend
Year End Dividend Per Share Dividend(%) Remark
11-Jun-13 7.5 150.0 Interim
26-Jul-12 7.5 150.0 Final
07-Jul-11 6.3 125.0 Final
15-Jul-10 5.0 100.0 Final
16-Jul-09 4.5 90.0 Final
10-Jul-08 4.5 90.0 Final
12-Jul-07 4.0 80.0 Final

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46
14-Jul-05 0.0 120.0 Final
Bonus
Date Ratio
05-Apr-10 1:2
30-Aug-06 1:1
2.4 Products plants :-
From nine pharmaceutical production operations in India as well as a Zydus Cadila
develops and manufactures a large range of pharmaceuticals as well as diagnostics,
herbal products, skin care products and other OTC products.
The company makes active pharmaceutical ingredients at three sites in India:
Ankleshwar plants – Zydus Cadila's plant complex at Ankleshwar in Bharuch
District of Gujarat, has been producing drug material since 1972. There are around 12
plants in the complex, which is ISO 9002 and ISO 14001 certified approved by the
U.S. Food and Drug Administration (FDA). Total plant capacity at Ankleshwar is
around 180 million tonnes.
Vadodara plant – Zydus Cadila's plant at Dhabhasa, in Vadodara District's Padra
taluka (in the eastern part of the district) in Gujarat, was commissioned in 1997 by a
company called Banyan Chemicals, and acquired by Zydus Cadila in 2002. The plant
has a 90 million tonne capacity. It is approved by the U.S. FDA and is also approved
to World Health Organization (WHO) good manufacturing practice (GMP)
guidelines.
Patalganga plant – Zydus Cadila acquired an API plant at Patalganga in Maharashtra
state, 70 km from Mumbai, about 859 km from Nagpur, in the 2001 German
Remedies deal. This plant operates to WHO GMP standards.
Others

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47
Navi Mumbai plant – This operation, at Navi Mumbai in Maharashtra, is a 50/50
joint venture with Nycomed Pharma of US, makes intermediates of the drug
pantoprazole.
Mumbai Business Office – This office houses Business Unit India - 2 or German
Remedies. This office belonged to German Remedies (I) Ltd. This company was
acquired in 2000. This was the biggest takeover in the History of Indian
Pharmacological Industry. German Remedies is now a Registered Trademark of
Cadila Healthcare Ltd.
Goa plants – The company's plants at Ponda in the southern Indian state of Goa do
formulation work as well as manufacture oncology drugs and a herbal laxative
branded Agiolax based on Psyllium seeds. These Plants belonged to German
Remedies (I) Ltd. too and now are part of Business Unit - Manufacturing of the
Company.
Baddi plant – In 2004 Zydus commissioned at formulation plant at Baddi, in
Himachal Pradesh state of northern India. The Baddi plant makes solid oral
pharmaceuticals.
Sikkim plant – In 2008 Zydus commissioned at formulation plant at Majhitar, in
Sikkim state of eastern India. The Sikkim plant makes solid oral pharmaceuticals and
hormones. This plant now caters almost all Domestic Formulation needs of the
Company.
In Gujarat, India
Dabhasa plant – Zydus Cadila's API/Bulk Drug Plant in a village about 20
kilometers South from Vadodara houses one of the largest process research (API)
centers in the country. This plant belonged to Banyan Chemicals which was acquired
by Zydus in 2003
Vatwa plant – Zydus Cadila's plant at Vatwa, an industrial suburb of Ahmedabad,
makes products for Animal Health care division of the company.

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48
Zyfine plant (Changodar) – Zydus Cadila's plant at Changodar, 20 kilometres from
Ahmedabad on the city's outskirts, manufactures fine chemicals. Zydus is current
constructing a facility at Changodar to make vaccines for hepatitis B and rabies.
Zydus Research Centre (ZRC) (Changodar) – Zydus's NCE, NME, MBE research
facility is the largest of its kind in Indian, with more than 500 post graduate scientists
it is working towards the prosperous future of the company and Indian Pharmaceutical
Industry.
Zydus Hospira Oncology Pvt. Ltd. (SEZ, Matoda) – Zydus's JV venture with
Hospira Inc. of US manufactures Anti Cancer Injectables at this plant. This plant is
also U.S. FDA approved and situated in Special Economy Zone, about 25 kilometers
from Ahmedabad. This SEZ is developed by Zydus Infrastructure Pvt. Ltd., another
group company of Zydus.
Zydus – BSV(SEZ, Matoda) – Zydus's JV with Bharat Serum and Vaccine Ltd.'s
Plant is another facility located in the same SEZ.
Zydus Technologies Ltd.(SEZ, Matoda) – Zydus's JV with Noveltech Inc.Plant is
another world class facility located in the same SEZ for Novel Drug Delivery
Systems.
Nutralite Manufacturing Fascility (Changodar) – Zydus manufactures and sells,
Nutralite - a health, butter substitute. This plant comes under the banner of Zydus
Wellness Ltd. This company also manufactures and sales, popular brands as
SugraFree, Everyouth, Everyouth Men'z and D'lite.
Corporate control :
Zydus Cadila's major shareholder remains the Patel family. Pankaj Patel (born 1951),
son of the founder, is CEO. In 2004 Pankaj Patel was included by Forbes magazine in
its annual List of India's richest people. Forbes estimated Patel's net worth at
US$510m, making him India's 26th richest person.[2]
However in 2005 Patel dropped
off the Forbes list due to a fall in the stock price of Cadila Healthcare. Moreover,
there is a team of nine senior level executives, known as the Executive Committee,
who are heads of different operations look after the overall management processes.
None of the members except Pankaj Patel are on the Board of Directors. The Indian
pharmaceutical industry has become the third largest producer in the world and is

