Security Analysis

And
Portfolio Management
Report
On
Pharmaceutical Industry
Submitted By:
Kailas Dalvi (RollNo. 21)
Parin Chawda( RollNo. 33)
Shashan Singh Rathore(RollNo. 44)
MBA(IB)
2008-10

IIFT Kolkata
Table of Contents
ECONOMIC ANALYSIS.............................................................................................................................. 4
INDIAN PERSPECTIVE .......................................................................................................................... 4
OUTPUT ............................................................................................................................................... 4
AGRICULTURE ..................................................................................................................................... 6
INDUSTRIAL ......................................................................................................................................... 6
INFRASTRUCTURE ............................................................................................................................... 7
SERVICES ............................................................................................................................................. 7
AGGREGATE DEMAND ........................................................................................................................ 8
MONETARY CONDITIONS .................................................................................................................... 9
INFLATION ......................................................................................................................................... 10
MACROECONOMIC OUTLOOK .......................................................................................................... 11
INDUSTRY ANALYSIS.............................................................................................................................. 12
GLOBAL INDUSTRY ............................................................................................................................ 13
INDIAN PHARMAEUTICAL INDUSTRY ................................................................................................ 14
PHARMACEUTICAL INDUTRY STRUCTURE .................................................................................... 16
SWOT ANALYSIS ............................................................................................................................ 16
GROWTH DRIVERS ........................................................................................................................ 18
PORTER’S FIVE FORCES MODEL .................................................................................................... 22
COMPANY ANALYSIS ............................................................................................................................. 23
CIPLA LTD .......................................................................................................................................... 23
SHAREHOLDING PATTERN............................................................................................................. 23
INVESTMENT STRATEGY................................................................................................................ 23
KEY RISKS ....................................................................................................................................... 24
ECONOMIC ACTIVITIES .................................................................................................................. 24
RECENT DEVELOPMENTS .............................................................................................................. 24
FINANCIAL ANALYSIS ..................................................................................................................... 25
SWOT ANALYSIS ............................................................................................................................ 26
GLENMARK PHARMACEUTICALS ...................................................................................................... 27
SHAREHOLDING PATTERN............................................................................................................. 27
INVESTMENT RATIONALE:............................................................................................................. 27
KEY RISKS ....................................................................................................................................... 28

2
 ECONOMIC ACTIVITIES .................................................................................................................. 28
RECENT DEVELOPMENTS .............................................................................................................. 28
FINANCIAL ANALYSIS ..................................................................................................................... 29
SWOT ANALYSIS ............................................................................................................................ 30
GLAXO SMITHKLINE PHARMA ........................................................................................................... 31
SHAREHOLDING PATTERN............................................................................................................. 31
INVESTMENT RATIONALE.............................................................................................................. 31
KEY RISKS ....................................................................................................................................... 32
ECONOMIC ACTIVITIES .................................................................................................................. 32
RECENT DEVELOPMENTS .............................................................................................................. 32
FINANCIAL ANALYSIS ..................................................................................................................... 33
SWOT ANALYSIS ............................................................................................................................ 35
REFERENCES .......................................................................................................................................... 36
APPENDIX .............................................................................................................................................. 37
CIPLA LTD .......................................................................................................................................... 37
ESTIMATED B/L SHEET .................................................................................................................. 37
PRICE ESTIMATION ........................................................................................................................ 38
GLENMARK PHARMACEUTICALS....................................................................................................... 40
ESTIMATED B/L SHEET .................................................................................................................. 40
PRICE ESTIMATION ........................................................................................................................ 41
GLAXO SMITHKLINE PHARMA ........................................................................................................... 43
ESTIMATED B/L SHEET .................................................................................................................. 43
PRICE ESTIMATION ........................................................................................................................ 44

3
ECONOMIC ANALYSIS

The current economic crisis that has been observed around the entire globe has affected the
emerging economies as well. India on the whole as per the economic indicators is not in
recession but is definitely facing a slowdown with the rate of growth of GDP would
definitely be affected. However the general consensus is that we have already bottomed out
and now the only way for the global economy would be up. The green shoots are already
visible with the major economies of Europe (Germany & France) reversing the trend of
declining GDP growth rate. Despite the developments the analysts believe that the global
economy is not yet out of the woods. The unemployment rate in the developed countries is
continuously on the ascent which is not a very good sign.

INDIAN PERSPECTIVE

The scene for India is not as ominous as the rest of the world due a variety of reasons the
most important being the relatively strong domestic demand & the burgeoning Indian middle
class. India's GDP growth in 2008-09 was one of the highest in the world and reflected the
resilience of the country's growth impulses to a severe external shock as well as the impact of
the policy response to contain the adverse effects of the global economic crisis on domestic
growth. Even in the recently concluded meeting of the 100 CEOS & the Finance Minister, the
outlook for the Indian economy has been bullish even though the growth rate for the current
fiscal quarter was expected to drop to 6%, the annual growth rate in GDP is expected to be at
an optimistic 9%.

OUTPUT
The phenomenal growth rate that the Indian economy has observed from 2003-08 of 8.8%
was not sustained in 2008-09.The GDP grew at 6.7% in 2008-09 due to the overall world
recession. The slowdown was majorly due to a sharp decline in the industrial sector & a
moderate downturn in the services & agriculture. From the table given below we can observe
that in the fourth quarter of 2008-09 only agriculture sector showed a reversal of trend on the
quarterly basis with a rise from -0.8% to 2.7%.

4
 EXHIBIT 1

The above given exhibit shows the rate at which the Indian GDP has been growing & thus is
one of the emerging economies of the world.

EXHIBIT 2

5
AGRICULTURE
Even though the agriculture sector saw a bounce back in the last quarter of 2008-09 the
current monsoon conditions are threatening the overall recovery of the economy. Delayed as
well as inadequate southwest monsoon has put the kharif crops in jeopardy which accounts
for 57% of the total agricultural produce. The food management is a big issue facing the
country that needs to be tackled & which might act as a drag on the overall economic growth.

INDUSTRIAL
The industries showed a good growth in July 2008, but registered a sharp decline in the
second half of the year with negative growth in December 2008 & March 2009. The infusion
of liquidity in order to kick start the economy has its effect on the IIP with some of the
sectors showing a phenomenal growth. The electricity sector recorded an appreciable increase
whereas the mining & manufacturing related to food products has shown a decline.

EXHIBIT 3

6
INFRASTRUCTURE
The core infrastructure sector grew by a good 4.8% vis-a-vis the 3.5% growth shown in the
corresponding sectors for the previous year. The sectors which have shown a growth include
the cement, coal & electricity. This augurs well for India in the long run as the fiscal stimulus
would enable to complete the twin job of putting the economy back on the path of recovery
coupled with the development of the infrastructure in India which has been a laggard for a
long time.

