LOVELY PROFESSIONAL UNIVERSITY

PHAGWARA, PUNJAB
CORPORATE FINANCE -FINM 542
Submitted By
Nakul Dutta (12106942)

Rashmi Sharma (12108345)

Palle Praneetha (12104173)

Mayank Raj Jaiswal (12108434)

Mir Annan (12110856)

Saisavalli Khan Mudivedu (12113015)

MITTAL SCHOOL OF BUSINESS

Under The Guidance Of
Mr. Vishal Goyal
(Lecturer Of Mittal School of Business)

1
Contents
INTRODUCTION........................................................................................................................................................... 3
DIFFERENT TYPES OF FINANCIAL FUNCTIONS ............................................................................................... 5
10 LATEST NEWS RELATED TO ALKEM LABORATORIES LTD .................................................................... 6
REFFERENCE ............................................................................................................................................................. 21

2
 INTRODUCTION
COMPANY DETAILS

The Indian Pharmaceutical Markets:

The Indian Pharmaceutical market has characteristics that make its unique. First, branded generics dominated,
making up for the 70 to 80 per cent of the retail market. Second, local players have enjoyed a dominant position
driven by formulation development capabilities and early investments. Third, price levels are low, driven by
intense competition. While India ranked tenth globally in terms of value, it is ranked third in the volumes.
These characteristics present their own opportunities and challenges.

Alkem Laboratories Ltd.:

Established on 1973 and headquartered in Mumbai, India, Alkem began operations as a health care marketing
company. Alkem has since grown to become India’s seventh largest pharmaceutical company with sales
revenues exceeding USD 500 million with a CAGR of 16% over the last five years.

Alkem, one of the India’s leading generic and specialty pharmaceutical companies, is a significant player in
the branded drugs and generic drugs space. With a wide raging presence across acute and chronic therapeutic
segments with substantial brand share in the Central Nervous System, Gastro-intestinal, Anti-diabetic, Anti-
osteoporosis, Anti-malaria, Cardiovascular, immunosuppressant, and Nutraceutical segments, Alkem leads
the Indian market in the Anti-infective and Pain Management segments.

Basic Product Information

Alkem’s success in highlighted by its leadership in the Anti-infective and Pain Management segments. Of its
portfolio of 800 brands, 3 brands, Taxim (Cefotaxim), Clavam (Amoxicillin + Clavulanic Acid), and Sumo
(Paracetamol) are ranked among the top 25 brands in India, while 14 feature among the top 300 brands in the
Indian markets, Alkem was the first Indian company to develop, manufactured & market the following
products in India:

➢ Anaestrazole
➢ Cefotaxime + Sulbactam
➢ Satranid azole
➢ Ceftriaxone + Tazobactam
➢ Cefixime + Clavulanic Acid

Alkem has also diversified into the health foods area with the following products:

➢ Jeevan prash – a tasty, Low Calorie & sugar free chyawanprash

➢ Blocal – Low Calorie Sweetner

3
 ➢ Salt Substitutes, Fat Substitutes and Sucralose based products – Jams, Cookies, Jelly, Juices & cakes
(Calories Conscious and Diabetics), Cholestrol free edible Oil.

Financial Status:

The following is the financial status of the company:

• Negligible Debt; Major Project Cost and Expansion Programs met out of Retained Earning
• Low borrowing Cost, Interest Cost progressively becoming nil, Net income generated on the Interest
Front
• Own substantial Properties and Tangible Assets
• Liquidity:
I. Accumulated Cash Reserves and Surplus
II. Surplus available for Expansion, R&D and M&A Activity

Alkem Labs is considering plans to launch an IPO to raise between Rs.3000 crores to Rs. 4000 crores which
if finalized could potentially be one of the biggest offerings in the pharma space in a long time. The likely
timelines for the IPO is around the second half of FY15 and a proposed equity dilution of around 25% would
value the company anywhere between Rs.12000- Rs16000 crore rupees. Merchant bankers are learnt to have
been shortlisted by the company.