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49
poised to grow into an industry of $ 20 billion in 2015 from the current turnover of $
12 billion.
2.5 Products:-
Tablets
Bulk Drugs
Injections
Capsules
Dry Powder Injectibles
Liquids
Processing Charges
Ointments
Dry Syrup, Powder & Injectibles
Other Fiscal Benefits
Suppositories
Others
Cosmetics

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50
CHAPTER :- 3
RESEARCH AND METHODOLOGY

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51
3.1 RESEARCH OBJECTIVE:
Objective of research is to analyses financial position and performance of Cadila
Healthcare Limited by Analyzing working capital management .
3.2 SCOPE OF RESEARCH
I have studied working capital management, inventory management and cash
management of the Cadila Healthcare Limited by Analyzing their profit and loss
account and balance sheets for the year last four year.
3.3 DATA TYPE
Secondary Data
3.4 D ATA SOURCES:
Internet, Reference Books, Annual Reports, Audit Reports
3.5 RESEARCH DESIGN:
Exploratory Research.
3.6 TOOLS USED FOR ANALYSIS:
 Working capital requirement Analysis
 Financial Ratios
 Liquidity position

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52
3.7 LITERATURE REVIEW
The idea of the topic of the research was drawn from the various mediums which I
gone through are as follows:
 I have gone through the various books providing guidance regarding working
capital and inventory management like Pandey I.M., Khan & Jain and
Prasanna Chandra.
 The various project reports which I have undergone namely working capital
and inventory management of Amul, Financial analysis of Hetro
Pharmaceuticals, financial analysis of Ranbaxy lab and Finanacial analysis of
VRN Ceramic ltd.
3.8 LIMITATIONS FOR THE STUDY
 No proper response from the trade associations.
 Primary data is limited
 It is not possible to get cent percent correct information. The research was
made according to the information available from related departments and
through annual reports published.

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53
CHAPTER :- 4
THEORETICAL FRAMEWORK OF WORKING
CAPITAL MANAGEMENT

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54
4.1 Working Capital Management
Working capital refers to that part of the firm’s capital which is required
for financing short- term or current assets such as cash, marketable
securities, debtors & inventories. Funds, thus, invested in current assts
keep revolving fast and are being constantly converted in to cash and this
cash flows out again in exchange for other current assets. Hence, it is also
known as revolving or circulating capital or short term capital.
Working capital management is concerned with the problems arise in
attempting to manage the current assets, the current liabilities and the
inter relationship that exist between them.
The term current assets refers to those assets which in ordinary course of
business can be, or, will be, turned in to cash within one year without
undergoing a diminution in value and without disrupting the operation of
the firm. The major current assets are cash, marketable securities, account
receivable and inventory.
Current liabilities ware those liabilities which intended at there inception
to be paid in ordinary course of business, within a year, out of the current
assets or earnings of the concern. The basic current liabilities are account
payable, bill payable, bank over-draft, and outstanding expenses.
The goal of working capital management is to manage the firm’s current
assets and current liabilities in such way that the satisfactory level of
working capital is mentioned.

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55
Definition:-
According to Park & Gladson-
“The excess of current assets of a business (i.e. cash, accounts
receivables, inventories) over current items owned to employees and
others (such as salaries & wages payable, accounts payable, taxes owned
to Government)”.
Capital required for a business can be classified under two main
categories via,
1) Fixed Capital 2) Working Capital
Every business needs funds for two purposes for its establishment and to
carry out its day- to-day operations. Long terms funds are required to
create production facilities through purchase of fixed assets such as p&m,
land, building, furniture, etc. Investments in these assets represent that
part of firm’s capital which is blocked on permanent or fixed basis and is
called fixed capital. Funds are also needed for short-term purposes for the
purchase of raw material, payment of wages and other day – today
expenses etc.

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56
4.2 CONCEPT OF WORKING CAPITAL
There are two concepts of working capital:
1. Gross working capital
2. Net working capital
The gross working capital is the capital invested in the total current
assets of the enterprises current assets are those assets which can
convert in to cash within a short period normally one accounting
year.
CONSTITUENTS OF CURRENT ASSETS
1) Cash in hand and cash at bank
2) Bills receivables
3) Sundry debtors
4) Short term loans and advances
5) Inventories of stock as:
a. Raw material
b. Work in process
c. Stores and spares
d. Finished goods
6. Temporary investment of surplus funds.
7. Prepaid expenses
8. Accrued incomes.
9. Marketable securities.

