Financial Analysis of Dr Reddy’s Laboratories Ltd

Course Instructor Prof. Manju Jaiswal

Team Members Jaideep Singh (272/47) Pankaj Gangwani (209/47) Kanupriya Sharda (260/47) Sanjay Kumar Sah (245/47)

CHIEF EXECUTIVE NAME SECRETARY NAME

: Mr G V Prasad : Mr Sandeep Poddar

BOARD OF DIRECTORS

Mr. G V Prasad Mr. Ravi Bhoothalingam Dr. K Anji Reddy Ms. Kalpana Morparia Dr. Omkar Goswami Mr. Anupam Puri Dr. Ashok S Ganguly Mr. Satish Reddy Dr. Bruce L A Carter Dr. J P Moreau

LISTED IN

:

NATIONAL STOCK EXCHANGE OF INDIA LTD NEW YORK STOCK EXCHANGE THE STOCK EXCHANGE, MUMBAI

Corporate Financial Reporting and Analysis, 2010

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In 1998. Reddy's obtained its first USFDA approval for Ibuprofen API and started its formulations operations. In 2006. for the first time in India. outside Japan. cardiovascular diseases. to Novo Nordisk. In 1990. In 1999. Generic & Branded Finished Dosages. a group company. The appreciation and recognition is a role to boost. Dr. as part the company has received plenty of awards and applications already.the fourth-largest generics company in Germany. the company got Pharma Excellence Awards 2006-07 under the category of Sustained Growth by The Indian Express. Dr. In 1987. Best Corporate Social Responsibility Initiative 2007 by BSE . Reddy's achieved a revenue of US$ 1 Billion. to be listed on the New York Stock Exchange. Reddy's made its first overseas acquisition . first generic product to be marketed under the "Dr. Dr. and it is sustain path of the company to survive. Reddy's launched Ibuprofen. Today. Dr. the company acquired American Remedies Limited. to Novo Nordisk. developing and commercializing innovative medicines that satisfy unmet medical needs are the two parallel objectives of Dr. In 2001. Reddy's Laboratories is leading pharmaceutical company in India in terms of turnover and profitability. Reddy launched a GDR issue of US$ 48 million. entered a new territory when it. In 1994. In 2008. became the first Asia Pacific pharmaceutical company. Reddy's Research Foundation was established and the company started its drug discovery programme. anti-infectives and inflammation. DRF 2593 (Balaglitazone). Dr. Reddy's" label in the US. In the same year. Dr. Reddy's became the first Indian pharmaceutical company to out-license an original molecule when it licensed anti-diabetic molecule. Reddy's acquired Benzex Laboratories Pvt. Dr. In 1986. and Biopharmaceuticals. In 1993. In 1995. a company engaged in the sale of generic finished dosages in Italy. Dr. continued that. Dun & Bradstreet American Express in Corporate Awards 2007. Dr Reddy's manufactures a range of products such as Active Pharmaceutical Ingredients. Specialty Pharmaceuticals. a pharmaceutical company based in India. In 2002. Reddy's went public and entered international markets with exports of Methyldopa. Reddy's Laboratories was founded in 1984 by Dr Anji Reddy. Reddy's. Dr. Corporate Financial Reporting and Analysis. obesity. In 2003. 2010 Page 3 . Limited to expand its Bulk Actives business.1. DRF 2725 (Ragaglitazar). The company proven research capabilities and vertically integrated with a presence across the pharmaceutical value chain and it conducts research in the areas of diabetes. Dr. In 1997. The deal has been completed via Dr Reddy's Italian subsidiary.India and Amity Leadership Award for Best Practices in HR in Pharmaceutical Sector. BRIEF COMPANY BACKGROUND Dr. Dr. Reddy's acquired Betapharm. In 1988. Reddy's Laboratories is India's leading pharmaceutical company with presence in over 100 countries. Dr. In the year 2000. Dr. the company has acquired Jet Generici Srl. Reddy's Laboratories became India's third largest pharmaceutical company with the merger of Cheminor Drugs Limited. Reddy's licensed anti-diabetic molecule. Reddy's Laboratories Limited. To help people lead healthier lives by delivering affordable and accessible medication to all parts of the world and discovering. Dr. Dr. exported Norfloxacin and Ciprofloxacin to Europe and Far East.BMS Laboratories Limited and Meridian Healthcare in UK. the company set up a joint venture in Russia.

It ranks very high in the third world. almost every type of medicine is now made indigenously. supported by Intellectual Property Protection regime is well set to take on the international market. It has expanded drastically in the last two decades. 2010 Page 4 . Corporate Financial Reporting and Analysis.2. low R&D costs. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. The Pharmaceutical Industry. in terms of technology.” Richard Gerster 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. From simple headache pills to sophisticated antibiotics and complex cardiac compounds. It is an extremely fragmented market with severe price competition and government price control. which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). the Indian Pharma Industry is estimated to be worth $ 4.000 registered units. The Indian Pharmaceutical sector is highly fragmented with more than 20. innovative scientific manpower. with its rich scientific talents and research capabilities. strength of national laboratories and an increasing balance of trade.e.. Following the de-licensing of the pharmaceutical industry. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant. industrial licensing for most of the drugs and pharmaceutical products has been done away with. These units produce the complete range of pharmaceutical formulations. i. the pharmaceutical industry in India has low costs of production. A highly organized sector. i. quality and range of medicines manufactured. Playing a key role in promoting and sustaining development in the vital field of medicines. The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs. International companies associated with this sector have stimulated. medicines ready for consumption by patients and about 350 bulk drugs.. chemicals having therapeutic value and used for production of pharmaceutical formulations. chemicals. BRIEF INDUSTRY OUTLOOK “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. orals and injectibles.5 billion. assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world.e. tablets. There are about 250 large units and about 8000 Small Scale Units. capsules. drug intermediates. growing at about 8 to 9 percent annually. pharmaceutical formulations.

