marketing report on cipla

8/13/2019 marketing report on cipla

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Roll no. Name

26 Gadhiya Amit

35 Italiya Jaydeep

122 Bathani Nilesh

126 Chauhan Vipul

128 Chodvadiya Ashish

148 Gadhiya Chirag


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The Indian Pharmaceutical Industry today is in the front rank ofIndias science-based industries with wide ranging capabilities

in the complex field of drug manufacture and technology a

highly organized sector, the Indian Pharma Industry is estimated

to be worth $ 4.5 billion, growing at about 8 to 9 percentannually. It ranks very high in the third world, in terms of

technology, quality and range of medicines manufactured From

simple headache pills to sophisticated antibiotics and complex

cardiac compounds, almost every type of medicine is now made

indigenously.


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Top 20 Biopharmaceutical & Biotechnology companies in India, as of 2011

Rank Company Revenue 2011 (Rs crore)

1 Biocon 1483

2 Serum Institute of India 1041

3 Panacea Biotec 928.414 Nuziveedu Seeds Private Limited 610

5 Reliance Life Sciences 490

6 Quintiles 476.25

7 Novo Nordisk 462

8 Rasi Seeds 371.88

9 Mahyco 364.9

10 Trans Asia 350

11 Ankur Seeds 325

12 Syngene International 318

13 Bharat Biotech International 298.34

14 Indian Immunologicals Limited 28315 Krishidhan Seeds 276.13

16 Shantha Biotechnics 272

17 Novozymes 242

18 Bharat Serums 226

19 Jubilant Lifesciences 210

20 Eli Lilly and Company 204


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THE GROWTH SCENARIO:-

India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14

percent per year. It is one of the largest and most advanced among the

developing countries.

Over 20,000 registered pharmaceutical manufacturers exist in the country. The

domestic pharmaceuticals industry output is expected to exceed Rs260 billion

in the financial year 2002, which accounts for merely 1.3% of the global

pharmaceutical sector. Of this, bulk drugs will account for Rs. 54 billion (21%)

and formulations, the remaining Rs 210 billion (79%). In financial year 2001,

imports were Rs. 20 billion while exports were Rs87 billion.


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Advantage To India

1. Competent Work Force

2. Cost Effective Chemical Systems

3. Information & technology

4. Globalization

5. Consolidation


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World Wide Pharmaceutical Drug Production


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Indian Pharma IndustryAn Overview

The Indian Pharma industry has gained significant traction in the last few years. It is currently on

a high growth trajectory and rapidly integrating with the global industry. This integration is

opening up tremendous new opportunities for Indian Pharma across all segments includinggenerics, research and development of New Chemical Entities (NCE) and Contract Research and

Manufacturing Services (CRAMS). Indian companies are now well positioned to explore these

opportunities as they adopt effective and efficient business models that are spread across one or

more of each of these segments.


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Ci l


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Cipla

Cipla Limited

Type Public

Traded as BSE: 500087

NSE: CIPLA

Industry Pharmaceuticals

Founded 1935

Headquarters Mumbai, Maharashtra, India

Key people Y. K. Hamied (CMD), Chairman

Products Pharmaceuticals and diagnostics

Revenue 5,717.72 crore (US$1.26 billion) (2010)

Net income 1,082.59 crore (US$238.17 million)

(2010)

Employees over 16000

Website www.cipla.com


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Fundamentalanalysis is the study of economic, industry, and company conditions in an

effort to determine the value of a company's stock. Fundamental analysis typically focuses

on key statistics in a company's financial statements to determine if the stock price is

correctly valued.

Fundamental analysis is a method used to determine the value of a stock by analyzing the

financial data that is 'fundamental' to the company. Fundamental analysis is really a logical

and a systematic approach to estimating the future dividend and share price it is based on

the basic premise that share price is determined by number of fundamental factor relating to

the economy, industry and company. Fundamental analysis thus provide and analytical

framework for rational decision-making. The analytical framework is known as EICframework, or Economic Industry and Company analysis. Thus fundamental analysis insist

that no one should purchaser or sell a share on the basis of tips and rumor but on the basis

of detailed analysis and information.