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57
In a narrow sense, the term working capital refers to the net working. Net
working capital is the excess of current assets over current liability, or,
say:
NET WORKING CAPITAL = CURRENT ASSETS – CURRENT
LIABILITIES.
Net working capital can be positive or negative. When the current assets
exceeds the current liabilities are more than the current assets. Current
liabilities are those liabilities, which are intended to be paid in the
ordinary course of business within a short period of normally one
accounting year out of the current assts or the income business.
CONSTITUENTS OF CURRENT LIABILITIES
1. Accrued or outstanding expenses.
2. Short term loans, advances and deposits.
3. Dividends payable.
4. Bank overdraft.
5. Provision for taxation, if it does not amt. to app. of profit.
6. Bills payable.
7. Sundry creditors.
4.3 CLASSIFICATION OF WORKING CAPITAL
Working capital may be classified in to ways:
 On the basis of concept

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58
 On the basis of time.
On the basis of concept working capital can be classified as gross
working capital and net working capital. On the basis of time, working
capital may be classified as:
Permanent or fixed working capital.
Temporary or variable working capital
Amount of Working
Capital
Temporary capital
Permanent Capital
Time
PERMANENT OR FIXED WORKING CAPITAL
Permanent or fixed working capital is minimum amount which is required
to ensure effective utilization of fixed facilities and for maintaining the
circulation of current assets. Every firm has to maintain a minimum level
of raw material, work- in-process, finished goods and cash balance. This
minimum level of current assts is called permanent or fixed working
capital as this part of working is permanently blocked in current assets.
TEMPORARY OR VARIABLE WORKING CAPITAL

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Temporary or variable working capital is the amount of working capital
which is required to meet the seasonal demands and some special
exigencies. Variable working capital can further be classified as seasonal
working capital and special working capital. The capital required to meet
the seasonal need of the enterprise is called seasonal working capital.
Special working capital is that part of working capital which is required
to meet special exigencies such as launching of extensive marketing for
conducting research, etc.
4.4 IMPORTANCE OR ADVANTAGE OF ADEQUATE
WORKING CAPITAL
 SOLVENCY OF THE BUSINESS:
Adequate working capital helps in maintaining the solvency of the
business by providing uninterrupted of production.
 Goodwill:
Sufficient amount of working capital enables a firm to make prompt
payments and makes and maintain the goodwill.
 Easy loans:
Adequate working capital leads to high solvency and credit standing
can arrange loans from banks and other on easy and favorable terms.
 Cash Discounts:
Adequate working capital also enables a concern to avail cash
discounts on the purchases and hence reduces cost.

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60
 Regular Supply of Raw Material:
Sufficient working capital ensures regular supply of raw material and
continuous production.
 Regular Payment Of Salaries, Wages And Other Day TO Day
Commitments:
It leads to the satisfaction of the employees and raises the morale of its
employees, increases their efficiency, reduces wastage and costs and
enhances production and profits.
 Ability to Face Crises:
A concern can face the situation during the depression.
4.5 FACTORS DETERMINING THE WORKING CAPITAL
REQUIREMENTS
1. NATURE OF BUSINESS:
The requirements of working is very limited in public utility undertakings
such as electricity, water supply and railways because they offer cash sale
only and supply services not products, and no funds are tied up in
inventories and receivables. On the other hand the trading and financial
firms requires less investment in fixed assets but have to invest large amt.
of working capital along with fixed investments.
2. SIZE OF THE BUSINESS:
Greater the size of the business, greater is the requirement of
working capital.

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3. PRODUCTION POLICY:
If the policy is to keep production steady by accumulating
inventories it will require higher working capital.
4. LENTH OF PRDUCTION CYCLE:
The longer the manufacturing time the raw material and other
supplies have to be carried for a longer in the process with
progressive increment of labor and service costs before the final
product is obtained. So working capital is directly proportional to
the length of the manufacturing process.
4.6 Sources of working capital
The company can choose to finance its current assets by
1. Long term sources
2. Short term sources
3. A combination of them.
Long term sources of permanent working capital include equity and
preference shares, retained earning, debentures and other long term debts
from public deposits and financial institution. The long term working
capital needs should meet through long term means of financing.
Financing through long term means provides stability, reduces risk or
payment and increases liquidity of the business concern. Various types of
long term sources of working capital are summarized as follow:

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1. Issue of shares:
It is the primary and most important sources of regular or permanent
working capital. Issuing equity shares as it does not create and burden on
the income of the concern. Nor the concern is obliged to refund capital
should preferably raise permanent working capital.
2. Retained earnings:
Retain earning accumulated profits are a permanent sources of regular
working capital. It is regular and cheapest. It creates not charge on future
profits of the enterprises.
3. Issue of debentures:
It crates a fixed charge on future earnings of the company. Company is
obliged to pay interest. Management should make wise choice in
procuring funds by issue of debentures.
Short term sources of temporary working capital
Temporary working capital is required to meet the day to day business
expenditures. The variable working capital would finance from short term
sources of funds. And only the period needed. It has the benefits of, low
cost and establishes closer relationships with banker.
Some sources of temporary working capital are given below:

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1. Commercial bank:
A commercial bank constitutes significant sources for short term or
temporary working capital. This will be in the form of short term loans,
cash credit, and overdraft and though discounting the bills of exchanges.
2. Public deposits:
Most of the companies in recent years depend on this source to meet their
short term working capital requirements ranging fro six month to three
years.
3. Various credits:
Trade credit, business credit papers and customer credit are other sources
of short term working capital. Credit from suppliers, advances from
customers, bills of exchanges, etc helps to raise temporary working
capital
4. Reserves and other funds:
Various funds of the company like depreciation fund. Provision for tax
and other provisions kept with the company can be used as temporary
working capital.The company should meet its working capital needs
through both long term and short term funds.