EXHIBIT 4

SERVICES
The services sector also saw the effects of the global melt down as this is one sector which is
dependent to a large extent on the global scenario. It recorded a lower growth of 9.4% in
2008-09 compared to the 10.8% growth in 2007-08.The below given table shows the
performance of the services sector for the year 2008-09

7
 EXHIBIT 5

AGGREGATE DEMAND
One of the bulwarks of the strong economic growth that Indian has witnessed in the past
decade has been the strong domestic demand. The comparative weakening of the aggregate
demand has acted as big impediment to the growth of the GDP. There was a significant
reduction in private consumption as well as a moderation in investment which had to be
compensated by an expansionary fiscal policy. In the last 2 quarters there was a deceleration
in the sales growth & PAT as well indicating a fall in the aggregate demand. The overall rise
in the Aggregate demand does depend to a large extent on the monsoons as the major demand
comes from the rural areas. A shortfall in rain would not augur well for the rural population
which would in turn hamper the growth in aggregate demand. The external demand is also
tantamount to the growth in the Aggregate demand which would need to increase so that the
growth in economy can be sustained.

8
 EXHIBIT 6

MONETARY CONDITIONS
The expansionary policy that the RBI has adopted has ensured that there has been ample of
liquidity in the system. Also the fiscal stimulus that the government has given coupled with
the lowering of interest rates that have been observed of late has ensured that there no dearth
of liquidity in the market. In the recent review the interest rates have remained unchanged
due to the fear of looming inflation.

EXHIBIT 7

9
The above chart gives a track of the money supply that is present in the economy.

EXHIBIT 8

INFLATION
The Whole sale price index has declined sharply to 0.8 % in the end of March from the
acrophobic heights of 12.9% in August 2008.Currently inflation is not a major issue with the
inflation at negative levels due to high base effect. Some of the important reasons are the fall
in prices of crude as well as a general decline in the commodity prices coupled with a fall in
global demand. However the upward pressure on the prices in the future is pretty eminent due
to the delayed monsoons as well as the drought like conditions that are caused due to paucity
of rains.

Also there has been a change in the stance taken by RBI from September 2008 from
containing the aggregate demand to supporting demand expansion so that the growth is not
sacrificed. The main idea behind it is that the domestic liquidity remains strong & there is a
continuous credit flow to the various productive sectors of the economy.

10
 EXHIBIT 9

MACROECONOMIC OUTLOOK
The macroeconomic outlook shown by the various global agencies indicates that there is
going to be recessionary pressures that would remain prevalent throughout 2009 even though
there are some indicators that are showing positive signs. The IMF has revised the growth
projection for India from 4.5% to 5.4% for the year 2009 even though the finance minister
remains optimistic of enjoying a 9% growth.

The various surveys that were done by Dun & Bradstreet, CII & NCAER indicate that there
would definitely be a change in the business sentiment with the gradual return to optimism
for the business. This business optimism is also seen through the huge rally that has been
observed on the BSE & NSE.

The survey conducted by professional forecasters for the RBI has the following findings.

 GDP growth rate for 2009-10 at 6.5%.

 Agriculture sector growth rate to 2.5% from an earlier predicted level of 3.0%.
 Industrial sector growth rate to 4.8% from an earlier predicted level of 4.1%.
 Services sector growth rate to 8.3% from an earlier predicted level of 7.5%.
 Higher predicted growth rates for Industrial & Services sector in the 3rd & 4th quarters
for 2009-10.

11
INDUSTRY ANALYSIS
“The Indian Pharmaceutical industry is a success story providing employment for millions &
ensuring that essential drugs at affordable prices are available to the vast population of this
subcontinent.” - Richard Gerster

The Indian pharmaceutical Industry has come a long way since its infant stages in 1960s. The
important events that have occurred in the life of the pharmaceutical industry can be depicted
as follows.

EXHIBIT 10

The days when Indian pharmaceutical industry was equivalent to making cheap generic drugs
is passé & a consolidation is happening in the current Indian market. The most watershed
events in the above shown timeline would be

 Phase 2. Indian Patent Act 1970.

-Led to the growth of the generic drug segment as India had a process patent regime.

 Phase 5. New Indian Patent law 2005.

-Led to the Indian Pharmaceutical majors to also look forward to invent drugs.

12
GLOBAL INDUSTRY
The Global industry needs to be taken a look at due to the fact that Indian Pharmaceutical
firms are having a considerable chunk of the pie on the global scene as well as the local
Indian market. In 2008, the global pharmaceutical market has grown at the slowest rate in this
decade and is expected to slow down further. The market reached USD773 billion at a growth
rate of 4.8% in 2008, which is the slowest growth rate of the decade. The two largest markets,
the US and Europe which contributed almost 73% of the global market in 2008, achieved
growth rates of 1.4% and 5.8% respectively. Going forward, the US market is expected to
stagnate or decline further over the next five years while the European market is expected to
grow at a sluggish pace with a CAGR of 2 - 5% for 2008 – 2013.

The following are the reasons for the same

 Decrease R&D productivity.

 Squeezing of profit margins due to the competing off patent Generic Drugs.
(Drugs worth USD 47 billion are getting off patent in the next three years)
 Current global financial crisis.
 Higher cost of developing new drugs.
 Stricter regulatory requirements.
 Fewer & smaller blockbuster drugs.

World Pharmaceutical Industry 2001 2002 2003 2004 2005 2006 2007 2008
Total World Market (in US $ Bil ions) 393 429 499 560 605 648 75 773
Growth over previous year 11.80% 9.20% 10.20% 7.90% 7.20% 6.80% 6.60% 4.80%
EXHIBIT 11

Year 2003 2004 2005 2006 2007

Blockbuster sales growth n/a 24% 14% 10% 9%
Market Share 33.10% 36.50% 38.70% 39.70% 39.70%
Pharma Maket growth % n/a 12% 8% 7% 9%

EXHIBIT 12

In order to address the above mentioned issues the pharmaceutical majors around the world
are looking forward to tackle the issue by

 Cutting down costs through increased operational efficiency.

13
  Looking forward to emerging markets for outsourcing.
 Looking at strategic alliances & acquisitions, an inorganic form of growth.

Thus from the above exhibit it can be observed that the Blockbuster sales growth on a year on
year basis has been declining which is the main source of income for the big pharmaceutical
firms.

The big companies are looking forward to cost cutting measures on a large scale through
outsourcing to the Asian competitors.