the comparable numbers were Rs. This was because previous year sales included revenues from sales of Authorized Generics products. Operating and Other Expenses The increase in operating expenses year on year has some common causes . Depreciation and Amortization Depreciation and amortization decreased by 17% to Rs.373 million in 2007–08. 5. One of the reasons was an increase in Gross sales of Global Generics which grew by 50% to Rs. Revenues from Betapharm have suffered due to pricing pressures in the German generics market as well as supply chain problems. which did not materialize in 2007–08.856 million.428 million in 2008-09 and to Rs.higher advertisement costs. As outlined above. 66.035 million in 2006–07.655 million in 2006–07 to Rs. This was on account of annual increments and increase in number of employees. Personnel costs rose by 19% to Rs. No launches during FY08 and end of exclusivity period for simvastatin and finasteride led to drop in prices. from 15% in 2008-09. Exceptional performance in FY07 was on account of four generic launches in the US. 4. PAT decreased by 55% from Rs. 50. personnel costs increased to 17% in 2009-10. this was because previous year sales included revenues from sales of Authorized Generics products.634 million in 2009-10.3. State Healthcare Insurance Fund companies issued tenders for generics supply where the lowest bidder for each in a local geography wins. 916 million in 2008-09 on account of liquidated damages paid to Eli Lilly arising out of an unfavourable court decision relating to patent of olanzapine in Germany. Gross sales increased by 165 per cent to Rs.8 billion or 24% of DRL’s total revenues.131 million in 2009-10 due to lower amortization charge on betapharm intangibles. 4. As a share of total income. and repairs and maintenance expenses due to increase in production and commissioning of two new manufacturing plants.476 million in 2007–08. Balance Sheet and Profit & Loss Analysis Sales Gross sales increased by 37% to Rs. Selling expenses have grown over the years on account of symposiums. simvastatin and finasteride contributed INR 15. 49. which did not materialize in 2007–08. 3515 million which is relatively low compared to 2007-08 and 2006-07.147 million leading to PAT of Rs. sales development costs and higher field expenses. 68. Profit/ (loss) after Tax PAT decreased from Rs.626 million in 2009-10 .456 million and Rs. During the year 2009-10. 11. resulting from impairment charge recorded in 200809. (9.373 million in 2007-08 to Rs. 10. BROAD ANALYSIS OF FINANCIAL STATEMENTS A. 3.802 million.70. 9. media expenses. Gross sales decreased by 24 percent to Rs. This was caused by the German generics market is transiting to a lowest-price tender model. rise in power and fuel consumption and costs.172) million in 2008-09 primarily due to Betapharm impairment of intangibles of Rs 3. Corporate Financial Reporting and Analysis.167 million and goodwill of Rs. The lower PAT in 2008-09 as compared to 2009-10 can also be attributed to an expense of Rs. 2010 Page 5 . During FY07. 4. increase in number of employees and increase in carriage outwards because of higher sales volumes.

It is favourable for potential investors. Germany’s 4th largest pharma company for EUR 483 million. 14. Cash and Bank Balances We see a decrease in cash and bank balances over the five years which is a positive sign as more investments are being made to grab business opportunities. In 2008-09.Depreciation and amortization increased by 24% to Rs. Positive cash flow from operating activities over the years. due to extraordinarily high sales ad discussed before.369 million in 2006–07 due to write down of intangible assets in Trigenesis. there was an increase in Income Tax Impairment does not figure in the calculation of Taxable Income. 4. Amortization grew from Rs. despite unforeseen expenditures. USA and Jet Generici SRL. Additional investments were incurred towards normal capital expenditure as well as new projects in PSAI and Global Generics. Inorganic Growth DRL since the past few years has been vying for high growth through inorganic route through acquisitions in the international arena. Cash Flow from Operating Activities Net Profit before Taxation: This displays a steady increase over the years due to the accompanying steady increase in revenue which can be accounted to increased business with owing to high organic growth and thus increased Corporate Financial Reporting and Analysis. Cash Flow Statement Analysis Overall An over study of the cash flow statement shows the company is doing well. its order books and plant in Mexico for US $61 million and of Betapharm. FY 2007 saw much higher tax. this decrease can also be attributed to increased operational expenses over the years. Negative cash flow from investing and financing activities is a good sign of growth and expansion and a measure of its credibility in the market. However.023 million in 2008-09 and Rs 8693 million in 2009-10. 2. B. BASF Corporation’s manufacturing facility at Shreveport in Louisiana. 436 million in 2005–06 to Rs. 2010 Page 6 . 4. Even though DLR has recorded aggregate non-cash impairment charge amounts to Rs. The same can be inferred from the cash flow statement. Income Tax We see an increasing trend in income tax over the years owing to increasing sales and income of the company.977 million in 2008-09 and by 6 percent to Rs. a company engaged in the sale of generic finished dosages in Italy.018 million in 2007–08 because of increase in gross block and intangibles. shows that the company’s operations are profitable. company has been on a spree of acquisitions and has recorded huge inorganic growth in recent years. the company continued its inorganic Growth by acquiring a portion of Dowpharma Small Molecules business associated with its United Kingdom sites in Mirfield and Cambridge. During the year 2005-2006 they raised huge amounts of debt to fund their acquisition of Roche’s API business.

Details of investment make it clear that most of the sales are the sale of the company’s investment in different mutual funds and equity of other companies. 3. Profit/Loss due to Foreign Exchange Rate: The year 2007–08 saw exceptional fluctuations in the Indian rupee-US dollar exchange rate. 807 million. leading to high inorganic growth as discussed before.5%. During the year 2005-06 they raised huge amounts of debt to fund their acquisition.sales. the goodwill also had to be evaluated for impairment.24 during the previous year. However. (4379) in 2008-09 and Rs.8 bn or 24% of DRL’s total revenues. 224 million. This resulted in huge unrealized losses to the tune of Rs.665 million to meet the business growth.009 million in 2009-10 compared to Rs. 2010 Page 7 . 18. 9. Cash Flow from Investing Activities Purchase/Sale of fixed assets: We observe a steady trend of increasing outflow of cash over the years.9796 million of previous year. However. The Betapharm impairment was triggered by adverse market conditions such as decrease in market prices and an increasing trend of State Healthcare Insurance Fund companies in Germany to adopt a lowest price tender supply model. This increased sales 176% and PAT was up by 558%. did not include many of the key products. 45. 3. The increased sales resulted in increased net operating cash flow by 10.000 million.28 compared to Rs. plant and equipment of Rs. These huge cash reserves have been useful in allowing the company to make investments in inorganic growth over 2007-08 and 2008-09. sale of fixed assets is small indicating utilisation of assets for operations. depreciation of the US dollar adversely affected realizations. 485 million. An outflow of Rs 27026 million in 1005-06 shows they used their entire cash flow from operating activities and financing activities to fund these acquisitions leaving the company with net cash of Rs.419 million in 200809. 40. we see a net loss Rs 6563 million for the year 2008-09 which was due to Betapharm impairment. 6. Corporate Financial Reporting and Analysis. USD deteriorated once again in 2009-10 leading to a forex loss of Rs. With the market having moved to tender-based supplies. simvastatin and finasteride contributed INR 15. The surge in PBT in 2006-07 is due to exceptionally high sales on the account of 4 generic launches in the US each enjoying an exclusivity period. compared to Rs. Investing activities includes investment in property. The dollar strengthened in the following year leading to a reversal of the previous effect and resulted in huge unrealized foreign exchange gains to the tune of Rs. The cash position at the end of year 2006-2007 increased by 90% to Rs. Compared to purchases. Purchase/Sale of Current Investments: Investment in mutual funds net of proceeds from sale amounted to Rs. indicating some amount of organic growth of the company. The average daily US dollar value for 2007–08 was Rs. While the Company took adequate foreign exchange cover against its exports. Products awarded to the Company under a big tender from the German State Health Fund ―SHIǁ. Greater sale than purchase of current assets in 2008-09 led to a decrease in interest income by 37% in 2009-10 Acquisition of Companies: There has been outflow of cash over the years to acquire new companies. even in the face of slowing sales and profit growth. As a result the Company tested carrying value of betapharm intangibles for impairment. During 200607.382 million in 2007-08.