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SOURCES OF ADDITIONAL WORKING CAPITAL
Sources of additional working capital include the following-
1. Existing cash reserves
2. Profits (when you secure it as cash)
3. Payables (credit from suppliers)
4. New equity or loans from shareholder
5. Bank overdrafts line of credit
6. Long term loans
If we have insufficient working capital and try to increase sales, we can
easily over stretch the financial resources of the business. This is called
overtrading. Early warning signs include
1. Pressure on existing cash
2. Exceptional cash generating activities. Offering high discounts for
clear
cash payment
3. Bank overdraft exceeds authorized limit
4. Seeking greater overdrafts or lines of credit
5. Part paying suppliers or there creditor.
6. Management pre occupation with surviving rather than managing.
4.9 Different Aspects of Working Capital Management
Management of Inventory
Management of Receivables/Debtors
Management of Cash
Management of Payables/Creditors

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MANAGEMENT OF INVENTORY
Inventories constitute the most significant part of current assets of a large
majority of companies. On an average, inventories are approximately
60% of current assets. Because of large size, it requires a considerable
amount of fund. The inventory means and includes the goods and services
being sold by the firm and the raw material or other components being
used in the manufacturing of such goods and services.
Nature of Inventory:
The common type of inventories for most of the business firms may be
classified as raw-material, work-in-progress, finished goods.
Raw material:
it is basic inputs that are converted into finished products through
the manufacturing process. Raw materials inventories are those
units which have been purchased and stored for future productions.
Work–in–process:
Work-in-process is semi-manufactured products. They represent
products that need more work before them become finished
products for sale.
Finished goods:
These are completely manufactured products which are ready for
sale. Stocks of raw materials and work-in-process facilitate
production, while stock of finished goods is required for smooth
marketing operations.
So operating cycle can be known as following:-

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Sales
Raw Material
Work in Progress
Cash Collection from
Debtors
Finished Goods
Credit Sales Cash Sales

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Need to hold inventories
Maintaining inventories involves trying up of the company’s funds and
incurrence of storage and holding costs. There are three general motives
for holding inventories:
Transactions Motive: IT emphasizes the need to maintain inventories to
facilitate smooth production and sales operation.
Precautionary Motive: It necessitates holding of inventories to guard
against the risk of unpredictable changes in demand and supply forces
and other factors.
Speculative Motive: It influences the decision to increase or reduce
inventory levels to take advantage of price fluctuations.
Management of Receivables/Debtors
The Receivables (including the debtors and the bills) constitute a
significant portion of the working capital. The receivables emerge
whenever goods are sold on credit and payments are deferred by
customers. A promise is made by the customer to pay cash within a
specified period. The customers from whom receivable or book debts
have to be collected in the future are called trade debtors and represents
the firm’s claim or assets. Thus, receivable is s type of loan extended by
the seller to the buyer to facilitate the purchase process. Receivable
Management may be defined as collection of steps and procedure
required to properly weight the costs and benefits attached with the credit
policy. The Receivable Management consist of matching the cost of

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68
increasing sales (particularly credit sales) with the benefits arising out of
increased sales with the objective of maximizing the return on investment
of the firm.
Nature
The term credit policy is used to refer to the combination of three
decision variables:
1. Credit standards:
It is the criteria to decide the type of customers to whom goods could be
sold on credit. If a firm has more slow –paying customers, its investment
in accounts receivable will increase. The firm will also be exposed to
higher risk of default.
2. Credit terms:
It specifies duration of credit and terms of payment by Customer
Investment in accounts receivable will be high if customers are allowed
extended time period for making payments.
3. Collection efforts:
It determine the actual collection period. The lower the collection period,
the lower the investment in accounts receivable and vice versa.
Management of Cash
Cash management refers to management of cash balance and the bank
balance and also includes the short terms deposits. Cash is the important
current asset for the operations of the business. Cash is the basic input
needed to keep the business running on a continuous basis. It is also the

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ultimate output expected to be realized by selling the service or product
manufactured by the firm. The term cash includes coins, currency, and
cheque held by the firm and balance in the bank accounts.
Factors of Cash Management:
Cash management is concerned with the managing of
1. Cash flows into and out of the firm
2. Cash flows within the firm and
3. Cash balance held by the firm at a point of time by financing deficit or
investing surplus cash. Sales generate cash which has to be disbursed
out. The surplus cash has to be invested while deficit has to borrow. Cash
management seeks to accomplish this cycle at a minimum cost and it also
seeks to achieve liquidity and control.
Management of Payables/Creditors
Creditors are a vital part of effective cash management and should be
managed carefully to enhance the cash position. Purchasing initiates cash
outflows and an over-zealous purchasing function can create liquidity
problems. Consider the
Following:
Who authorizes purchasing in our company-is it tightly managed or
spread among a number of people?
Are purchase quantities geared to demand forecasts?
Do we use order quantities which take account of stock-holding and
purchasing costs?
Do we know the cost to the company of carrying stock?
Do we have alternative source of supply?
How many of ours suppliers have a returns policy?
Are we in a position to pass on cost increases quickly through price
increase?