Fundamental analysis includes:

1. Economic analysis

2. Industry analysis

3. Company analysis


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1. ECONOMICANALYSIS

The first step to this type of analysis includes looking at the macroeconomic situation.

Key Indicators of Economy

1. Industrial Growth

2. Core infrastructure industries

3. Inflation

4. Money indicator5. Stock market

6. Fiscal indicator

7. Merchandise Trade

8. Foreign investment

9. Foreign exchange reserves

10. Exchange rate


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GDP growth forecast for selected countries 2000-2050

GDP - Composition by Sector:-

Agriculture: 17.6%

Industry: 29%

Services: 53.4%


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2. INDUSTRYANALYSIS

The next step taken in analysis in this category is looking at the industry as a

whole. Industry Analysis includes

1. Total sales,

2. Price levels,

3. Competition and their effects,

4. Foreign competition,

5. Any entrances or exits from the industry.

Once the economic analysis is made the investor would look into the industry

group which appears promising in the coming year or years. Each Industry has a

life cycle of its own. As per industry life cycle theory, three stages of its life can be

discerned viz. Pioneering stage, expansion stage and stagnation stage.

The industry analysis should cover policy statements of the government from time

to time current developments in the industry, technological changes, market

conditions, capacity build-ups and utilization levels, labor problems, competitions

and foreign investment interest, global state of the industry and export potential.


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3. COMPANYANALYSIS:-

Last in this process of studying the fundamentals includes looking at the company

individually. Company Analysis includes

1. Sales,

2. Prices,

3. New products,

4. Earnings,

5. Any chance of debt or equity occurring.

Share prices depends partly on its intrinsic worth for which financial analysis of a

company is necessary to help the investor to decide whether to buy or not the share of

the company. The soundness and intrinsic worth of a company is known only by an in-

depth fundamental analysis. The market price of a share depends among otherparameters on the sound fundamentals of the company, the financial and operational

efficiency and the profitability of the company. An investor needs to know the

performance of the company, its intrinsic worth as indicated by some parameters like

book value, earning per share, P/E multiple etc.


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MEANING OF RATIO:-

A ratio is only a comparison of the numerator with the denominator. The tern ratio

refers to the numerical or quantitative relationship between two figures and

obtained by dividing the former by the latter.

Ratio analysis is an important and age old technique of financial analysis. The data

given in financial statements ratio are relative form of financial data and very

useful techniques to cheek upon the efficiency of a firm. Some ratio indicates thetrend or progress or downfall of the firm.

Aid to measure general efficiency: Ratios enable the mass of accounting data to

be summarized and simplified.

Aid to measure financial solvency: They point out firms liquidity position to

meet its short-tern obligation and long-tern solvency.


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1. Profitability Ratio

1. Gross Profit Ratio

Gross profit ratio (GP ratio)is the ratio of gross profit to net salesexpressed as a percentage. It

expresses the relationship between gross profit and sales.

Formula: - Gross Profit Ratio = (Gross profit / Net sales) 100

Company/Year 2007 2008 2009 2010 2011 2012 Average

Cipla 24.27 17.16 20.88 21.68 16.65 19.15 19.96

2007 2008 2009 2010 2011 2012

Cipla 24.27 17.16 20.88 21.68 16.65 19.15

0

5

10

15

20

25

30

Gross Profit Ratio

Here, the average gross profit Ratio of the 19.96 % for Cipla. In the year 2007 Gross

profit ratio is 24.27 which is the highest in the last six years. And in 2011 the ratio is 16.65

which is the lowest in the last six years.


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2. Net Profit Ratio

Net profit ratiois the ratio of net profit (after taxes) to net sales. It is expressed as percentage.