COMPANY COST CUTTING MEASURES

Pfizer  Closing 5 research facilities
 Selling 3 manufacturing facilities
 Reducing 10% of workforce
 Outsourcing 30% of manufacturing to
Asia
GSK Pharmaceuticals  Reducing cost through restructuring
target sales & marketing
 Closed 28 plants since 2000
Novartis  Cut spending by 2010
 Reduction of 2500 jobs

EXHIBIT 13

From the point of view mergers & acquisitions the watershed moment that took the Indian
Pharmaceutical Industry by storm is the acquisition of Ranbaxy the largest Pharmaceutical
Company of India. The company was taken over by the 2nd largest Japanese pharmaceutical
company Daiichi Sankyo which was more into innovative drug manufacturing. The rationale
behind the acquisition was given as follows

INDIAN PHARMAEUTICAL INDUSTRY

India is the world’s fourth largest producer of pharmaceuticals by volume & accounts for
around 8% of global production. In terms of value, production accounts for around 1.5% of
the world total. The Indian pharmaceutical industry directly employs around 500,000 people
and is highly fragmented. Despite accounting for 8% of global production in value terms it
captures only 1.5% indicating that India is more into generic drug & bulk drugs. In terms of
the GDP the pharmaceutical sector comprises around 7 % of the GDP growing at the rate of
12% - 14 % annually.

14
 Indicator Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Sales Growth Of Drugs And Pharmaceuticals Companies 11.68 16.04 22.94 19.47 10.72
Expenses Growth Of Drugs & Pharmaceuticals Companies 10.8 20.22 16.5 16.56 29.19
PBDIT Growth Of Drugs & Pharmaceuticals & Drugs Companies 1.04 25.87 45.27 14.85 -55.07
PAT Growth Of Drugs & Pharmaceuticals Companies -5.57 42.64 62.82 11.67 -95.01
Expenses To Sales Ratio Of Drugs & Pharmaceuticals Companies 94.47 97.9 92.62 90.36 105.51
Other Income To Total Income Ratio Of Drugs & Pharmaceuticals Companies 3.63 6.47 5.53 4.49 2.99
Extra Ordinary Income To Total Income Ratio Of Drugs & Pharmaceuticals Companies 0.7 0.15 0.22 0.96 5.04
Extra Ordinary Expenses To PDBIT Ratio Of Drugs & Pharmaceuticals Companies 0.26 0.13 0.18 0.82 2.79
PBDIT Margin Of Drugs & Pesticides Companies 19.13 20.09 24.15 23.46 9.65
PAT Margin Of Drugs & Pharmaceuticals Companies 10.04 11.95 16.24 15.35 0.7

EXHIBIT 14

The outlook of bigger Pharmaceutical firms of looking at emerging markets for outsourcing
is a good sign for the Indian market as India is looked upon as a manufacturing hub for drugs.
At the same time due to the new Patent Law 2005 India pharmaceutical companies are
becoming targets for the foreign firms as sustaining profits is becoming tougher & a lot of
small companies are getting gobbled up. The Indian companies are now trying to move up the
value chain by developing new drugs so that they will be able to sustain the phenomenal
growth observed in the past few decades.

Some of the important features of the Industry are as follows

 A knowledge based Industry.

 Huge manufacturing potential for high quality drugs & formulations.
 Developing cost effective technologies for various bulk drugs & intermediates.
 Cost advantageous.
 Highly fragmented industry.
 Tremendous export potential in newer markets like Africa along with expanding the
share in the older European & American markets.
 A growth driver for GDP with the sector poised to grow at 16% from 2007 to 2011.
 Strong technical manpower.
 Competencies in chemistry, process development & reverse engineering.

15
PHARMACEUTICAL INDUTRY STRUCTURE
The various segments in which the Indian Pharmaceutical Industry can be divided into are as
follows.

EXHIBIT 15

It can be observed that the number of companies in manufacturing of Bulk drugs & Generic
drugs is the highest & the amount of fragmentation that is present in the sector.

Company Size($ Billion) Market Share (%) Growth Rate (%)

Total Pharmaceutical Market 6.9 100% 9.90%
Cipla 0.36 5.30% 13.40%
Ranbaxy 0.34 5.00% 11.50%
GSK Pharmaceuticals 0.29 4.30% -1.20%
Piramal Healthcare 0.27 3.90% 11.70%
Zydus Cadila 0.24 3.60% 6.80%
Total of top 5 Companies 1.53 22.10% -

EXHIBIT 16

SWOT ANALYSIS
The Indian Pharmaceutical industry despite its robust growth is under pressure to change
from the various external factors. The SWOT analysis of the Indian Pharmaceutical industry
highlights the strengths & the opportunities that the Indian Pharmaceutical Industry has at the
same time trying to weigh the possible threats & the weakness that can be exploited by the
competitors.

16
 EXHIBIT 17

STRENGTHS
The above mentioned strengths have always held the Indian pharmaceutical Industry in a
good stead, the main being the cost advantage & the expertise that India has developed over
in the field of reverse Engineering.

WEAKNESS
The highly fragmented Indian Pharmaceutical Industry makes it a hugely competitive
industry. However that is beneficial from the point of view of producing quality drugs at a
lower price finally benefiting the final customer in the end. However it also acts as a
weakness as there is always a likelihood of it being gobbled up by the major Pharmaceutical
giants. Also the lack of product development acts as a weakness which is a major source of
revenue for any Pharmaceutical company.

17
OPPORTUNITIES
The opportunities that lay in store for the Indian pharmaceutical Industry on the whole are
immense due a lot of factors. The most important factor would be the coming off patent for a
lot of Blockbuster drugs which can then be sold as Generics. Also the recent financial crisis
has turned people towards the use of Generic drugs thus increasing their usage as well. Indian
is also entering into a lot of markets apart from the traditional markets of USA & Europe.

THREATS
The threats that are looming large are numerous, the takeover threat being immense. Even the
pharmaceutical MNCs are looking forward to India & China as a manufacturing hub with
more focus on Bulk Drugs & Generics to boost their growth. Also the threat from China is
huge not only from the point of view of taking away business but also the counterfeit drugs
that have been sold in the name of Indian manufacturers.

GROWTH DRIVERS

EXHIBIT 18

The above mentioned factors are some of the important growth drivers that will sustain the
growth of the Pharmaceutical Industry in the future.

18
PRODUCT PATENT REGIME/PRODUCT PATENT REGIME
After the new patent law of 2005 & the acquisition of Ranbaxy, the Indian pharmaceutical
firms are trying to move up the value chain by investing hugely in RND and trying to foray
into the innovative drug manufacturing market. The results can be observed from the number
of patents that were filed which shows an upward trend .Also the cost of doing RND in India
is lesser than the other countries & as a result a lot of major global pharmaceutical firms are
looking at India as a hub for doing low cost RND.