4
 DIFFERENT TYPES OF FINANCIAL FUNCTIONS
Finance function is the most important of all business functions. It remains a focus of all activities. It is not
possible to substitute or eliminate this function because the business will close down in the absence of finance.
The needs for money is continuous. Its starts with setting up an enterprise and remains at all times.

There are different types of function which are as follows:

• Investment Function
• Financial Function
• Dividend Function
• Liquidity Function

Investment Function: Investment function related to the determination of total amount of assets to be held
in the firm, the composition of these assets and the business risk complexions of the firm as perceived by its
investors. It is the most important financial decision. Since fund involve cost and are available are limited
quantity, its proper utilization is very necessary to achieve the goal of wealth maximization.

Investment Function are of two broad groups:

I. Long term investment Function:

The long-term investment function is referred to as the decision.
II. Short term investment Function:
The short-term investment function as Working Capital Management.

Financial Function: Once the firm has taken the investment decision and committed itself to the new
investment, it must decide the best means of financing these commitments. Since, firms regularly make new
investments, the needs for financing and financial decisions are on going. Hence, a firm will be continuously
planning for new financial needs. The financial decision is not concerned with how best to finance new assets,
but also concerned with the best overall mix of financial for the firm.

Dividend Function: The third major financial function related to the disbursement of profits back to investors
who supplied capital to the firm. The term dividend refers to that part of profits of a company which is
distributed by it among its shareholders. It is the reward of shareholders for investments made by the share
capital of the company. The dividend decision is concerned with the quantum of profits to be distributed by
shareholders.

Liquidity Function: Liquidity functions is a short-term function and involve a period of less than one year.
Liquidity functions are needed to manage day to day expenses of firm for short period.

5
 10 LATEST NEWS RELATED TO ALKEM LABORATORIES LTD

INVESTMENT DECISION NEWS

❖ Alkem looks for partnerships, in-licensing deals to bolster presence in US market

(July 18, 2021)

ANALYSIS:

Objective: Using Investment Decision rule on a news article ( related to Alkem lab)
Alkem laboraties is looking for partnership and licensing deal in United States to boost there production’ the
company strategy is to do more production and expand their business in US market.

Profit & Loss A/c

Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 TTM
Sales + 5,688 6,401 7,357 8,344 8,865 9,604
Expenses + 4,687 5,392 6,237 6,868 6,920 7,591
Operating Profit 1,001 1,009 1,120 1,476 1,945 2,014
OPM % 18% 16% 15% 18% 22% 21%
Other Income 110 115 82 102 230 225
Interest 45 55 55 65 59 55
Depreciation 101 143 193 253 275 278
Profit before tax 965 926 955 1,260 1,842 1,905
Tax % 6% 31% 19% 9% 12%
Net Profit 892 631 761 1,127 1,585 1,631
EPS in Rs 74.61 52.77 63.61 94.26 132.57 136.42
Dividend Payout % 20% 25% 25% 27% 23%

SOURCE: SCREENER

6
INTERPRETATION

➢ Company wants to take investment decision to grow their company because they want to increase their
capabilities of production of products.
➢ Alkem laboratories instead of higher competition and evolving regulatory control company wants to
tackle this problem through investment decision and launch new products.
➢ Good Infrastructure facilities in US company took this step for investment decision.
➢ Medium- and long-term financial decision the company invest because of facilities provided by US and
subsidiaries at Enzene will also help drive growth.
➢ During FY2020-2021the company US business get rise in revenue Rs2,466 crore as compared to
Rs2200 in previous year growth of (12.1%).
➢ Covid 19 crisis also increases the sale of medicines and future of pharmatical company is also bright
company took an investment decision.

7
 ❖ Alkem Laboratories Launches Ibuprofen, Famotidine Tablets In Us Market
(August 04, 2021)

ANALYSIS:
Objective: Using Investment Decision on news article (related to Alkem Lab) Alkem Lab investing capital
on launching new prioduct in US market to increase there presence and expand there production in US
market.