000/. 1956 or based on the useful life of the assets as estimated by Management. 4. 10. the company borrowed money through commercial papers to meet its short-term requirements. Cash Flow from Financing Activities Issue of Shares: With its exceptional sales in 2006-07. whichever is higher. Reddy’s Laboratories Limited (DRL) are presented in accordance with Indian Generally Accepted Accounting Principles (GAAP). Fixed assets and depreciation • Fixed assets are carried at the cost of acquisition or construction less accumulated depreciation. • Intangible assets and amortisation • Intangible assets are amortised over their estimated useful lives on a straight-line basis. risperidone and pravastatin which led to a 55% drop of its sales in the US. This is a sign of growth and profitability and is justified considering the excess cash with the company despite having exploited investment opportunities. SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The financial statements of Dr.000 million worth of equity shares. fexofenadine. 2010 Page 8 . the company was able to cover all of its financing activities through cash generated by operating activities. its order books and plant in Mexico for US $61 million and of Betapharm. Individual assets costing less than Rs. In 2007-08. 5. Corporate Financial Reporting and Analysis. • Depreciation on fixed assets is done using the straight-line method at the rates specified in Schedule XIV to the Companies Act. the company also paid back a large amount of unsecured loan. The financial statements are rounded off to the nearest million.are depreciated fully in the year of acquisition. Germany’s 4th largest pharma company for EUR 483 million. It still went ahead with issuing Rs. starting from the date the asset is available to the Company for use. This could be due to forecasts of turbid market conditions in US and emerging signs of global recession. This has to be compared with the fact that the previous year. Dividends: We see an increase in the amount of dividend paid over the years with the payment being Rs 1232 million in 2009-10.2009-10 did not see any acquisitions owing to huge losses due to impairment charges at German subsidiary Betapharm and withdrawal of one lot each of its four generic drugs — citalopram. Long-term/Short-term Borrowings: During the year 2005-2006 they raised huge amounts of long-term debt to fund their acquisition of Roche’s API business.

Revenue from domestic sales of active pharmaceutical ingredients and intermediates is recognized on delivery of products to customers. Finished goods (traded) Specific identification method Investments • Long-term investments are carried at cost less any other-than-temporary diminution in value. The reduction in the carrying amount is reversed when there is a rise in the value of the investment or if the reasons for the reduction no longer exist. • Current investments are carried at the lower of cost and fair value. Revenue from domestic sales of generic products is recognized upon delivery of products to stockists by clearing and forwarding agents of the Company. • The exchange differences relating to options not designated as cash flow hedges are recognised in the Profit and Loss Account as they arise. Income and expenditure items at representative offices are translated at the respective monthly average rates. cost of conversion and other costs incurred in bringing the inventories to their present location and condition. from the factories of the Company. Foreign currency transactions and balances • Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. • Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date. Non-monetary assets are recorded at the rates prevailing on the date of the transaction. • Derivative instruments and hedge accounting • DRL uses foreign exchange forward contracts and options to hedge its movements in foreign exchange rates and does not use the foreign exchange forward contracts and options for trading or speculative purposes. determined separately for each individual investment.Inventories • Inventories are valued at the lower of cost and net realisable value. The resultant exchange differences are recognised in the Profit and Loss Account. • • The methods of determining cost of various categories of inventories are as follows: Raw materials First-in-first-out (FIFO). are translated at year end rates. Revenue Recognition • Revenue from sale of goods is recognised when significant risks and rewards in respect of ownership of products are transferred to customers. Corporate Financial Reporting and Analysis. stores and spares and packing materials Weighted average method. Cost of inventories comprises all cost of purchase. 2010 Page 9 . work-in-process and finished goods (manufactured) FIFO and including an appropriate share of production overheads. The comparison of cost and fair value is done separately in respect of each category of investment.

Dividend income is recognised when the unconditional right to receive the income is established. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. • If any such indication exists. the carrying amount is reduced to its recoverable amount. • Leases • Assets taken on lease where the company acquires substantially the entire risks and rewards incidental to ownership are classified as finance leases. • Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future. • For diluted earnings per share.• Revenue from export sales is recognized when the significant risks and rewards of ownership of products are transferred to the customers. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists. the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost. • Leases that do not transfer substantially all the risks and rewards of ownership are classified as operating leases and recorded as expense as and when the payments are made over the lease term. net of interest charges. Corporate Financial Reporting and Analysis. which is based upon the terms of the applicable contract. Impairment of Assets The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. are reflected as secured loans. The rental obligations. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount. • Income-tax expense • The current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company. where there is unabsorbed depreciation or carry forward of losses. net profit after tax for the year and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets Earnings per share • The basic earnings per share (“EPS”) is computed by dividing the net profit after tax for the year by the weighted average number of equity shares outstanding during the year. however. the Company estimates the recoverable amount of the asset. 2010 Page 10 .