PATENTS 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Filed 12613 17466 24505 28940 35218
Examined 10709 14813 11,569 14119 11751
Granted 2469 1911 4320 7539 15261

EXHIBIT 19

COST ADVANTAGE
As show earlier the level of fragmentation in the Indian pharmaceutical industry is huge
which makes the Indian proposition cost advantageous. There are nearly 8000 manufacturers
which enable the industry to drive down costs along the life cycle of the project. Compared to
USA & Europe the costs are lower by 65% & 50% respectively.

EXHIBIT 20

19
Installation costs-The cost of setting up a plant in India is 30% lower than establishing an
FDA plant in USA.

EXHIBIT 21

The pool of trained chemists & pharmacists in India is 6 times larger than USA & are
available at 10% of cost.

EXHIBIT 22

20
ENTRY INTO NEW MARKETS
The Indian pharmaceutical Industry is consolidating its position in the already established
USA & European markets. However at the same time they are entering into other continents
like Africa & Latin America where there is a great demand for the generic drugs industry.
Also there is awareness about the safety of the generic drugs globally & also due to the
financial crisis the demand is on the rise which augurs well for the Indian industry.

EXHIBIT 23

21
PORTER’S FIVE FORCES MODEL

EXHIBIT 24

22
COMPANY ANALYSIS

CIPLA LTD
Cipla is a leading pharmaceutical company in India with a strong and profitable business
model. The company has a well-diversified portfolio, without any overdependence on a
particular segment. The company owns around 30 manufacturing plants. The manufacturing
facilities are approved by the major international regulatory agencies including the US FDA,
MHRA (UK) and WHO.

It conducts research for developing innovative drug delivery systems for both new and
existing drugs with major focus on new medical devices in the area of respiratory medicine
including an inhaler device for insulin.

SHAREHOLDING PATTERN

GROUP PERCENTAGE
PROMOTER 39.38
FII 13.4
DII 18.41
PUBLIC 22.07
OTHERS 3.54

EXHIBIT 25

INVESTMENT STRATEGY

 Low Risk global strategy-Cipla's strategy for its generics business is to enter into bulk
drug supply arrangements with companies well entrenched in the generic markets.
Cipla has entered into partnerships for 125 products with 8 companies in the US and a
strategic alliance to develop over 50 generic products for the generics major
Teva/Ivax. The company thus, intends to enter specialty segments with a low-risk
return approach ensuring relatively stable earnings flow
 Anti-asthma and anti-HIV focus to augur well: Cipla enjoys a near dominant position
in the asthma segment (about 20% of sales). It is one of the few companies globally
having the required technology to manufacture CFC-free inhalers. With CFC inhalers
to be compulsorily phased out by 2010, this segment is expected to see growth in the
future
 Debt to equity and coverage ratios is favorable to minority equity investors

23
KEY RISKS

 An unfavourable court ruling in an ongoing litigation between the Government of

India and Cipla regarding alleged overcharging of certain drugs could potentially
pressurise the Company’s bottom line

 If the cost of raw material keep on increasing due to increased pressure on Chinese
companies to move to higher level drugs, companies margin will be hit drastically

ECONOMIC ACTIVITIES
The company is present in 3 major segments:

 Bulk Drugs
 OTC
 Veterinary Drugs
 Prescription Drugs
 Technological services

The key competitors of the company are:

 Dr. Reddy’s Labs

 Lupin
 Sun Pharma
 Glaxosmithkline

RECENT DEVELOPMENTS

 On 19th August , 2009 the Delhi High court allowed it to see the generic version of
Bayer’s cancer drug.
 During April 2009, the USFDA raised 9 deviations in the manufacturing process
during inspection of the company’s Bangalore unit. The company has stated that it
would submit it response to the Regulator within the stipulated time period. On the
Adcock Ingram-Cipla Medpro issue in South Africa, the company has stated that it
would support its partner (Cipla Medpro) in case of any hostile takeover by Adcock.
Cipla Medpro currently contributes around 7% of the company’s Total Exports and
there can be risks to this contribution in case of any hostile takeover by Adcock

24
  July 2009: Recently ,the Delhi High Court allowed Cipla to manufacture and sell
generic version of patented lung cancer drug 'Erlotinid' invented by Swiss Pharma
company Hoffman La Roche Ltd
 Aug 2009: It also lost Indian government order for Tami flu to Hetero

FINANCIAL ANALYSIS

Column1 Column2 Column3 Column4 Column5

Key Ratios 2005 2006 2007 2008
Sales (in Crore) 2401.17 3103.81 3657.95 4295.24
Net Profit (in Crore) 409.61 607.64 668.03 701.43
EBIT Margin 21.75% 23.24% 22.28% 19.79%
EBITDA Margin 24.04% 25.82% 25.10% 22.83%
Net Profit Margin 17.06% 19.58% 18.26% 16.33%
ROCE 2908.00% 2964.00% 25.33% 20.00%
Sales Growth (YOY) 16.81% 29.26% 17.85% 17.42%
EPS Growth (YOY) -74.10% 48.32% -57.60% 5.01%
Retention Ratio 70.70% 70.80% 72.70% 74.00%
OCF* Growth -22.72% 39.42% 19.12% 13.17%
Debt Equity 12.00% 24.00% 4.00% 15.00%
Interest Coverage 68.26% 55.74% 116.10% 72.47%
Current Ratio 1.84% 1.69% 272.00% 1.98%

EXHIBIT 26

 The company’s debt to equity & leverage ratios are very favorable
 Company has posted phenomenal sales growth over the period of last 3-4 years
 EPS growth has been very low due to equity dilution during the period of 2006-07
 Commenting on the road ahead the company, they are looking at 10% top line and
bottom-line growth in FY10, and Operating margins are seen at 23-25%
 The net sales for the quarter ended march 09 grew by 14% to Rs. 1235 cr this was
mainly driven by strong performance in Domestic market and its Formulations
segment in exports. Others segment (Others include Technology Knowhow/fees and
other services) which grew by 225.1%
The company analysis was also done by the Value Benchmark Method. By this method the
value anchor or the value range was found out. We can see that by this method the stock price
comes out to be Rs 294 while the current market price is Rs 275. Thus we can conclude that
the stock is undervalued and its price will grow up in the future. Hence, it’s recommended to
stay invested in this stock for the short term.

