1.

1 INTRODUCTION
Financial Analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relationship the items of Balance Sheet and the Profit and Loss Account. Financial Analysis can be undertaken by the management of the firm or by parties outside the firm via: Owners, creditors, Investors and others. The nature of analysis will differ depending on the purpose of the analyst. Trade creditors are interested in the firms ability to meet their claims over a very short period. Investors who have invested their money in the firms shares are most concerned about the firms earnings. Management of the firm would be interest in every aspect of financial analysis. It is their overall responsibility to see that the resources of the firm are used most effectively and efficiently that the firms financial condition in sound. The financial statement are prepared for the purpose of presenting a periodical review or report on the progress made by the concern and deal with the status of the investment in the business and results achieved during the accounting period. The aim of maintaining various records is to exhibit the various financial position of the business. Financial Statements, Income Statements and Statements are the outcome of the accounting process. The Financial Statements provide rich information about the operational results of a Business Unit and much can be learned from a careful examination of these statements. Financial Statements are prepared primary for decision making. Financial Analysis is the process of determining the significant operating and financial characteristic of a firm from accounting data. Financial Statement Analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statement and a study of the trends of these factors as shown in the series of statements. The technique of financial analysis is typically devoted to evaluate the past, current and project performance of a business firm. This project evaluates past performance, present financial position, liquidity position, enquire into profitability of the firm and to plan for future operations. This project included Ratio Analysis, Trend Analysis and correlation.

1.2 STATEMENT OF THE PROBLEM

HLL Life care Ltd is one of the companies that witnessed tremendous growth during the past many years. But the company has not been able to put up a consistent performance year after. This is the most important problem in the company. In addition to this, some other problems are faced by the company. As we know cash is the important current asset for the operations of the business. It also the basic input needed to keep the basic business running on a continuous basis. The company should keep sufficient cash. Cash shortage will disturb the companys manufacturing operations. Liquidity is the ability of the firm to meet its current liabilities as they fall due. Since liquidity is basic to continuous operations of the company it is necessary to determine the degree of liquidity of HLL Life care LTD, Peroorkada factory. The purpose of Profitability, Liquidity and Solvency analysis is to diagnose the information contained in financial statements so as to judge the profitability and the financial soundness of the firm.

1.3 REVIEW OF LITERATURE

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Study of liquidity on profitability helps for identifying the financial strengths and weaknesses by carefully analyzing the relationship between the items of financial statements and other accounting data. Financial statement analysis is the major step in financial performance analysis. It is the process of selection, relation and evaluation of accounting data available from financial statements and other sources of data. A number of books, journals, magazines and reports of the previous studies were referred for the purpose of getting a deep knowledge about the topics. Details regarding some of the previous studies are described below. In 1998, Renjith Paul C did a project study titled Financial Performance Analysis of Sun Earth ceramics Ltd vis a vis five major companies in the ceramics industry. The project work made an attempt compare the financial performance with emphasis on liquidity on profitability of Sun earth Ceramics Ltd vis a vis five mojor players in the industry. The other companies which were selected for the comparison were Bell Ceramics Ltd, Spartex Ceramics Ltd, Kajaria Ceramics Ltd,Murudeswar Ceramics Ltd and Somany Pilkington Ltd. The tools such as Ratio analysis and working capital cycle are mainly used in the analysis work. In the same year, Ciby Thomas did a study on the topic An analysis of Financial Statement of Excel Glasses Ltd. The study was aimed at assessing the companys liquidity position, leverage, activity and profitability of the company. The tools used in the study were Ratio analysis, Index analysis and common size statement analysis with the help of financial statements for the period 1992 to 1997.

In the year 2003, Renu N Nair did a study on the topic Financial Statement Analysis of Hindustan Life care Ltd. The study focused on ascertaining the profitability,

liquidity and solvency of Hindustan Latex Ltd and to study the financial position of the company. The Ratio analysis tools were used in the study. In the year 2009, Rajeena James did a project study titled Feasibility study on Financial Performance of Kinfra. The tools used in the study were Ratio Analysis, Trend analysis and Common size statements. In the year 2009, Sreelakshmi Gangadaran didi a study titled Liquidity on Profitability at HLL life care ltd. The tools used in the study were Ratio Analysis, Trend analysis and correlation.

1.4 OBJECTIVES

1. To study the liquidity position of HLL Life care Ltd, Peroorkada to meet its current liabilities. 2. To study the profitability position of the organization and its relationship with liquidity. 3. To get in touch with the over all financial activities of the Finance Department of HLL Life care ltd.

1.5 RESEARCH METHODOLOGY

The research methodology considered as the blue print of the study, it determines the strength, reliability and accuracy of the project. Methodology can be said as the methods used by researchers in selecting samples, sample size, data collection and different tools in data collection. The research methodology which I was used in HLL Life care Ltd at Peroorkada factory is briefly described below.

TYPES OF RESEARCH DESIGN

Types of research design which is used in this study are descriptive and analytical research.

SOURCES OF DATA
The different sources of data collection are PRIMARY SOURCE Primary data are collected through discussions and interviews with management personnels of various departments. The various sources of primary data collection are Self observation, conducting formal interviews with the Department Heads and other executives. An informal talk with the personnel in the organization is used in this study. SECONDARY SOURCE Secondary data for the study was collected from the official website of HLL Life care Limited. (www.lifecarehll.com). In addition to the information from the web site Annual reports of HLL Life care Limited, Internal newsletters, Company Records, Magazines, journals and Government publications are also used for the study.

1.6 DATA ANALYSIS TOOLS AND TECHNIQUES

Statistical tools used for the study are briefly described blow 1. Tools used for data collection The main tool used for data collection was the Annual Report of HLL Life care Ltd. In addition to this company journals and other magazines are used for data collection. 2. Tools used for analysis of data The tools used to analyze the data are Ratio analysis Comparative Statement Analysis Trend Analysis Correlation

3. Tools used for representing data The main tools used for representing data are Tables Diagrams (Bar) And Graphs

1.7 SCOPE OF THE STUDY

The scope of the study includes to understand the over all financial performance of HLL Life care Ltd. The major source of information for this study was Annual Reports of the company from the year 2006 to 2010. During this study I can also under stand the major functions of financial department and its relationship with other departments.

1.8 LIMITATIONS

As usual for any research study was also having certain limitations as mentioned below. Under this research the depth study was not possible because of the time limit. The various risks involved in raising the funds from different sources cant be determined. Collecting details from each and every department was not possible.

1.9 CHAPTERISATION
Chapter 1 deals with Introduction, objectives, scope, limitations etc of the company. Chapter II deals with Industry Profile. Chapter III deals with the Companys profile that includes the history of the company, its Mission and Vision, quality policy, certifications, awards and recognitions, Product profile and organization chart. Chapter IV deals with data analysis and interpretation. Chapter V deals with Findings, Conclusion and Suggestions of the study.

INDUSTRY PROFILE

India is one of the fastest growing countries in the world. The main problem faced by the country is growing population. The main policy adopted by the government to solve the problem is family planning and birth control. The term birth control includes all methods used to regulate or prevent the birth of children. Most of the people agree that some family limitations or spacing is desirable for good family and society. When people talk about birth control, they are usually referring to artificial methods, which include contraceptives, oral birth control pills and the use of condoms. Nowadays, the countries are looking towards the future keeping our social responsibilities in perspective and aiming to provide a wide range of contraceptive and high quality health care aids for meeting the expectations and demand of the global family. The contraceptive industry has been becoming highly competitive. With the enhanced focus worldwide on protected sex, distinctive sex in customer preference has been evident with more people using condoms as a prophylactic than a spacing method. This shift has been an important reason in repositioning of condoms worldwide as a pleasure enhancing and HIV protection device. HLL Life care Limited has repositioned the company, the company is leading Moods brand on pleasure enhancing platform. With multiple variant, the brand has been offering the choices needed for the most discerning consumers in the premium segment of condoms. With increased use of oral pills and rids for spacing the hormone based methods are getting high acceptance. With MNC pharmacy companies launching new generations hormone based contraceptive like nuvaring, ingestible, implant new progestins based OCPs, projective releasing ides etc. The choices for consumer and clinicians have increased the company intense to strengthen their R&D base and evolve partnership with other organization to enhance their competitiveness. With great support from ministry to health and family FILL has entered into a collaborative agreement with Beijing Zizhu pharmacy in China. Under this agreement FILL will launch a range of CDRI, Luck now for marketing of the contraceptive developed by them. Under this agreement FILL will be marketing consap contraceptive cream. With the right partnership and leveraging of competence in social and commercial marketing. The company will be able to emerge as a leading organization in the industry. The company has been operating in the highly 8

competitive hospital products industry. Supportive health care products like blood bags, hydrocephalus shunts, tissue expanders etc, have been developed by Indian labs for substituting the costlier imports. With the availability of local brands, the foreign competitors have reduced prices and few Indian companies have entered the fray enhancing competitive pressure has resulted in lowering margins. The company has broad based the product mix by offering various value added product like multiple blood collection bags blood filtered shunt accessories medical equipments this broadening of product mix has helped HLL Lifecare Limited in bundling precuts and creating effective solution for health care provides. History of condoms The use of condoms has been traced back several thousand years. It is believed that around 1000 BC the ancient Egyptians used a linen sheath for protection against disease. The syphilis epidemic that spread across Europe gave rise to the first published account of the condom. Gabrielle Fallopius described a sheath of linen he claimed to have invented to protect men against syphilis. Having been found useful for prevention of infection, it was only later that the usefulness of the condom for the prevention of pregnancy was recognised. Condoms made out of animal intestines began to be available. However, they were quite expensive and the unfortunate result was that they were often reused. Condom manufacturing was revolutionised by the discovery of rubber vulcanisation by Goodyear (founder of the tyre company) and Hancock. This meant that is was possible to mass produce rubber goods including condoms quickly and cheaply. Vulcanisation is a process, which turns the rubber into a strong elastic material. In 1957, the very first lubricated condom was launched in the UK by Durex. From the early 1960s, the use of condoms as a contraceptive device declined as the pill, the coil and sterilisation became more popular. The female condom has been available in Europe since 1992 and it was approved in 1993 by the US Food and Drug Administration (FDA).In more recent years, improved technology has enabled the thickness of the condom to decrease. Also, condom manufacturers have recognised that one size of condom does not fit all. You can now find condoms that are different shapes, widths and lengths.

Market and Growth Forces Worldwide, the condom industry is predicted to experience significant growth in the next 10 years. The number of users is expected to increase by more than 40 percent by 2015, to some 742 million, both from population growth and prevalence of use. The industry holds a lot of promise, not so much in the United States, but primarily in developing countries. An estimated 350 million couples around the world today still do not have access to modern methods of contraception. Whereas prevention of pregnancy is still a primary function of condom use, the driving force for growth continues to be prevention of disease. The total number of AIDS deaths between 1981 and the end of 2003 is now at approximately 20 million. Global Manufacturing Estimated worldwide condom production is currently slightly over 20 billion pieces annually. A few research firms have tried to estimate the current number of operating condom factories, and figures vary anywhere from 90 to 110 manufacturing plants operating globally. The majority of these plants manufacture only condoms made from natural rubber latex, and some also produce other latex products such as gloves, finger cots, and catheters. The majority of the plants therefore reside in locations where natural rubber latex plantations reside, and where labour costs are competitive. The production of condoms is much more labour intensive than that of glove manufacturing, because of more stringent testing needs, more complicated packaging, and significant product differentiation.