Formula:- Net Profit Ratio = (Net profit / Net sales) 100


Cipla 18.41 16.43 14.58 18.97 14.98 15.92 16.55

2007 2008 2009 2010 2011 2012

Cipla 18.41 16.43 14.58 18.97 14.98 15.92

0

5

10

15

20

Net Profit Ratio

This ratio also indicates the firm's capacity to face adverse economic conditions such as

price competition, low demand, etc. Obviously, higher the ratio the better is the

profitability. But while interpreting the ratio it should be kept in minds that the

performance of profits also be seen in relation to investments or capital of the firm and not

only in relation to sales.

Here, the average NP Ratio is for the 16.55 %. In the year 2010 it was 18.97 % which is

the highest in last six years. And the lowest was 14.58 % in the year 2009.

3 O ti P fit R ti


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3. Operating Profit Ratio

Operating ratiois the ratio of cost of goods sold plus operating expenses to

net sales. It is generally expressed in percentage.

Operating ratio measures the cost of operations per dollar of sales. This is

closely related to the ratio of operating profit to net sales.

Formula: - Operating Ratio = [(Cost of goods sold + Operating expenses) / Net sales] 100


Cipla 23.07 20.27 23.78 24.63 20.27 22.89 22.48

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012

Cipla 23.07 20.27 23.78 24.63 20.27 22.89

Operating Profit Ratio

Here, the average operating Ratio is of the company is 22.48 %. And the highest operating ratio

is 24.63 % in the year 2010. And the lowest ratio is 20.27 % in the year 2008 and as well as 2011also.

2 Liquidity & Solvency Ratios:


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2. Liquidity & Solvency Ratios:

1. Current Ratio

Current ratiomay be defined as the relationship between current assets and current liabilities. This

ratio is also known as "work ing capital r atio". It is a measure of general liquidity and is most widely

used to make the analysis for short term financial position or liquidity of a firm. It is calculated bydividing the total of the current assets by total of the current liabilities.

Formula: - Current Ratio = Current Assets / Current Liabilities


Cipla 2.65 2.62 1.81 2.17 1.94 3.12 2.39

0

0.5

1

1.5

2

2.5

3

3.5

2007 2008 2009 2010 2011 2012

Cipla 2.65 2.62 1.81 2.17 1.94 3.12

Current Ratio


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Interpretation:-

A relatively high current ratio is an indication that the firm is liquid and has the ability to payits current obligations in time and when they become due. On the other hand, a relatively low

current ratio represents that the liquidity position of the firm is not good and the firm shall not

be able to pay its current liabilities in time without facing difficulties. A ratio equal to or near

2:1 is considered as a standard or normal or satisfactory.

Here, the average Current Ratio of the company was 2.39 %. And it was exactly near about the

standard of current ratio which is 2:1. So we can say that satisfactory level of Current ratio issatisfied.


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2. Quick Ratio

Liquid ratiois also termed as "Liquidity Ratio",Acid Test Ratio" or "Quick Ratio". It is the ratio

of liquid assets to current liabilities. The true liquidity refers to the ability of a firm to pay its short

term obligations as and when they become due.

Formula: - Liquid Ratio = Liquid Assets / Current Liabilities


Cipla 1.76 1.88 1.93 1.57 1.56 1.89 1.77


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Interpretation:-

The quick ratio/acid test ratio is very useful in measuring the liquidity position of a firm. It

measures the firm's capacity to pay off current obligations immediately and is more rigorous test of

liquidity than the current ratio. It is used as a complementary ratio to the current ratio. Liquid ratio

is more rigorous test of liquidity than the current ratio because it eliminates inventories and prepaid

expenses as a part of current assets. Usually a high liquid ratio an indication that the firm is liquidand has the ability to meet its current or liquid liabilities in time and on the other hand a low

liquidity ratio represents that the firm's liquidity position is not good. As a convention, generally, a

quick ratio of "one to one" (1:1) is considered to be satisfactory.