13 1.81% 7.20 4.03% 12.68 Mar-07 1.89% 9.53 4.94% 19.05 28.14 26.72% 4. GENERIC RATIO ANALYSIS Liquidity ratios Current Ratio Quick Ratio Financial Slack Efficiency Ratios Overall Efficiency Fixed Assets Turnover Working Capital Turnover Inventory (FG & WIP) Turnover Average Inventory Holding Period Debtors Collection Period Creditors Payment Period Profitability Ratios Operating Profit Margin Net Profit Margin Return on Total Assets (ROTA) Return on Capital Employed (ROCE) or ROI Return on Net Worth (RONW) Dividend Per Share (DPS) Pay-out Ratio Basic Earning Per Share (EPS) Long-term Solvency ratios Debt-Equity Ratio (D/E) Debt Ratio Interest Coverage Ratio Mar-10 1.5.64 1.34 18.46 104 69 13 Mar-06 10.39 0.48 Mar-08 2.23% 4.15 0.18% 6.72% -13.50 2.36 -7.62 0.60 3.26 19. 2010 Page 11 .76 0.16 3.15 Corporate Financial Reporting and Analysis.30 5.92% 5.27 0.54 20.24 2.79% 14.09 6.47% 12.44 0.52 Mar-08 0.49% 9.50 80 56 7 Mar-09 16.63 78 53 7 Mar-08 11.39 4.34 2.23% 7.77 3.08 1.66% -26.15 Mar-06 1.55 Mar-10 1.34 3.31% 11.82% 18.18 1.27 1.08 Mar-06 2.84 Mar-10 0.64 3.18 Mar-09 1.09% 5.69 10.37% 26.28 10.87 11.65 1.76% 8.72% 3.01% 6.48 12.13 Mar-09 2.15% 5.74% 27.11 N/A Mar-09 0.02 Mar-08 0.89 Mar-06 0.10% 24.95 Mar-07 0.57 0.01 0.82 3.28 Mar-07 3.26 -0.79 1.07 78.51 0.38 7.95 52 36 5 Mar-07 21.83% 7.89 1.08 88 68 8 Mar-10 16.

16 Mar-08 22.67 3.00 Mar-07 9.79 1.31 6.52 1. 2010 Page 12 . Here both current and quick ratios are greater than 1 over the 5 years.70 2.70 1.07 2. The increase in the difference between quick and current ratios over time shows that the firm has increased its inventory over the years. indicating that the firm leads in cash. TREND ANALYSIS i.Market based ratios Price Earning (P/E) Price to Book Value ( P/B) Market Cap/Sales Mar-10 61.88 Mar-06 37.41 2. Corporate Financial Reporting and Analysis.06 2.22 2.10 Mar-09 -8.62 3. Liquidity ratios Current Ratio & Quick Ratio: Liquidity ratios indicate how well a company manages its short-term obligations. A relative decrease in current ratio over the years shows that the firm is putting extra cash into investments indicating good liquidity management.

therefore an increase in the ratio over the years as seen above indicates more efficient use of assets.34.64 in FY 06 to 3.ii. This greatly increases the requirement of working capital Corporate Financial Reporting and Analysis. Fixed Asset Turnover sales revenue per rupee of fixed assets. Working Capital Turnover shows how many times the working capital is revolved to generate sales – an increase from 1.65 to 1. Debtors Collection Period & Creditors Payment Period: Inventory Holding Period for the firm shows slight increase over the years except in FY 07 which shows a great dip which is because of increased sales in that year with the launch of the 4 Generics in the US as discussed before. The firm has relatively high Debtors Collection Period compared to Creditors Payment period indicating a liberal credit policy of the firm for its buyers but a relatively stringent payment policy with its suppliers.53 in FY 10 shows better utilization of working capital over time. Efficiency Ratios Fixed Assets Turnover & Working Capital Turnover: Overall efficiency of the firm has increased over the five year period from 0. 2010 Page 13 . Inventory Holding Period.

revenues from Betapharm suffered due to pricing pressures in the German generics market. the firm should try to maximize its payment period to enjoy better bargaining power in the market. because of a 310% fall in PAT caused by Betapharm Impairment which has been discussed above in the Cash Flow Analysis. The increase in Net Profit Margin in FY 07 is due to increased sales in 2007 on account of four generic launches in the US as outlined under Sales.which explains high inventory holding period. However. As PAT became positive again in FY 10. Net Profit Margin increased but is still low compared to previous years. Net Profit Margin denotes overall profitability – from both operations as well as from non-operating activities. Profitability Ratios Operating Margin & Net Profit Margin: Operating Margin indicates profitability from a firm’s main operating activities. However. Also. iii. which in turn was caused by a fall in the sales of authorized generics (AG) in FY 08 — which had contributed 48 percent of this segment’s revenues in FY 07. Corporate Financial Reporting and Analysis. we can see a significant fall in Operating Margin by 37% in 2008 as compared to the previous year which is due to a fall in revenues by 23%. Net Profit Margin fell in FY 09 by 250% from FY 08 even though Net Sales increased. Operating profits and sales are relatively similar in FY 10 and FY 09 which is evident from relatively similar Operating Margins. 2010 Page 14 .

44 0.30 5.57 0. iv. we see a large negative RONW which was due to a net loss owing to Betapharm impairment.51 0.38 7. it has achieved a good mix of debt and equity as reflected by the Debt-Equity Ratio. DLR saw an increase in ROTA. In the first 3 years higher RONW compared to ROCE indicates low borrowing costs but in FY 09. Corporate Financial Reporting and Analysis.48 Mar-08 0.39 0. ROCE follows a similar trend but is slightly higher than ROTA which indicates better profitability of assets engaged within the business. However over the years. The difference between ROCE and RONW shows the impact of financing charges and other income. A high Interest Coverage Ratio over the years shows the firm’s ability to meet its interest requirements except in FY 09 when ICR is negative implying a net loss or negative PAT.15 In FY 06 the firm had greater debt than shareholder funding.36 -7. 2010 Page 15 .08 Mar-06 1. RONW shows residual return to shareholders. Long-term Solvency Ratios This explains the long-term financing plans of the company. We see a rise in ROTA from FY 06 to FY 07 by 300% and then a fall in FY 08 by 61% which is both due to high operating profits in FY 07 owing to increased sales with the launch of the four Generics in the US which could not be sustained in FY 08 after the exclusivity period ended. Too much dependency on loans may severely impact profitability and liquidity whereas presence of debt provides incentive for better performance.28 10.62 0.60 3.28 Mar-07 0. Long-term Solvency ratios Debt-Equity Ratio (D/E) Debt Ratio Interest Coverage Ratio Mar-10 0. Return on Capital Employed & Return on Net Worth ROTA shows the profitability on total assets of the firm.Return on Total Assets. As sales rose again in FY 09 and 10.13 Mar-09 0.