Present status of industry in the world Driven by the development of new generation, low dose, lower side effects, hormonal contraceptives, the world contraceptives market is projected to reach US $11.7 billion by 10

the year 2010. strong growth is expected to stem from developing countries where growing population, and rising incidences of STPs, and AIPS are causes of national concern. The significant role played by Govts in these countries in the form of establishing, and implementing social marketing programs is posed to benefit sales of contraceptives in the upcoming years. World contraceptives market stands enthused by the huge untapped potential in developing countries like China, and India. An estimated 50% of condoms sold are branded and available commercially while the remaining is distributed in developing countries under social marketing programs designed to promote safe sex. The growing cultural trend of postponing child bearing until later in life, is offering opportunities for the markets growth in both developed and developing countries alike. World market for contraceptive implants/ injections is forecast to grow the strongest in Asia Pacific over the period 2000 to 2015, to reach US $ 359.60million by the year 2015. world oral contraceptives market is dominated by the United States and Europe with a combined 75.82% share estimated in the year 2007. by the year 2015, America are forecasted to reach US $ 841.5million. Leading global and regional players operating in the industry Ansell Ltd, Barr pharmaceuticals Inc, Bayer Schering Pharma AG, Female Health company, Church & Dwight co. Inc, Schering Plough corporation organon USA Inc, SSL International PLC, Wyeth corporation, and Warner Chilcott, among others. Present Status of the Indian Industry

The major players in India apart from HLL are TTK groups (Kohinoor) brand, SSL International Durex brand, JK Ansells Kamasutra brand and polar Latex, sureted Prophylactics ( India) Limited, Indus Medicare etc. The total production capacity in India is around 2.5 billion. Kamasutra brand is in high demand in the market, which is followed by Moods of HLL.

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There are three segments for Indian condom market. 1. Free supply 2. Social market 3. Commercial market The future contraceptives market 2025 1. Steady growth of 2.5 billion customers. 2. Male hormonal contraceptives from 2010 3. Vaginal micro biocides in wide spread use 4. Several delivery forms of hormone contraceptives 5. Health benefits are strong selling points 6. The most user friendly methods will prosper. Competitors of HLL TTK Health care Ltd JK Chemicals Polar Latex Ltd

The following is the production capacity of major companies: HLL Life care Limited TTK Limited Polar Limited J K Ansell Sureted Prophylatics(India) Ltd Indus Medicare 1000 400 250 500 100 250

THEORATICAL PERSPECTIVE

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FINANCE Managing a firms finance is both an art and science. It requires not only a feel for the situation and analytical steel but also a thorough knowledge of the techniques and tools of financial analysis and the knowledge to apply them and interpret the results Finance is defined as the administrative function in an organization which relate with the arrangement of cash and credit to the organization to carry out its objectives as satisfactory as possible. Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establish relationships between the items of Balance sheet and the Profit and loss account. Every business enterprise whether large medium or small size needs finance to carry out its operations and to achieve its targets. Finance is rightly said to be the life blood of an enterprise. The main activities essential to the successful administration of finance in any organization consists of financial planning and control, determinant of business success, focal point of decision making, raising the needed funds, financial analysis and measure of performance. The future plan of any organization should be laid down in view of the organizations financial strength and weakness. Financial analysis is the starting point for making plans, before using any sophisticated forecasting and budgeting procedure. Analysis of past things should be of great value in improving the standards, techniques and procedures of financial control involved in the business activities. FINANCIAL MANAGEMENT Financial management is the effective and efficient utilization of financial resources, by erecting a balance among financial planning, procurement of funds through various sources, and that must be suitable and economical for the needs of the business. The three important managerial functions are investment asset mix decision, financing or capital mix decision and dividend or profit allocation decision. Erza Solomon the function of financial management is to review and control decisions to commit or recommit funds to new or on going uses. Thus in addition to raising of funds financial management is directly concerned with production, marketing and other functions with in an enterprise whether decisions are made about the acquisition or distribution of assets. 13

The raising of capital funds and using them for generating returns and paying returns to suppliers of funds are called the finance function of the firm. A firms success and even survival, its ability and willingness to maintain production and investment in fixed or working capital are to a very considerable extent determined by its financial policies both past and present- Irwin friend.

FINANCIAL STATEMENT 1. BALANCE SHEET It is a statement showing to all the assets owned by the firms and represents all the liabilities including the equities of owners and outsiders at a particular time. 2. PROFIT AND LOSS ACCOUNT It shows the operating results of a firm at a particular period between two balance sheet dates. FINANCIAL ANALYSIS Analysis is the critical examination of accounting information given in the financial statements. Financial analysis is the process of determining financial strengths and weakness of an organization of establishing the strategic relationship between the components of balance sheet and profit and loss account and the statement of change in the financial position. The information contained in the statements is used by management, creditors, investors and others to form judgment about the operating performance and financial position of the firm.

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OBJECTIVES OF THE FINANCIAL ANALYSIS Through the financial analysis we can seek answers to the following questions. 1. What sources of long terms finance are employed by the firm and what is the relationship between the firm? Is there any change to solvency of the firm due to the employment of excessive debt? 2. 3. Are the earnings of the firm adequate? Do investors consider the firm profitable and safe for the purpose of investing their in the shares of the firm? 4. 5. Is the firm in position to meet the current obligations? How efficiently does the firm uses its assets?

TOOLS OF FINANCIAL ANALYSIS 1. 2. 3. A. Ratio analysis Comparative statement / Schedule of changes in working capital Trend Analysis RATIO ANALYSIS A ratio is defined as the indicated quotient of two mathematical expressions and as the relationship between two or more things - Websters New Collegiate Dictionary. In financial analysis a ratio is used as an index or yard stick for evaluating the financial position. The relationship between two accounting figures expressed mathematically is known as financial ratio. A ratio helps the analyst to make qualitative judgment about the firms financial position and performance. Ratio indicates a quantitative relationship which is used to make a qualitative judgment. PROCEEDURE OF RATIO ANALYSIS

Step I

Selection of relevant data from the financial statement depending upon the objective of the analysis 15

Step II

Calculation of appropriate ratio from the above data

Step III

Comparison of the calculated ratios of the same firm in the past or the ratios developed from projected financial statement or the ratios of the some other firms

Step IV
Interpretation of ratios

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ADVANTAGES AND APPLICATION OF RATIO ANALYSIS 1. 2. Ratio analysis is of much help in financial forecasting and planning. The financial strength and weakness of a firm are communicated in a more

easy and understandable manner by use of ratios. 3. Ratio analysis helps in making decision from the information provided in

the financial statements. 4. Ratio analysis helps in making effective control of the business standard

ratios can be based upon proforma financial statements and variances or deviations if any. 5. Ratios even help in co-ordination which is of utmost importance in effective

business management. LIMITATIONS OF RATIO ANALYSIS 1. 2. 3. 4. 5. Ratios can sometimes be misleading. Interfirm comparison on the basis of ratio analysis is distorted. Ratios are only a preliminary step in interpretation. Ratio can never be substitute of raw figures. Price level changes make ratio analysis difficult.

CLASSIFICATION OF RATIOS Financial ratios may be grouped in to following classifications. 1. Liquidity-Ratios 2. Leverage Ratios 3. Activity Ratios

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4. Profitability Ratios All these ratios can be computed to analyse the working capital position the investment characteristics

Analysis of the working capital position is also termed as short term analysis. Analysis of the investment characteristics is also termed as long term analysis. Three well defined groups have a strong interest in analyzing the financial ratios of the firm. I. Management of the firm The creditors The investors

LIQUIDITY RATIOS Liquidity ratios are computed by relating the amount of cash and other current assets to current liabilities.

Different liquidity ratios are 1. Current Ratios = CurrentAsset Curren Liability Cuurent Asset Inventory CurrentLiabilies Cash Annual Purcase / 360 Days

2. Quick Ratios Or Acid test Ratio =

3. Cash to Average Daily Purchase Ratio =

4. Average payment period

Accountpayable Averagedailycreditpurchases

II.

LEVERAGE RATIOS These are called solvency Ratios 1. Debt to total Assets = Total debts Total Assets

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2.

Times

interest

Earned

Pr ofit before taxes + int erest ch arg es Interest charges 3. Fixed Charge Coverage

Income before fixed changes and taxes Fixed ch arg es

III.

ACTIVITY RATIOS
Measure the degrees of effectiveness in use of resources or funds by an enterprise. Sales Inventory Re ceivable Sales perday Sales Fixed Assets Sales Total assets

1. Inventory turnover ratio

2. Average collection period

3. Fixed Assets Turnover ratio =

4. Total Assets turnover

IV.

PROFITABILITY RATIOS
Measure the effectiveness and efficiency of the management of the firm.

GENERAL PROFITABILITY RATIO

1. Operating Ratio = = Operating cos t x100 Netsales

Cost of goods gold + operating exp enses X 100 Net Sales

Interpretation 19

Higher operating ratio the less favorable. It is because it would have a small margin to cover interest, income tax, dividend reserves. 2. Net Profit Ratio = Interpretation This ratio indicates the firms capacity to face adverse economic conditions. Higher the ratio, better is the profitability. 3. GROSS PROFIT RATIO General profit ratio measures the relationship of the gross profit to net sales Gross profit ratio = Gross profit x100 Net Sales Net profit after tax x100 Sales

Sales cos t of goods gold x100 sales

4. EXPENSES RATIO

Particular exp ense x100 Net sales

1. Selling and distribution expenses ratio

Seeling and distribution exp ense x100 Sales Non operating exp ense x100 Sales Cost of goods goldx100 Sales

2. Non operating expenses ratio =

3. Cost of goods gold ratio =

4. Administrative and office expense ratio = Interpretation Lower the ratio, the greater is the profitability and higher the ratio lower is the profitability. Selling and distribution exp ense x100 Sales

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V. OVER ALL PROFITABILITY RATIOS

1. Return on equity capital ROI Net profit after tax preferencedividend EquitySharecapital ( Paidupcapital )

To know the profits earned by company and those profits which can be made available to pay dividend. 2. Earning per share (EPS)

=
3.

Net profit after tax preference dividend No of equity shares

Dividends per share = DPS = Earning paid to share holders No of common share

4.

Dividend pay out Ratio

= Payout Ratio = Earning per share x100

Dividend per share

5.

Dividend yield =

Dividend per share Market value per share Earning per share Market value purchase

6.

Earning yield =

7.

ROCE return on capital employed

Net profit after taxes capital employed

Earning power Earning power = Return on investment Net profit after taxes Sales x Sales capitalemployed

=
B.

COMPARATIVE STATEMENT

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A simple method of tracing the periodic change in the financial performance of an organization is to prepare comparative statement. Changes- increases and decreases and items of income statement and balance sheet can be shown in two ways. 1. Aggregate changes 2. Relative or proportional changes The financial statements prepared in forms of common Base percentages are called Common size statement. This kind of analysis is called vertical analysis. C. TREND ANALYSIS In financial analysis the direction of change over a period of years is of crucial importance. Trend analysis of ratio indicates the direction of change. This kind of analysis is particularly applicable to the items of profit and loss account. The trends of sales and net income may be studied in the light of two factors: the rate of fixed expansion or secular trend in the growth of the business and general price level. For trend analysis the use of the index number is generally advocated. Assign the number 100 to items of the base year and to calculate the percentage change in each item of other years as relation to the base year. This procedure may be called a Trend percentage method D. CORRELATION Correlation refers to the relationship between any two or more variables. Two variables are said to be correlated if with a change in the value of one variable, there arises a change in the value of the other variable also. The statistical tool with the help of which the relationship between two or more than two variables is studied is called measures of correlation. Co-efficient of correlation is plural number lying between -1 and +1. When the correlation is negative, it lies between 0 and 1. When the coefficient of correlation is 0, it indicates that there is no correlation between the variables.