25
SWOT ANALYSIS
Strengths:
 Cipla has a voluminous product
portfolio containing more than 200
brands some of which are the leading
brands in their respective category
 The company has excellent process
R&D skills which are considered to be
one of the best in the country
 The Company has excellent distribution
network
Opportunities:
 Lifestyle diseases, Rising Life
Expectancy, Rising Disposable Income
and innovation are major drivers of
pharmaceutical industry. With
increased shift in this segment,
domestic market is set to grow. This is
an opportunity for company like Cipla
which is already a leader in domestic
market
EXHIBIT 27
26
Weaknesses:
 It is not present in CRAMS and Bio
Pharmaceutical segment which are the
best projected segment in the industry
Threats:
 China's recent move to cut
incentives on exports may add
to the cost of imports. These
factors will impact the
Company's overall margins. An
alternative resource for import
of raw material is not so
feasible. If stringent action is
taken by Chinese government
then it can hurt margins of the
company
 Recent acquisitions attempt of
its subsidiary Cipla Medpro by
Adcock-Ingram. This
subsidiary accounts for 8% of
companies export
GLENMARK PHARMACEUTICALS

Glenmark Pharmaceuticals Started as an Family Business in 1977 with focus on marketing

and manufacturing of formulations. In 2008 the company was divided into two units
Glenmark Pharmaceuticals Ltd. (GPL) and Glenmark Generics Ltd (GGL) to keep sharp
focus on both the segments. Since 2000 company has been into Research of NCE, NBE and
drug discovery system and has grown among best in India.

SHAREHOLDING PATTERN

GROUP PERCENTAGE
PROMOTER 52.09
FII 28.24
DII 3.36
PUBLIC 14.93
OTHERS 1.38

EXHIBIT 28

INVESTMENT RATIONALE:

 Innovation, research and aggressiveness are the words that better describe Glenmark.
It has been reorganized into GPL and GGL. This will help in keep sharp focus on both
the sectors.
 Company’s sound strategy of developing molecules and out licensing next phase
leads to lowering of the involved risk in research and also an inflow of revenue due to
milestones payments and royalties.
 Company has growth with a CAGR of 39% over past four years. It started its NCE
research in 2000 and now is the best in it in India.
 Company’s majority revenue in specialty segment is generated domestically along
with emerging economies while in generics it’s US from which major revenues are
generated. Specialty and Generics contribute 60:40 to overall revenues.

27
  In near term company had a bad relationship with investors due to non-transparency
of its guidance for FY’09 and no guidance for FY’10. Coupled with few bad news for
its NCE and hence its stock has been underperforming market in short term.

KEY RISKS

 Bad global and economic conditions could hurt its revenue since lesser companies
would in position to in- license NCE, also due to it margins may decline.
 Any negative news on NCE, like recent hiccups with research partners could hurt its
potential in pipeline.
 Rupee appreciation can lead to significant MTM losses if sound hedging policy id not
adapted.
 Its aggressive efforts to build front end markets through acquisitions could hurt him if
not executed properly.

ECONOMIC ACTIVITIES
The company is present in 3 major segments:

 Specialty
 Generics
 NCE Research and collaboration

The key competitors of the company are:

 Lupin
 Torrent Pharma
 Dr. Reddy’s Lab

RECENT DEVELOPMENTS

 April 2009: Company has announced that the results of fourth quarter along with
results of FY’09 will be published in June.
 April 2008: company has said this FY they will be less aggressive and hence less
CAPEX will be done along with focus to attain operational efficiency.

28
  Dec 2008: GRC8200 molecule under research with Merck, Germany was halted. This
was second blow to R&D after GRC6211 molecule's research with Eli Lilly was
stopped in advanced stage.

FINANCIAL ANALYSIS

Column1 Column2 Column3 Column4 Column5

Key Ratios 2005 2006 2007 2008
Sales (in Crore) 538.13 620.83 838.76 1408.71
Net Profit (in Crore) 63.48 67.03 134.8 389.02
EBIT Margin 19.50% 17.20% 27.22% 36.17%
EBITDA Margin 22.28% 20.01% 30.01% 38.26%
Net Profit Margin 11.80% 10.80% 16.07% 27.61%
ROCE 12.80% 8.34% 13.26% 32.65%
Sales Growth (YOY) 41.09% 15.37% 35.10% 67.95%
EPS Growth (YOY) -24.65% 75.00% 80.33% 46.75%
Retention Ratio 83.83% 83.55% 91.13% 94.81%
OCF* Growth -61.30% -414.83% -63.38% -2475.93%
Debt Equity 1.52% 2.28% 2.02% 52.00%
Interest Coverage 5.84% 5.70% 5.31% 10.89%
Current Ratio 4.24% 1.82% 1.18% 1.83%

EXHIBIT 29

 For fiscal year ending FY08 company’s sales stood at Rs 2009.2 cr, an 60% increase
YoY and its net profit at Rs 632.1 cr, an increase of 100% YoY.
 Over the years Company have been constantly increasing EBIT Margin, thus
improving upon its operational efficiency.
 Company has posted phenomenal sales and EPS growth every year over the last 3-4
years.
 The profitability ratios of the company have been increasing year on year due to huge
revenues from high margin business such as specialty.
 The Debt-Equity ratio of company has been getting better and better and is impressive
compared to industry average and keeping in light the amount of money it invests into
its R&D activities.
 Despite low D/E company has below industry average current ratio due to heavy
locked in amount in perusing R&D.
The value benchmark method leads to a stock price valuation of stock at Rs 211, while
current stock price is Rs. 225. The stock is over valued so we feel that the investor should
hold for sometime before investing in the stock.

29
 SWOT ANALYSIS

Strengths Weaknesses

 Combination of good presence in high  Inability of it’s to maintain

margins and high volume businesses. sound relationship with
partners in research especially
 Three quarters of revenue being in molecules in phase-III.
generated from India and US which has
immense potential going further in  Inability to keep good
respective sectors of specialty and relationship and trust with its
generics. Also its ROW presence is investors due to poor
growing impressively. transparency policy.

 Tremendous growth in all the sectors of  Comparatively low presence in

its presence in last 3-4 years (in FY’08 emerging markets, except
generics had growth of 108%). India, compared to its peers
could be a competitive
 Strong portfolio of molecules in pipeline disadvantage in poor economic
whose future seems promising taking conditions.
past performance of company in view

Opportunities Threats

 Need of big global firms for new
potential new drugs for getting their
share of higher margins – potential
customers of its NCE.
 Rising healthcare expenditure and rising
income levels will stimulate demand of
branded formulations in emerging
economies.
 Growing competition and pricing pressure in
generics could put pressure on its margins.
 Failure of its molecules in pipeline will put
immense pressure on its earning since
revenues from R&D achievement contribute
about 25% to GPL.

EXHIBIT 30

30
GLAXO SMITHKLINE PHARMA

In 1924 the company was formed under name of H.J.Foster & co as an fully owned
subsidiary of above named company of UK which was in 1950 renamed to present name,

GlaxoSmithKline is the largest Pharma MNC subsidiary in India which is the largest vaccines
player in India and among top5 domestic player having more than 90% of revenue being
generated domestically.