The efficiency Ratio – Asset Turnover is also increasing over the last 3 years showing that the firm is operating efficiently and is effectively utilizing its fixed assets to generate Sales (Note:.76281 0.71549 1.317494 Operating Margin (1) Asset Turnover (2) Leverage Impact (3) Equity Ratio (4) ROE = 1*2/(3*4) 16.8642 Mar-08 11. Corporate Financial Reporting and Analysis. P/B denotes the price market is willing to put on its assets. as FY 10 goes back to being profitable. 2010 Page 16 .650679 1. Even though there is a dip in the P/B multiple in 2009. vi. Du-pont Analysis Mar-10 Mar-09 16.33501 0.79454 1.125109 1. We see that the Profitability Ratio of the firm has increased over the past 3 years and shows that the company is able to pay for its fixed costs.523887 31.25055 0.v.470353 0. Market-based Ratios Price Earning & Price to Book Value: High P/E over the years indicates good future earnings for the firm and that the market is willing to put a high premium on the firm’s earnings which is true for DRL except in 2009 where P/E multiple goes negative which is again due to huge Betapharm impairments that year.626313 The Du.3644381 0.18463 0.There were exceptionally high sales in FY 2007 due to high sales because of the launch of 4 generic drugs in the US). Lastly the Leverage impact is negative in FY 2009 because of impairment losses due to beta-pharm as discussed earlier.921844 1. However. such as interest on debt.3394538 3.29649 Mar-07 21.634524 0.8334 Mar-06 10.554062 7.The leverage. we see a steep rise in P/E.793122 1.184209 -1.point analysis tries to show the breakup of the ROE in terms of the four factors mentioned above. overall its greater than 1 over the years implying market confidence in the firm and high goodwill.6998467 9.678699 10.692294 -22.

35 19.38 -534.61 -100.92 57.42 0 537.75 25.00 3.05 Sep-09 1.50 -34.85 7.00 3.51 0 30.95 40.30 -11.20 267.26 -12.00 0.96 14.26 95.06 0 0.49 -145.85 8.59 68.23 -8.48 -100.96 7.69 0.00 -40.42 -49.7.62 0 0.01 Dec-09 -5.49 8.) Equity Jun-10 3.24 -26.02 Dec-08 13.50 0.70 -42.92 -4.80 -119.85 -0.64 -100.28 -100.06 0 98.01 -3.24 13.17 Variation Of Quarterly Net Sales and PAT: Corporate Financial Reporting and Analysis.55 163.89 -2.73 -100.18 Mar-10 -6.93 6.30 -391. Profit EPS (Unit Curr.05 Jun-09 -7.70 83.84 0 1.92 -6.33 -41.01 -385.83 -147.97 12.56 83.39 -197.20 -100.98 44.26 -52.00 -73.68 0 0.37 22.68 98.11 -1.03 -117.03 -480.60 -7.06 -15.89 0 -1.24 -54.62 -12.77 3.45 -145.96 -1.85 -9.21 -16.74 -6.01 -25.87 20.00 0.26 -100.49 354.56 4.00 0.00 -363.29 -5.51 0 -25.11 90.51 10. QUARTERLY PERFORMANCE ANALYSIS Q on Q Variation: Quarter Gross Sales Excise Duty Net Sales Other Operating Income Other Income Total Income Total Expenditure PBIDT Interest PBDT Depreciation Tax Reported Profit After Tax Extra-ordinary Items Adj.48 8.23 -119.47 9.00 -7. 2010 Page 17 .61 -11.48 1.36 -52.22 -173.41 -68.21 -888.70 0 83.00 17.12 -56.59 -100.12 Mar-09 6.

60 crore) and impairment on some of the product related intangibles (Rs 85.44 Q2 14.82 -14.45 176.85 -5.07 crore for the quarter ended December 2009 as compared to net profit of Rs 159. Despite launching two OTC products in US market.35 -13.23 -118.74 -81.65 -2.85 crore on the back of moderate growth of 15% in income from operation to Rs 1858.84 53. the sales from US market plunged by 35% due to lower penetration of these drugs. Russia and Indian markets.42 -139.16 13.. Net sales plummeted by 17.24 crore).28% to Rs 1622.65 -246.94 68.80 crore as compared to a huge net loss of Rs 1255. Excluding the revenues from Sumatriptan in the Q1 FY'09.43 Q3 -4. 2010 Page 18 . The fall in revenues and profits was on a higher base as it marketed authorized generic Sumatriptan in US market in Q1 FY'09.81 8.63 -19.63 -53.98 -5. Net sales declined by 6% to Rs 1703.45 3.91 -50. The prices of Sumatriptan have been corrected as generic versions were launched by the generic players after expiring the patent in the mid of August 2009 Corporate Financial Reporting and Analysis.30 -46.28 103.00 -52. The growth in revenues for the quarter is mainly driven by good growth in North America.75 -18.21 -4. the base business rose by 4%.25 -6.04 crore.28 crore on the account of impairment goodwill and intangibles for its German subsidiary.44 15.90 -4. Net profits rose to Rs 105.16 -17.84 crore in the corresponding previous period on the account of writeoff of goodwill (Rs 1376.67 -26.00 crore in Q4 FY'09 due to expenses of Rs 1462.71 -9.84 Dr Reddy's Laboratories net profit on consolidated basis for the quarter ended June 2010 declined by 14% to Rs 209.47 0 317.63 -70.16 crore in the corresponding previous period. Net loss during the quarter under review was on the back of expenses booked amounting to Rs 458.10 -129.13 crore.98 23. Dr Reddy's Laboratories came out with robust results and above the expectation of market for the quarter ended September 2009.78 31. Dr Reddy's Laboratories reported net loss of Rs 233.79 -73.55 crore due to price erosion in authorized generic Sumatriptan.04 149.28 Q4 -17.47 -7.76 22.21 -122.12 -20.58 -17.78 -130. Dr Reddy's Laboratories came out with pale performance for the quarter ended March 2010. Net profit spurted by 177% to Rs 239.Y on Y Variation: Quarter Gross Sales Excise Duty Net Sales Other Operating Income Other Income Total Income Total Expenditure PBIDT Interest PBDT Depreciation Tax Reported Profit After Tax Q1 -7.56 crore on a higher base as it supplied authorized generic version of Sumatriptan before patent expiration in US market in Q4 FY'09.76 1. The price of drug was eroded as patent expired in the mid of August 2009 and more players started supplying the drug in US market.55 crore on 7% fall in the income from operations to Rs 1683.85 215.62 14.50 -108.