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COMPANY PROFILE

HLL Lifecare Limited (HLL) commenced its journey to serve the Nation in the area of healthcare, on 1st March 1966, with its incorporation as a corporate entity under the Ministry of Health and Family Welfare of the Government of India. HLL was set up in the natural rubber rich state of Kerala, for the production of male contraceptive sheaths for the National Family Welfare Programme. The company commenced its commercial operations on 5th April 1969 at Peroorkada in Thiruvananthapuram (formerly Trivandrum). The Plant was established in technical collaboration with M/s Okamoto Industries Inc. Japan. Two most modern Plants were added, one at Thiruvananthapuram and the other at Belgaum in 1985. Another Plant was added in the early nineties at Aakkulam in Thiruvananthapuram for the production of Blood Transfusion Bags, Copper T IUDs, Surgical Sutures and Hydrocephalus Shunt. HLL has grown today into a multi-product, multi-unit organization addressing various public health challenges facing humanity. HLL has been declared a Mini Ratna Company by the Government of India and upgraded as a Schedule B PSU. HLL Lifecare Limited is the only company in the world manufacturing and marketing the widest range of Contraceptives. It is unique in providing a range of Condoms, including Female Condoms, Intra Uterine Devices, Oral Contraceptive Pills - steroidal, non-steroidal and Emergency contraceptive pills; and Tubal Rings. HLL today produces 1.316 billion condoms making it one of the worlds leading manufacturers of condoms, accounting for nearly 10 percent of the global production capacity. HLLs Health care product range include: Blood Collection Bags, Surgical Sutures, Auto Disable Syringes, Vaccines, In - Vitro Diagnostic Test Kits, Pharma products for Women,

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Natural products, Hydrocephalus Shunt, Tissue Expanders, Surgical and Examination Gloves, Blood Banking equipment, Neonatal euipment, Blood Transfusion and Intravenous sets, Vending Machines, Iron and Folic Acid Tablets, Sanitary Napkins, Oral Rehydration Salts and Medicated Plasters. HLLs Blood Bags have been registered in Brazil and were launched here on 23rd June, 2006. HLL also launched its non-steroidal contraceptive pill under the brand name Ivyfemme in Peru on 15th October 2008. HLL has introduced Closed System Blood Bags that are integrated with Leukocyte Filter called LD Bags. These bags are intended for leuko-depletion immediately upon collection of blood from donors at blood banks. In collaboration with The Female Health Company (FHC), of US, HLL is marketing FC female condom in India. The female condom is the only female controlled prevention technology approved by the US FDA and the WHO. FC is distributed in over 100 countries around the world. HLL launched the nitrile female condom - Velvet in India on 17th Decembrer, 2007. Targeted at contemporary Indian women and new age couples, these superior quality nitrile condoms are women initiated contraception and come with dual protection against unwanted pregnancy and STDs, HIV/AIDS HLL has also launched several initiatives in the services sector for medical infrastructure development, diagnostic centres and procurement consultancy. These have been conceived to bring about a whole new realm of accessible, affordable healthcare delivery to every citizen. Over the years each of the initiatives taken up by HLL has been targeted towards making quality healthcare available at the doorstep of every family. Associate Institutions of HLL namely HLFPPT and LifeSpring Hospitals have ensured that healthcare delivery reaches the underserved and vulnerable populace, at an affordable cost.

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With a vast array of innovative products and social programmes to meet the nations health care needs, HLL Lifecare Limited (HLL) is firmly on track, with its vision of Innovating for Healthy Generations. Manufacturing Facilities HLL has today six state of the art manufacturing facilities. HLL commenced its commercial operations on April 5, 1969 at Peroorkada in Thiruvananthapuram in the state of Kerala. Together with the manufacturing facility at Peroorkada, HLL today has five state-of-the-art manufacturing facilities at: Kanagala near Belgaum (1985) - for contraceptives and pharmaceutical products; Akkulam in Thiruvananthapuram (1994) - for hospital products; Kakkanad in the Cochin Special Economic Zone (2004) - for female condoms and male condoms for export; and Manesar in Gurgaon (2007) - for rapid in-vitro diagnostic test kits. All these units have ISO 9001, ISO 14001- quality and environmental management system certifications. HLLs Peroorkada, Akkulam and Kanagala Plants have OHSAS 18001 Certification for efficient occupational health and safety management system. The testing laboratory for finished products at Peroorkada factory has NABL accreditation under ISO/EC 17025. Peroorkada Facility, Thiruvananthapuram ( PFT ): The manufacturing unit at Peroorkada was set up in 1969 in technical collaboration with M/s Okamoto Industries Inc. Japan. The plant has since undergone continuous modernisation over the years and has an annual production capacity of 1066 million pieces of condoms. The facility is equipped with modern machines and equipment for production, inspection and quality testing, conforming to GMP and meets international standards. The unit produces many variants of condoms with different flavours and textures. Condoms manufactured in this facility have product certifications such as, CE, KITE, SABS, NF Mark, and meet a range of international quality specifications and standards such as: WHO 2003, ISO 4074:2002, SANS ISO 4074, ASTM D 3492, and GOST- 4645-81. The facility has certifications under ISO 9001, ISO 13485, WHO GMP, OHSAS and ISO 14001.

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Akkulam Facility, Thiruvananthapuram ( AFT ): AFT is a modern state-of-the-art facility for manufacture of Blood Bags and other medical devices namely IUDs (Intra Uterine Devices), Surgical Sutures, Hydrocephalus Shunts, Tissue Expanders and Tubal Rings. The manufacturing facility is centrally air - conditioned and has class 10000 and class 100 clean areas. The facility is certified for conformity with ISO 9001, WHO GMP, ISO 13485, OHSAS 18001 and ISO 14001. The annual production from this unit is: Blood Bags 11.5 million pieces, Copper IUD 5.5 million pieces, Shunts -5,000 pieces, Tissue Expander - 2000 pieces, Surgical sutures 1,25,000 dozens and Tubal Ring 2.5 million pairs. The products from this unit carry the CE Mark. Kanagala Facility, Belgaum ( KFB ): The Kanagala plant in Belgaum, Karnataka commenced its operation with production of condoms in 1985 using Japanese technology. This unit underwent diversification in 1992 with the tabletting facility for birth control pills - Mala-D/N and the formulation and tabletting of Saheli (centchroman) the indigenous, non-steroidal once-a-week pill. The tabletting of Emergency Contraceptive pills was started in 2003. Manufacturing facility for centchroman bulkdrug was added in 2004. In 2006, commercial manufacturing of women healthcare products was commenced. The manufacturing unit has GMP as well as ISO 9001, ISO 13485, ISO 14001 and OHSAS 18001 certifications. Kakkanad Facility, Cochin ( KFC ): HLLs female condom manufacturing facility at Cochin Special Economic Zone, Kakkanad, has been set up in technical collaboration with M/s. Female Health Company (FHC), US. The female condom manufactured at KFC is the second generation of female condoms made from synthetic nitrile latex, the product generically being termed FC2. The installed capacity of the plant is 7 million pcs of FC2 per year. In addition, KFC has a fully automatic testing and packing facility for male condoms with an annual capacity of 150 mln. pcs per year. This facility mainly caters to the export market. KFC has the ISO 9001:2000, ISO 13485 and WHO GMP certification for manufacturing and sale of female condoms (FC2).

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Manesar Facility, Gurgaon(

MFG ): HLLs in-vitro immuno diagnostics kit

manufacturing facility at Manesar, Gurgaon, Haryana has an installed capacity to manufacture 26 million rapid pregnancy test kits per year on single shift operation. The unit commenced its operations in November 2007. The unit manufactures rapid test kits for detection of metabolic hormones such as human chorionic gonadotropin (hCG) in urine and prognosis of diseases such as dengue, malaria(different strains), kala-a-zar (leishmaniasis), TB, chikungunya and other infectious diseases. Indore Facility, Indore (MFI): HLLs Indore facility commenced operation in April 2010 in the Industrial area in the commercial capital of MP. The Plant is a formulation facility for the production of a range of pharma products including Tablets, Capsules and ORS. Technology and Innovations Since inception, HLL has been constantly innovating to create novel products with the help of modern technology, so that the benefits of modern healthcare can transform everyday lives of the common man. Over the years, every product of HLL, created through constant Research and Development has aimed at making world-class healthcare available to the society at large. HLL has successfully commercialised indigenous technologies developed by premier research institutions such as Sree Chitra Tirunal Institute of Medical Sciences and Technology, Thiruvananthapuram and the Central Drug Research Institute, Lucknow. This ability to assimilate innovative technology has enabled HLL to produce cost-effective and high quality medical devices, drugs and contraceptives. Through several collaborations with world leaders in technology, HLL now has state-of-the-art facilities to manufacture world-class healthcare products and make them available to millions worldwide. Global Outlook With the changing socio-political climate, global health programmes are constantly seeking diverse solutions in the area of medicine and healthcare. HLL provides the perfect answer to many questions that the world faces in healthcare, thanks to its extensive experience,

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innovative technologies and ample resources. The innovative products and services of HLL today reach over 115 countries spanning the seven continents. Its consultancy services and products are part of the global healthcare packages of international agencies such as UNPFA, UNOPS, UNHCR, WHO, PSI and IDA. Marketing Over the past two decades, HLL has steadily set up a strong and sound infrastructure for direct marketing. HLL has put in place a vast distribution network covering the length and breadth of the country. HLLs products today reach over 200000 retail outlets, covering 3500 hospitals, reaching over 30000 medical professionals, with over 2800 stock points, has over 700 frontline team members placed in every town, with offices in all metros and mini metros, and reaching over one lakh villages in the remotest corners of the nation. It is the leading social marketing organization in the country in the area of contraceptives with a market share of over 65 percent in the rural and semi urban markets, including in the highly populated states of UP, Madhya Pradesh, Bihar etc. HLL has made vast inroads in the commercial segment too, with the growth in its market share from 0.1 percent in the nineties to 15 percent at present. HLLs products are today exported to over 115 countries. New Business Areas HLL has ventured into the area of Vaccines to take on the challenge posed by communicable diseases, which are responsible for a significant share of the global burden of diseases, particularly in developing nations. The need to have affordable high quality vaccines for preventing communicable diseases is a public health priority in India particularly for the underprivileged sections of society. With this objective in view, HLL introduced Hivac B: a recombinant vaccine for Hepatitis B and Tyfex: a highly purified VI Capsular Polysccharide vaccine for Typhoid, and recently Hilrab the human rabies vaccine.

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The Ministry of Health and Family Welfare handed over to HLL in 2008, 430 acres of land at Chengalpet, near Chennai in Tamil Nadu, for its proposed Integrated Vaccine Project - a project of national importance and the MediPark - an exclusive industrial park for the development of medical technology products and the Auto-Disable Syringe plant. Innovative technologies, expertise and highly qualified and skilled manpower are the main pillars, which enable HLL to offer perfect solutions to many problems that the world faces in healthcare. HLL started the LifeSpring Hospital Chain as an initiative for creating access to good quality and affordable maternal and child care, for the low income population. The first LifeSpring Hospital was launched at Hyderabad in December 2005 and also at Kanpur and at Agra in UP. HLL and Acumen Fund, a nonprofit venture philanthropy fund based in the US formed on 18th March, 2008, LifeSpring Hospitals (Pvt.) Ltd. - a joint venture intended to create a chain of small hospitals (20-25 beds) focused on providing low-income clients in the country, widespread access to maternal and child health care services. The company, a 50/50 equity partnership between HLL and Acumen, has already opened five hospitals in 2008 and plans to open thirty across India by the end of 2010 and scale to 140 franchised hospitals between 2010 and 2012. This is a unique social franchising LifeSpring charges range between 30-50% of the prevailing market rates, and will significantly reduce the burden of rising health costs on the nations low-income communities, helping to reduce poverty. LifeSpring Hospitals offers the following key services: antenatal care, postnatal care, deliveries (normal and caesarean), family planning services and medical termination of pregnancy, pediatric care, including immunizations, as well as diagnostic services, a pharmacy, and health care education to the communities in which it works Infrastructure Development Division of HLL is a premier consultancy organisation for development of medical and allied infrastructure facilities. Medical infrastructure projects being executed by HLL include the upgradation of Medical Colleges at Thiruvananthapuram, Bangalore, Salem, Madurai, Rohtak, Nagpur and Aligarh under the Pradhana Mantri Swasthya Suraksha Yojana (PMSSY). Also, HLL is upgrading the

