ASSIGNMENT: CA1

COURSE CODE- ACCM507

COURSE TITLE- FINANCIAL REPORTING,

STATEMENT AND ANALYSIS-II

SUBMITTED BY

NAME- Anuvartika Bharti

SECTION- Q2143

MITTAL SCHOOL OF
BUSINESS

REGISTRATION NO- 12107644

ROLL NO- RQ2143B45

ORGANISATION- Sun
Pharmaceutical Industries Limited
(Sun Pharma)

SUBMITTED TO
Mr. Sushant Gupta
Faculty, Mittal School of Business
 INTRODUCTION
SUN PHARMACEUTICAL INDUSTRIES
LIMITED

Sun Pharmaceutical Industries Limited (Sun Pharma) is an Indian multinational company based in
Mumbai, Maharashtra, which manufactures and sells pharmaceutical formulations and active
pharmaceutical ingredients mainly in India and the United States. Sun Pharmaceuticals was founded
by Dilip Shanghvi in 1983 in Vapi, Gujarat. Sun Pharma is present in more than 100 countries
worldwide. The acquisition of Ranbaxy in 2014 made Sun Pharma the largest pharmaceutical
company in India and the fourth largest company in the world, with a total profit of more than US $
4.5 billion as of June 2021. The products cover a wide range of medical fields including psychiatry,
anti-infective, neurology, cardiology, orthopaedics, diabetology, gastroenterology, ophthalmology,
nephrology, urology, dermatology, gynaecology, respiratory, oncology, dentistry and nutrition. Its
API products include Acamprosate Calcium, Alendronate Sodium, Amifostine trihydrate,
Budesonide and Carvedilol.

Sun Pharma provide high quality, affordable medicines that are trusted by clients and patients in
more than 100 countries. Sun Pharma's global presence is supported by more than 40 production
centres spread across 5 continents, R&D centres around the world and multicultural staff members
from more than 50 nations. Sun Pharma promotes efficiency by introducing new products based on
strong R&D strength involving approximately 2,000 scientists and R&D investment of more than 7-
8% of annual revenue.

More than 72% of Sun Pharma sales come from markets outside India, mainly in the United States.
The US is the largest market, comprising about 30% of the company's profits in all, complete form
making up 93% of profits. Production in all 44 parts of the world in India, US, Asia, Africa,
Australia and Europe. In the United States, the company is marketing a large generator basket.

Sun Pharma came second in India's most respected product list (Medicine) and listed as most
respected companies. CSR under the Foundation for Disease Elimination and Control of India has
been awarded the Mahatma Award for Social Good. Its Mobile Health Care Unit Project has been
recognized as the Best Public Health Plan by the ACEF Asian Leadership Forum. All over the
company holds a very good position in the pharmaceutical market.
 SUN PHARMA COMPANY COST ANALYSIS
Sun Pharmaceutical Industries Ltd is an international pharmaceutical company. Sun Pharma has a
market share of 9.1% and sales growth of 13%. compared to the conventional industry. 10%
growth. Ranbaxy's recent acquisition has made Sun Pharma the largest pharmaceutical company in
India and the 5th largest pharmaceutical company in the world.

Costs that Change depending on the company’s production volume is variable cost. When
production increases total variable cost increases and when production decreases total variable cost
decreases. Some of the variable cost which I have analysed for Sun Pharmaceuticals Industries
Limited are:

i. Inventory
ii. Printing and Stationery
iii. Work in progress
iv. Power and Fuel
v. Commission on sales
vi. Selling, promotion and distribution
vii. Freight outward and handling charges
viii. Travelling and conveyance
ix. Cost of material consumed
x. Repair and Maintenance

Costs that do not change in the relation to production volume is fixed cost. Whether Production
increases or decreases the fixed cost stays the same. Some of the fixed cost which I have analysed
for Sun Pharmaceuticals Industries Limited are:

i. Rent
ii. Insurance
iii. Salary
iv. Finance Cost
v. Miscellaneous Expense
vi. Professional, legal and consultancy
vii. Depreciation and amortisation expense
viii. Property, Plant and Equipment
ix. Rates and Taxes
x. Telephone Expense
 COST SHEET OF SUN PHARMA

Particulars Amount
  2021 2020 2019
Add: Cost of Material Consumed 38091.1 32017.1 27277.1
Add: Inventory 31657.2 26336.7 27926.2
PRIME COST 69748.3 58353.8 55203.3

Add: Rent 37.6 58.5 211.5

Add: Salary 16511.6 15660.5 14379.5
Add: Finance cost 2569.8 4080.1 5409.2
Add: Power and fuel 3841.3 3947.4 4072.8
Add: Printing and stationery 204.4 182 176.6
Add: Depreciation and amortisation expenses 5868.1 5615.6 5529.5
Add: Property Plant and Equipment 48739.8 49103.1 47092.1
Add: Repair and Maintenance 2396.2 2297.9 2154.5
Add: Insurance 739.8 715.2 538.2
Add: Work-in-progress 10198.9 8700.1 8659.2
Add: Rates and Taxes 1621.8 2177.9 1165.9
Add: Miscellaneous expenses 2421.7 2780.4 2214.3
WORKS COST 95151 95318.7 91603.3