Here, the average quick ratio is 1.77 %. And the highest quick ratio was 1.93 % in the year 2009.

And the lowest ratio was 1.56 % in the year 2011. And the quick ratio is satisfied.

0

0.5

1

1.5

2

2007 2008 2009 2010 2011 2012

Cipla 1.76 1.88 1.93 1.57 1.56 1.89

Quick Ratio

3 Debt-Equity Ratio


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3. Debt-Equity Ratio

Debt-to-Equity ratio indicates the relationship between the external equities or outsiders funds and

the internal equities or shareholdersfunds.

Formula: Debt Equity Ratio = External Equities / Internal Equities

Or

Outsiders funds / Shareholders funds


Cipla 0.04 0.15 0.22 -- 0.07 -- 0.14


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Interpretation:-

Debt to equity ratio indicates the proportionate claims of owners and the outsiders against the

firms assets. The purpose is to get an idea of the cushion available to outsiders on the

liquidation of the firm. However, the interpretation of the ratio depends upon the financial and

business policy of the company. A ratio of 1:1 is usually considered to be satisfactory ratio

although there cannot be rule of thumb or standard norm for all types of businesses.

Here, the average Debt-Equity Ratio is of Cipla is 0.14 %. And the highest ratio was 0.22 % in

the year 2009. And the lowest ratio was 0.04 % in the year 2007. It was near about 0 in 2010 as

well as 2012.

4 Long term Debt Equity Ratio


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4. Long term Debt-Equity Ratio

It is also known as external internal equi ty ratio. It is determined to ascertain soundness of the long

term financial policies of the company.

Formula: - Long term Debt Equity Ratio = Total Long Term Debts / Total Long Term Funds

Or

Total Long Term Debts / Shareholders Funds


Cipla 0.04 0.15 0.02 -- -- -- 0.10

Interpretation:-

Here, the average Long-term Debt Equity Ratio is for company was 0.10%. and the highest ratio was

0.15 % in the year 2008 and the lowest ratio was 0.02 % in the year 2009. In the last 3 years we can

say that there is no long term debt in company.

3 Turn over Ratios:


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3. Turn-over Ratios:

1. Inventory Turn-over Ratio

Stock turnover ratio and inventory turnover ratio are the same. This ratio is a relationship

between the cost of goods sold during a particular period of time and the cost of average inventoryduring a particular period. It is expressed in number of times. Stock turnover ratio / Inventory

turnover ratio indicates the number of time the stock has been turned over during the period and

evaluates the efficiency with which a firm is able to manage its inventory. This ratio indicates

whether investment in stock is within proper limit or not.

Formula:-

Inventory Turnover Ratio = Cost of goods sold / Average inventory at cost

Inventory Turnover Ratio = Net Sales / Average Inventory at Cost

Inventory Turnover Ratio = Net Sales / Average inventory at Selling Price

Inventory Turnover Ratio = Net Sales / Inventory


Cipla 3.71 3.83 3.79 4.18 3.73 3.88 3.85


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Interpretation:-

Inventory turnover ratio measures the velocity of conversion of stock into sales. Usually a high

inventory turnover/stock velocity indicates efficient management of inventory because more

frequently the stocks are sold, the lesser amount of money is required to finance the inventory. A lowinventory turnover ratio indicates an inefficient management of inventory. A low inventory turnover

implies over-investment in inventories, dull business, poor quality of goods, stock accumulation,

accumulation of obsolete and slow moving goods and low profits as compared to total investment.

Here, the average Inventory Turnover Ratio is 3.85 % and the highest ratio is 4.18 % in the year 2010

and the lowest ratio is 3.71 % in the year 2007.

2 Debtors Turn over Ratio


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2. Debtors Turn-over Ratio

Debtorsturnover ratio or accounts receivable turnover ratio indicates the velocity of debt collection

of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over

during a year.