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MANAGEMENT OF WORKING CAPITAL
Management of working capital is concerned with the problem that arises
in attempting to manage the current assets, current liabilities. The basic
goal of working capital management is to manage the current assets and
current liabilities of a firm in such a way that a satisfactory level of
working capital is maintained, i.e. it is neither adequate nor excessive as
both the situations are bad for any firm. There should be no shortage of
funds and also no working capital should be ideal. WORKING CAPITAL
MANAGEMENT POLICES of a firm has a great on its probability,
liquidity and structural health of the organization. So working capital
management is three dimensional in nature as
 It concerned with the formulation of policies with regard to
profitability, liquidity and risk.
 It is concerned with the decision about the composition and
level of current assets.
 It is concerned with the decision about the composition and
level of current liabilities.
4.10 WORKING CAPITAL ANALYSIS
As we know working capital is the life blood and the centre of a business.
Adequate amount of working capital is very much essential for the
smooth running of the business. And the most important part is the
efficient management of working capital in right time. The analysis of
working capital can be conducted through a number of devices, such as:
1. Ratio analysis
2. Fund flow analysis.
3. Budgeting.

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METHODS OF WORKING CAPITAL ANALYSIS
There are so many methods for analysis of financial statements but
Following techniques are used most .:-
 Comparative size statements
 Trend analysis
 Cash flow statement
 Ratio analysis
A detail description of these methods is as follows:-
COMPARATIVE SIZE STATEMENTS:-
When two or more than two years figures are compared to each other
than we called comparative size statements in order to estimate the future
progress of the business, it is necessary to look the past performance of
the company. These statements show the absolute figures and also show
the change from one year to another.
TREND ANALYSIS:-
To analyze many years financial statements uses this method. This
indicates the direction on movement over the long time and help in the
financial statements.
CASH FLOW STATEMENT:-
Cash flow statements are the statements of changes in the financial
position prepared on the basis of funds defined in cash or cash
equivalents. In short cash flow statement summaries the cash inflows and
outflows of the firm during a particular period of time..

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RATIO ANALYSIS:-
Ratio analysis is the process of the determining and presenting the
relationship of the items and group of items in the statements.
Types of ratio:-
 Liquidity ratio: They indicate the firms’ ability to meet its
current obligation out of current resources.
 Current ratio:- Current assets / Current liabilities
 Quick ratio:- Liquid assets / Current liabilities
Liquid assets =Current assets – Stock -Prepaid expenses
 Leverage or Capital structure ratio: This ratio discloses the
firms ability to meet the interest costs regularly and long term
solvency of the firm.
 Debt equity ratio:- Long term loans / Shareholders
funds or net Worth
 Debt to total fund ratio:- Long terms loans/ share
holder funds +long term loan
 Proprietary ratio:- Shareholders fund/ shareholders
fund+long term loan
 Activity ratio or Turnover ratio:- They indicate the rapidity
with which the resources available to the concern are being used
to produce sales.
 Stock turnover ratio:- Cost of good sold/Average stock
(Cost of good sold= Net sales/ Gross profit,
Average stock=Opening stock+closing stock/2)

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 Debtors turnover ratio:- Net credit sales/ Average
debtors
+Average B/R
 Average collection period:- Debtors+B/R /Credit sales
per
(Credit sales per day=Net credit sales of the year/365)
 Creditors Turnover Ratio:- Net credit purchases/
Average
Creditors + Average B/P
 Average Payment Period: - Creditors + B/P/ Credit
purchase per day.
 Fixed Assets Turnover ratio:- Cost of goods sold/Net
fixed Assets
(Net Fixed Assets = Fixed Assets – depreciation)
 Working Capital Turnover Ratio:- Cost of goods
sold/
Working Capital
(Working capital= current assets – current liability)
 Profitability Ratios or Income ratios:- The main objective of
every business concern is to earn profits. A business must be
able to earn adequate profit in relation to the risk and capital
invested in it.
 Gross profit ratio:- Gross profit / Net Sales * 100
(Net sales= Sales – Sales return)

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 Net profit Ratio:- Net profit / Net sales * 100
(Operating Net Profit= operating net profit/ Net Sales
*100 or operating Net profit= gross profit – operating
expenses)
 Operating Ratio :- Cost of goods sold + Operating
expenses/Net Sales * 100
(Cost of goods sold = Net Sales – Gross profit, Operating
expenses = office administration expenses + Selling
distribution expenses + discount + bad debts + interest on
short term loans)
 Earning per share(E.P.S.) :- Net Profit – dividend on
preference share / No. of equity shares
 Dividend per share (D.P.S.):- Dividend paid to equity
share Holders / No. of equity shares *100.
 Dividend Payout ratio(D.P.) :- D.P.S. / E.P.S. *100

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CHAPTER :- 5
DATA ANALYSIS AND INTERPRETATION

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5.1 Working Capital statement of Cadila Healthcare Limited
of last four years ( in Rs. Cr ).
Statement of Changes in Woking Capital at Cadila Healthcare Limited . ( In Rs. Cr.
)
Particulars 2009-10 2010-11 2011-12 2012-13
Inventories 380.8 464.5 501.2 587.2
Sundry Debtors 400.8 475.1 581.2 683
Cash and Bank Balance 7.6 14.1 118.3 91.6
Loans and Advances 395.9 537.2 799.6 947.4
Fixed Deposits 20.6 28.3 0 0
Total CA, Loans Advances (A) 1,205.70 1,519.20 2,000.30 2,309.20
Deffered Credit 0 0 0 0
Current Liabilities 531.2 654 884.9 781
Provisions 151.7 180.4 227.1 212
Total CL Provisions ( B) 682.9 834.4 1,112.00 993
Increase / Decrease in Working Capital
( A-B)
522.80 684.80 888.30 1,316.20

