Cipla Limited Global Business School

GLOBAL BUSINESS SCHOOL

ASSIGNMENT REPORT ON
FINANCIAL STATEMENT ANALYSIS OF CIPLA LIMITED
Submitted in partial fulfillment of the requirement for degree of

Master of Business Administration

In
Financial Accounting for Managers
Submitted by
Tamazzer Fahim-18MBA278-(SU53)

Under the guidance of

Mr.Mahesh Bendigeri Dr.Prashant Yatgiri

(Asst.Professor,GBS) (Mentor, Director , GBS)

2018-2019

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COMPANY PROFILE

Cipla Limited, incorporated on August 17, 1935, is a holding company. The Company is a
pharmaceutical company. The Company's strategic business units include Active
Pharmaceutical Ingredients (APIs), Respiratory and Cipla Global Access. The Company's
geographical segments include India, USA, South Africa and Rest of the World. The
Company offers its products for the therapeutic areas, including cardiovascular, children's
health, dermatology and cosmetology, diabetes, human immunodeficiency virus/acquired
immuno deficiency syndrome (HIV/AIDS), infectious diseases and critical care, malaria,
neurosciences, oncology, ophthalmology, osteoporosis, respiratory, urology and women's
health. Its manufacturing facilities are located in Goa, Bangalore, Baddi, Indore, Kurkumbh,
Patalganga and Sikkim.

The Company manufactures over 200 generic and complex APIs. The Company has a total
API manufacturing capacity of approximately 1,000 metric tons. Its respiratory products are
available in over 100 countries. The Company offers a portfolio of inhalation products, with
over 30 molecules and combinations across a range of devices, to suit individual patient
needs. The Company manufactures metered dose inhalers, dry powder inhalers, nasal sprays,
nebulizers and a range of inhaled accessory devices. The Revolizer is a dry powder inhaler.
Cipla Global Access is a tender-based institutional business that concentrates on
approximately four therapy areas: HIV/AIDS, malaria, multi drug-resistant tuberculosis and
reproductive health. The Company caters to over 300,000 patients around the world in the
reproductive health and family planning segment. Cipla Global Access also provides
medications for infections caused by helminths, schistosomiasis and kala azar.

Cipla Vet is the Company's animal health division. It offers veterinary products in the
categories, including companion care, equine, livestock, poultry, swine and aqua products.
The Company's product range covers therapeutic segments, such as anti-invectives’, anti-
inflammatory, anti-thyroids, immunosuppressant’s, parasiticides, nutraceuticals and feed
additives. Cipla Vet develops and manufactures various dosage forms, such as Spot-on, Oral
Paste, Oral Powder, Sterile Injection, Beta Lactam oral formulation, Immunosuppressant Soft
Gel Capsule and External Spray. It supplies animal health products in various markets,
including the United States, Europe, Australia, New Zealand, South Africa, Hong Kong,
Turkey, Korea, Brazil and Mexico.

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RATIO ANALYSIS

Ratio analysis is the process of examining and comparing financial information by

calculating meaningful financial statement figure percentages instead of comparing
line items from each financial statement.

Managers and investors use a number of different tools and comparisons to tell
whether a company is doing well and whether it is worth investing in. The most
common ways people analysis a company’s performance are horizontal
analysis, vertical analysis, and ratio analysis.

Horizontal and vertical analyzes compare a company’s performance over time and
to a base or set of standard performance numbers.

USES OF RATIO ANALYSIS:

There are various groups of people who are interested in analysis of financial position
of a company. They use the ration analysis to work out a particular financial characteristic of
the company in which they are interested. Ration analysis helps the various groups in the
following manner:-

 To work out the Profitability

 To work out the Solvency
 Helpful in analysis of Financial Statement
 To simplify the accounting information
 Helpful in comparative analysis of the performance

OBJECTIVES OF THE STUDY:

 To understand the techniques and methods of cost ratios.
 To know the importance of cost accounting and cost ratio analysis in fertilizer industry.
 Application of costing information in decision making.
 Suggest appropriate controlling techniques for improving underwriting performanc

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 FINANCIAL RATIO
1)Debt Equity ratio: External debt/Internal debt
(in crore)
year External debt Internal debt Debt equity ratio
2018 3893.49 14229. 0.27
9
2017 3422.71 12543.66 0.27
2016 7828.81 11516.22 0.67
2015 4897.94 10780.27 0.45
2014 3460.56 10041.38 0.34
2013 2656.06 8860.55 0.29

Diagrammatic representation of DEBT RATIO

Debt ratio
0.8
0.7
0.6
0.5
0.4
Debt ratio
0.3
0.2
0.1
0
2018 2017 2016 2015 2014 2013

Interpretation:When we compare the ratio in 2016 the company had the highest debt ratio.
But in the recent two year the ratio had decreased.