89 2.82 19.25 4.01 73337. In contrast. The relatively smaller increase in sales of DRL can be attributed to a higher base in FY 09 due to high sales of sumatriptan. Meanwhile. for Cipla. 2010 Page 19 .92%.01 Cipla 2010 2009 53595.66 -26.6 1.75 0 0 Profitability vs Sales Growth For DRL.8 1554.424. However. the operating profit margin was highest for Cipla at 28.13 16. Liquidity vs Profitability DRL had a current ratio of 1.0 250.75% in FY 09 to 17. Thus industry wide.8% in FY 10 over FY 09 and 38% in FY 09 compared to the previous year.92%.7 0 0 47.8.38 and 1. Efficiency vs Profitability Ranbaxy had a fixed asset efficiency ratio of around 2. Cipla saw an increase in its current ratio from 1.199.04 24.21. thus better liquidity management.89 in FY 10 decreased from 2. Cipla achieved a much higher topline growth.04% in 2009-10.8 1901.21 3.27 in FY 09.89 9.50 -7.92 12.27 1.84 12.06 3. while the fixed asset efficiency ratio for Cipla stood at 1.08 -6.89 2. net sales grew by 1. Ranbaxy witnessed a topline growth of 2.9 7.22 21.99 18.14 0.18 1.48 16. COMPARATIVE ANALYSIS Company Year Net Sales Net Sales Increase (%) Market Capitalization Equity Dividend Cap-ex Debt-Equity Ratio (x) Current Ratio (x) Fixed Assets (x) Inventory (x) Interest Cover Ratio (x) Operating Profit Margin (%) Return On Capital Employed (%) Return On Net Worth (%) Dr Reddy's 2010 2009 69886 68619 1.562.97 15.2 49606 8.72 27.9 19.09 2.9% to 28.11 24.4 2.15 0.89 in FY 09 to 2.16 4.39 1.21 17.16 in FY 10.94 3.03 1.37 1.72% to 16.31 0.08 10. net sales increased by 8.57 2.11%. Even though DRL was able to achieve a higher sale as a multiple of its fixed assets compared to Cipla and Ranbaxy.7 0.83 21. DRL saw an increase in asset efficiency while Cipla and Ranbaxy saw a decrease indicating better utilisation of assets byDRL.84% and DRL at 16. Ranbaxy’s current ratio was 1.17 1.7 0. its profitability was the lowest.84% in FY 10. though there was a growth in both sales and profits in the last financial year.36 in FY 10 which shows an excess of current assets.8 1605.3 -13.07 Ranbaxy 2010 2009 75412.684.83% in FY 10. followed by Ranbaxy at 17. We see that Ranbaxy has Corporate Financial Reporting and Analysis.15 21. while the operating profit margin increased from 21. In comparison. which indicates investment of lead cash.85 21.72 47.94 and for Ranbaxy at 1.1 1054.86 28. while its operating profit margin declined from 13.38 1.82 4.11%. while the operating profit margin increased from 16.37 in the financial years which is a good level of liquidity.36 1.91 1.

All the above comparisons show that Cipla has had the best financial growth over the last financial year. while others concentrate on manufacturing. DRL has proposed higher dividends to its shareholders.85%. Cipla also saw the highest sales growth of 8. Dividend Payout vs Capital Expenditure DRL has a proposed dividend payout of Rs 190 crore for 2009-10.424. compared to 250.15 crore increase for Ranbaxy. compared to Rs.8 crore. 9. like DLR and its rivals Cipla and Ranbaxy. Two main areas of focus are i) Global Generics and ii) Pharmaceutical Services and Active Ingredients. As a share of the total revenue. and manufacturing.683 crore of DRL. Even though Cipla has a much higher Capital Expenditure. 24. DRL has improved in the last year but Cipla must invest its excess current assets for further growth. the R&D expenditure of the company was 5% in FY 10 and 6% in FY 09.04% compared to Ranbaxy’s sales growth of 2. DRL has had a higher R&D expenditure as compared to Ranbaxy as the former is largely involved in developing new drugs. Thus. 21. The other competitors in the industry are also spending 5% or more on R&D. a high expenditure on Research and Development is a good indicator that captures the pharmaceutical industry. This is essential to support the new product pipe-line of these companies and is responsible for driving future revenue growth.7 crore in FY 10. 21. Ranbaxy. but the product life cycle and pay-offs are much smaller as compared to the development of new drugs. Traditionally. Cipla’s capital expenditure stood at 1. KEY INDICATOR FOR INDUSTRY The pharmaceutical industry has two distinct functions: research and development (R&D).5 crore. Corporate Financial Reporting and Analysis. 2010 Page 20 .199 crore of Ranbaxy and Rs. compared to the other major competitors in the industry.562. on the other hand. Sales Growth vs Market Valuation Cipla’s market capitalization stands at Rs. 160. modification of existing manufacturing processes to reduce the time cycle. Indian patents and US patents filings for protection of Intellectual Property generated during R&D. while the later specialized in Novel Drug Delivery System (NDDS). DLR invests heavily into R&D every year.7 crore for DRL and only 47.83% and DRL’s 1. Benefits of R&D expenditure include: commercial production of the new products. has not proposed any dividends in FY 10 and FY 09 owing to its net loss in FY 09. while that for Cipla is Rs. modification of existing manufacturing processes for some of the products and significant savings in cost of production. The largest and best-known pharmaceutical firms. do both.the best liquidity management. NDDS leads to lower risk and R&D expenditure as well as faster turn-out times. Overall Cipla has a higher market value compared to DRL and Ranbaxy due to consistently better performance in departments of profitability and liquidity as well a better future earning potential. Some firms are primarily engaged in R&D.

277million. DRL’s EBITDA of Rs. 2010 Page 21 . DRL’s revenues increase by 20% in 2009-10 to Rs.capitaline. The Company’s revenue has been rising at a CAGR of 23% over the last decade. the company’s revenues grew by 25% in 2009-10 — versus an overall market growth of 8%. That is a creditable performance by any standard.10.com 2) Dr Reddy’s Laboratories Annual Report 2010. 2007. References 1) www.158 million — thus crossing the Rs. 15. In Russia. OVERALL FINANCIAL HEALTH 2009-10 has been a financially satisfactory year for Dr Reddy’s Laboratories. It entered the list of top 10 generic companies in the US. 2009. In the Indian market. Consolidated revenues for 2009-10 were Rs. 1. 10. Excluding revenues from sumatriptan — DRL’s Authorized Generic version of Imitrex which was launched in 2008-09 — revenue grew by 9%. 2008. The company aims to earn a return on capital employed between 18% to 22%. 70. in line with the goal of reaching 25% by 2012-13. Return on Capital Employed (RoCE) in 2009-10 was 17%.000 crore landmark. 2006 Corporate Financial Reporting and Analysis. DRL made some noticeable achievements in 2009-10.828 million in 2009-10 was the highest among pharmaceutical companies in India. as against 14% in 2008-09.