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Interpretation:-
2010-11 :-
Gross working capital is Rs 1519.20. Sundry debtor amount Rs 475.10 current
liabilities are Rs 654 and provisions are Rs 180.40 and net working capital is
Rs.684.8 . There has been increase of Rs 162 in the net working capital over the
previous year.
2011-12 :-
Gross working capital is Rs 2000.30. Sundry debtor amount Rs 581.20.current
liabilities are Rs 884.9 and provisions are Rs 227.10 and net working capital is
Rs.1112 . There has been increase of Rs 203.50 in the net working capital over the
previous year.
2012-13 :-
Gross working capital is Rs 2309.20. Sundry debtor amount Rs 683..current liabilities
are Rs 781. and provisions are Rs 212 .and net working capital is Rs.993 . There has
been increase of Rs 427.90 in the net working capital over the previous year.
From the above information its has been analyzed that Cadila Healthcare Lmited has
positive working capital means that the business is able to pay off its short-term
liabilities. Also, a high working capital can be a signal that the company might be able
to expand its operations

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Components of working capital Respective percentage :
Year
Inventory To
Net Working
Debtors to
Net working
Cash Bank
to net working
Loans
Advance to
net working
2010 0.73 0.77 0.01 0.76
2011 0.67 0.69 0.02 0.78
2012 0.56 0.65 0.01 0.90
2013 0.44 0.51 0.07 0.72
0
0.2
0.4
0.6
0.8
1
2010 2011 2012 2013
Inventory To Net Working
Debtors to Net working
Cash Bank to net working
Loans Advance to net working
Interpretation :-
Above table depicts the proportion of components of current assets in the net working
capital. It shows that each component of current assets contribute how many
percentage in working capital
In The year 2010 inventory to net working capital ratio is 0.73 i.e. which change each
year due to change in the amount of inventory to 0.67, 0.56 0.44 in the year 2011,
2012 2013 respectively
Similarly, the contribution of debtors in working capital is highest in the year 2013 is
0.77 lowest in 2010 is 0.51.This change takes place due to change in amount of
debtors every year

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Talking about cash bank balance to working capital, it is 0.01 , 0.02, 0.01 and 0.07
respectively in 2010 , 2011 2012 and 2013 marginally fluctuation due to change in
amount of cash bank balance
Likewise, loans advance shows highest contribution to net working capital in the
year 2010 its 0.76 , in the year 2011 its marginally goes up with 0.78 , in the year
2012 its goes up 0.90 and in the year 2013 its comes down to 0.72 . This shows that in
the current year company has reduced their inventory, but debtors of the company has
increased maintaining cash balance in a proper manner because it shows reduction in
cash balance in the year 2012

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5.2 LIQUIDITY POSITION:
Liquidity position measures the ability of the from to meets its current obligation
liquidity position established relationship between current assets and current liabilities
of the company
Year C A C L
Net Working.
C
Amt
2010 1205.70 682.9 522.80
2011 1519.20 834.40 684.80 162
2012 2000.30 1112. 888.30 203.50
2013 2309.20 993 1316.20 427.90
Total 7034.40 3622.30 3412.10 793.40
Mean 1758.60 905.575 853.03 198.35
Growth 25 % 25 % 25% 25 %
Interpretation :-
The above table shows liquidity position of the company for the different years.
It shows that current assets of the company is continuously increasing every year.
Similarly current liabilities of the company is also increasing.
But comparing current assets and current liabilities the current asstes of the company
is more than its current liabilities. The current assets of the company is increasing at a
faster than its current liabilities which can be known from the mean of the both. It
shows good liquidity position of the company.
Table also explain the company in the net working capital of the company.
Talking the year 2010 as the base year, working capital of the company is increasing
in the year 2011, similarly it also increases in the year 2012 and in the year 2013 as
compare to previous year.
It show that company is maintaining its working capital as when required.

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5.3 COMPARATIVE BALANCE SHEET STATEMENTS
The effects of the conduct of a business are reflected in its balance sheet by increase
or decrease in assets, liabilities and proprietary capital. These changes can be known
by a comparison of the balance sheets of two or more different dates of previous
years. Knowledge of these changes is of considerable value in framing an operation
regarding the progress of the business unit. While a single balance sheet reveals the
financial status at a specific point of time, a comparative balance sheet analysis shows
the changes in it. These changes may be result operations, the conversion of assets
and liabilities and capital forms into other and the various interactions among assets,
liabilities and capital. In the comparative balance sheets not only absolute change (in
terms of rupees) but also relative changes (in percentage as rate of change) would be
studied in fact the relative change are more important than there to the analyst.
Information regarding relative changes must modify the analysis operation based on
absolute changes.
In the computation of percentages it should be noted that if a certain items has a value
in one year and does not exist the next year the percentage of decrease is 100% But if
the item has no value in the first year and has an value in the second no percentage
can be shown because if an number is divided zero the quotient is infinity.