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2)Current ratio: Current Asset/ Current Liability

(in crore)
YEAR CURRENT ASSET CURRENT LIABILITY CURRENT
RATIO
2018 10,814. 3,832.2 2.82 1.14
1 1.14
2017 3,373.70 1.14
8,804.63 2.61 1.14
2016 8,841.23 7,776.05 1.41
2015 7,591.44 7,776.05 1.95
2014 5,651.37 3,893.61 2.20
2013 7,938.17 2,563.58 3.51

Diagrammatic representation of CURRENT RATIO

Current ratio
4.00
3.50
3.00
2.50
2.00
Cuurent ratio
1.50
1.00
0.50
0.00
2018 2017 2016 2015 2014 2013

Interpretation: when we compare the ratio in 2013 the company had the highest current ratio
and over the period it started to decline in 2016 it had the lowest ratio, but in the recent past
when we compare 2017-2018 the current ratio is increasing.

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3)Quick ratio:-Current asset-Inventory/Current liability

(In crore)
YEAR ASSET INVENTORY LIABILITY RATIO
2018 10,814.1 4,044.70 3,832.22 1.76
2017 8,804.63 3,485.28 3,373.70 1.57
2016 8,841.23 3,808.05 7,776.05 0.64
2015 7,591.44 3,780.62 3,893.61 0.97
2014 5,651.37 2,895.26 2,563.58 1.07
2013 7,938.17 2,343.37 2,264.60 2.47

Diagrammatic representation of QUICK RATIO

Quick ratio
3

2.5

1.5
Quick ratio
1

0.5

0
2018 2017 2016 2015 2014 2013

Interpretation: when we compare the ratio in 2013 the company had the highest Quick ratio
and over the period it started to decline in 2016 it had the lowest ratio, but in the recent past
when we compare 2017-2018 the quick ratio is increasing.

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4) Proprietary ratio: Stakeholder's equity/Total asset*100

(In crore)
YEAR STAKEHOLDERS TOTAL ASSET *100 RATIO
EQUITY
2018 14,229.19 22,860.55 62.2% 62.2%
2017 12,543.66 21,037.07 59.6% 59.6%
2016 11,516.22 21,128.18 54.50% 54.50%
2015 10,789.24 15,717.53 68.644% 68.644%
2014 10,050.35 13,403.24 74.98% 74.98%
2013 10,050.35 13,403.24 111.7% 111.7%

Diagrammatic representation of PROPREITARY RATIO

Propreitary ratio
1.2

0.8

0.6
propreitary ratio
0.4

0.2

0
2018 2017 2016 2015 2014 2013

Interpretation: when we compare the ratio in 2013 the company had the highest proprietary
ratio and over the period it started to decrease in 2016 but in the recent past when we
compare 2017-2018 the proprietary ratio is increasing with no much change.

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 PROFITABILITY RATIO
1)Return on Investment: Net profit/Total investment *100
(in crore)
YEAR NET PROFIT TOTAL RATIO
INVESTMENT
2018 250.11 14,229.19 1.75
2017 250.11 12,543.66 1.99
2016 179.76 11,516.22 1.55
2015 331.59 10,789.24 3.07
2014 400.03 10,050.35 3.98

Digramatic representation of RETURN ON INVESTMENT

Return on Investment
4.5
4
3.5
3
2.5
2 Return on Investment
1.5
1
0.5
0
2018 2017 2016 2015 2014

Interpretation: when we compare the ratio in 2014 the company had the highest Return on
investment and over the period it started to decline in 2016 it had the lowest ratio, but in 2017
it gained some increase but in 2018 it is again decreasing. As it measure the gain on
investment, the company had gained highest gain in 2013.

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2)Return on equity: Net Income/Shareholders equity

(in crore)
YEAR NET INCOME SHAREHOLDER RATIO
EQUITY
2018 11,724.78 14,229.19 0.82
2017 11,779.69 12,543.66 0.93
2016 10,898.34 11,516.22 0.94
2015 12,398.02 10,789.24 1.14
2014 10,279.69 10,050.35 1.022
2013 9,660.57 10,050.35 1.089

Digramatic representation of RETURN ON EQUITY

Return on Equity
1.4

1.2

0.8

0.6 Return on Equity

0.4

0.2

0
2018 2017 2016 2015 2014 2013

Interpretation: when we compare the ratio they are almost the same with few fluctuation. As
it measures the ability of a firm to generate profits from its shareholders investments.