2 7471.7 29389.5 15960.7 47203.0 842.4 31169.4 18610.0 54878.0 19042.0 1994.9 26263.0 523.0 29270.0 3502.9 42012.0 21686.1 3600.6 33917.4 11228.0 5349.7 8527.4 9796.8 1341.0 11848.0 386.0 0.5 20305.0 1074.0 64468.0 14840.2 2897.8 35354.2 6665. BRIDGED BALANCE SHEET.0 1331.2 26. P&L AND CASH FLOW FOR LAST FIVE YEARS A.0 34419.0 4296.9 10657.0 17954.0 642.0 11599.0 6522.0 35757.3 24906.0 15753.0 17112.2 5104.0 40946.5 95.0 38798.2 5051.0 10333.1 383.0 6600.5 6144.1 1062.6 2129.9 26617.6 781.4 37492.0 19976. Balance Sheet (Rs Million) Year SOURCES OF FUNDS : Share Capital Reserves Total Total Shareholders Funds Minority Interest Secured Loans Unsecured Loans Total Debt Total Liabilities APPLICATION OF FUNDS : Gross Block Less: Accumulated Depreciation Net Block Capital Work in Progress Investments Current Assets.8 0.0 269.0 5519.0 3580.0 13250.0 39972.6 10.1 51857.0 1144.0 841.0 4821.0 39125.2 1337.0 0.0 247.0 16746. 2010 .0 15118.0 36924.0 30337.3 20688.0 14571.0 11019.Appendix 1.0 1779.0 20248.3 18762.0 44128.0 38202.0 5623.5 1375.6 39133.0 64653.6 64889.8 8095.0 839.0 44969.0 2684.0 19684.0 14406.0 35261.0 13394.0 65027.0 1053.0 7622.0 6609. Loans & Advances Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Deferred Tax Assets Deferred Tax Liability Mar 10 Mar 09 Mar 08 Mar 07 Mar 06 844.0 37768.0 7447.0 55237.0 23522.0 52608.5 Page 22 Corporate Financial Reporting and Analysis.0 11508.2 1398.0 18829.0 0.4 9853.0 19590.5 7810.0 1175.0 793.

0 4019 5.7 12.6 648.776.3 7817 535.946.0 -806.803.9 51857.5 0 1185.3 1779.9 1310.6 36.0 4977 11.3 1616.034.6 2013.0 -1417 2051 6.0 994 -5.4 0.0 1415 5487 11.5 B.0 64653.4 1913.1 -81.3 -3.1 -1215.0 901.849.035.619.9 683.7 2006 24.358.5 2.4 Corporate Financial Reporting and Analysis.6 65.4 -896.428.838.0 976 4147 7077 11.8 629.152.826.1 14.7 0 8848.0 -967.0 55237.550.8 -15 8849 1214 631 0 12.631.399.1 223.634.3 10.482.7 9655.0 385 6183 2668 3515 0 -2183.0 14.626.9 1467.0 -740 69.8 9622.0 52608.0 2007 66.9 3791.0 -754. 2010 Page 23 .7 1998.470.0 -17.1 1208.5 812.0 1793 1053 0 1036 2008 50.0 15041.5 383.5 0 366.472.7 1587.0 -538.595.0 -6289 1031 6.7 -1371.9 -326 1036 3063 1900 0 1162 2009 69.001.0 1037.8 4389.001.9 2.0 1082 -6564 2608 -9172 0 -11.6 13.568.2 6463.5 -910. Profit And Loss Statement (Rs Million) Year Sales Turnover Excise Duty Net Sales Stock Adjustments LESS EXPENDITURE: Raw Materials Power & Fuel Cost Other Manufacturing Expenses Employee Cost Selling and Administration Expenses Depreciation Operating Profit Miscellaneous Expenses Other Income Profit Before Interest & Tax Less: Interest & Financial Charges Profit Before Tax Less: Tax Profit After Tax Minority Interest(after tax) Extraordinary Items Adjusted Net Profit Adjustments below Net Profit P&L Balance brought forward Appropriations Dividend Preference Dividend P&L Balance carried down 2010 70.0 2309 18.138.196.476.696.9 23.00 -247 20.0 1022 5450 1077 4373 -8 -8.2 422.8 6251.370.8 1243.0 4131 11.4 3285.9 26.766.886.3 3362.724.0 -809 68.9 5698.3 545.8 1185.0 1227 7060 9716 15.Net Deferred Tax Total Assets Contingent Liabilities -70.00 1341 20.0 -845 49.0 64889.398.0 2631 0 12.8 518.0 2743.6 1161.986.

0 0.0 -0.0 281.0 0.0 -4621.8 -783.5 2278.0 86.0 140.3 -5344.5 -120.0 Mar-07 12399.0 -320.0 625.0 -1076.0 5877.0 Mar-08 5450.0 0.0 416.5 -27026.0 859.0 16401.8 -190.0 17.0 21102.0 5035.7 14418.0 -2791.0 -15860.4 115. & W/O (Net) P/L in Forex Fin.9 -22. Lease & Rental Chrgs Others Op.0 4019.0 2467.0 -7790.0 5991.0 -87.6 0.0 792. Tran Net Cash from Operating Activities Cash Flow from Investing Activities Investment in Assets : Purchased of Fixed Assets Sale of Fixed Assets Financial/Capital Investment : Purchase of Investments Sale of Investments Interest Received Acquisition of Companies Mar-10 6183.5 12729.0 224.0 0.0 24.9 171.7 0.8 331.0 -12022.7 -1894.2 3.0 -5092.0 -344.0 3997.1 0.0 10684.0 17107.0 -882.0 0.0 6660.0 18756.0 368.3 12589.0 -2556.0 -1154.0 14628.4 1616.0 -2831.0 4977.0 8782.6 0.0 0.9 682.3 -1829.1 1295.0 Mar-09 -6563.0 -9665.0 1210.0 4583.5 0.0 -1424.4 1282.0 -1532.0 63.0 -110.0 3610.8 -2065.0 -3875.0 5128.0 -114.0 59.0 -6419.8 493.0 0.0 21341.0 -53.0 -46. 2010 Page 24 .3 693.1 1027.0 4131.C.0 11.0 3791.0 5128.0 1105.0 807.0 0.0 Corporate Financial Reporting and Analysis.0 1363.8 99.0 14238.1 -400.6 17393.0 -2944.8 1105. Profit before Working Capital Changes Adjustment For Trade & other receivables Inventories Trade Payables Loans & Advances Cash Generated from/(used in) Operations Direct Taxes Paid Cash Flow before Extraordinary Items Gain on Forex Exch.0 48.0 0.5 Mar-06 2013.0 0.0 -47.0 12478.0 -14.3 5274.1 -528.9 256.0 -24112.0 -3461.0 0.0 655.2 -66.0 233.0 -485.0 -1646.4 0.0 60.0 18510.0 -145.0 83.0 246. Cash Flow Statement Year ending Cash Flow From Operating Activities Net Profit before Tax & Extraordinary Items Adjustment For: Depreciation Interest (Net) Dividend Received P/L on Sales of Assets P/L on Sales of Invest Prov.

