RANBAXY LABORATORIES LIMITED Page | 1 A Project Report On Financial Analysis Of Submitted to Global Institute of Management Gujarat Technological University On 10/12/2012 In Partial fulfillment of the requirements for the Accounting for Managers course in the Master of Business Administration Programme Submitted By: komal Dulam (16) Ronak Modi (17) Asha Desai (18) Devika Singh (19) GLOBAL INSTITUTE OF MANAGEMENT
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R A N B A X Y L A B O R A T O R I E S L I M I T E D P a g e | 1
AProject Report
OnFinancial Analysis
Of
Submitted toGlobal Institute of Management
Gujarat Technological UniversityOn
10/12/2012
In Partial fulfillment of the requirements for theAccounting for Managers course in the
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Preface
The subject matter of financial management has been changing at a rapid phase about three decades ago; the scope of financial management was circumscribed to the raising of funds, whenever needed and little significance use to attach to the financial decision making of problem solving the mid fifties, the emphasis shifted to wise utilization of funds.
The ‘modern’ thinking in the financial management gives greater importance of management and decision makes policy. Today the financial mgt is not in a passive role of a scorekeeper of the accounting information and arranging funds.
We as a student of management cannot keep ourselves isolated from this field of financial management. We need to know the practical application of or other theoretical knowledge so we have prepared a financial report on “Ranbaxy Laboratories Ltd.” and have tried to analysis each and every report of annual report of five successive years and put it in logical format as per my analysis.
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Acknowledgement
We are very much thankful to Ranbaxy laboratories Ltd. for these all type of information is taken from the last five year financial statement.
We are also thankful to our Director Mr. Kishor Bhunsali who encourages us for studying the finance.
We are mostly thankful to our Prof. Dhaval Patel for helping us in our practical studies in our sem-1 (MBA) program and also very much thankful to her valuable suggestion, guidance in preparing this report.
Also thankful to our parents for providing oriented and for all encouragement.
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Executive summary
Operating expenses may be defined as those that pertain to the production process, or, more generally, the process of carrying out the business. Such processes include all those pertaining to purchases, human resources, production and marketing and selling. Conventionally, expenses incurred on rising or using finances are not considered as operational expenses. There are a few more - amortization, write-offs, prior-period expenses, etc. Often, the distinction between operating and non-operating expenses is clear. But at times there is some ambiguity regarding the nature of the expense.
As a result, the basic framework of data capture at CMIE avoids the classification of expense heads as operational and non-operational. However, disclosure practices of companies often compel us to use the term "operational expenses". Expenses that can be posted without the use of such a term are posted appropriately into CMIE's detailed classification of expense items and, the remaining "operational expenses” are clubbed into one of the two data-fields: "Other operational expenses of industrial enterprises" or "Other operational expenses of non-financial services enterprises".
This data-field includes all operating expenses of an industrial enterprise that are not already covered in any of the other data field. These are likely to be industry-specific operational expenses. Examples of such expenses can be preservation expenses, laboratory expenses, testing expenses etc.
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Index
Sr.No. Content Page no.
1Chapter :1
Introduction of Company5
2Chapter-2:
Comparative Balance sheet and Analysis of Balance Sheet 10
3Chapter-3:
Comparative Profit and Loss Account and Analysis of Profit & Loss Statement15
4Chapter-4:
Common Size Statements19
5Chapter 5:
Trend Analysis (Index Analysis)23
6Chapter 6:
Analysis of Cash flow Statement26
7Chapter 7:
Ratio Analysis27
9Chapter 9:
Contemporary Issues in Accounting of the company36
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CHAPTER: 1 (Company profile)
1.1 Introduction of Company
Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a Japanese company Shionogi. The name Ranbaxy is a portmanteau word from the names of its first owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from his cousins Ranbir Singh and Gurbax Singh. After Bhai Mohan Singh's son Parvinder Singh joined the company in 1967, the company saw a significant transformation in its business and scale. His sons Malvinder Mohan Singh and Shivinder Mohan Singh sold the company to the Japanese company Daiichi Sankyo in June 2008.
Ranbaxy was established in 1961 and went public in the year 1973. It has global sales of US $1340 million for the year ended on 31st December, 2006. It has the largest market in USA (sales appx. US $380 million); then come Europe and BRICS (Brazil, Russia, India, China, South Africa).