QUATERLY RESULT
Jun- Sep-19 Dec-19 Mar- Jun-20 Sep- Dec- Mar- Jun-
19 20 20 20 21 21
Sales + 1,850 2,264 2,182 2,049 1,992 2,363 2,318 2,192 2,731
Expenses + 1,585 1,811 1,729 1,746 1,470 1,762 1,789 1,901 2,138
Operating Profit 264 453 453 303 522 600 529 291 593
OPM % 14% 20% 21% 15% 26% 25% 23% 13% 22%
Other Income 17 31 28 27 55 36 96 46 47
Interest 16 18 17 14 17 18 13 11 13
Depreciation 56 56 59 81 67 70 69 69 71
Profit before tax 210 410 405 235 493 548 543 258 556
Tax % 11% 7% 4% 19% 14% 12% 15% 3% 14%
Net Profit 185 371 382 189 422 472 451 240 468
EPS in Rs 15.51 31.02 31.95 15.79 35.3 39.48 37.72 20.07 39.15

SOURCE: SCREENER

INTERPRETATION:
➢ The Alkem Laboratories launch a product Ibuprofen and Famotidine tablet took an investment
decision because there is a huge demand of this tablet and symptom of rheumatoid arthritis and
ostreoarthritis in US.
➢ Alkem Laboratories has launched this product Ibuprofen and Famotidine tablets in the strength
800mg/26.6 in US under approval from (USFDA)
➢ The Company said that is the first generic approval of Duexis tablets 800/26.6 by the (USFDA)
➢ Shares of Alkem Laboratories were trading 0.01 percent higher at Rs 3510.50 on BSE.

8
 ❖ Alkem Labs Gains On Launching Affordable Epilepsy Drug
(June 10,2021)

ANALYSIS:
Objective: Using Investment Decision rules on news article related to Alkem Laboratories
Alkem Labs gain on launching a Product due to symptoms of Epilepsy Drug.

QUATERLY RESULTS
Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
Sales + 2,049 1,992 2,363 2,318 2,192 2,731
Expenses + 1,746 1,470 1,762 1,789 1,901 2,138
Operating Profit 303 522 600 529 291 593
OPM % 15% 26% 25% 23% 13% 22%
Other Income 27 55 36 96 46 47
Interest 14 17 18 13 11 13
Depreciation 81 67 70 69 69 71
Profit before tax 235 493 548 543 258 556
Tax % 19% 14% 12% 15% 3% 14%
Net Profit 189 422 472 451 240 468
EPS in Rs 15.79 35.3 39.48 37.72 20.07 39.15

SOURCE: SCREENER

INTERPRETATION:
➢ Alkem laboratories launch a product PERAMPIL Tablet because there is a symptom of Epilepsy in
India.
➢ The company launched Perampil tablet 6mg-Rs300/strip of 15 tablets at affordable prices in India.
➢ The drug perampil has been approved by the Drugs Controller General of India (DCGI).
➢ The organization announced 27% expansion in net benefit to Rs 240 crore on 7% increment in
income from tasks to Rs2192.2 crore in Q4 FY21 and Q4 FY20.

9
 ❖ Buy Alkem Laboratories, target price Rs 3920: Kotak Securities
(August,20,2021)

ANALYSIS:

QUATERLY RESULTS
Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
Sales + 2,049 1,992 2,363 2,318 2,192 2,731
Expenses + 1,746 1,470 1,762 1,789 1,901 2,138
Operating 303 522 600 529 291 593
Profit
OPM % 15% 26% 25% 23% 13% 22%
Other Income 27 55 36 96 46 47
Interest 14 17 18 13 11 13
Depreciation 81 67 70 69 69 71
Profit before 235 493 548 543 258 556
tax
Tax % 19% 14% 12% 15% 3% 14%
Net Profit 189 422 472 451 240 468
EPS in Rs 15.79 35.3 39.48 37.72 20.07 39.15

Source: Screener
INTERPRETATION:

• Market price of Alkem Laboratories is Rs3801.15

• In the year 1973 Alkem Laboratories ltd is a large capiral company
• Quarter ended 30-6-2021 the company reported total income of Rs 2778.01 crore up 24.01% from
last Quarter
• Company current Net Profit After Tax Rs 480.23 Crore up 24.01% from latest Quarter

10
FINANCIAL DECISION NEWS

❖ Alkem Laboratories (NSE: ALKEM) Is Increasing Its Dividend To ₹5.00

(August 8, 2021)
ANALYSIS:

11
Alkem Laboratories has recently growth 37.12% in total sales revenue in June 21, 2021. The Alkem
pharmaceutical company has reported overall net profit in June Quarter has 95% grew on at Rs 468.12 crore
company financial highlight performance and the company main reason to growth is that few months before
the raw material of pharmaceutical companies have been reducing and during the pandemic supply chain
constraints continued. The Alkem Company has announced payment of the dividend will be increasing 0.09%
due to rising the earning per share has been increasing in National Stock Exchange (NSE) as well as Bombay
Stock Exchange (BSE).

INTERPRETATION:

• The net profit of the company in June 2020 was 422.01 crore after that in June 2021 at Rs 468.12 crore
a quite clear the company profit has increased as compare to previous year.
• During the pandemic Covid-19 sales and Income of Alkem Company raised in June 1992 crore to 2731
crore.
• The Alkem Company has capability to adverse economic condition and they have to sufficient funds
to pay the long term liabilities and great Return on Investment (ROI).
• Alkem Laboratories will be increasing the dividend interest up to 0.9% reason that shares are growing
on stocks in India. Now company has disclosed that large proportion of the earning are being reinvest
back into the expanding the future business because in upcoming 12 months experts are assumed that
price of share will be declining and company is investing to another companies because in future they
don’t suffering any losses that why company tie-up with TATA Memorial Hospital launches in
“Cancer Care Hospital”.

FINANCE FUNCTION:

I have read the news article, I clear say about that DIVIDEND FUNCTION apply on this news because Alkem
Laboratories has disclosed an equity dividend of at 5.00 rose and currently price of the share at Rs 4003 on
stocks. The paid up Equity Share of the Alkem Laboratories Company as on 31st March, 2021 was 239.1
Million. The Alkem Laboratories Company has not issued any kind of shares of outsiders as well as
Company’s employees and don’t distributes voting rights to others.

12
DIVIDEND DECISION NEWS
❖ Alkem Labs bets on domestic growth, US market recovery
(September 21, 2021)

ANALYSIS:
Objective: using Dividend decision rule on a news article (related to Alkem Labs.)

According to article, Alkem Labs claims on domestic growth which led to US market recovery. The
company says there was more than 40 % of growth in overall finance.

3,000

2,500

2,000

1,500

1,000

500

INTERPRETATION:

13
➢ Alkem provided a strong Chronic product portfolio and a large Rapid product line, which are drivers
of both its growth and earnings potential, Due to this we see the change in growth of Alkem labs it
reported growth in revenue in the June quarter
➢ It was supported growth in domestic formulation sale by 69% on yearly basis and dropping in price
of US market impact the company’s growth and sales declined 9% yearly in the quarter.
➢ The growth in different segments and investment on product brightens the growth outlook.
➢ Due to pandemic the company get large no of sale in covid related drugs
➢ Alkem had risen a 38.1% in revenues in the quarter of June. This was supported by a year-on-year
(y-o-y) growth of 69% in domestic formulation sales. Price decline in the US market has, however,
been negatively impacting the company’s growth, and sales degraded by 9% year-on-year in the
quarter.
➢ The company’s complete annual sales rise at 18.6% is also a statement of ease. So, analysts are
expecting a growth rate over fifteen for the upcoming year.

➢ Meanwhile, the pricing pressure in the US market continues to be an overhang on growth there.
➢ US sales went down y-o-y in the June quarter, but analysts point to a 11% upcoming continuous
growth as an encouraging sign.
➢ The ramp-up in sales of recently launched pain management generics of Duexis is expected to give a
positive outcome.
➢ Pointing to a decent pipeline of new launches, analysts at HDFC Securities Ltd expect US revenue to
grow at 11% compounded annual growth rate basis over FY21-23.
➢ The major profit in share prices amount shows that much of these favourable outcomes are already
beneficial. With the recent rise, the shares of Alkem Laboratories trade at 26.7 times the earnings
estimate of FY22.