SHAREHOLDING PATTERN

GROUP PERCENTAGE
PROMOTER 50.67
FII 14.77
DII 17.41
PUBLIC 16.81
OTHERS 0.34

EXHIBIT 31

INVESTMENT RATIONALE

 Having reputed itself as the safest company in sector to bet upon GlaxoSmithKline is
the biggest MNC operating in India having strong presence in Branded Formulations
and Generic Formulations.
 Company generates more than 90% of its revenues from domestic operations with
very few percent from exports to small nations and few percent from fine chemicals
business which have been now sold off.
 Company holds leadership position in many segments in which it operates
domestically such as Dermatology, anti-parasitic, vitamins and minerals.
 It is one of the biggest vaccines players in Indian market with Vaccines for Hepatitis-
A, Hepatitis-B, Influenza, Chickenpox etc. In near future it plans to come with
vaccines for cervical cancer for which clinical trials are over.

31
  It has maintained its decent growth momentum by way of new product launches
regularly. It wants to focus on specialty, CVS, CNS, oncology, Neuropsychiatry and
Diabetology in near term since they have huge margins and fast growth.
 On RnD front anti-infective, cardiovascular segments are focus along with try to
develop an anti counterfeit process for coating.

KEY RISKS

 Procuring API from china for some of its products could still be an issue with
company as was in last FY.
 Continuity of poor contribution from Biddle Sawyer, it subsidiary could increase its
top-line while depleting bottom-line.
 Price Control and unfavorable legislation in domestic market could hamper
company’s growth and potential in drastic way
 Low R&D Expenditure could hurt company in coming years

ECONOMIC ACTIVITIES
The company is present in 3 major segments:

 Generic Formulations
 Branded Formulations
 Vaccines
The key competitors of the company are:

 Lupin Labs
 Pfizer
 IPCA Labs

RECENT DEVELOPMENTS

 Aug 09: Glaxo SmithKline Pharmaceutical announced the launch of its patented
medicine promecta, used in treatment of depleted platelet count by the end of fourth
quarter this year.
 Apr 09: Glenmark’s molecule for neuropathic pain, osteoarthritis - GRC 10693,
successfully completes Phase I trials

32
  Feb 09: Glenmark receives approval from the U.S. FDA for Lithium Carbonate
Capsules
 Dec 08: SCRIP, the leading pharmaceutical magazine in the world Crowns Glenmark
as the "Best Pharma Company in the World - SME" and the "Best Company in
Emerging Markets" at the SCRIP Awards 2008 in London

FINANCIAL ANALYSIS

Column1 Column2 Column3 Column4 Column5

Key Ratios 2005 2006 2007 2008
Sales (in Crore) 1490.89 1593.86 1710.82 1761.39
Net Profit (in Crore) 333.09 502.08 545.51 537.75
EBIT Margin 32.68% 42.29% 43.28% 42.48%
EBITDA Margin 33.85% 43.28% 44.20% 43.40%
Net Profit Margin 22.34% 31.50% 31.89% 30.52%
ROCE 29.45% 31.05% 32.85% 28.83%
Sales Growth (YOY) 23.26% 6.91% 7.34% 2.96%
EPS Growth (YOY) 24.77% 18.67% 18.09% 9.70%
Retention Ratio 28.86% 46.13% 45.11% 33.64%
OCF* Growth 29.68% 52.46% -31.43% 24.35%
Debt Equity 0.00% 0.01% 0.00% 0.00%
Interest Coverage 207.16% 277.93% 857.19% 921.51%
Current Ratio 1.01% 0.94% 0.96% 0.96%

EXHIBIT 32

 EPS growth posted by company is in tune with industry average which is a bit
depressing after having such a high margins, the attributable reason being a lower
sales growth YoY.
 Company falls on lower side when it comes to Retention Ratio and hence shows a
reason for its slow growth in sales and its CAPEX needs are lower attributable from
lower retention ratio since debt for company is almost nil.
 Over the considered years company has constantly maintained EBIT Margins and Net
Profit Margins at a level which is among the best in industry. The impressive thing
being maintaining these figures despite such a huge turnover and regularly depressing
margins.
 Having established itself as the safest company to invest, it still maintains an ROCE
an level which is much higher than industry average and better than most of its peers
in segments in which it operates
 Asset Turnover Ratio of Company is very impressive and this is why the CAPEX
needs for company is very low and hence lower retention ratio. There has been

33
 marginal drop in the figures over the years but at present this drop doesn't hold much
significance.

By the Value Benchmark method the price calculated is coming out to be Rs. 1491
while the current market price is around Rs. 1454. Thus we can conclude that the stock’s
intrinsic value is higher and it’s undervalued and investors should invest in this stock.

34
 SWOT ANALYSIS
STRENGTHS
 Leadership position in many high volume
high margin segments (branded and
generics) in domestic markets.
 More than 90% of company’s revenue
being generated domestically which is
outperforming sectors growth globally and
is going to do so for coming years.
 Strong portfolio of vaccines and still
growing which have their evergreen growth
in terms of revenue.
 Very impressive figures in most cases when
it comes to financial outlook, one of the
best in industry.
 Strong cash position, No leverage risk and
hence an assured investor and so a low
return demand.
OPPORTUNITIES
 Its foray into CNS, CVS, Oncology, and
Diabetology in domestic market can turn
out to be a boon for company since they are
fast growing segment with some of them
having growth of 30%.
 Global arms likely decision to make this
subsidiary a manufacturing hub for its
products could mean more revenue for
firm.
 Its recent acquisition outlook in generic
space could lead it to achieve inorganic
growth in near term.
EXHIBIT 33
35
WEAKNESSES
 Issues with procurement of API highlights
optimization issues in supply chain.
 A slow sales growth of 3%-4% despite
domestic industry growth of around 12%
and the major sectors in which it operates
growing more than domestic industry
average.
 Low R&D expenditure, to the tune of
.74% of revenue could mean lost
opportunity for new product launches and
non utilization of its domestic market
position in optimal manner.
THREATS
 Price controls and non-favorable
regulations could hurt company's fortunes
badly.
 Continued issues with its supply chain
could hurt its operational efficiency and
hence margins.
 In its pursuit for achieving inorganic
growth in few segments of its operation
e.g. Generics if not executed properly
could mean issues with management and
could question future sustainability and
profitability for company keeping in mind
its lower sales growth.
REFERENCES