Formula: - Debtors Turnover Ratio = Total Sales / Debtors


Cipla 3.74 3.47 3.24 3.31 4.14 4.63 3.76

Interpretation:-

Here, the average Debtors Turnover Ratio is for the company was 3.76 % and the highest ratio was

4.63 % in 2012 and the lowest ratio was 3.24 % in the year 2009.

3. Fixed Assets Turn-over Ratio


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3. Fixed Assets Turn over Ratio

Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the

efficiency and profit earning capacity of the concern.

Formula:- Fixed Assets Turnover Ratio = Cost of Sales / Net Fixed Assets


Cipla 2.75 1.91 1.94 1.94 1.61 1.62 1.96

Interpretation:-

Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-

utilization of fixed assets.

Here, the average Fixed Assets Turnover Ratio is for company was 1.96 %. And the highest ratio

was 2.75 % in the year 2007 and lowest ratio was 1.61 % in the year 2011.

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4. Valuation Ratios:

1. Dividend payout Ratio

Dividend payout ratiois calculated to find the extent to which earnings per share have been used

for paying dividend and to know what portion of earnings has been retained in the business. It is an

important ratio because ploughing back of profits enables a company to grow and pay more dividends

in future.

Formula: - Dividend Payout Ratio = Dividend per Equity Share / Earnings per Share


Cipla 27.22 25.92 23.41 17.31 27.23 16.60 22.95


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Interpretation:-

Here, the average Dividend Payout Ratio is for the company 22.95 %. The highest ratio

was 27.22 % in the year 2007 and the lowest was 16.60 % in the year 2012. From the

above we can saw that company making reserve by 77 % of EPS so we can say that

company give priority to reserve than dividend.

2. Earnings per Share


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2. Earnings per Share

An earnings per share ratio (EPS Ratio) isa small variation of return on equity capital ratio and

is calculated by dividing the net profit after taxes and preference dividend by the total number of

equity shares.

Formula: - (Net profit after tax Preference dividend) / No. of equity shares (common shares)


Cipla 8.59 9.02 9.99 13.47 11.96 14.00 11.17

Here, the average Earning per Share ratio of company was 11.17 %. And the highest ratio

was 14 % in the year 2012 and the lowest ratio was 8.59 % in the year 2007.


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1. Low cost of production.

2. Large pool of installed capacities

3. Efficient technologies for large number of Generics.

4. Large pool of skilled technical manpower.

5. Increasing liberalization of government policies.

Strengths

Weakness


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1. Fragmentation of installed capacities.

2. Low technology level of Capital Goods of this section.

3. Non-availability of major intermediaries for bulk drugs

4. Lack of experience to exploit efficiently the new patent regime.

5. Very low level of Biotechnology in India and also for New Drug Discovery

Systems.

6. Lack of experience in International Trade.

7. Low level of strategic planning for future and also for technology

forecasting.

Opportunities


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1. Growing attention for health.

2. New diagnoses and new social diseases.

3. Spreading prophylactic approaches.

4. Saturation point of market is far away.

5. New therapy approaches.

6. New delivery systems.

7. Spreading attitude for soft medication (OTC drugs).

8. Easier international trading.

pp

Threats


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1. High Cost of discovering new products and fewer discoveries.

2. Stricter registration procedures.

3. High entry cost in newer markets.

4. Competition, particularly from generic products.

5. More potential new drugs and more efficient therapies.

6. Switching over form process patent to product patent.

Threats


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Here the average gross profit Ratio of the 19 96 % for Cipla In the year 2007 Gross


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Here, the average gross profit Ratio of the 19.96 % for Cipla. In the year 2007 Gross

profit ratio is 24.27 which is the highest in the last six years. And in 2011 the ratio is

16.65 which is the lowest in the last six years.

Here, the average NP Ratio is for the 16.55 %. In the year 2010 it was 18.97 % which is

the highest in last six years. And the lowest was 14.58 % in the year 2009.