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JIPMER Institute at Puducherry and is the in-house consultant to Government of India for setting up six AIIMS - like institutes at Bhopal, Bhubaneshwar, Jodhpur, Patna, Raipur and Rishikesh. The medical infrastructure development projects handled by HLL today totals over Rs. 45000 million ($1000 million). HLL Procurement and consultancy services Division provides consultancy services to Government of India, State Governments and other institutions for procuring a range of healthcare and hospital products, equipment and services. It is designated as a National Procurement Support Agency (NPSA). With a team of highly qualified and experienced professionals, it has proven expertise to undertake consultancy assignments including bid process management, procurement of goods and stores, as well as project planning and monitoring. Procurement and Consultancy Services Division has ISO 9001 Certification. Hindlabs, a novel initiative delivers high-end diagnostic services adding value to partner hospitals by deploying the latest diagnostic technology and operational support. The objective is to deliver quality services at affordable costs for the common people. Hindlabs provides professional lab management services for both in-vitro diagnostics and radio diagnosis centres in hospitals. HLL has set up a most modern diagnostic center at the CGHS Dispensary at New Delhi and is also operating three 1.5 Tesla MRI Scan Centres at the Thrissur, Alapuzha and Kottayam Medical Colleges in Kerala. A whole range of women healthcare products have been introduced by HLLs Women Healthcare Division (WHD), with a promise to provide total healthcare for women of all ages - addressing their social, mental and physical well being. WHDs product basket includes - Contraceptives, Ovulation Inducers, Antiemetics, Menstrual Cycle Regulators, Antifibrinolytics, MTP Pills, Pregnancy Test Kits, Natural Products and Vaccines. It has a strong distribution network, reaching out to over 13000 gynaecologists across the country. HLL has forayed into Natural Products for human wellness, in the area of women healthcare, health generics, symptomatic relief, neutraceuticals and personal healthcare, in the Indian market. At present HLL is partnering with the renowned ayurvedic institution of Kerala Kottakkal Arya Vaidya Sala (AVS), to introduce a range of ayurvedic products in

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the domestic and international markets. HLL has since introduced Lactohil an ayurvedic galactagogue that also serves a s health tonic for lactating mothers and Herbs and Berries Chyavanules Chyawanaprash in granular form. HLL has commenced manufacture and distribution of Nishchay Rapid Diagnostic Test kits for the detection of Pregnancy in markets all over the country, from its manufacturing facility at Manesar in Haryana. HLL plans to introduce in the near future Diagnostic kits for the detection of Malaria and Dengue fever and Chikungunya. The overall objective is to effectively bring down the infant/maternity mortality rate, and Malaria and Dengue mortality reduction. Research and Development From Blood Transfusion Bags to Hydrocephalus Shunts, to once-a-week Non Steroidal Oral Contraceptive Pill, to several variants of condoms, every product from HLL is a result of innovation. The last four decades have seen HLL tie up with various scientific and academic institutions of excellence, for developing new and novel healthcare products. Today R & D Centre of HLL has several projects in hand, both in-house and collaborative, with premier academic and research institutions in the country and abroad, viz:- Indian Institute of Technology (IIT), Kanpur; Central Drug Research Institute (CDRI), Lucknow; Sree Chitra Tirunal Institute of Medical Sciences & Technology (SCTIMST), Thiruvananthapuram; Regional Cancer Centre (RCC), Thiruvananthapuram and Population Council, USA. These projects cover a wide area of research ranging from development of novel techniques for drug delivery to blood filters to novel contraceptives and cancer care devices. Based on its technological competency, the R&D centre is implementing sponsored projects from organizations. With the objective of developing new and novel healthcare products, HLL aims to translate the laboratory scale technologies available at premier research institutes, to a commercial scale. As a first_step towards this, HLL has set up a Technology Business Incubation Centre (TBIC) at Rajiv Gandhi Centre for Biotechnology (RGCB), Thiruvananthapuram. The immediate_goal of the TBIC would be to develop novel, fast and easy to use

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diagnostic methodologies for various infectious diseases. This would further be extended to the development of new healthcare products. HLL is in the process of setting up a full-fledged world-class R&D Centre in Thiruvananthapuram, to develop innovative products in the area of Reproductive and Contraceptive Research, Devices and Immunobiologicals.

HLLs Partners In its search for becoming a truly world-class provider of healthcare products and services, HLL has been seeking to adapt knowledge from its partners. HLL has over the years been networking with various corporate organizations, development agencies and NGOs by combining strengths and capabilities of several world leaders. Some of them are listed below: Okamoto Industries Inc. for male condoms. Female Health Company (FHC) for manufacture of Female Condoms and its promotion in Asia. Finishing Enterprises, USA for Copper T IUD. Helm, Germany for distribution of DMPA (Depot Medroxyprogesterone Acetate) in India. Arya Vaidya Sala (AVS), Kottakkal, Kerala, for Ayurvedic products. Bharat Biotech International Ltd. for Hepatitis B and Typhoid vaccines. Chengdu Institute of Biological Products for supply of JE Vaccines to Government of India. Cheng Da Biotechnology (CDBIO) for marketing of Human Anti-Rabies Vaccine in India. Cycle Technologies Inc., USA for manufacture and distribution of Cycle Beads in India and abroad.

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More than 300 NGOs for implementing population stabilisation and HIV/AIDS prevention and control programmes.

MISSION OF THE COMPANY To accomplish the Corporate Vision, HLL Lifecare Limited has outlined a Mission to be a World Class Health Care Company by the year 2010, with focus on five key areas, namely

Business Customer Innovation Employee Social Sector initiatives. and global levels of operations with cost

Business Leadership Attain rapid growth competitiveness. Be among the top three players in each main product category. Become the organization to be benchmarked with. Become an acknowledged and admired leader at industry forums.

Customer Focus Focus on quality and customer delight at all time

Innovation Establish core competence through a process of learning and innovation. Create a culture of continuous innovation resulting in at least 10% of turnover from Research and Development initiative.

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Employee Satisfaction Strive to be the employer of choice in India with employee satisfaction levels of over 90%. Social Sector Initiatives Be recognized as the leading social organization in the field of reproductive and Women's Health, with a commitment to the society - a partner of choice for implementing all government and multi-lateral initiatives in these segments areas to achieve its vision. These are - customers, employees, business, industry, and social initiatives. VISION OF THE COMPANY HLL Lifecare Limited will establish itself as the Leader in its core activities, through a process of continuous innovation and participatory approach in order to Provide best value to the customer. Be an employer of choice. Promote the cause of family health in general, and women's health in particular. ORGANIZATIONAL POLICIES HLL Lifecare Limited is committed to: Provide products and services, conforming to international standards in the health care area to the complete satisfaction of all customers and for building healthy generations. Achieve a high standard of personal, corporate and business excellence through continual improvement, human resource development and teamwork. Market the products and services of the company globally on the strength of innovation, quality, cost and delivery. Meet all statutory & regulatory requirements and be an organization with Good Corporate Governance and Corporate Social Responsibility.

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HLL Lifecare Limited committed to quality by mandating that all manufacturing facilities are certified to a quality system standard.

SAFETY, HEALTH AND ENVIRONMENT (SHE) POLICY

Protect environment, prevent pollution and eliminate occupational health and safety risks through continuous monitoring and control of the impact of its activities, products or services on a continual basis. Comply with all legal and other requirements, with respect to the organizations activities. Encourage concern and respect for the environment, health and safety of employees and subcontractors and adopt appropriate operating practices and training for the same. Set measurable objectives for continual improvement. Conserve raw materials, energy & reduce waste at source. Extend all support to agencies for creating awareness regarding good environment, health and safety policy to the public. SHE Management System Certifications HLL Lifecare Limited believes that preserving natural resources and protecting the environment is their responsibility to their employees, their customers and the communities in which they operate. They are also committed to health and safety of their employees and as part of this responsibility they have developed and are maintaining excellent environmental, health, and safety management systems that meet the requirements of ISO 14001 & OHSAS 18001.

Major Events in the area of Health Care

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In partnership with Becton and Dickinson (BD) one of the worlds leading Health Care companies, HLL recently introduced Bsure reuse prevention syringe for use in the curative segment. This is a major step to address the public health challenge facing the nation. The Bsure syringe employs a unique plunger breaking mechanism that is clinician activated, to eliminate any possible reuse of the syringe. HLL had also earlier introduced the Autolok- auto destructive syringe, for the national immunization programme. HLL has teamed up with M/s Gambro BCT - a Swedish Company, a global leader in automated blood collection technologies, therapeutic aphaeresis, and leukaphaeresis, for cell therapy applications. HLL is marketing their Blood Component Therapy Aphaeresis Systems in India. The Aakkulam Unit of HLL has recorded outstanding performance for the year 2006-07. The Unit manufactured a record 5.5 M Pcs. of Blood Transfusion Bags during the past year. The Unit also produces Surgical Sutures, Copper Ts, Tubal Rings, Hydrocephalus Shunts and Tissue Expanders. HLLs Blood Bags have been registered in Brazil and these were launched here on 23rd June, 2006. HLL has also introduced Closed System Blood Bags that are integrated with Leukocyte Filter - called LD Bags. These bags are intended for leuko-depletion immediately upon collection of blood from donors at blood banks. In the area of the Female Condom, HLL has entered into an agreement with The Female Health Company (FHC), a US company, to market their primary product - FC female condom in India. FHC is the manufacturer of FC female condom, the only female controlled prevention technology approved by the US FDA and the WHO. FC is distributed in over 100 countries around the world. HLL is in talks with FHC, for a possible transfer of technology to enable production of FC Female Condoms in the country. HLL launched on 17th Decembrer, 2007 Velvet - the new condom for women in India. Targeted at contemporary Indian women and new age couples, this risk free condom

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ensures full protection during sexual intercourse. Velvet is made of a special material called nitrile, which is thinner and stronger than the male condom, making it more reliable during usage. These superior quality nitrile condoms are women initiated contraception and come with dual protection against unwanted pregnancy and STDs, HIV/AIDS.

New Business Vaccines Life spring Hospital Network In Vitro Diagnostic Test kits Hind Labs Diagnostic centre Medipark

HLL has ventured into the area of Vaccines to take on the challenge posed by communicable diseases, which are responsible for a significant share of the global burden of diseases, particularly in developing nations. The need to have affordable high quality vaccines for preventing communicable diseases is a public health priority in India. The company has initially launched the marketing of Hepatitis B and Typhoid Vaccines. The Ministry of Health and Family Welfare handed over to HLL on 11th January 2008, nearly 300 acres of land at Chengalpet, near Chennai in Tamil Nadu, for its proposed Medical Equipment Park and Vaccine Project. The MediPark is envisaged to be an integrated manufacturing facility complex of international standards in the field of healthcare and shall comprise of manufacturing industries for medical diagnostics, equipments, disposables and devices. The complex will also house an incubation centre. HLL started the LifeSpring Hospital Chain to provide cost effective quality care, particularly in the area of reproductive health for the low income population. The first LifeSpring Hospital was launched at Hyderabad in December 2005 and also at Kanpur and at Agra in UP.