431.9 -9.628.20 2873.6 3820.0 0.552.20 77.2 18610.70 82.2 2265.7 726.9 427.5 0 2398.1 843.1 845.446.5 292.20 3606.0 -738.70 -9348.4 1117.3 3278 1234.0 5596.9 -1.8 65.0 -1941.7 -437.295.30 0 191.2 206.0 18610.30 147.3 17.0 7447.8 16.0 115.0 -7724.1 17.0 0.20 13.5 866.2 993.6 1335.998.5 Mar-10 16.10 119.6 16.50 3554.3 788.70 13.7 -628.247.60 74.0 -2651.1 19.3 17.5 233.390.8 68.10 84.225.70 3888.0 -7672.2 9355.0 -958.0 -11163.416.6 1659.4 Dec-08 18.767.2 171.4 -9554.0 10029.0 -1824.5 0 2095.50 29.0 -1955.0 15.0 -321.7 Mar-09 19.40 13.5 2444.60 232.0 -1232.00 4440.0 -4549.0 7537.5 1227.0 6600.1 51.5 842 Corporate Financial Reporting and Analysis.0 977.688.00 18.00 2528.80 14.235.3 2095.509.344.4 3428.831. QUATERLY FINANCIAL RESULTS Quarter Gross Sales Excise Duty Net Sales Other Operating Income Other Income Total Income Total Expenditure PBIDT Interest PBDT Depreciation Tax Reported Profit After Tax Extra-ordinary Items Adjusted Profit After Extra-ordinary item Jun-10 16.7 988.3 -67 16.4 0 866.4 1058 0 1058 Dec-09 17.30 141.) Equity 124.983.795.0 61.7 0 844.3 1783.40 0 18.30 0 16.2 0 844.1 18.7 39 2834.60 78.872.1 89.3 441.0 -436.0 -3646.1 73. 2010 Page 25 .20 114.426.4 26884.022.0 -7754.0 5623.550.3 4304.8 6263.8 -12.2 843.524.4 452 1591.8 -1536.0 0.3 18.10 144.3 0 842.8 18.4 EPS (Unit Curr.0 5623.0 5.5 16.5 842.3 94.7 145.6 Sep-08 16.8 -27548.00 -14.0 -8537.6 18.7 263.614.9 9796.1 142.7 -4114.7 0 2444.5 -2330.1 17.0 -5317.4 19.2 8813.40 0 45.0 -4148.0 9796.0 -5050.6 Sep-09 18.8 2398.2 177.0 -433.2 2.0 1147.0 -737.Others Net Cash Used in Investing Activities Cash Flow From Financing Activities Proceeds: From issue of shares (incl share premium) From other Long Term Borrowings From short Term Borrowings Payments: Of the Long Tem Borrowings Of the short term Borrowings Interest Paid Dividend Paid Net Cash Used in Financing Activities Net Inc/(Dec) in Cash and Cash Equivalent Cash and Cash Equivalents at Beginning of the year Cash and Cash Equivalents at End of the year -80.332.831.4 91.9 -7071.40 2078.061.517.8 976 357.310.206.3 -744.5 Jun-09 18.90 133.6 0 1591.8 92.6 171.5 -1897.6 18.0 -12462.3 276.50 14.1 82.670.0 7447.6 21622.8 468.90 13.189.0 3476.899.2 135.0 -1071.189.10 -662.9 1133.6 0.

00% 22.64% 0.73% Total Current Assets 73.91% Minority Interest 0.49% 6.00% 78.53% 74.00% 0.72% 51.3.50% 45.66% 2.92% 15.00% 54.93% 22.83% 44.51% 27.00% 122.00% 0.46% 22.83% 6.04% 2.79% 0.87% Provisions 3.09% Total Liabilities 100.00% 71.00% 7.00% Dr reddy 1.00% Corporate Financial Reporting and Analysis. Loans & Advances 0.62% 31.05% Loans and Advances 20.19% 0.70% 28.55% 12.86% 40.56% 72.30% Miscellaneous Expenses not written off 0.13% 100.30% 2.01% Unsecured Loans 0.28% 55.95% 5.86% 3.71% Reserves Total 97.91% 100.00% Total Shareholders Funds 99.00% 9.76% 6.00% Ranbaxy 2.57% Sundry Debtors 26.00% Lease Adjustment 0.47% 13.00% Inventories 25.19% 0.23% 22.81% 0.00% Capital Work in Progress 11.74% 0.54% 77.53% Net Current Assets 53. 2010 Page 26 .66% 38.00% 14.57% Investments 4.51% 10.00% APPLICATION OF FUNDS : Gross Block 48.83% Less : Current Liabilities and Provisions Current Liabilities 16.22% 100.60% 70.08% Total Debt 0.22% 23.00% Deferred Tax Liability 3.00% 2.03% Net Deferred Tax -3.00% Equity Application Money 0.05% 12.13% 0.21% 100.95% 0.17% -0.98% Less: Accumulated Depreciation 14.20% Equity Share Warrants 0.66% Total Current Liabilities 20.49% 34.48% Cash and Bank 1.98% Net Block 34.00% Deferred Tax Assets 0.00% Secured Loans 0.00% 25.03% Total Assets 100. COMMON SIZE BALANCE SHEETS: COMPARATIVE ANALYSIS Company Cipla SOURCES OF FUNDS : Share Capital 2.62% 49.71% 0.12% 0.72% 42.17% Current Assets.

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