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3) Earning per total earning/Outstanding

share: shares
total earning=net income-prefered dividend
(In crore)
EARNINGS PER
SHARE 2018 2017 2016 2015 2014 2013
Basic EPS
(Rs.) 18 18 13 17 15 17.29

Digramatic representation of EARNINGS PER SHARE

EARNINGS PER SHARE

20
18
16
14
12
10
EARNINGS PER SHARE
8
6
4
2
0
2018 2017 2016 2015 2014 2013

Interpretation: When we compare the ratios the company has High Earning per share Ratio
which indicates a potentially worthwhile investment in the company.

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4) P/E: Market Value per share/ EPS

(In crore)
YEAR MARKET VALUE EPS RATIO
PER SHARE
2018 161.02 18 8.94
2017 160.9 18 8.93
2016 160.68 13 12.36
2015 160.59 17 9.44
2014 160.58 15 10.70
2013 160.58 17.29 9.28

Diagrammatic representation of PER EQUITY SHARE

Per equity share

14

12

10

6 Per equity share

0
2018 2017 2016 2015 2014 2013

Interpretation: when we compare the ratio the company has high p/e ratio as P/E ratio
provides a measuring stick for comparing whether a stock is overvalued or undervalued.

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5)Return on Asset: Net income/ total asset turnover

(In crore)
YEAR INCOME TOTAL ASSET RATIO
TURNOVER
2018 11,724.78 22,860.55 0.51
2017 11,779.69 21,037.07 0.55
2016 10,898.34 21,128.18 0.51
2015 12,398.02 15,717.53 0.788
2014 10,279.69 13,403.24 0.766
2013 9,660.57 13,403.24 1.216

Digramatic representation of RETURN ON ASSET

Return on Asset
1.4

1.2

0.8

0.6 Return on Asset

0.4

0.2

0
2018 2017 2016 2015 2014 2013

Interpretation: when we compare the ratio in 2013 the company had the highest return on
asset and over the period it started to decline in 2016. This ratio helps the investors and
financial professional to quickly check the prospect of an investments..

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 TURNOVER RATIO
1)Inventory turnover ratio: Sales/Closing stock
(In crore)
YEAR SALES CLOSING STOCK RATIO
2018 10949.53 4044.70 2.70
2017 11004.44 3485.28 3.157
2016 10430.99 3808.05 2.73
2015 11873.46 3780.62 3.14
2014 9738.94 2895.26 3.36
2013 9075.84 2343.37 3.87

Diagrammatic representation of INVENTORY TURNOVER RATIO

Inventory turnover ratio:

4.5
4
3.5
3
2.5
2 Inventory turnover ratio:
1.5
1
0.5
0
2018 2017 2016 2015 2014 2013

Interpretation: when we compare the ratio in 2013 the company had the highest Inventory
turnover ratio during the past five year the ratios are varying partially with no much change.
Hence the ratios hoe effectively inventory is managed.

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2)Creditors turnover ratio: net credit purchases/average account payables

(In crore)
Year Net credit purchase Average account Ratio
payables
2018 1102.21 2119.12 0.520
2017 837.39 1571.14 0.532
2016 582.34 1475.82 0.3945
2015 390.02 1577.24 0.247
2014 311.43 979.53 0.317
2013 2087.46 827.09 2.523

Diagrammatic representation of CREDITORS TURNOVER RATIO

Creditors turnover ratio

0.6

0.5

0.4

0.3
Creditors turnover ratio
0.2

0.1

0
2018 2017 2016 2015 2014

Interpretation: In 2017 the company indicates highest creditors turn over ratio. A high ratio
means there is relatively short time between purchase of goods and services.

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3)Debtors turnover ratio: Sales/ average account payables

(in crore)
Year Sales Average account Ratio
payables
2018 10949.53 2119.12 5.16
2017 11004.44 1571.14 7.004
2016 10430.99 1475.82 7.069
2015 11873.46 1577.24 7.527
2014 9738.94 979.53 9.94
2013 9075.84 827.09 10.97

Diagrammatic representation of DEBITORS TURNOVER RATIO

12
Debtor turnover ratio
10

4 Debitor
turnover
2 ratio

0
2018 2017 2016 2015 2014 2013

Interpretation: this ratio indicates quality of credit sales and receivable. During the course of
five years debtors creditor ratio is decreasing.