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HLL and Acumen Fund, a nonprofit venture philanthropy fund based in the US formed on 18th March, 2008, LifeSpring Hospitals (Pvt.) Ltd. - a joint venture intended to create a chain of small hospitals (20-25 beds) focused on providing low-income clients in the country widespread access to maternal and child health care services. The company, a 50/50 equity partnership between HLL and Acumen, will support LifeSprings plan to open five hospitals in 2008 and thirty across India by the end of 2010 and scale to 140 franchised hospitals between 2010 and 2012. This is a unique social franchising initiative for creating access to good quality reproductive health services to poor people, at affordable prices. LifeSpring charges range between 30-50% of the prevailing market rates, and will significantly reduce the burden of rising health costs on the nations low-income communities, helping to reduce poverty. LifeSpring Hospitals will offer the following key services: antenatal care, postnatal care, deliveries (normal and caesarean), family planning services and medical termination of pregnancy, pediatric care, including immunizations, as well as diagnostic services, a pharmacy, and health care education to the communities in which it works Procurement and Consultancy Services Division of HLL Lifecare Limited handles the procurement of Drugs, Chemicals, Medical Equipments and other health sector goods for its clients at a pre-decided commission rate agreed upon by both HLL and the client through a written contract. Currently HLL (P & CD) is handling the procurement of different Central Government Agencies such as NACO, NVBDCP and MCD. P & CD of HLL also procures medical equipments for several medical colleges all over India under the PMSSY Scheme on behalf of the Ministry of Health and Family Welfare, Government of India. This division also provides procurement and consultancy services for HLFPPT and HLLs Pregnancy kit Manufacturing Factory at Manesar (MFG). The import of JE Vaccines from Chengdu Institute of Biologicals, China for and on behalf of Ministry is also coordinated by the P&CD of HLL Lifecare Limited. Infrastructure Division (ID) of HLL Lifecare Limited . is the in-house consultant to the Ministry of Health & Family Welfare, Govt. of India for up-gradation of Medical Colleges at Bangalore, Salem & Trivandrum under Pradhan Mantri Swasthya Suraksha

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Yojna(PMSSY) and also for six AIIMS like hospitals at Bhopal, Bhubaneswar, Jodhpur, Patna, Raipur & Rishikesh. ID of HLL is also the consultant to MOH&FW for upgradation of JIPMER, Pondicherry. HLL set up last year, a dedicated Womens Health Care Pharma Division to cater to the reproductive Health Care needs of women - covering all age groups. The initial focus of the division will be the Gynaec segment, the products of which will be promoted through Doctors. All products for this Division are being manufactured at HLLs Kanagala Plant, near Belgaum in Karnataka. The product range will cover all sectors of womens health viz., autoimmune diseases, gynaecological infections and sexually transmitted diseases, hormone-related disorders (including menopause, contraception and sexual dysfunction), osteoporosis, cancer, and urinary bladder disorders. HLL has commenced manufacture and distribution of Nishchay Rapid Diagnostic Test kits for the detection of Pregnancy in markets all over the country. At the first instance HLL is manufacturing and supplying 22 million Pregnancy Test Kits from its manufacturing facility at Manesar in Haryana. The product will be distributed to the various sub centers, PHC, CHC, taluk hospitals, district hospitals, General Hospitals, speciality hospitals etc. in various states in the country. HLL also plans to introduce in the near future Diagnostic kits for the detection of Malaria and Dengue fever and Chikungunya. The overall objective is to effectively bring down the infant/maternity mortality rate, and Malaria and Dengue mortality reduction. HLL launched on 9th February, 2008 at New Delhi, HINDLABS - its first Diagnostic centre in the country, a Public Private partnership venture with the CGHS (Central Government Health Scheme). This most modern Lab facility which was inaugurated by the Union Minister for Health and Family Welfare Dr. Anbumani Ramadoss, will deliver reliable, accurate and quality diagnostic services to the CGHS beneficiaries at CGHS rates. The same services will be provided to patients outside the CGHS too at affordable rates. The plan ahead is to establish Diagnostic Centres for the CGHS, in the National Capital Region (NCR) and in 23 major cities of India covering over 110 hospitals.

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Corporate Social Responsibility HLL, India's leading manufacturers and marketers of Contraceptives, Health Care and Pharma Products, is today on the path of rapid growth. HLL has set its sights to be a Rs 1000 crore company by the year 2010. But apart from increasing the figures in its balance sheet the company is also involved in various Corporate Social Responsibilities which have helped people enrich their lives in one way or the other. The CSR Poicy of HLL is to- Be a socially responsible corporate entity with thrust on three pillars of sustainable development-Social, Environmental & Economic. The various community initiatives by HLL over the past two years are: Health: The Company initiated a massive cleanliness drive in various parts of the city along with the Corporation of Trivandrum and Habitat to face the challenge posed by the spread of vector borne vector borne diseases in the city and neighborhood. HLL is also assisting in the modernization of the Peroorkada General Hospital that serves a vast segment of the citys population. It has also conducted free diabetic medical camp by renowned diabetician Dr. Jyothidev Kesavdev for people living near the Akkulam factory, a few kms from the Trivandrum Medical College,. To ensure proper sanitation and cleanliness at the Anganwadi opposite to the Akkulam Factory, the company constructed and donated toilets for them. Blood donation -Employees of HLL have been participating regularly in blood donation camps. Also, most of the company employees have given their consent for donating eyes after their death. The forms were handed over to the National organization for the Blind.

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Family wellbeing: The Company has contributed to provide pucca houses to the poor families, whose homes were in a dilapidated state in the vicinity of the HLL factory at Peroorkada. HLL made arrangements to distribute drinking water in Kanagala village near its factory at Kanagala in Belgaum District, and uniforms and other assistance for the school going kids in the village. Cultural, Educational, Sports initiatives: The company has been extending financial assistance to various educational, cultural, social and sports organizations for their various activities all over the state. In this area priority has been accorded to activities of students of the states school and colleges for organising their various educational events/seminars and cultural. .

The company has been providing assistance for poor students in Govt. run schools for obtaining uniforms, note books etc. HLL has also been providing assistance for the noon meal scheme for students of the Govt. UP School at Peroorkada. The company has also provided computers, furniture and uniforms for various schools in the city. Computers were provided to the Mahilamandiram UP School, Trivandrum, Govt. L.P. School, Mangad, Trivandrum and Anandamarg LP School, Trivandrum.. It has also helped in providing the furniture for the computer labs in Govt. Girls High School, Peroorkada and Govt. UP School at Peroorkada, Govt. L.P.School, Mangad, and Govt. UP School, Palkulangara. The company also assisted the Sisu Vihar UP School, Trivandrum and the Govt. UP School at Elamad at Kollam for acquiring books for their Library. Infrastructure Development: As a corporate responsibility, HLL has renovated the Kowdiar Park - a major Park in the heart of the city, in front of the Kowdiar Palace at Thiruvananthapuram. The company also

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added recreational facilities for Children at the Childrens Park, adjoining this Park. The park is today a major attraction for the citizens of the city who converge here in vast numbers. Other Initiatives There is a Govt. Mental Health centre very close to the factory of the company at Peroorkada, with hundreds of inmates. The company has provided a bread-baking unit for the centre at a cost of around Rs.1.35 lakhs. The employees of the company provide breakfast and arranges for feast to the inmates during Onam, the main festival of Kerala.The company has also provided job opportunities to local people while engaging contract works in the Factory.Employees also provide new clothes to the inmates at the Mental Health centre during Onam. Also, with HLLs support, a voluntary association (VALSALYA) has been set up by the company employees, to undertake the social activities in the vicinity of the Peroorkada Plant. The Company accorded assistance of over 3 lakhs to two children Benson and Bensy, affected by AIDS who lost their parents, for their medicines and care. Hindustan Latex Family Planning Promotion Trust (HLFPPT) a not for profit organization promoted by HLL has been supporting implementation of population stabilization and HIV AIDS prevention and care programme in partnership with international development agencies, state governments and MOHFW. HLFPPT has been pioneering implementation of social marketing programmes for enchancing the access and demand for condoms, oral contraceptive pills and other health products. Internal CSR Several Employee related activities are being undertaken at the Plant and in the offices aimed at emotional, motivational, skill development and empowement of employees. Some of these activities were: Counselling for personal as well as emotional problems affecting work.

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 Visit the Family of absentee employee to understand their problems and counseling. Employees are given all assistance including financial support to acquire higher qualifications, an area of empowerment which would enable them to go up the ladder in the company as well improve their knowledge and confidence levels. Extending career guidance to employees children and organizing summer camps for their personality development and other skills. Have set up a Yoga and Meditation Centre for the employees to handle their stress related problems and also a well equipped Health Centre. Initiated a social forestry programme - for tree plantation in the factory premises by retiring employees

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PRODUCT PROFILE Today HLL product range includes Condoms Oral Contraceptive Pills Intra Uterine Devices Oral Re-hydration Salts Iron and Folic Acid Medicated Plaster Blood Collection Bags Sutures Hi - Tec Hydrocephalus Shunts Needle Destroyer Blood Collection Monitor Blood Transfusion and Intravenous Set Tissue Expander Blood Bag Tube Sealer Mediguard Surgical Glove

The above mentioned product can be divided under three heads Contraceptive Aids Condoms Copper Ts Oral Contraceptive Pills (saheli) Mala D and Preventable Emergency Contraceptive Pills Healthcare Aids Hydrocephalus Shunts Surgical Sutures

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Surgical and Examination Gloves Blood Transfusion Bag Social market products Ferros plus iron and folic acid tablets Jal jeevan oral re-hydration salts Plast aid medicate plaster Products that come under Export Business unit Condoms Oral contraceptive pills Emergency contraception Blood collection bags Surgical sutures Gloves

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FINANCE DEPARTMENT AT HLL LIFECARE LIMITED

At HLL Life care Ltd, senior officers of finance department are responsible for taking major decisions on raising and allocating financial resources, framing policies regarding management of working capital etc. The Executive Director heads this department. The finance department deals with the receipts and payments of cash, thus resulting in the smooth functioning of the companys business activities. Financial management is that managerial activity which is concerned with the planning and controlling of the firms financial resources. Thus we can say that finance is the life blood of business. The different sections in the department are: Ledger section Party bills section Payroll section Cash and computer section Internal audit section Costing and finalization of accounts

1. Ledger section Ledger section deals with functions such as: Passing and settling of all miscellaneous advances Passing and settling of freight advances Passing and settling of local purchases Passing and settling of personal accident claims of all employees All works connected with sales All works connected with insurance coverage of fixed assets

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 Passing of bills related to telephone, electricity, water charge, etc. Attending sales tax assessment of the unit with the sales tax office Excise duty statement preparation Scrutinizing of all journal vouchers connected with ledger, party bills, payroll, costing Section 2. Party Bill Section This section deals with service bills for rendering services such as telephone, typewriter, computer, etc. Service bills are usually of a contract nature with respect to work order supplied. The accounts department certifies the bills and prepares payment accordingly. This department prepares the vouchers for the above and these vouchers are sent to the cash department for drawing cash. A separate file is maintained for every supplier. In case of an extra item supplied by the supplier, purchase department sends an amendment order to finance department. Bills are prepared accordingly and a copy is also sent to store section. If the supply is less than the order placed, no payment is made unless fully quantity of material is supplied. The types of payment made to suppliers are: Advance payment Payment against credit Payment through bank

3. Payroll, Cash and Computer Sections These sections deal with salary computation with respect to attendance, overtime work, leave and recoveries. Vouchers are sanctioned and cash/cheque is issued from the cash section. Salary details are obtained from computer with gross and net amounts. Salary account is prepared every month. Advance amount given to employees are recovered from the following months salary. Allowances like festival allowance, house rent allowance, medical allowance, dearness allowances etc. are given to employees. 4. Internal Audit Section The following are the major functions of this section:

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 Scrutinizing personal files of all employees of the unit relating to annual increment, promotion, transfer etc. Scrutinizing all purchase proposals, comparative statements, etc. connected with supply order and purchases Scrutinizing pay fixation statements, arrears pertaining to pay provision and other connected work of all employees. Scrutinizing several specific cases apart from the above wor as directed by top authority. 5. Costing Section Costing section deals with the preparation of quarterly financial reports, monthly profitability reports, budget, bank statements, etc. Profitability trend & wage analysis is done on the basis of monthly reports. 6. Finalization of Accounts This section co-ordinates and assists in the preparation of the final accounts of the company. It also assists the statutory auditors of the company.