 E & Y Pharmaceutical Industry Report 2008

 Newspaper Articles
 Annual Report of Companies
 www.moneycontrol.com

36
APPENDIX

CIPLA LTD
ESTIMATED B/L SHEET
Particulars Mar 2009 Mar 2010
No of Months 12 12
Gross Sales 50216.4
Less :Inter divisional transfers 0
Less: Sales Returns 0
Less: Excise 610.40
Net Sales 49606
Other Income 3661.7
Total Income 53267.7 64185.14
EXPENDITURE :
Increase/Decrease in Stock -1135.50
Raw Materials Consumed 24609.50
Power & Fuel Cost 917.10
Employee Cost 2428.60
Other Manufacturing
Expenses 5998.40
General and Administration
Expenses 2453.60
Selling and Distribution
Expenses 3755.90
Miscellaneous Expenses 3186.80
Less: Pre-operative Expenses
Capitalised 0
Total Expenditure 42214.4 53230.0
Operating Profit 11053.30 10955.1
Interest 522.3 1129.9
PBDT 10531.00 12085.0
Depreciation 1517.9 1839.4
Profit Before Taxation &
Exceptional Items 9013.10 10245.7
Exceptional Income /
Expenses 0 0
Profit Before Tax 9013.10 10245.7
Provision for Tax 1245 1174.27
Profits After Tax 7768.1 9071.4
Appropriations 12867.10
Equity Dividend % 100.00
Earnings Per Share 9.99
Book Value 55.86

37
 PRICE ESTIMATION
Particulars Mar 2009 Mar 2008 Mar 2007 CAGR
No of Months 12 12 12
Gross Sales 50216.4 40885.6 35331.7
Less :Inter divisional transfers 0 0 0
Less: Sales Returns 0 0 0
Less: Excise 610.40 906.60 949.30
Net Sales 49606 39979 34382.4
Other Income 3661.7 3403.1 2305.5
Total Income 53267.7 43382.1 36687.9 0.20
EXPENDITURE :
Increase/Decrease in Stock -1135.50 -413.70 307.30
Raw Materials Consumed 24609.50 21013.30 16948.50
Power & Fuel Cost 917.10 969.00 867.10
Employee Cost 2428.60 2279.10 1620.50
Other Manufacturing Expenses 5998.40 3568.00 2998.70
General and Administration Expenses 2453.60 2430.50 1750.00
Selling and Distribution Expenses 3755.90 2846.30 2260.80
Miscellaneous Expenses 3186.80 818.70 709.90
Less: Pre-operative Expenses
Capitalised 0 0 0
Total Expenditure 42214.4 33511.2 27462.8 0.83
Operating Profit 11053.30 9870.90 9225.10
Interest 522.3 180.5 111.6 1.16
PBDT 10531.00 9690.40 9113.50
Depreciation 1517.9 1306.8 1033.7 0.21
Profit Before Taxation & Exceptional
Items 9013.10 8383.60 8079.80
Exceptional Income / Expenses 0 0 0
Profit Before Tax 9013.10 8383.60 8079.80
Provision for Tax 1245 1369.3 1399.5 -0.06
Profits After Tax 7768.1 7014.3 6680.3
Appropriations 12867.10 10917.80 9722.30
Equity Dividend % 100.00 100.00 100.00
Earnings Per Share 9.99 9.02 8.59
Book Value 55.86 48.20 41.52

Earning Per Share (Rs) 9.99 9.02 8.59

Equity Dividend (%) 100 100 100
Book Value (Rs) 55.86 48.2 41.52
Dividend Payout Ratio 20.2 22.2 23.3 -0.07
Average Dividend Payout 18.81

Net Profit Margin 0.16 0.18 0.19

Asset Turnover 0.95 0.94 1.05

38
Leverge 1.22 1.15 1.04
Return on Equity (%) 18.07 19.10 21.21
Book Value Per Share 56.00 48.00 41.52
Earnings Per Share 9.99 9.02 8.59
Dividend Payout Ratio 0.2 0.22 0.23
Dividend Per Share 2 2 2
CAGR (Sales) % 0.40
CAGR (EPS) % 0.16
CAGR (DPS) % 0.00
Average Retention Rate 0.78
Average Return on Equity 19.46
Sustainable Growth Rate 15.25
Beta (Historical Data Estimate) 0.8
Price (Beginning) 220 236 258
Price (Ending) 219.75 219.75 235.7
P/E (Prospective) 22.02 26.16 30.03
P/BV (Retrospective) 0.01 0.01 0.01
Estimated EPS (As per
calculations) 12.25
Average of
Market Return (Data Compiled) % 22 past 3 years
Risk Free Rate 8
Cost of Equity 19.2
Growth Rate of Dividends 0
P/E 24.00
Price 294.094445

39
GLENMARK PHARMACEUTICALS

ESTIMATED B/L SHEET

Particulars 2008 2009
No of Months 12 12
Income
Sales Turnover 1413.32
Excise Duty 33.49
Net Sales 1379.83
Other Income 1.4
Stock Adjustments 30.2
Total Income 1411.43 2204.867
Expenditure
Raw Materials 467.47
Power & Fuel Cost 17.02
Employee Cost 108.91
Other Manufacturing
Expenses 20.52
Selling and Admin Expenses 252.8
Miscellaneous Expenses 40.44
Preoperative Exp Capitalised 0
Total Expenses 907.16 1664.388
Operating Profit 502.87 540.479
Interest 43.64 69.01276
PBDT 460.63 609.4918
Depreciation 29.44 38.20639
Other Written Off 0
Profit Before Tax 431.19 571.2854
Extra-ordinary items 0
PBT (Post Extra-ord Items) 431.19 571.2854
Tax 42.16 64.52301
Reported Net Profit 389.02 506.7624
Total Value Addition 439.68
Preference Dividend 0
Equity Dividend 17.15
Corporate Dividend Tax 2.92
Per share data (annualised)
Shares in issue (lakhs) 2487.26
Earning Per Share (Rs) 15.64
Equity Dividend (%) 70
Book Value (Rs) 41.34

40
 PRICE ESTIMATION
Particulars Mar '06 Mar '07 Mar '08 CAGR
No of Months 12 12 12
Income
Sales Turnover 620.83 838.75 1413.32
Excise Duty 55.5 28.96 33.49
Net Sales 565.33 809.79 1379.83
Other Income 14.38 18.24 1.4
Stock Adjustments -1.33 50.8 30.2
Total Income 578.38 878.83 1411.43 0.56
Expenditure
Raw Materials 200.45 309.56 467.47
Power & Fuel Cost 8.66 15.17 17.02
Employee Cost 60.11 78.21 108.91
Other Manufacturing Expenses 18.26 16.86 20.52
Selling and Admin Expenses 147.61 187.58 252.8
Miscellaneous Expenses 23.07 37.81 40.44
Preoperative Exp Capitalised 0 0 0
Total Expenses 458.16 645.19 907.16 0.75
Operating Profit 105.84 215.4 502.87
PBDIT 120.22 233.64 504.27
Interest 17.45 39.36 43.64 0.58
PBDT 102.77 194.28 460.63
Depreciation 17.48 23.46 29.44 0.30
Other Written Off 0 0 0
Profit Before Tax 85.29 170.82 431.19
Extra-ordinary items 0 -2.04 0
PBT (Post Extra-ord Items) 85.29 168.78 431.19
Tax 18 33.97 42.16 0.53
Reported Net Profit 67.3 134.8 389.02
Total Value Addition 257.7 335.63 439.68
Preference Dividend 1.4 0.69 0
Equity Dividend 8.31 9.58 17.15
Corporate Dividend Tax 1.36 1.44 2.92
Per share data (annualised)
Shares in issue (lakhs) 1187.21 1200.58 2487.26
Earning Per Share (Rs) 5.55 11.17 15.64
Equity Dividend (%) 35 40 70
Book Value (Rs) 25.16 37.5 41.34