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Conclusion
From the performance evaluation of the company for five years using financial
information made available one can conclude that the company had been running its business
in safe mode by avoiding risk.
There is fluctuation in many ratios namely current ratio, quick ratio, proprietary ratio,
inventory turnover ratio, debtors turnover ratio indicates that are not well established
practices to the process. These process need to be strengthened. The firm has to look into
these factors.

Reference

https://in.reuters.com/finance/stocks/company-profile/CPLFY.PK

https://www.myaccountingcourse.com/accounting-dictionary/ratio-analysis

https://www.moneycontrol.com/stocks/company_info/print_main.php

https://www.cipla.com/en/corporate-information

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PROFIT AND LOSS CIPLA FROM 2014-2018

Standalon ---------------
e Profit & ---- in Rs.
Loss Cr. ----------
account ---------

Mar 18 Mar-18 Mar-17 Mar-16 Mar-15

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME

Revenue
From
Operations 11,004. 10,637. 11,873.
[Gross] 11,004.44 44 08 46 9,831.88

Less:
Excise/Sevic
e Tax/Other
Levies 54.91 0 206.09 0 92.94
Revenue
From
Operations 11,004. 10,430. 11,873.
[Net] 10,949.53 44 99 46 9,738.94
Other
Operating
Revenues 440.37 440.37 337.5 244.26 392.84
Total
Operating 11,444. 10,768. 12,117.
Revenues 11,389.90 81 49 72 10,131.78

Other Income 334.88 334.88 129.85 280.3 147.91

Total 11,779. 10,898. 12,398.
Revenue 11,724.78 69 34 02 10,279.69
EXPENSES

Cost Of
Materials 3,303.3 2,956.0 3,633.3
Consumed 3,303.31 1 4 4 3,426.74
Purchase
Of Stock-In 1,064.2 1,128.9 1,037.5
Trade 1,064.23 3 9 6 903.41
Operating
And Direct
Expenses 475.13 0 443.37 0 0

Changes In
Inventories
Of FG,WIP
And Stock-
In Trade -212.05 -212.05 56.27 228.35 -349.05

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Employee
Benefit 1,785.9 1,728.9 1,778.5
Expenses 1,785.94 4 7 6 1,505.58
Finance
Costs 11.9 11.9 39.2 147.07 136.05

Depreciatio
n And
Amortisatio
n Expenses 529.61 529.61 499.97 442.69 433.2
Other 3,307.8 2,858.5 3,386.4
Expenses 2,777.79 3 9 8 2,683.79
Total 9,790.7 9,711.4 10,654.
Expenses 9,735.86 7 0 05 8,739.72

Mar-18 Mar-18 Mar-17 Mar-16 Mar-15

12 mths 12 mths 12 mths 12 mths 12 mths

Profit/Loss
Before
Exceptiona
l,
ExtraOrdin
ary Items 1,988.9 1,186.9 1,743.9
And Tax 1,988.92 2 4 7 1,539.97

Exceptional
Items -77.52 -77.52 0 0 0

Profit/Loss 1,911.4 1,186.9 1,743.9

Before Tax 1,911.40 0 4 7 1,539.97
Tax Expenses-
Continued Operations

Current Tax 431.33 442.88 311.06 356.64 318.78

Deferred
Tax 11.55 0 -99.06 -74.97 40.1
Total Tax
Expenses 442.88 442.88 212 281.67 358.88

Profit/Loss
After Tax
And
Before
ExtraOrdin 1,468.5 1,462.3
ary Items 1,468.52 2 974.94 0 1,181.09

Profit/Loss
From
Continuing 1,468.5 1,462.3
Operations 1,468.52 2 974.94 0 1,181.09

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Profit/Loss
For The 1,468.5 1,462.3
Period 1,468.52 2 974.94 0 1,181.09

Mar-18 Mar-18 Mar-17 Mar-16 Mar-15

12 mths 12 mths 12 mths 12 mths 12 mths
OTHER ADDITIONAL
INFORMATION

EARNINGS PER SHARE

Basic EPS 18.2 18.2
(Rs.) 18.25 5 12.13 1 14.71
Diluted 18.2 18.1
EPS (Rs.) 18.22 2 12.11 6 14.66
VALUE OF IMPORTED AND
INDIGENIOUS RAW
MATERIALS
Imported
Raw
Materials 0 0 0 0 1,523.87
Indigenous
Raw
Materials 0 0 0 0 2,004.38
STORES, SPARES AND
LOOSE TOOLS