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COMPARATIVE BALANCESHEET Comparative Balance Sheet of HLL Life care Ltd

For the year ending 31st March 2009 and 2010 2009 ASSETS Current assets: Inventories Sundry debtors Cash & Bank Balance Other Current assets Loans & Advances Total Current Assets Fixed Assets: Fixed Asset Capital work in progress Investments Total Fixed Assets Total Assets LIABILITIES & CAPITAL 7289.69 3541.53 506.7 11337.92 39641.82 12248.64 230.41 785.42 13264.47 39233.35 4958.95 -3311.12 278.72 1926.55 -408.47 68.03 -93.49 55.01 16.99 -1.03 6130.51 13235.8 5504.47 373.62 3059.5 28303.9 5312 11776.75 3981.92 1912.59 2985.62 25968.88 -818.51 -1459.05 -1522.55 1538.97 -73.88 -2335.02 -13.35 -11.02 -27.66 411.91 -2.41 -8.25 2010 Amount RS Percentage %

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Current Liabilities: Current Liabilities Provisions Total Current Liabilities Share Capital Reserve & Surplus loan Funds secure loan unsecured loan Total long term obligations Total Liabilities 9469.17 143.36 22416.02 39641.82 8771.72 327.58 23123.55 39233.35 -697.45 184.22 707.53 -408.47 -7.36 128.50 3.16 -1.03 16554.99 670.81 17225.8 1553.5 11249.99 15370.2 739.6 16109.8 1553.5 12470.75 1220.76 -1184.79 68.79 -1116 -7.16 10.25 -6.48 0 10.85

Comparative Balance Sheet of HLL Life care Ltd

For the year ending 31st March 2008 and 2009 2008 ASSETS Current assets: Inventories Sundry debtors Cash & Bank Balance Other Current assets Loans & Advances Total Current Assets Fixed Assets: Fixed Asset Capital work in progress Investments Total Fixed Assets Total Assets LIAB ILITIES & CAPITAL Current Liabilities: 51 5631.4 839.15 308.45 6779 31023.91 7289.69 3541.53 506.7 11337.92 39641.82 1658.29 2702.38 198.25 4558.92 8617.91 29.45 322.04 64.27 67.25 27.78 4338.32 12954.38 1644.8 426.57 4880.84 24244.91 6130.51 13235.8 5504.47 373.62 3059.5 28303.9 1792.19 281.42 3859.67 -52.95 -1821.34 4058.99 41.31 2.17 234.66 -12.41 -37.32 16.74 2009 Amount RS Percentage %

Current Liabilities Provisions Total Current Liabilities Share Capital Reserve & Surplus loan Funds secure loan unsecured loan Total long term obligations Total Liabilities

9409.15 2602.23 12011.38 1553.5 10688.95 6669.94 100.14 19012.53 31023.91

16554.99 670.81 17225.8 1553.5 11249.99 9469.17 143.36 22416.02 39641.82

7145.84 -1931.42 5214.42 561.04 2799.23 43.22 3403.49 8617.91

75.94 -74.22 43.41 0 5.25 41.97 43.16 17.90 27.78

Comparative Balance Sheet of HLL Life care Ltd

For the year ending 31st March 2007 and 2008 2007 ASSETS Current assets: Inventories Sundry debtors Cash & Bank Balance Other Current assets Loans & Advances Total Current Assets Fixed Assets: Fixed Asset Capital work in progress Investments Total Fixed Assets Total Assets LIAB ILITIES & CAPITAL Current Liabilities: Current Liabilities Provisions 2008 Amount RS Percentage %

5083.53 8356.95 3246.12 580.61 4582.9 21850.11 3917.37 705 298.38 4920.75 26770.86

4338.32 12954.38 1644.8 426.57 4880.84 24244.91 5631.4 839.15 308.45 6779 31023.91

-745.21 4597.43 -1601.32 -154.04 297.94 2394.8 1714.03 134.15 10.07 1858.25 4253.05

-14.66 55.01 -49.33 -26.53 6.50 10.96 43.75 19.03 3.37 37.76 15.89

9991.64 2558.48

9409.15 2602.23

-582.49 43.75

-5.83 1.71

52

Total Current Liabilities Share Capital Reserve & Surplus loan Funds secure loan unsecured loan Total long term obligations Total Liabilities

12550.12 1553.5 9442.66 2849.56 375.02 14220.74 26770.86

12011.38 1553.5 10688.95 6669.94 100.14 19012.53 31023.91

-538.74 1246.29 3820.38 -274.88 4791.79 4253.05

-4.29 0 13.2 134.07 -73.3 33.69 15.89

Comparative Balance Sheet of HLL Life care Ltd

For the year ending 31st March 2006 and 2007 2006 ASSETS Current assets: Inventories Sundry debtors Cash & Bank Balance Other Current assets Loans & Advances Total Current Assets Fixed Assets: Fixed Asset Capital work in progress Investments Total Fixed Assets Total Assets LIAB ILITIES & CAPITAL Current Liabilities: Current Liabilities Provisions Total Current Liabilities 3153.48 5726.64 2187.35 173.6 2245 13486.07 3852.9 36.68 3889.58 17375.65 5083.53 8356.95 3246.12 580.61 4582.9 21850.11 3917.37 705 298.38 4920.75 26770.86 1930.05 2630.31 1058.77 407.01 2337.9 8364.04 64.47 668.32 298.38 1031.17 9395.21 61.20 45.93 48.40 234.45 104.14 62.02 1.67 1822.03 26.51 54.071 2007 Amount RS Percentage %

4382.77 1620.23 6003

9991.64 2558.48 12550.12

5608.87 938.25 6547.12

127.97 57.91 109.06

53

Share Capital Reserve & Surplus loan Funds secure loan unsecured loan Total long term obligations Total Liabilities

1553.5 8174.22 1461.52 183.41 11372.65 17375.65

1553.5 9442.66 2849.56 375.02 14220.74 26770.86 1268.44 1388.04 191.61 2848.09 9395.21

0 15.52 94.97 104.47 25.04 54.071

54

LIQUIDITY RATIOS
Liquidity is the ability of the firm to meet its current liabilities as they fall due. Since liquidity is basic to continuous operations of the firm it is necessary to determine the degree of liquidity of the firm.

Current Ratio: Current ratio is the most common ratio for measuring liquidity. It represents the ratio of current assets to current liabilities. It is also called working capital ratio. It is calculated by dividing current assets by current liabilities. Current Assets Current Ratio = Current Liabilities
Table No 4.1

Year

Current Asset

Current Liabilities

Current Ratio

2006 2007 2008 2009 2010

Average: 1.852

13486.07 21850.11 24224.91 28303.90 25968.88

6003.00 12550.12 12011.38 17225.80 16109.80

2.25 1.74 2.02 1.64 1.61

Source: Secondary Data

55

Chart No 4.1

Interpretation: The current ratio of the firm measures its short-term solvency, i.e., its ability to meet short term obligations. In a sound business a current ratio of 2:1 is considered an ideal one. In HLL Life care Ltd the years 2006 and 2008 showing satisfactory ratios. A high ratio indicates sound solvency position and a low ratio indicates inadequate working capital.

Quick Ratio: This ratio is some times known as Acid Test Ratio or Liquidity Ratio. It is the relation between quick assets to current liabilities. It is determined by dividing quick assets by current liabilities.

56

Quick or Liquid Assets Quick Ratio = Current Liabilities

Table No 4.2

Year

Quick Assets

Current Liabilities

Quick Ratio

2006 2007 2008 2009 2010

Avg: 1.446

10332.59 16776.58 19906.59 22173.39 20656.88

6003.00 12550.12 12011.38 17225.80 16109.80

1.72 1.34 1.66 1.29 1.22

Source: Secondary Data

Chart No 4.2

57

Interpretation: An acid Test Ratio of 1:1 is considered satisfactory as a firm can easily meet all its current liabilities. If the ratio is less than 1:1, then the financial position of the concern shall be deemed to be unsound. On the other hand, if the ratio is more than 1:1, then the financial position of the concern is sound and good. In HLL Life care ltd the year from 2006 to 2010 showing a positive Quick Ratio. 2008 is the year which showing higher quick ratio. Absolute Liquidity Ratio/ Super Quick Ratio The ratio is obtained by dividing cash (of course cash in hand and cash at bank) and marketable securities by quick liabilities. It is also known as cash position ratio. Cash + Marketable securities Absolute Liquidity Ratio = Quick Liabilities

58

Table No 4.3

Year

Absolute liquid assets

Quick Liabilities

Quick Ratio

2006 2007 2008 2009 2010

Avg: .266

2187.35 3246.12 1644.80 5504.47 3981.92

6003.00 12550.12 12011.38 17225.80 16109.80

.36 .26 .14 .32 .25

Source: Secondary Data

Chart No 4.3

Absolute Liquidity Ratio

0. 0 0. 0 0. 0 0. 0 0 05 .1 15 .2 25 .3 35 .4

Absolute Liquidity Ratio

2005-06

2006-07

2007-08

2008-09 2009-2010

59

Interpretation: A ratio of 0.75:1 is recommended to ensure liquidity. This test is more vigorous measure of a firms liquidity position.

PROFITABILITY RATIOS
A business firm is basically a profit earning organization. The income statement of the firm shows the profit earned by the firm during the accounting period. Profitability is an indication of the efficiency with which the operations of the business are carried on. Poor operational performance may indicate poor sales and hence poor profits. Gross Profit Ratio The gross profit ratio plays an important role in two management areas. In the area of financial management, the ratio serves as a valuable indicator of the firms ability to utilize effectively outside sources of fund. Secondly, this ratio also serves as important tool in shaping the pricing policy of the firm. The ratio expresses the relationship between gross profit and sales. This ratio is calculated by dividing gross profit by net sales. Gross Profit *100 Gross Profit Ratio = Net sales

Table No 4.4

60

YEAR

GROSS PROFIT

NET SALES

GROSS PROFIT RATIO

2006 2007 2008 2009 2010 Avg: 47.8

9138.83 10069.42 13942.16 14972.57 20473.93

19430.77 21288.58 24348.17 36641.86 44006.29

Chart No 4.4

47.033 47.30 57.26 40.86 46.53 Source: Secondary Data

GROSS PROFIT RATIO 70 60 50 40 30 20 10 0 2006 2007 2008 2009 2010 GROS GROSS PROFIT RATIO

Interpretation: The table of Gross Profit Ratio shows that 46.53% attained in the year of 2010. The company is maintaining the highest Gross Profit Ratio of 57% in the year 2008 and lowest of 40% in the year 2009.

61

Net Profit Ratio This ratio is also called as the net profit to sales or net profit margin ratio. It is determined by dividing the net profit to sales for the period and measures the profit per rupee of sales. Net Profit *100 Net Profit Ratio = Sales

Table No 4.5

YEAR

PROFIT AFTER TAX

NET SALES

NET PROFIT RATIO

2006 2007 2008 2009 2010 Avg: 5.374

2063.89 1746.78 1427.82 757.83 1493.39

21288.58 24348.17 31556 36641.86 44006.29

9.7 7.2 4.5 2.07 3.4 Source: Secondary Data

Chart No 4.5

62

NET PROFIT RATIO 12 10 8 6 4 2 0 2006 2007 2008 2009 2010 9.7 7.2 4.5 2.07 3.4 NET PROFIT RATIO

Interpretation: According to the above table, net profit of the company is decreasing year by year though the sale is increasing. In the year of 2006 Net Profit of the company is 9% and in 2010 it is only 3%. Operating Ratio Operating ratio is an indicative of the proportion that the cost of sales bears to sales. cost of sales includes direct cost of goods sold as well as other operating expenses. It is an important ratio that is used to discuss the general profitability of the concern. Total operating expenses include all costs like administration, selling and distribution expenses, etc but do not include financing cost and income tax. (Cost of goods sold + operating expenses)*100 Operating Ratio= Net Sales

Table No 4.6

YEAR

COST OF GOODS SOLD

OPERATING EXPENSES

NET SALES

OPERATING RATIO

63

2006 2007 2008 2009 2010 Avg: 76.192

10291.94 11219.16 10406.01 21669.29 23532.46

4640.02 .5541.51 7795.41 6711.77 8672.7

19430.77 21288.58 24348.17 36641.86 44006.29

76.85 78.73 74.75 77.45 73.18

Source: Secondary Data

Chart No 4.6
OPERATING RATIO

80 79 78 77 76 75 74 73 72 71 70

78.73 76.85 74.75

OPERATING RATIO 77.45 73.18

2006

2007

2008

2009

2010

Return on shareholders fund This ratio shows the rate of profit on shareholders fund. It relates the profit available for the shareholders to their total investment. It is also known as profit on net worth ratio. Net profit interest and tax * 100 Return on shareholders fund = Shareholders fund

64

Table No 4.7

YEAR 2006 2007 2008 2009 2010 Avg: 96.404

PAT 2063.89 1746.78 1427.83 757.83 1493.39

SHAREHOLDER'S FUND 1553.8 1553.8 1553.8 1553.8 1553.8

RATIO 132.83 112.42 91.89 48.77 96.11

Source: Secondary Data

Chart No 4.7
RETURN ON SHAREHOLDER'S FUND

140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 132.83 112.42 91.9 48.77 96.11 RETURN ON SHAREHOLDER'S FUND

Interpretation: According to the above table, net profit of the company is decreasing year by year though the sale is increasing. In the year of 2006 it is 133 but in 2010 it is only 96%. Return on total asset