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Comparative Statement of Balance Sheet for 2010-2011 ( In Rs. Cr. )
Particulars 2010 2011 Increase/
Decrease
Change in %
Sources Of Funds
Total Share Capital 68.2 102.4 34.2 50.14662757
Equity Share Capital 68.2 102.4
Share Application Money 0 0
Preference Share Capital 0 0
Reserves 1,553.90 1,987.50 433.6 27.90398353
Revaluation Reserves 0 0
Networth 1,622.10 2,089.90 467.8 28.83915911
Secured Loans 554.2 531.7 -22.5 -4.059906171
Unsecured Loans 39.9 32.3 -7.6 -19.04761905
Total Debt 594.1 564 -30.1 -5.066487123
Total Liabilities 2,216.20 2,653.90 437.7 19.75002256
Mar '10 Mar '11
12 mths 12 mths
Application Of Funds
Gross Block 1,556.70 1,732.50 175.8 11.29312006
Less: Accum. Depreciation 606.3 695.9 89.6 14.77816263
Net Block 950.4 1,036.60 86.2 9.06986532
Capital Work in Progress 142.9 233.7 90.8 63.54093772
Investments 598.9 698.8 99.9 16.68058107
Inventories 380.8 464.5 83.7 21.98004202
Sundry Debtors 400.8 475.1 74.3 18.53792415
Total Current Assets 789.2 953.7 164.5 20.84389255
Fixed Deposits 20.6 28.3 7.7 37.37864078
Total CA, Loans Advances 1,205.70 1,519.20 313.5 26.00149291
Deffered Credit 0 0 0
Current Liabilities 531.2 654 122.8 23.11746988
Provisions 151.7 180.4 28.7 18.91891892
Total CL Provisions 682.9 834.4 151.5 22.18480012
Net Current Assets 522.8 684.8 162 30.98699311
Miscellaneous Expenses 1.2 0 -1.2 -100
Total Assets 2,216.20 2,653.90 437.7 19.75002256
Contingent Liabilities 530.6 122.4 -408.2 -76.93177535
Book Value (Rs) 118.84 102.07 -16.77 -14.1114103

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83
Interpretation :-
Total current assets and loan advance of the company in 2010-11 are increased by
313.50 cr with compare to previous year and total current liabilities and provisions are
increased by 151.50 cr with compare to previous year. It shows net positive working
Capital increased by 437.70 cr with compare to previous year so that it seen that the
working capital position of the company is satisfactory but long term investment on
fixed assets is not possible from working capital fund .
The liquidity position of the company in also satisfactory as all current assets has
increased in 2010-11 .

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84
Decrease
Change in %
Sources Of Funds
Total Share Capital 102.4 102.4 0
Reserves 1,987.50 2,454.70 467.20 23.50691824
Networth 2,089.90 2,557.10 467.20 22.35513661
Secured Loans 531.7 749.2 217.50 40.90652624
Unsecured Loans 32.3 346.6 314.30 973.0650155
Total Debt 564 1,095.80 531.80 94.29078014
Mar '11 Mar '12
12 mths 12 mths
Gross Block 1,732.50 2,016.20 283.70 16.37518038
Less: Accum. Depreciation 695.9 798.5 102.60 14.74349763
Net Block 1,036.60 1,217.70 181.10 17.47057689
Investments 698.8 1,212.20 513.40 73.46880366
Inventories 464.5 501.2 36.70 7.900968784
Sundry Debtors 475.1 581.2 106.10 22.3321406
Total Current Assets 953.7 1,200.70 247.00 25.89912971
Fixed Deposits 28.3 0 -28.30 -100
Total CA, Loans
Advances
1,519.20 2,000.30 481.10 31.66798315
Deffered Credit 0 0 0.00 0
Current Liabilities 654 884.9 230.90 35.3058104
Provisions 180.4 227.1 46.70 25.88691796
Total CL Provisions 834.4 1,112.00 277.60 33.26941515
Net Current Assets 684.8 888.3 203.50 29.71670561
Miscellaneous Expenses 0 0 0.00 0
Total Assets 2,653.90 3,652.90 999.00 37.6427145
0.00 0
Contingent Liabilities 122.4 361.7 239.30 195.5065359

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85
Book Value (Rs) 102.07 124.89 22.82 22.35720584
Interpretation :-
increased by 277.60 cr with compare to previous year.. It shows net positive working
Capital increased by 203.50 cr with compare to previous year. so that it seen that the
The liquidity position of the company in also satisfactory as all current assets has
increased in 2011-12 .

`
86
Comparitive Statement of Balance Sheet for 2012-2013 ( In Rs. Cr. )
Decrease
Change in %
Sources Of Funds
Total Share Capital 102.4 102.4 0 0
Reserves 2,454.70 2,809.10 354.40 14.43760948
Networth 2,557.10 2,911.50 354.40 13.85945016
Secured Loans 749.2 1,052.50 303.30 40.48318206
Unsecured Loans 346.6 593 246.40 71.09059435
Total Debt 1,095.80 1,645.50 549.70 50.16426355
2012 2013
12 mths 12 mths
Gross Block 2,016.20 2,125.50 109.30 5.421089178
Less:Accum.
Depreciation
798.5 628.4 -170.10 -21.3024421
Net Block 1,217.70 1,497.10 279.40 22.94489612
Investments 1,212.20 1,279.90 67.70 5.584886982
Inventories 501.2 587.2 86.00 17.15881883
Sundry Debtors 581.2 683 101.80 17.5154852
Cash and Bank Balance 118.3 91.6 -26.70 -22.569738
Total Current Assets 1,200.70 1,361.80 161.10 13.41717332
Fixed Deposits 0 0 0.00 0
Total CA, Loans
Advances
2,000.30 2,309.20 308.90 15.4426836
Deffered Credit 0 0 0.00 0
Current Liabilities 884.9 781 -103.90 -11.7414397
Provisions 227.1 212 -15.10 -6.64905328
Total CL Provisions 1,112.00 993 -119.00 -10.7014388
Net Current Assets 888.3 1,316.20 427.90 48.17066306
Miscellaneous Expenses 0 0 0.00 0
Total Assets 3,652.90 4,557.00 904.10 24.75019847
0.00 0
Contingent Liabilities 361.7 1,238.10 876.40 242.3002488