DIVIDEND AND DIVIDEND

PERCENTAGE
Equity
Share 180.
Dividend 160.94 0 160.87 92 160.59

Tax On
Dividend 28.33 0 32.71 0 32.69
Equity
Dividend
Rate (%) 150 150 100 100 100

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BALANCE SHEET OF CIPLA FROM 2014-2018

Previous
Cipla Years »

-------------------
Consolidated in Rs. Cr. ----
Balance Sheet ---------------

Mar 18 Mar-17 Mar-16 Mar-15 Mar-14

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share
Capital 161.02 160.9 160.68 160.59 160.58

Total Share Capital 161.02 160.9 160.68 160.59 160.58

Revaluation
Reserves 0 0 0 8.97 8.97
Reserves and
Surplus 14,068.17 12,382.76 11,355.54 10,619.68 9,880.80
Total Reserves
and Surplus 14,068.17 12,382.76 11,355.54 10,628.65 9,889.77

Total Shareholders
Funds 14,229.19 12,543.66 11,516.22 10,789.24 10,050.35
Equity Share
Application Money 0 0 0 12.25 0

Minority Interest 352.44 438.23 350.09 180.48 49.58

NON-CURRENT LIABILITIES
Long Term
Borrowings 3,662.11 3,645.36 221.88 309.28 317.87

Deferred Tax
Liabilities [Net] 503.31 756.89 975.73 331.74 311.85
Other Long Term
Liabilities 143.36 138.71 143.53 40.58 32.57
Long Term
Provisions 137.92 140.52 144.68 160.35 77.44

Total Non-Current
Liabilities 4,446.70 4,681.48 1,485.82 841.95 739.73

CURRENT LIABILITIES
Short Term
Borrowings 435.87 467.23 4,969.67 1,392.48 910.47

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Trade Payables 2,119.12 1,571.14 1,475.82 1,577.24 979.53

Other Current
Liabilities 650.12 932.96 1,019.71 503.68 408.67
Short Term
Provisions 627.11 402.37 310.85 420.21 264.91

Total Current
Liabilities 3,832.22 3,373.70 7,776.05 3,893.61 2,563.58

Total Capital And

Liabilities 22,860.55 21,037.07 21,128.18 15,717.53 13,403.24

ASSETS

NON-CURRENT ASSETS

Tangible Assets 5,316.38 5,010.43 4,604.85 4,140.56 3,995.94

Intangible Assets 1,819.05 1,784.88 2,057.90 130.62 7.44

Capital Work-In-
Progress 512.35 719.23 741.01 534.88 353.64

Intangible Assets
Under Development 468.98 963.75 1,319.86 46.02 88.2

Other Assets 0 0 1.07 0 0

Fixed Assets 8,116.76 8,478.29 8,724.69 4,852.08 4,445.22

Non-Current
Investments 156.63 135.62 175.28 249.76 397.14
Deferred Tax
Assets [Net] 187.65 168.13 78.69 47.11 2.88

Long Term Loans

And Advances 41.66 39.48 41.84 296.96 301.49
Other Non-Current
Assets 729.01 714.25 560.88 121.72 112.05
Total Non-Current
Assets 12,046.45 12,232.44 12,286.95 8,126.09 7,751.87

CURRENT ASSETS

Current Investments 1,102.21 837.39 582.34 390.02 311.43

Inventories 4,044.70 3,485.28 3,808.05 3,780.62 2,895.26
Trade Receivables 3,102.45 2,563.05 2,356.27 2,004.25 1,638.89
Cash And Cash
Equivalents 965.61 624.21 871.4 564.26 175.16

Short Term Loans

And Advances 19.91 9.53 10.92 707.37 595.49

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OtherCurrentAssets 1,579.22 1,285.17 1,212.25 144.92 35.14

Total Current
Assets 10,814.10 8,804.63 8,841.23 7,591.44 5,651.37

Total Assets 22,860.55 21,037.07 21,128.18 15,717.53 13,403.24

OTHER ADDITIONAL
INFORMATION

CONTINGENT LIABILITIES,
COMMITMENTS
Contingent
Liabilities 1,002.86 1,441.90 1,150.11 1,820.24 1,320.06

BONUS DETAILS
Bonus Equity Share
Capital 151.66 151.66 151.66 151.66 151.66

NON-CURRENT INVESTMENTS
Non-Current
Investments
Unquoted Book
Value 147.01 123.22 158.46 248.64 394.92

CURRENT INVESTMENTS

Current Investments
Unquoted Book
Value 1,102.21 837.39 582.34 390.02 311.43

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