65

Profitability can be measured in terms of relationship between net profit and total assets. This ratio is also known as return on gross capital employed. It measures the profitability of investment. The overall profitability can be known by applying this ratio: Net profit*100 Return on total asset = Total asses

Table No 4.8

YEAR 2006 2007 2008 2009 2010 Avg :5.92

PAT 2063.89 1746.78 1427.83 757.83 1493.39

TOTAL ASSET 17375.62 26474.48 31023.91 39641.82 39233.35

RATIO 12 7 4.6 2 4 Source: Secondary Data

Chart No 4.8

66

RETURN ON TOTAL ASSET 14 12 10 8 6 4 2 0 2006 2007 2008 12 7 4.6 2 2009 4 2010 RETURN ON TOTAL ASSET

Interpretation: This table shows a decreasing trend in the ratio of profit to total assets. In the beginning period it was 12 but in 2010 it is only 4, means 1/3 of the 2006. Earning Per Share: This ratio helps in the assessment of the profitability of a firm from the stand point of equity shareholders. It is calculated by dividing the profit available the equity shareholders by the number of shares issued. The profits available to the equity shareholders are represented by the net profits after interest, tax, and preference dividend. Net profit available to equity shareholders E.P.S= Number of equity shares issued

Table No 4.9

YEAR

PAT

NO: OF EQUITY

RATIO

67

SHARES 2006 2007 2008 2009 2010 Avg:.96

Chart No 4.9
EARNINGS PER SHARE 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2006 2007 2008 2009 2010 1.33 1.12 0.92 0.49 0.96 EARNINGS PER SHARE

2063.89 1746.78 1427.83 757.83 1493.39

1553.5 1553.5 1553.5 1553.5 1553.5

1.33 1.12 0.92 0.49 0.96

Source: Secondary Data

Interpretation: The above table reveals a decreasing trend in the EPS. In the year 2006 it was 1.32 but in the year 2010 it is decreased to .96. Return on investment This ratio is also known as Return on Net capital Employed. The primary objective of making investment in any business is to obtain satisfactory return on capital invested. It indicates the return on capital employed in the business and it can be used to show the efficiency of the business as a whole. 68

(Net profit before interest, tax and dividend)*100 Return on capital employed= Net capital employed
Table No 4.10

YEAR 2006 2007 2008 2009 2010 Avg:22.8

OPERATING PROFIT 4498.81 4527.91 6146.75 8317.69 11801.13

TOTAL TANGIBLE ASSETS 17375.65 26474.48 31023.91 39641.82 39233.35

RATIO 26 17 20 21 30

Source: Secondary Data

Chart No 4.10

69

RETURN ON INVESTMENT 35 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 RETURN ON INVESTMENT

Interpretation: The return on investment ratio is showing a decreasing tendency. The net profit has decreased.

TREND ANALYSIS
The financial statements may be analyzed by computing trends of series of information. This method determines the direction upwards or downwards and involves the computation of the percentage relationship that each statement item bears to the same item in base year. Procedures for Calculating Trends

70

1. One year is taken as a base year. Generally, the first or the last is taken as base year. 2. The figures of base year are taken as 100 3. Trend percentages are calculated in relation to base year. If a figure in other year is less than the figure in base year, the trend percentage will be less than 100 and it will be more than 100 if figure is more than base year figure. Each years figure is divided by the base years figure. The interpretation of trend analysis involves a cautious study. An increase of 20% in current assets may be treated favourable. If this increase in current assets is accompanied by an equivalent increase in current liabilities, then this increase will be unsatisfactory. The base period should be carefully selected. The base period should be a normal period. The price level changes in subsequent years may reduce the utility of trend ratios. If the figure of the base period is very small, then the ratios calculated on this basis may not give a true idea about the financial data.

TREND IN CASH
Table No 4.11

YEAR

CASH

TREND %

71

2006 2007 2008 2009 2010

2187.35 3246.12 1644.82 5504.47 3981.92

100 148.40 75.196 251.65 182.04

Interpretation: The above table reveals that cash shows an increasing trend from the base year 2006. Only one year which is decreased from the base year was 2008. This increasing trend shows that firm has sufficient cash balance. Means that firm maintains fair liquidity position.

TREND IN SALES
Table No 4.12

YEAR 2006

SALES 21288.58

TREND % 100

72

2007 2008 2009 2010

24348.17 31556 36641.86 44006.29

114.37 148.22 172.12 206.71

Interpretation: The above table indicates an increasing trend in sales. Means the companys sales were increasing year to year. In 2006 the trend percentage of the company was 100. But in 2010 it rises to 206.71%.

TREND IN PROFIT
Table No 4.13

YEAR 2006 2007 2008

PROFIT 2063.89 1938.4 1427.82

TREND % 100 93.92 69.18

73

2009 2010

757.83 1493.39

36.72 72.36

Interpretation: The above table of trend in profit indicates a decrease in profit in every year. In the base year means in 2006 it was 100%. But in the corresponding years it shows a down ward trend. In the year 2009 was the year which has a low profit i.e. 37% only.

TREND IN CURRENT LIABILITIES

Table No 4.14

YEAR 2006 2007 2008 2009

CURRENT LIABILITIES 4382.77 9991.64 9409.15 16554.99

TREND % 100 228 214.68 377.73 74

2010 Interpretation:

15370.2

350.7

The above table shows an increasing trend in current liabilities. It means that the short term obligations of the firm are increasing year after year. In the base year it was only 100%. But in 2010 it rises to 350.7.

TREND IN SUNDRY DEBTORS

Table No 4.15

YEAR 2006 2007 2008 2009 2010

SUNDRY DEBTORS 5726.64 8356.95 12954.38 13253.8 11776.75

TREND % 100 145.93 226.21 231.44 205.64

Interpretation: From the above table of trend in debtors we can find out that the trend percentage of sundry debtors is increasing year after other. In the base year, i.e. in 2006 it was only 100% but in 2010 it rise to 205.64. 2009 is the year which shows highest % i.e., 231%. From this we can assume that the receivables management of the company is very poor.
Chart No 4.11

75

1200 1000 800 600 400 200 0 2006 2007 2008 2009 2010 d e b t o rs c u rre n t lia b ilit y p ro fit s a le s cash

CORRELATION

CORRELATION BETWEEN PBT AND SALES

Table no 4.16

YEAR

PBT X

NET SALES Y

XY

X^2

Y^2

76

2006 2007 2008 2009 2010 TOTAL

3114.88 2750.88 2142.95 1654.43 2261.4 11924.54

19430.77 21288.58 24348.17 36641.86 44006.29 145715.67

60524516.86 58562328.95 52176910.9 60621392.44 99515824.21 331400973.4

9702477.414 7567340.774 4592234.703 2737138.625 5113929.96 29713121.48

377554822.8 453203638.4 592833382.3 1342625904 1936553560 4702771307

r=

N xy ( x ) ( y ) N x2
2 2

( x ) N y ( y)

(5*331400973) - (11924.54*145715.67) = (5*29713121.48)- (11924.54) ^2 -80587468.77 = 6370953.17 -80587468.77 = 2524.07*47757.2 -80587468.77 = 120542515.8 77 2280800053 (5*4702771307)-(145715.67) ^2

= - 0.67
Chart No 4.12
50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 2 0 0 5 .5 2 0 0 6 2 00 6 . 5 20 07 2 0 0 7 .5 2 0 0 8 2 0 0 8 .5 2 0 0 9 2 0 0 9 . 5 2 0 1 0 2 0 1 0 .5 PBT N E T S A LE S

Interpretation: The correlation between profit before tax and sales are negatively correlated. The value of two variables more opposite directions is said to be negative correlation. It means that when ever an increase in the value of net profit it resulted in a decrease in the value of sales. And also, whenever a decrease in the value of the net profit, at that same time sales of the company increases.

CORRELATION BETWEEN PBT AND WORKING CAPITAL

Table No 4.17

YEAR 2006

PBT 3114.88

WORKING CAPITAL 7483.07

XY 23308865.08

X^2 9702477.414

Y^2 55996336.62

78

2007 2008 2009 2010 TOTAL

2750.88 2142.95 1654.43 2261.4 11924.54

9299.99 12213.53 11078.1 9859.08 49933.77

25583156.49 26172984.11 18327940.98 22295323.51 115688270.2

7567340.774 4592234.703 2737138.625 5113929.96 29713121.48

86489814 149170315.1 122724299.6 97201458.45 511582223.7

r=

N xy ( x ) ( y ) N x
2 2 2

( x ) N y ( y)

(5*115688270.2) - (11924.54*49933.77) = (5*29713121.48)- (11924.54) ^2 578441350.9-595437237.7 = 6370953.169 -16995886.81 = 20275955.27 = -0.84

Chart No 4.13
60000 50000 40000 30000 20000 10000 0 2005 PBT WORKING CAPITAL

(5*511582223.7)-(49933.8) ^2

64529732.3

79
2006 2007 2008 2009 2010 2011

Interpretation: The correlation between profit before tax and working capital are negatively correlated. The value of two variables more opposite directions is said to be negative correlation. It means that when ever an increase in the value of net profit it resulted in a decrease in the value of working capital. And also, whenever a decrease in the value of the net profit, at that same time working capital of the company increases.

80

FINDINGS
1. A standard current ratio of 2 is approximately maintained for 2 years. But for other 3 periods it is lower than 2. it means that there is no proportional increase in current assets. 2. Relatively high current ratio is an indication that the firm is liquid and the ability to pay its current obligation in times and when they become due. 3. Comparing current ratio and quick ratio, the stock lying at warehouse is very low. A major portion is accumulation of sundry debtors, i.e., receivables management is very poor. 4. According to absolute liquid ratio, the company is not having sufficient liquid cash. Hence the problem of technical insolvency may arise when immediate cash is required. 5. A standard gross profit ratio is maintained by the company for the period of study. It means that there direct expenses or cost of goods sold is approximately same for the period. 6. The indirect operating expense of the company is very high, that is why the net profit ratio is decreasing though sales are increasing. 7. Since net profit has decreased year after year, the return on shareholders fund has also decreased.

81

8. The trend % of net profit shows a decreasing trend, it indicates that the firm should take necessary step to overcome the situation. 9. Trend ratio in sales show a fluctuating trend, it indicates a favorable condition. 10. The increase in provision indicates that the organization is earning more profit in each year. 11. Correlation between Profit and Stock are negative correlation. 12. Correlation between profit before tax and current liabilities shows a negative correlation

SUGGESTIONS
1. HLL should show a cost conscious approach to increase its profitability. 2. In case of liquidity position the company should reduce its total dependency on the cash credit facility offered by banks. 3. The indirect operating expenses are very high. It has to be reduced. So that the net profits can be increased. 4. There is a shortage of liquid cash, so receivables management has to improve. 5. Return on shareholders fund is minimum which is not recommendable. 6. Return on investment is decreasing year after year. The trend has to be reversed. 7. Modernize the process for reducing cost of production. 8. More autonomy to the plant can improve the performance of the company.

82

CONCLUSION

The study was undertaken in HLL Life care Ltd with a view to have insight into the financial performance of the firm especially its liquidity and profitability position. The main tools used in this study are ratio analysis, trend analysis and correlation. The study throws light on various aspects such as the company efficiency utilizing its assets and overall performance of the company. The analysis is mainly based on the secondary data obtained from annual reports of the company, websites, circulars, company manuals, etc. It could be concluded that though the net sales are improving the net profits are decreasing year after year. Steps must be taken to control the indirect expenses. With strict financial controls, the company will be able to reverse the declining trend in profit.

