ASSIGNMENT ON

FINANCIAL
MANAGEMENT
ON

Submitted By
Submitted To
Pankaj Anand Rai
Ms.Ritu Sharma Pooja P.

15-01-2009

Introduction
Cipla was incorporated in 1935, in the name of Chemical Industrial and Pharmaceutical
Laboratories. The name was changed to the acronym ‘Cipla’ in 1984. Over the last 6 decades
Cipla has set up plants at five locations, mainly concentrated in Maharashtra. The Hamied
brothers, sons of the founder, late Dr K A Hamied, manage Cipla. Dr Y K Hamied, with a
doctorate in Organic Chemistry from Cambridge, is the Chairman and Managing Director. He
himself heads the research division, which has around 200 people. His brother, M K Hamied,
looks after marketing. Cipla has four plants located at Patalaganga, Kurkumbh, Mumbai in
Maharashtra and one at Bangalore in Karnataka. All plants make bulk drugs as well as
formulations and have secured FDA (USA)/ MCA (UK) for most of its plants.
Cipla has crossed the USD 1 billion mark in terms of turnover for the year 2007-08. While
domestic sales grew by more than 13%, export sales posted a growth of about 23% for the
quarter. Total sales for the year 2007-08 has increased by 16% which has been in line with the
estimates.

Background
Cipla was officially opened on September 22, 1937 when the first products were ready for
the market. The Sunday Standard wrote: "The birth of Cipla which was launched into the
world by Dr. K.A. Hamied will be a red letter day in the annals of Bombay Industries.
The first city in India can now boast of a concern, which will supersede all existing firms
in the magnitude of its operations. India has lagged behind in the march of science but
she is now awakening from her lethargy. The new company has mapped out an ambitious
programme and with intelligent direction and skillful production bids fair to establish a
great reputation in the East. "

Business
Cipla occupies the third position in the domestic formulations market and commands a market
share of 4.74 per cent. Cipla currently markets over 350 products and is the market leader in the
generic segment consisting of more than 100 products. The company has strong presence in anti-
asthmatic, antibiotics, cardiovascular, anti-AIDS and anticancer areas. Cipla was the first one to
enter into the competitive generics business and has occupied the leadership position in this
segment.
Cipla is the market leader in anti asthmatic inhaler segment with over 70 per cent market share.
This segment is growing rapidly mainly due to increase in pollution leading to a spurt in the
number of asthma cases in patients. One of its major products, Asthalin inhaler has annual sales
of more than Rs 30 crore. The company offers full range of inhalers, rotahalers and spacers that
have gained excellent acceptance among the asthma patients. The company has introduced CFC-
free, environment-friendly Budecort inhalers for the first time in India. The CFC- free products
have a huge export potential .The inhaler therapy is preferred to tablets since the dose required is
about 1/ 10 of the oral dose. Moreover, the drug directly goes to the lung and gives instantaneous
relief to the patient. Cipla will be maintaining a leadership position due to the entire range of
inhalers and with the advantage of economies of scale.
Cipla has presence in niche segments such as cardiovascular, anti-AIDS, and anticancer. The
company has several products in each of these segments that will help it maintain a steady
growth in the long run. Cipla is building a strong presence in the anti-AIDS segment and is
offering the entire range of products. The company has reduced the prices of anti-AIDS drug five
times in the domestic market through technological advancements. The company's recent offer to
supply the cocktail of drugs consisting of Lamivudine, Nevirapine and Stavudine at US $ 350 per
patient per year to Medicins Sans Frontieres (MSF) has given it an international recognition.
Cipla has ambitious plans to supply anti-AIDS drugs at concessional prices to African countries
at a fraction of international price ranging from US $ 5000-8000 charged by MNCs. The
company manufactures the entire range of anti-AIDS drugs namely: Lamivudine, Zidovudine,
Navirapine, Didanosine and Stavudine. Cipla has introduced more than 100 new products in the
generic segment. The company has also introduced branded products in anti-epilepsy, anti-
AIDS, psychiatry, Obesity and NSAIDS segments. These products are likely to contribute
significantly in the current year and will help the company to improve the market share. Apart
from the anti-aids products, some of the new products launched by the company are Silagra
(Sildenafil citrate) for erectile dysfunction, Venlor(Venlafaxine) an anti-depressant, Obestat
(Sibutramine) for obesity and Rofixx(Rofecoxib) a Cox-2 inhibitor for acute and chronic pain.