Add: Telephone Expense 13374.5 1111397.1 10275.3

Add: Professional, legal and consultancy 6089.9 5650.3 4546.2
COST OF PRODUCTION 19464.4 1117047.4 14821.5

Add: Freight outward and handling charges 2929.2 2505.3 2481.3

Add: Commission on sales 466 351.3 231.8
Add: Selling, Promotion and distribution 4571.7 5557.7 3746.5
Add: Travelling and conveyance 757.2 1645.5 1615.2
COST OF GOODS SOLD 8724.1 10059.8 8074.8

COST OF SALES / TOTAL COST 193087.8 1280779.7 169702.9

COST CALCULATED

Cost Amount
2021 2020 2019
PRIME COST 69748.3 58353.8 55203.3
WORKS COST 95151 95318.7 91603.3
COST OF PRODUCTION 19464.4 1117047.4 14821.5
COST OF GOODS SOLD 8724.1 10059.8 8074.8
COST OF SALES / TOTAL COST 193087.8 1280779.7 169702.9
PV RATIO, MARGIN OF SAFETY, BREAK EVEN POINT OF SUN
PHARMA

Fixed Cost
Particulars 2021 2020 2019
Rent 37.6 58.5 211.5
Insurance 739.8 715.2 538.2
Finance Cost 2569.8 4080.1 5409.2
Miscellaneous Expenses 2421.7 2780.4 2214.3
Professional, Legal and Consultancy 6089.9 5650.3 4546.2
Telephone Expense 13374.5 1111397.1 10275.3
Depreciation & Amortisation Expense 5868.1 5615.6 5529.5
Property, Plant and Equipment 48739.8 49103.1 47092.1
Rates and Taxes 1621.8 2177.9 1165.9
Salary 16511.6 15660.5 14379.5
TOTAL FIXED COST 97974.6 1197238.7 91361.7

Variable Cost
Particulars 2021 2020 2019
Inventory 31657.2 26336.7 27926.2
Power and Fuel 3841.3 3947.4 4072.8
Printing and Stationery 204.4 182 176.6
Work-in-progress 4428.5 3843.5 4562.5
Repair and Maintenance 2396.2 2297.9 2154.5
Commission on Sales 466 351.3 231.8
Selling Promotion and Distribution 4571.7 5557.7 3746.5
Freight Outward and Handling
charges 2929.2 2505.3 2481.3
Travelling and Conveyance 757.2 1645.5 1615.2
Cost of Material Consumed 38091.1 32017.1 27277.1
TOTAL VARIABLE COST 89342.8 78684.4 74244.5

FORMULA USED

P/V ratio = (Contribution / Sales) * 100

Contribution = Total Sales - Total Variable Cost

Margin Of Safety = Actual Sales - Break Even Sales    

Break Even Sales = (Total Fixed Cost * Sales) / (Sales - Total Variable
Cost)

Break Even Point= (Total Fixed Cost) / (P/V ratio)

P/V Ratio - The profit-volume ratio is measuring the contribution per rupee for sales. It measures
the change in profit as a result of changes in volume.

For year 2021,

Contribution = Total Sales of 2021 – Total Variable Cost of 2021

= 193087.8 – 89342.8
= 103,745

P/V Ratio = (Contribution / Sales) * 100

= (103745 / 193087.8) * 100
= 53.7294%

For year 2020,

Contribution = Total Sales of 2020 – Total Variable Cost of 2020

= 1280779.7 – 78684.4
= 1202095.3

P/V Ratio = (Contribution / Sales) * 100

= (1202095.3 / 1280779.7) * 100
= 93.8565 %

Year
2021 2020
Contribution 103745 1202095
53.7294 93.8565
P/V ratio 4 2

Margin of Safety- Margin of Safety is a number that helps organizations set prices for their
products and increase their productivity and efficiency.
For year 2021,
Break Even Sales = (Total Fixed Cost for 2021* Total Sales for 2021) / (Total Sales for 2021 –
Total Variable Cost for 2021)
= (97974.6 * 193087.8) / (193087.8 – 89342.8)
 = 18917699969.88 / 103745
= 182348.0646

Margin of Safety = Actual Sales – Break Even Sales

= 193087.8 - 182348.0646
= 10739.7354

For year 2020,

Break Even Sales = (Total Fixed Cost for 2020* Total Sales for 2020) / (Total Sales for 2020 –
Total Variable Cost for 2020)
= (1197238.7 * 1280779.7) / (1280779.7 – 78684.4)
= 1533399023014.39 / 1202095.3
= 1275605.206

Margin of Safety = Actual Sales – Break Even Sales

= 1280779.7 – 1275605.206
= 5174.494

Year
2021 2020
193087.
Actual Sale 8 1280780
Break Even 182348.
Sale 1 1275605
Margin of 10739.7 5174.49
Safety 4 4

Break Even Point- Break-even point is a situation in which a company's revenue and
expenditure were equal during a period of calculation. It means that there was no net profit or no net
loss of the company.
For year 2021,

Break Even Point = (Total Fixed Cost of 2021) / (P/V Ratio of 2021)
= 97974.6 * 100 / 53.7294
= 182348.0758
For year 2020,

Break Even Point = (Total Fixed Cost of 2020) / (P/V Ratio of 2020)
= 1197238.7 * 100 / 93.8565
= 1275605.5254

Year
2021 2020
Break Even 182348. 127560
Point 1 5