14
 ❖ Alkem Labs Q4 results: Net profit rises 30% to Rs 249 Crore
(May 25,2021)

ANALYSIS:

Alkem Laboratories the well-known pharmaceutical company reported 30.11% increase in overall profit
by Rs 249.22 crore in the end of quarter of March 31, 2021. For previous fiscal year the firm has made
known the profit of Rs 191.54 crore this was revealed by Alkem labs while filing to BSE. Alkem also said
that the total revenue by operations was at Rs 2,192.16 crore during the same period.

The company's India sales grew 17.1 per cent in the fourth quarter of 2020-21 year-on-year, recording sales
of Rs 1,473.2 crore as compared to Rs 1,257.6 crore in the past year. For entire budgetary year 2020-21, the
net profit was of Rs 1,617.77 crore as against Rs 1,149.31 crore in the previous year, Alkem Laboratory
statement.
Consolidated revenue from performance in the year was Rs 8,865.01 crore. It added that revenue was Rs
8,344.36 crore in 2019-20. "Given the challenging scenery, we performed well in FY21 with about 6 per
cent year on year revenue growth, more than 400 basis points improvement in EBITDA margin and about 40
per cent growth in net profit. We also ended the year with a healthy balance sheet with net cash of more than
Rs 500 crore," Alkem MD Sandeep Singh said.
In a separate filing, the company said its board has recommended a final dividend of Rs 5 per equity share of
Rs 2 each for 2020-21.
The company's board has approved the re-appointment of Dheeraj Sharma as an independent director for the
second term of five consecutive years with effect from May 26, 2022, it added. The board has also approved
the restructuring of the company's subsidiaries in the US, the filing said. Shares of Alkem Laboratories were
trading at Rs 2,899.75 per scrip on BSE, down 3.31 per cent from its previous close

INTERPRETATION:
➢ The independent director Mr. Dheeraj Sharma is a great human asset for the company’s advancement.
➢ There is a +ve impact of covid period on the company’s profit sheet.
➢ Company’s management has full capability to showcase themselves 100% in every backdrop.

15
 ➢ Witnessing this much growth company has decided to restructure other small related companies as
well.

DIVIDEND DECISION:

For the year ending March 2021 Alkem Laboratories has declared an equity dividend of 1500.00%
amounting to Rs 30 per share. At the current share price of Rs 4003.10 this results in a dividend yield of
0.75%.

16
 ❖ Alkem laboratories Q2 net profit yo by 27% at Rs 482 crore.
(November 6, 2020)

ANALYSIS:
One of the top companies in the pharmaceutical sector, Alkem laboratories has joyfully reported a
percentage of 26.54 rise in its consolidated net profit to 481.51 crore in the quarter ended.

The main reason for the whole huge profit was high number of sales.

Before the firm had declared a net profit of Rs 380.52 crore during the BSE filing.

What is BSE filing:

Listing provides an exclusive privilege to securities in the stock exchange. Only listed shares are quoted on
the stock exchange. Stock exchange facilitates transparency in transactions of listed securities in perfect
equality and competitive conditions. Listing is beneficial to the company, to the investor, and to the public at
large.

There was a great difference in the revenue which came from the operations of the firm which stood at the
Rs 2,362.80 crore and then it was 2,264.03 for the same period a year.

17
 2500

2000

1500

1000

500

0
2019 2020

profit revenue from operations

The MD Sandeep Singh said they have had a fight with the COVID-19 pandemic and the firm has witnessed
a significant recovery.

They have also stated that they had many opportunities for releasing the new products as the government has
announced multiple rounds of unlocking.

We also got to know by reading this news that the firms’ international business was also at the good pace in
the US business which resulted in the increase of 28% growth during the first half of the financial year.