`
87
Book Value (Rs) 124.89 142.2 17.31 13.86019697
Interpretation :-
decreased by -119 cr with compare to previous year.. It shows net positive working
Capital increased by 427.90 cr with compare to previous year. so that it seen that the
In the year 2012-2013 current liabilities and provision is decreased and current assets
and advances is increase so liquidity position of company is also satisfactory .

`
88
5.4 TREND PERCENTAGES
Trend percentages are immensely helpful in making a comparative study of financial
statements for several years. The method of calculating trend percentages involves the
calculation of percentages relationships that each item bears to the same item in base
year. Any year may be taken as the base year. It is usually the earliest year. Any
intervening year may also be taken as the base year. Each item of base year is taken
as 100 and the percentages for each of the items of each of the years are calculated
these percentages can also be taken as index numbers showing relative changes in the
financial data resulting with passage of time.
The method of trend percentages is useful analytical devices for the management
since by substitution of percentages for large amounts the brevity and readability are
achieved. However percentages are not calculated for all the items in the financial
statements. They are usually calculated only for major items since the purpose is to
highlight important changes. But there is a danger of over emphasis being given to
percentages. In the case where the base is a small number a slight change might be
greatly exaggerated by percentages of change.

`
89
Statement Showing Trend Percentage in Assets During 2009-2013 ( In Rs. Cr )
Trend Percentage
Particulars 2009-10 2010-11 2011-12 2012-13 2009-10 2010-11 2011-12 2012-13
Current Assets 789.2 953.7 1,200.7 1,361.80 100 120.844 125.8991 113.417
Inventories 380.8 464.5 501.2 587.2 100 121.98 107.901 117.159
Sundry
Debtors
400.8 475.1 581.2 683 100 118.538 122.3321 117.515
Cash and Bank
Balance
7.6 14.1 118.3 91.6 100 1.85 8.39. 7.74
Loans and
Advances
395.9 537.2 799.6 947.4 100 135.691 148.8459 118.484
Fixed Deposits 20.6 28.3 0 0 100 137.379 0 0
Investments 598.9 698.8 1,212.20 1,279.90 100 116.681 173.4688 105.585
Statement Showing Trend Percentage in liabilities During 2009-2013
Trend Percentage
Particulars 2009-10 2010-11 2011-12 2012-13 2009-10 2010-11 2011-12 2012-13
Secured Loans 554.2 531.7 749.2 1,052.50 100 95.9401 140.9065 140.483
Unsecured Loans 39.9 32.3 346.6 593 100 80.9524 1073.065 171.091
Reserves 1,553.90 1,987.50 2,454.70 2,809.10 100 127.904 123.5069 114.438
Total Share
Capital
68.2 102.4 102.4 102.4 100 150.147 100 100
Current
Liabilities
531.2 654 884.9 781 100 123.117 135.3058 88.2586
Provisions 151.7 180.4 227.1 212 100 118.919 125.8869 93.3509
Contingent
Liabilities
530.6 122.4 361.7 1,238.10 100 23.0682 295.5065 342.3

`
90
Analysis of Trend Percentages :-
Interpretation :-
The above trend analysis revels that the inventories have been in decreasing trend and
the percentage increase is the highest in 2010-11 at 121.98 when compared with
2011-12. debtors has also been increasing trend except in the year 2013 . The
percentage decrease in 2013 is 117.515. cash and bank balances are also increase in
all the years percentage increase in 2011-12 is highest at 8.39. This has also registered
highest percentage increase in comparison with all the other current assets. Loans and
advances is also an increasing trend and the highest percentage increase in 2011-12 is
148.84 .
Current liabilities and provision have been increasing trend except in the year 2013 the
percentage in 2013 is 88.25 . Capital has increased 100 in 2010 and 100 in 2012 and
100 in 2013 it shows for that the company didn’t go for additional capital. The
reserves of the company are also on an increasing trend it shows a healthy profitability
position of the company, the percentage increase in reserves is highest in 2010-11 at
150.40 times .

`
91
5.5 RATIO ANALYSIS
CURRENT RATIO
The Current Ratio is the ratio of total Current assets to total current
liabilities. It is a measure of the firms short term solvency i.e., its ability
to meet short term obligations. The higher the current ratio the larger the
amount of rupees available for rupee of current liability conventionally a
current ratio of 2 is considered satisfactory. A higher current ratio may
indicative of slack management .
Table showing the details of Current Ratio in Rs. Cr :
Particulars 2009-10 2010-11 2011-12 2012-13
Current Assets 789.2 953.7 1,200.70 1,361.80
Current
Liabilities 531.2 654 884.9 781
Current Ratio 1.48 1.46 1.36 1.74
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2009-10 2010-11 2011-12 2012-13
Current Ratio

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