Here, the average operating Ratio is of the company is 22.48 %. And the highest

operating ratio is 24.63 % in the year 2010. And the lowest ratio is 20.27 % in the year

2008 and as well as 2011 also.

Here, the average Current Ratio of the company was 2.39 %. And it was exactly nearabout the standard of current ratio which is 2:1. So we can say that satisfactory level of

Current ratio is satisfied.

Here, the average quick ratio is 1.77 %. And the highest quick ratio was 1.93 % in the

year 2009. And the lowest ratio was 1.56 % in the year 2011. And the quick ratio is

satisfied.

Here, the average Debt-Equity Ratio is of Cipla is 0.14 %. And the highest ratio was

0.22 % in the year 2009. And the lowest ratio was 0.04 % in the year 2007. It was near

about 0 in 2010 as well as 2012.


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Here, the average Long-term Debt Equity Ratio is for company was 0.10%. and the

highest ratio was 0.15 % in the year 2008 and the lowest ratio was 0.02 % in the year

2009. In the last 3 years we can say that there is no long term debt in company.

Here, the average Inventory Turnover Ratio is 3.85 % and the highest ratio is 4.18 % inthe year 2010 and the lowest ratio is 3.71 % in the year 2007.

Here, the average Debtors Turnover Ratio is for the company was 3.76 % and the highest

ratio was 4.63 % in 2012 and the lowest ratio was 3.24 % in the year 2009.

Here, the average Fixed Assets Turnover Ratio is for company was 1.96 %. And thehighest ratio was 2.75 % in the year 2007 and lowest ratio was 1.61 % in the year 2011.

Here, the average Dividend Payout Ratio is for the company 22.95 %. The highest ratio

was 27.22 % in the year 2007 and the lowest was 16.60 % in the year 2012. From the

above we can saw that company making reserve by 77 % of EPS so we can say that

company give priority to reserve than dividend.

Here, the average Earning per Share ratio of company was 11.17 %. And the highest ratio

was 14 % in the year 2012 and the lowest ratio was 8.59 % in the year 2007.


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This is the final and most important stage of the entire project. The main objective of myproject ends with this Stage. This part will indicate to the investor, creditors, and

shareholders each of the Companys overall operating efficiency and performance that

will help them to make the most efficient investment decision.

The final investment decision is given on the basis of ratio analysis. Thus, it will highly

affect the investment decision.

From the analysis of pharmaceutical company. I found that the financial position and the

capital structure of the Cipla is stronger company. An earnings per share of the Cipla is

also good position. So it is also good company for the earning per share for investors.

But after that according to me it is advisable for the investing money in Cipla ltd. On thebase of overall analysis.


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Ph i l h l f I i h f i d i


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Pharmaceutical company have lots of room to grow, no Invest in these types of industries

helps the investors at long time.

Do not invest in inactive shares generally it is difficult to encase them.

Before investing we should undertake a deeps study on the net sales, net profits in

relations to equity capital employed &should attempt to forecast for the coming years.

From the company point of view, the company should allow the investors to take part in

board of directors meeting &gives maximum dividend to the shareholders.

Do not over pay for growth.

Do not invest in unlisted shares.

The Investors should become cautious while investing for very long time.

The investors should analyze the price movement.

Economic performance is greatly affected to the performance of the industries of the

country, so investors should know economic performance of the country while investing.


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Web sites:-

1) General:-

a. http://www.wikipedia.org/

b. http://www.Moneycontrol.com/

c. www.economywatch.com

2) Company`s Web sites:-www.cipla.com

Books& Other Material:-

1) Book:- Financial Management (Fifth

Edition)

Author: - M.Y. Khan & P.K. Jain Publication:

- Himalaya publication house.

2) Book:- Management Accounting (ThirdEdition)

Author: - R.S.N. Pillai & Bhagavathi

Publication: - Sultan Chand & Co.

3) Magazine:-Fundamental analysis of

pharmaceutical industries

Publication:- BSE training institute.


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marketing report on cipla

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