Total Assets 1046.79 1357.66 1552.79

Equity 318.75 450.16 1028.25

Net Profit Margin 0.11 0.16 0.28

41
Asset Turnover 0.59 0.62 0.91
Leverge 3.28 3.02 1.51
Return on Equity (%) 0.21 0.30 0.38
Book Value Per Share 25.16 37.5 41.34
Earnings Per Share 5.55 11.17 15.64
Dividend Payout Ratio 0.12 0.07 0.04
Average Dividend Payout 7.95
Dividend Per Share 0.70 0.80 0.70
Retention Rate 0.88 0.93 0.96
Sustainable Growth Rate 0.19 0.28 0.36
CAGR (Sales) % 0.51
CAGR (EPS) % 0.68
CAGR (DIVIDENDS) 0
Average Retention Rate 0.08
Average Return on Equity 0.30
Sustainable Growth Rate
Beta (Historical Data Estimate) 0.8
Price (Beginning) on NSE 148.7 157.53 305.63
Price (Ending) on NSE 161.75 307.48 489
Price (Average) 155.23 232.51 397.32
P/E (Prospective) 27.97 20.82 25.40
P/BV (Retrospective) 6.17 6.20 9.61
Estimated EPS (As per calculations) 10.72
Market Return (Data Compiled) % 16.50
Risk Free Rate 8.00
Cost of Equity 14.8
Growth Rate of Dividends 0.00
P/E 19.75
Price 211.807854

42
GLAXO SMITHKLINE PHARMA

ESTIMATED B/L SHEET

Particulars Dec 2008 Dec-09
No of Months 12
Gross Sales 17014.72
Less :Inter divisional transfers 0
Less: Sales Returns 0
Less: Excise 1586.94
Net Sales 15427.79
Other Income 954.8
Total Income 16382.59 19434.605
EXPENDITURE :
Increase/Decrease in Stock -460.49
Raw Materials Consumed 4706.85
Power & Fuel Cost 442.42
Employee Cost 1664.53
Other Manufacturing Expenses 3848.06
General and Administration Expenses 835.90
Selling and Distribution Expenses 1942.95
Miscellaneous Expenses 72.35
Less: Pre-operative Expenses Capitalised 0
Total Expenditure 13052.57 16224.135
Operating Profit 3330.02 3210.47
Interest 69.66 97.83
PBDT 3260.36 3308.30
Depreciation 419.5 415.76
Profit Before Taxation & Exceptional Items 2840.86 2892.54
Exceptional Income / Expenses 0
Profit Before Tax 2840.86 2892.54
Provision for Tax 957.54 1174.6206
Profits After Tax 1883.32 1717.92
Appropriations 1883.32
Equity Dividend % 150.00
Equity Dividend 209.57
Earnings Per Share 44.78
Book Value 180.92
Shares in issue (lakhs) 873.23

43
 PRICE ESTIMATION
Particulars Dec 2008 Dec 2007 Dec 2006 CAGR
No of Months 12 12 12
Gross Sales 17014.72 13955.05 12142.53
Less :Inter divisional transfers 0 0 0
Less: Sales Returns 0 0 0
Less: Excise 1586.94 1176.77 1023.17
Net Sales 15427.79 12778.28 11119.36
Other Income 954.8 688.6 521.8
Total Income 16382.59 13466.88 11641.16 0.19
EXPENDITURE :
Increase/Decrease in Stock -460.49 -229.31 -24.21
Raw Materials Consumed 4706.85 3476.56 2750.54
Power & Fuel Cost 442.42 304.37 299.30
Employee Cost 1664.53 1499.90 1286.39
Other Manufacturing Expenses 3848.06 3114.42 1673.89
General and Administration Expenses 835.90 682.09 1785.01
Selling and Distribution Expenses 1942.95 1647.26 1480.94
Miscellaneous Expenses 72.35 39.34 21.24
Less: Pre-operative Expenses
Capitalised 0 0 0
Total Expenditure 13052.57 10534.63 9273.1 0.83
Operating Profit 3330.02 2932.25 2368.06
Interest 69.66 46.11 35.32 0.40
PBDT 3260.36 2886.14 2332.74
Depreciation 419.5 434.94 427.09 -0.01
Profit Before Taxation & Exceptional
Items 2840.86 2451.20 1905.65
Exceptional Income / Expenses 0 0 0
Profit Before Tax 2840.86 2451.20 1905.65
Provision for Tax 957.54 824.45 636.32 0.23
Profits After Tax 1883.32 1626.75 1269.33
Appropriations 1883.32 1626.75 1269.33
Equity Dividend % 150.00 120.00 100.00
Equity Dividend 209.57 237.17 262.58
Earnings Per Share 44.78 38.68 30.18
Book Value 180.92 153.69 129.05
Shares in issue (lakhs) 873.23 847.03 847.03

Total Assets 7608.79 6463.5 5427.19

Shareholder's Funds 7608.79 6463.5 5427.19

Net Profit Margin 0.12 0.13 0.11

Asset Turnover 2.24 2.16 2.24
Leverge 1 1 1

44
Return on Equity (%) 0.27 0.27 0.26
Book Value Per Share 20.72 18.14 15.24
Earnings Per Share 215.67 192.05 149.86
Dividend Payout Ratio 0.11 0.15 0.21
Average Dividend payout 1.55
Dividend 15.00 12.00 7.00
Retention Ratio 0.85
CAGR (Sales) % 1.78
CAGR (EPS) % 0.76
CAGR (DPS) % 4.64
Average Retention Rate 0.85
Average Return on Equity 0.27
Sustainable Growth Rate 0.23
Beta (Historical Data Estimate) 1.19
Price (Beginning) 1135.35 1162.95 1121.75
Price (Ending) 1150 1130 1168.9
Price (Average) 1142.675 1146.475 1145.325
P/E (Prospective) 5.30 5.97 7.64
P/BV (Retrospective) 55.15 63.19 75.17
Estimated EPS (As per
calculations) 83.36
Market Return (Data Compiled) % 16.50
Risk Free Rate 8.00
Cost of Equity 18.12
Growth Rate of Dividends 46.39
P/E 17.89
Price 1491.39

45