1.2Company Details:
Type - Public
Founded - 1961
Headquarters- Gurgaon, Haryana, India
Employees - 1100 in R&D
Website - www.ranbaxy.com
For enquiries contact:
M. Giridhar Venugopal Director – Global Business Development & Acquisitions Ranbaxy Laboratories Limited Plot No. 90, Sector 32, Gurgaon – 122001 (Haryana), India E-mail: [email protected]
Registered Office A-41, Industrial Area Phase VIII-A, Sahibzada Ajit Singh Nagar, Mohali - 160 071 (Punjab), INDIA
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1.3Products
Using the finest R&D and Manufacturing facilities, Ranbaxy Laboratories Limited manufactures and markets generic pharmaceuticals, value added generic pharmaceuticals, branded generics, active Pharmaceuticals (API) and intermediates.
The Company remains focused on ascending the value chain in the marketing of pharmaceutical substances and are determined to bring in increased revenues from dosage forms sales.
Ranbaxy's diverse product basket of over 5,000 SKUs available in over 125 countries worldwide encompasses a wide therapeutic mix covering a majority of the chronic and acute segments. Healthcare trends project that the chronic treatment segments will outpace the acute treatment segments, primarily driven by a growing aging population and dominance of lifestyle diseases. Their robust performance in Cardiovasculars, Central Nervous System, Respiratory, Dermatology, Orthopedics, Nutritionals and Urology segments, clearly indicates that the Company has strengthened its presence in the fast-growing chronic and lifestyle disease segments.
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1.4 Company History:
Ranbaxy Laboratories Ltd. is the largest pharmaceutical company in India, and one of the world's top 100 pharmaceutical companies. Long a specialist in the preparation of generic drugs, Ranbaxy is also one of the world's top 10 in that pharmaceutical category as well. Yet, with India's agreement to apply international patent law at the beginning of 2005, Ranbaxy has begun converting itself into a full-fledged research-based pharmaceutical company.
A major part of this effort has been the establishment of the company's own research and development center, which has enabled the company to begin to enter the new chemical entities (NCE) and novel drug delivery systems (NDDS) markets. In the mid-2000s, the company had a number of NCEs in progress, and had already launched its first NDDS product, a single daily dosage formulation of ciprofloxacin.
Ranbaxy is a truly global operation, producing its pharmaceutical preparations in manufacturing facilities in seven countries, supported by sales and marketing subsidiaries in 44 countries, reaching more than 100 countries throughout the world. The United States, which alone accounts for nearly half of all pharmaceutical sales in the world, is the company's largest international market, representing more than 40 percent of group sales. In Europe, the company's purchase of RPG (Aventis) S.A. makes it the largest generics producer in that market.
The company is also a leading generics producer in the United Kingdom and Germany and elsewhere in Europe. European sales added 16 percent to the company's sales in 2004. Ranbaxy's other major markets include Brazil, Russia, and China, as well as India, which together added 26 percent to the group's sales. Ranbaxy posted revenues of $1.18 billion in 2004. The company, which remains controlled and led by the founding Singh family, is listed on the National Stock Exchange of India in Mumbai.
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1.5 Board of Directors
At the helm of the entire operations is the experience and able direction of the people who make it all happen. Ranbaxy acknowledges their inspiring stewardship and indefatigable work.
It shows the cash inflow and outflow of the company.
The highest cash equivalents in the year 2008 in last five years.
There is a major difference between the financing activities of the year2007 & 2008 because of company issue shares more than last year
Cash generated from operating activities is also highest in the 2010 as compare to the last five years. It may be because of high collection ofdebtors or sales of goods and services.
It shows from the last five year analysis that cash flow is in increasing and decreasing mood.
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Chapter 6 (Ratio analysis)
6.1- CLASSIFICATION OF RATIO
As per requirement of various users the ratio may be classified in following groups.