FINANCIALS :

CAPITAL STRUCTURE:
A mix of a company's long-term debt, specific short-term debt, common equity and preferred
equity. The capital structure is how a firm finances its overall operations and growth by using
different sources of funds.

Debt comes in the form of bond issues or long-term notes payable, while equity is classified as
common stock, preferred stock or retained earnings. Short-term debt such as
working capital requirements is also considered to be part of the capital structure.

Capital Structure of Cipla : Year After Year (2000-2007)

 Class Of Authorized Paid Up Paid Up Face Paid Up
From To Issued Capital
Share Capital Shares (Nos) Value capital

2007 2008 Equity Share 175.00 155.66 777291357 2 155.46

2006 2007 Equity Share 175.00 155.66 777291357 2 155.46
2005 2006 Equity Share 175.00 60.17 299870233 2 59.97
2004 2005 Equity Share 65.00 60.17 299870233 2 59.97
2003 2004 Equity Share 65.00 60.17 59972349 10 59.97
2002 2003 Equity Share 65.00 60.17 59972349 10 59.97
2001 2002 Equity Share 65.00 60.17 59972349 10 59.97
2000 2001 Equity Share 65.00 60.17 59972349 10 59.97
The aspect that stands out in Cipla's financial statements is the high profit margins over the last
five years. The operating profit margins ranged around 27 per cent, while the net profit margins
have been around 17 per cent during the last few years.

CIPLA: BALANCE SHEET AS ON 31 March 2008

Profit and loss account:
Ratios: Net Profit margin
Profit After tax /sales

Year- 2007 Year-2008

= 668.03/3438.24 = 701.43/3997.9

= .1942 or 19.42% = .1755 or 17.55%

GROSS PROFIT MARGIN

Gross profit/Sales

Year-2007 Year-2008
= 814.93/3438.24 =850.05/3997.90

=.2370 or 23.7% =.2126 or 21.26%

Total Assets Turnover

Sales/Total Assets

Year-2007 Year-2008
= 4413.74/3438.24 = 5733.21/3997.90

= 1.28 Times = 1.43 Times

Debt/Equity Ratio
Year-2007 Year -2008
=123.56/3236.27 = 580.53/3755.82

= .038 = .154
 Working capital turnover

Sales/Net current
Assets

Year-2007 Year-2008
=3438.24/1893.42 =3997.90/2496.27

=1.816 = 1.60

Return on Investments(ROI)
EBIT/Net Assets

Year-2007 Year-2008
= 814.93/1893.42 = 850.05/2496.27

=.43 = .34

Return on Equity(ROE)
PAT/ Net worth(Equity)

Year-2007 Year-2008
=668.03/3236.27 = 701.43/3755.82

=.206 or 20.6% = .1867or 18.67%

(Rupees in )

Leverage Calculation:
 Degree of Operating Leverage (DOL)
DFL = 1+ Interest /PBT

Year-2007 Year-2008
= 1+(6.95/807.98) = 1+ (11.69/838.36)
= 1.0086 = 1.014

CIPLA- MAIN COMPETITORS:

Dr. Reddy's Labs
One of India's top drug makers, Dr. Reddy's Laboratories develops and manufactures generic and
branded pharmaceuticals and bulk pharmaceutical ingredients. Its stable of products includes
ulcer medicines (Omez is a leading seller), antibiotics, antidepressants (generic version of Eli
Lilly's Prozac), pain relievers, and cardiovascular drugs. Dr. Reddy's Laboratories is building up
its biotech business and is expanding its drug discovery research arm. The firm operates in more
than 100 countries. Its branded drugs are sold only in Asia, Eastern Europe, Latin America, and
other emerging markets. Its generic drugs are sold in North America and Western Europe.
GlaxoSmithKline
GlaxoSmithKline (GSK) is One of the top five pharmaceutical firms in the world, GSK's top
sellers include central nervous system therapies, respiratory drugs, and anti- infectives. The
company's top product is asthma medication Advair, which combines two of the company's other
products, Flovent and Serevent, to form a single, twice-daily treatment. Other bestsellers include
herpes treatment Valtrex, epilepsy treatment Lamictal, antidepressants Paxil and Wellbutrin,

migraine therapy Imitrex, and antibiotic Augmentin. The company's consumer products include
Tums for sour stomachs and dental care products Aquafresh and Sensodyne.

SUN Pharmaceuticals:
SUN Pharma are an international speciality pharma company, with a presence in 30 markets. also
makes active pharmaceutical ingredients. In branded markets, products are prescribed in chronic
therapy areas like cardiology, psychiatry, neurology, gastroenterology, diabetology and
respiratory.