83

ORGANIZATION CHART OF HLL LIFE CARE LTD

CHAIRMAN

BOARD OF DIRECTORS

EXECUTIVE DIRECTOR 84

GENERAL MANAGER

DEPUTY GENERAL MANAGER (DGM)

ASSISTANT GENERAL MANAGER (AGM)

MANAGER

DEPUTY MANAGER

SENIOR ASSISTANT PLANT MANAGER / SENIOR ASSISTAN MANAGER

ASSISTANT PLANT MANAGER/ ASSISTANT MANAGER

EXECUTIVE TRAINEES

85

BALANCESHEET OF HLL Ltd AS ON 31ST MARCH 2010

Particulars SOURCES OF FUNDS SHAREHOLDERS FUND Share capital Reserves & Surplus LOAN FUNDS Secured loan Deferred Tax liabilities TOTAL APPLICATION OF FUNDS FIXED ASSETS Gross Block Less : Depreciation Net Block Capital work-in-progress INVESTMENTS CURRENT ASSETS LOANS & ADVANCES Inventories Sundry debtors Cash & Bank balance Other current assets Loans & advances (A) Less CURRENT LIABILITIES & PROVISIONS a) Current liabilities b) Provisions (B) Net Current Assets (A-B) TOTAL

2009-10

1553.50 12470.75 8771.72 327.58 23123.55 22422.43 10173.79 12248.64 230.41 12479.05 785.42 5312.00 11776.75 3981.92 1912.59 2985.62 25968.88 15370.20 739.60 16109.80 9859.08 23123.55

86

BALANCESHEET OF HLL Ltd AS ON 31ST MARCH 2009

Particulars SOURCES OF FUNDS SHAREHOLDERS FUND Share capital Reserves & Surplus LOAN FUNDS Secured loan Deferred Tax liabilities TOTAL APPLICATION OF FUNDS FIXED ASSETS Gross Block Less : Depreciation Net Block Capital work-in-progress INVESTMENTS CURRENT ASSETS LOANS & ADVANCES Inventories Sundry debtors Cash & Bank balance Other current assets Loans & advances (A) Less CURRENT LIABILITIES & PROVISIONS a) Current liabilities b) Provisions (B) Net Current Assets (A-B) TOTAL

2008-09

1553.50 11249.99 9469.17 143.36 22416.02 16293.74 (9004.05) 7289.69 3541.53 10831.22 506.70 6130.50 13235.80 5504.47 373.62 3059.50 28303.90 16554.99 670.81 17225.80 11078.10 22416.02

87

BALANCESHEET OF HLL Ltd AS ON 31ST MARCH 2008

Particulars SOURCES OF FUNDS SHAREHOLDERS FUND Share capital Reserves & Surplus LOAN FUNDS Secured loan Unsecured loan Grant/liability payable as per contract TOTAL APPLICATION OF FUNDS FIXED ASSETS Gross Block Less : Depreciation Net Block Capital work-in-progress TOTAL INVESTMENTS CURRENT ASSETS, LOANS & ADVANCES Inventories Sundry debtors Cash & Bank balance Other current assets Loans & advances (A) Less CURRENT LIABILITIES & PROVISIONS a) Current liabilities b) Provisions (B) Net Current Assets (A-B) Miscellaneous expenditure to this extent net written off TOTAL

2007-08

1553.50 10688.95 6669.94 100.14 Nil 19012.53 13967.62 (8336.22) 5631.40 839.15 6470.55 308.45 4338.32 12954.38 1644.80 426.57 4880.84 24553.36 9409.15 2602.23 12011.38 12233.53 Nil 19012.53

88

BALANCESHEET OF HLL Ltd AS ON 31ST MARCH 2007

Particulars SOURCES OF FUNDS SHAREHOLDERS FUND Share capital Reserves & Surplus LOAN FUNDS Secured loan Unsecured loans Grants/Liability payable as per contract TOTAL APPLICATION OF FUNDS FIXED ASSETS Gross Block Less : Depreciation Net Block Capital work-in-progress TOTAL INVESTMENTS CURRENT ASSETS LOANS & ADVANCES Inventories Sundry debtors Cash & Bank balance Other current assets Loans & advances (A) Less CURRENT LIABILITIES & PROVISIONS a) Current liabilities b) Provisions (B) Net Current Assets (A-B) Miscellaneous expenditure to this extent not written off

2006-07

1553.50 9442.66 2849.56 375.02 Nil 144220.74 11608.04 (7688.67) 3917.37 705.00 4624.37

5083.53 8356.95 3246.12 580.61 4582.90 21850.11 9991.64 2558.48 12550.12 9299.99 296.38

89

TOTAL

14220.74

BALANCESHEET OF HLL Ltd AS ON 31ST MARCH 2006

Particulars

2005-06

90

SOURCES OF FUNDS SHAREHOLDERS FUND Share capital Reserves & Surplus LOAN FUNDS Secured loan Un secured loans Grants/Liability payable as per contract TOTAL APPLICATION OF FUNDS FIXED ASSETS Gross Block Less : Depreciation Net Block Capital work-in-progress TOTAL CURRENT ASSETS LOANS & ADVANCES Inventories Sundry debtors Cash & Bank balance Other current assets Loans & advances (A) Less CURRENT LIABILITIES & PROVISIONS a) Current liabilities b) Provisions (B) Net Current Assets (A-B) Deferred Tax Liability (net) Assets held under as per contract TOTAL

1553.50 8174.22 1461.52 183.41 Nil 11372.65 10907.86 (7054.46) 3852.90 3541.53 10831.22

3153.48 5726.64 2187.35 173.60 2245.00 13486.07 4382.77 1620.23 6003.00 7483.07 Nil Nil 11372.65

91

PROFIT & LOSS A/C OF HLL LIFE CARE LTD FOR THE YEAR ENDED 31st MARCH, 2006

Particulars INCOME Sales Less : Excise Duty Net Sales Other Income Less/Add : Increased in stock of finished goods & stock in-progress TOTAL EXPENDITURE Material Consumed Power & fuel charges Water charges Employees salaries & benefits Other production expenses Administration Expenses Marketing expenses Insurance charges Finance charges Depreciation Value of finished goods purchased Voluntary retirement benefits TOTAL PROFIT FOR THE YEAR Prior period Adjustment (Net) Prior for the year before tax Provision for income tax (CR) Deferred Tax Fringe Benefits Tax PROFIT AFTER TAX Add : Opening balance of profit bought forward Less : Provision for Income Tax(PY) PROFIT AVAILABLE FOR APPROPRIATIONS Interim Dividend Tax on Interim Dividend Proposed Dividend Tax on Propose Dividend Transfer of General Reserve BALANCE CARRIED TO BALANCE SHEET

2005-2006 21406.60 (118.02) 21288.58 1427.47 (170.39) 22545.66 5709.22 1168.42 38.46 4408.36 825.29 1735.56 2904.46 54.60 49.25 613.78 1886.99 42.07 19436.46 3109.20 5.68 3114.88 1129.62 155.35 76.72 2063.89 _ _ 2063.89 232.50 34.89 180.30 25.29 1590.91 _

92

PROFIT & LOSS A/C OF HLL LIFE CARE LTD FOR THE YEAR ENDED 31st MARCH, 2007 PROFIT & LOSS A/C OF HLL LIFE CARE LTD Particulars INCOME Sales Less : Excise Duty Net Sales Other Income Less/Add : Increased in stock of finished goods & stock in-progress TOTAL EXPENDITURE Material Consumed Power & fuel charges Water charges Employees salaries & benefits Other production expenses Administration Expenses Marketing expenses Insurance charges Finance charges Depreciation Value of finished goods purchased Voluntary retirement benefits TOTAL PROFIT FOR THE YEAR Prior period Adjustment (Net) Prior for the year before tax Provision for income tax (CR) Deferred Tax Fringe Benefits Tax PROFIT AFTER TAX Add : Opening balance of profit bought forward Less : Provision for Income Tax(PY) PROFIT AVAILABLE FOR APPROPRIATIONS Interim Dividend Tax on Interim Dividend Proposed Dividend Tax on Propose Dividend Transfer of General Reserve BALANCE CARRIED TO BALANCE SHEET 93 2006-2007 24492 (144.17) 24347.90 3207.13 (1351.69) 28906.72 7217.47 1280.68 55.22 4812.76 912.62 1992.54 3548.97 61.33 272.50 661.18 5345.88 18.18 26182.96 2724.03 26.85 2750.88 764.35 (191.62) 48.13 2063.89 _ _ 2063.89 155.00 21.73 257.80 43.81 1268.44 _

FOR THE YEAR ENDED 31st MARCH, 2008 PROFIT & LOSS A/C OF HLL LIFE CARE LTD Particulars INCOME Sales Less : Excise Duty Net Sales Other Income Less/Add : Increased in stock of finished goods & stock in-progress TOTAL EXPENDITURE Material Consumed Power & fuel charges Water charges Employees salaries & benefits Other production expenses Administration Expenses Marketing expenses Insurance charges Finance charges Depreciation Value of finished goods purchased Pay revision areas Exchange rate fluctuation Voluntary retirement benefits TOTAL PROFIT FOR THE YEAR Prior period Adjustment (Net) Prior for the year before tax Provision for income tax (CR) Deferred Tax Fringe Benefits Tax PROFIT AFTER TAX Add : Opening balance of profit bought forward Less : Provision for Income Tax(PY) PROFIT AVAILABLE FOR APPROPRIATIONS Interim Dividend Tax on Interim Dividend Proposed Dividend Tax on Propose Dividend Transfer of General Reserve BALANCE CARRIED TO BALANCE SHEET FOR THE YEAR ENDED 31st MARCH, 2009 94 2007-2008 31709.17 (153.17) 31556.00 3448.89 (1036.67) 33968.22 8662.52 1431.80 57.79 6314.07 1147.66 2777.51 5017.90 52.09 447.10 733.07 5137.60 _ _ _ 26182.96 2724.03 (46.16) 2750.88 764.35 (191.62) 48.13 2063.89 _ _ 2063.89 155.00 21.73 257.80 43.81 1268.44 _

Particulars INCOME Sales Less : Excise Duty Net Sales Other Income Exchange Fluctuation TOTAL EXPENDITURE Material Consumed Less/Add :Decrease/Increase in stock of finished goods & stock in pro: Power & fuel charges Water charges Employees salaries & benefits Other production expenses Administration Expenses Marketing expenses Insurance charges Finance charges Depreciation Value of finished goods in trading Contract expenditure Pay revision arrears TOTAL PROFIT FOR THE YEAR Prior period Adjustment (Net) Prior for the year before tax Provision for income tax (CR) Deferred Tax Provision for income tax (PY) Fringe Benefits Tax(CY) Fringe benefit tax (PY) PROFIT AFTER TAX PROFIT AVAILABLE FOR APPROPRIATIONS Proposed Dividend Tax on Propose Dividend Transfer of General Reserve BALANCE CARRIED TO BALANCE SHEET PROFIT & LOSS A/C OF HLL LIFE CARE LTD FOR THE YEAR ENDED 31st MARCH, 2010

2008-2009 36760.48 (118.62) 36641.86 1879.47 (333.04) 38188.29 10953.02 (1581.64) 1934.74 92.67 7216.90 1471.90 3022.91 3631.97 53.91 920.64 899.59 7377.68 0.00 504.68 36498.97 1689.32 (34.89) 1654.43 707.53 43.22 75.38 89.89 19.41 757.83 155.35 26.40 576.07 _

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Particulars INCOME Sales Less : Excise Duty Net Sales Other Income Exchange Fluctuation TOTAL EXPENDITURE Material Consumed Less/Add :Decrease/Increase in stock of finished goods & stock in pro: Power & fuel charges Water charges Employees salaries & benefits Other production expenses Administration Expenses Marketing expenses Insurance charges Finance charges Depreciation Value of finished goods in trading Contract expenditure Pay revision arrears TOTAL PROFIT FOR THE YEAR Prior period Adjustment (Net) Prior for the year before tax Provision for income tax (CR) Deferred Tax Provision for income tax (PY) Fringe Benefits Tax(CY) Fringe benefit tax (PY) PROFIT AFTER TAX PROFIT AVAILABLE FOR APPROPRIATIONS Proposed Dividend Tax on Propose Dividend Transfer of General Reserve BALANCE CARRIED TO BALANCE SHEET

2009-2010 44177.90 (171.61) 44006.29 2041.89 (499.85) 46548.03 11142.28 (723.79) 1980.73 145.15 8645.44 1681.76 4009.65 4663.05 66.30 756.05 1279.07 8691.36 76.46 519.63 44317.72 2230.31 31.09 2261.40 798.77 184.22 (214.98) 0.00 0.00 1493.39 233.03 39.60 1220.76 _

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