However, during the second quarter of the financial year, 2021 companies’ sales grew by 0.5 % and it
recorded the sales of Rs 1,557.4 crore as compared to Rs 1,550.3 crores in the second quarter of the financial
year.

At the end of the financial year the firm has shown an increase of 16.45 increase in the profit which ranges
from 229.2 crore to 779 crore.

INTERPRETATION:

• As we know that in the year of 2019 emergence of pandemic COVID-19 prevailed, which led to
huge loss for many different firms of different sectors.
• However, we are discussing about the Alkem Laboratories which is a pharmaceutical company, has
shown good results by overcoming all the challenges faced.
• The firm also managed to withstand every challenge and to release new products as people began to
start being more cautious.
• The firm has released many new products which matched with the demand of the people which
included the anti-infective drugs mostly.

18
 ❖ Alkem laboratories Q4 net profit up 12% at Rs 191.54 crore
(June 5th 2020.)

ANALYSIS:

The top pharmaceutical firm has shown that the revenue from the operations was increased to Rs 2,048.99
crore for the quarter as in the past financial year it was 1,853.03 crore for the same period of the time.

The firm has also shown that the net profit for 170.50 crore for the prevailing year which they have said in
the BSE filing.

The total profit for the financial year ended in March 2020 was at Rs 1,149.31 crore as against Rs 773.64
crore for 2018-19.

INTERPRETATION:

• The company’s revenue from operations and also the net profit was very much increased.
• The company’s board has approved final dividend pf Rs 3 per equity share in the financial year 2020
BSI filing said.

19
LIQUIDITY DECISION NEWS
❖ Alkem Lab board nods closure of operations at Beta Block (Unit II)
manufacturing unit in Baddi
(20, September,2021)
ANALYSIS:
To Avoid operating expenses in balddi it is decided to discontinue to Manufaturing operation .

INTERPRETATION:
• In the regulatory filling beta block (Unit 2) manufacturing facility of Baddi Alkem took a decision
for the closure of manufacturing facility.
• The Board of director of a company passed a resolution on 16th September 2021 approve closure of
manufacturing facilities related to Baddi.
• The beta block turnover was 0.60% of the total turnover of the company.
• The stock price is currently trading at Rs3,784 down by Rs49.55 or 1.29% from its previous
closing of Rs3,833.55 on the BSE. The scrip opened at Rs3,815.55 and has touched a high and
low of Rs3,815.55 and Rs3,747.70 respectively .

20
REFFERENCE

• https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/alkem-
laboratories-launches-ibuprofen-famotidine-tablets-in-us-market/articleshow/85029512.cms
• https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/alkem-
looks-for-partnerships-in-licensing-deals-to-bolster-presence-in-us-
market/articleshow/84518149.cms
• https://www.business-standard.com/article/news-cm/alkem-labs-gains-on-launching-
affordable-epilepsy-drug-121061000723_1.html
• https://www.screener.in/company/ALKEM/consolidated/
• https://www.livemint.com/market/mark-to-market/alkem-labs-bets-on-domestic-growth-
revival-in-us-market-11632331941135.html
• https://economictimes.indiatimes.com/markets/stocks/earnings/alkem-labs-q4-results-net-
profit-rises-30-to-rs-249-cr/articleshow/82941202.cms
• https://www.thehindubusinessline.com/companies/alkem-laboratories-q2-net-profit-up-27-per-
cent-to-rs-482-cr/article33040416.ece
• https://www.moneycontrol.com/news/business/earnings/alkem-laboratories-q4-net-profit-up-
12-at-rs-191-54-crore-5365641.html
• https://www.indiainfoline.com/article/earnings-results/alkem-laboratories-q1-net-profit-up-95-
on-at-rs468cr-on-sequential-basis-on-better-cost-advantage-121080800204_1.html.
• https://economictimes.indiatimes.com/markets/stocks/recos/buy-alkem-laboratories-target-
price-rs-3920-kotak-securities/articleshow/85477028.cms

21