Profitability Ratio:-Profitability Ratio:-1. Gross profit ratio.2.2. Net profit ratio
3. Return on capital employs ratio4. Return on share holders fund5. Return on equity share holders fund6. Operating ratio7. Expenses ratio8. Earnings per share9. Dividend per share10. Price Earnings ratio
Liquidity ratio:-Liquidity ratio:-1. Current ratio2. Liquid ratio
Leverage ratio:- Leverage ratio:- 1. Debt equity ratio2. Proprietary ratio3. Capital gearing ratio4. Long term fund to fixed assets
Activity ratio:-Activity ratio:-1.1. Sales turnover ratio2.2. Total assets turnover ratio3.3. Debtor ratio4.4. Creditor ratio5.5. Book value per share6.6. Working capital turnover ratio
Coverage ratio:-Coverage ratio:-
1. 1. Debt service coverage ratio 2. Interest coverage ratio
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Interpretation: In the 2008 & 2009 it is 0.55 while it is in the 2007 by 0.31.
ACCOUNTIG POLICES AND NOTES
Significant accounting polices:-
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Schedule ‘N’:-
a. Basis preparation of financial statement:-
The financial statement are prepared under the historical cost conventional accept for certain
fixed assets which are revalued in accordance with the generally accepted accounting
principles in India. And the provisions of the companies act 1956.
b. Use of estimates :-
The preparation of financial statements requires estimates and assumptions to be made that
affect the reported amount of assets and liabilities on the date of the financial statements and
the reported amount of revenues and expense during the accounting period.
c. Own fixes assts:-
Fixed assets are stated at cost net of value added tax. And includes amounts added on
revaluations less accumulated depreciation and impairment loss if any all cost including
financial cost in commencement of commercial product net charges on foreign exchange
contract arising from exchange rate variations attribute table to the fixed assets are
capitalized.
d. Leased assts:-
Operating leases rentals are expensed with reference to lease terms and other considerations.
I. finance leases prior to 1st April, 2001: rentals are expensed with reference to lease terms and other
consideration.
II. Financial leases on or after 1st April. 2001: the lower of the value of the assets and present value of the
minimum lease rentals is capitalized as fixed assets with corresponding amount shown as lease liability. The
principal component in the lease rental is adjusted against the lease liability and the interest component is
charged to profit and loss account.
e. Intangible assets:-
Intangible assets are stated at cost of acquisition less accumulated amortiosation.
f. Depreciation:-
Depreciation on fixes assets is provided to the extent of depreciable amount on written down
value method at rates and in the manner prescribed in the company’s act 1956.
Depreciation is provided on straight line method over their useful life. 100% depreciation is
provided in the year of additions, on additions forming an integral part of existing plans
including incremental cost arising on account of translation of foreign currency liabilities for
accusation of fixed assets. Depreciation is provided as aforesaid over the residual life of the
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assets as certifies by values on assets acquired under fiancé lease from 1st April 2001.
Depreciation is provided over the lease term.
g. Foreign currency transactions:-
Transactions denominated in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction.
Monitory items denominated in foreign currency at year and are restated at year end
rates in case of items which are covered by forward exchange contracts.
Nonmonetary currency items are carried at cost.
h. Inventories:-
Items of inventories are measured at lower of the cost and net realizable value after providing
for obsolescence if any. Cost of inventories comprises of cost of purchase, cost of conversion
and other cost incurred in bringing them to their respective present location and condition.
i. Employee benefits:-
Short term employee benefits are recognize as an expense at the undiscounted amount
in pal account of the year in which the rendered services is rendered.
In respect of employees stock options the excess of fair price on the date of grant over
the exercise price is recognized as differed compensation cost amortized over the
vesting period.
j. Provision for current differed tax:-
Provision for tax is made after taking in to consideration benefits admissible under the
provisions of the income tax act 1961. Differed tax resulting from timing difference between
taxable and accounting income is accounted for using the tax rates and laws that are in acted
as on the balacesheet date.
k. Provisions contingent liabilities and assts:-
Provisions involving substantial degree of estimation in measurement are recognized when
there is a present obligation is a result of past events. Contingent liabilities are not recognized
but are disclosed in the notes. Contingent assets are neither recognized not disclosed.
Conclusion
The RANBAXY Project has documented substantial differences in the treatment of student and faculty in the College of Medicine. Current objectives are to
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1) continue with analysis of the data collected, particularly the ethnographic interviews with faculty and department chairs, and
2) Continue to meet with faculty and administration to identify additional strategies for solving the problems identified.
The ultimate goal of the project is to achieve parity for student and faculty in an environment of academic excellence.