Sun Pharma came into existence as a startup with just 5 products in 1983. In the time since, it has
crossed several milestones to emerge as an important speciality pharma company with
technically complex products in global markets, and a leading pharma company in India.

In India, they have reached leadership in each of the therapy areas that they operate in, and are
rated among the leading companies by key customers. Strengthening market share and keeping
this customer focus remains a high priority area for the company.

In the post-1996 years, Company has used a combination of internal growth and acquisitions to
drive growth; important mergers were those of the US, Detroit based Caraco Pharm Labs, ICN
Hungary (now called Alkaloida Chemical Company Exclusive Group), and that of the
internationally approved plants at Halol, India as well as Bryan, Ohio, US and Cranbury, NJ, US.

Lupin ltd.
Lupin Pharmaceuticals, Inc. is the U.S. wholly owned subsidiary of Lupin Limited, which is
among the top six pharmaceutical companies in India. Through our sales and marketing
headquarters in Baltimore, MD, Lupin Pharmaceuticals, Inc. is dedicated to delivering high-
 quality, branded and generic medications trusted by healthcare professionals and patients across
geographies.
Lupin Limited, headquartered in Mumbai, India, is strongly research focused. It has a program
for developing New Chemical Entities. The company has a state-of-the-art R&D center in Pune
and is a leading global player in Anti-TB, Cephalosporins (anti-infectives) and Cardiovascular
drugs (ACE-inhibitors and cholestrol reducing agents) and has a notable presence in the areas of
diabetes, anti-inflammatory and respiratory therapy.

We are building on our parent company’s strengths of vertical integration in discovery research,
process chemistry, active pharmaceutical ingredient production, formulation development and
regulatory filings. Lupin Pharmaceuticals, Inc. is committed to achieving its vision and mission
of becoming an innovation led transnational pharmaceutical company.

COMPETITIORS PERFORMANCE
LastPric MarketCa SalesTurnove NetProfi TotalAsset
Company e p. r t s
(Rs. cr.)
Sun Pharma 1,119.55 23,187.72 1,662.56 628.93 4,310.14
Cipla 187.95 14,609.19 4,226.81 700.48 4,336.35
GlaxoSmithKlin
1,150.40 9,744.24 1,570.30 537.66 1,366.67
e
Ranbaxy Labs 217.90 8,150.98 4,026.60 617.72 6,041.42
Dr Reddys
475.95 8,016.38 3,301.98 475.22 5,274.09
Labs
Divis Labs 1,167.25 7,557.77 1,033.19 353.56 960.07
Glenmark 257.75 6,457.15 1,372.69 389.02 1,552.79
Lupin 588.70 4,874.05 2,543.69 443.38 2,282.60
Piramal Health 220.60 4,610.83 1,930.02 301.48 1,520.76
CIPLA & COMPETITORS RATIOS COMPARISON
COMPANY RETURN ON ASSETS
RETURN ON EQUITY
CIPLA 19.2% 18.67%

DR. REDDY’S LAB 3.83% 10.32%

GLAXO- SMITHCLINE 17.5% 42.35%

LUPIN LTD. 10.31% 37.92%

SUN PHARMACEUTICALS 17.70% 38.30%

Mutual Funds Holding - Cipla

No. of
Scheme Name shares

Reliance Tax Saver (ELSS) Fund (G) 3,931,417

Reliance Equity Fund - Retail Plan (G)

3,035,661

Fidelity Equity Fund (G) 3,020,153

 Reliance Equity Advantg. Fund 1,853,322

HAREHOLDING PATTERN:
Mar-08

ndian promoters 17.93

oreign promoters 21.45

1.34

11.71

18.33

Public corporate
1.14
 23.84

3.56

777291357

Stock Prices for Cipla as on 15-01-09

CONDITION BSE NSE
Open 185.5 187.5

Day High 185.5 187.5

Day Low 181.05 180.55

Previous Close 187.8 187.95

52-Week high 243.55 244.95

52-Week low 146.4 145

P/E 20.76 20.75

Market Cap (Rs cr) 14146.86 14142.97

Volume 95150 1173467

BIBLIOGRAPHY:
WWW.CIPLA.COM

WWW.MONEYCONTROL.COM
WWW.FINANCE SCHOLAR.COM
WWW.EQUITYMASTER.COM
WWW.GOOGLEIMAGES.COM
WWW.SCRIBD.COM