eic of ranbaxy

8/2/2019 Eic of Ranbaxy

1/12

A

PROJECT REPORT

ON

STUDY ON FUNDAMENTAL ANALYSIS

OF

RANBEXY LABORETORIES LTD.

SUBMITTED TO

NARMADA COLLAGE OF MANAGEMENT, BHARUCH

AFFILIATED TO

GUJARAT TECHNOLOGICAL UNIVERSITY, AHMEDABAD

SUBMITTED BY

HARSHIT SUTHAR

ROLL NO: 1048

MBA (3RD SEMESTER)

UNDER THE GUIDANCE OF

MS. CHETNA MAKWANA


2/12

Economic Analysis

The economy of India is the eleventh largest economy in the world by

nominal GDP and the fourth largest by purchasing power parity (PPP). Followingstrong economic reforms from the socialist inspired economy of a post-independence Indian nation, the country began to develop a fast-pacedeconomic growth, as f ree market princ ip les were ini tiated in 1990for international competit ion and foreign investment. India is an emergingeconomic power with v e r y l a r g e p o o l o f h u m a n a n d n a t u r a lr e s o u r c e s , a n d a g r o w i n g l a r g e p o o l o f s k i l l e d professionals.Economists predict that by 2020, India will be among the leading economies of theworld.

The Gross Domestic Product (GDP)

In India expanded at an annual rate of8.80 percent in the last reportedquarter. From 2004 until 2010, India's average quarterly GDP Growthwas8.37 percent reaching an historical h igh of 10.10 percent inSeptember of 2006 and a record low of 5.50 percent in December of2004.

India's diverse economy encompasses tradit ional vi llage farming,modern agriculture, handicrafts, a wide range of modern industries,and a multitude of services. Services are the major source of economic growth,accounting for more than half of India's output with less than one third ofits labor force.

The economy has posted an average growth rate of more than 7% inthe decade since 1997, reducing poverty by about10 percentage points.Through this chart we can see that after the effects of recession Indianeconomy is coming out and again its on growth and its result is India'seconomy expanded 8.8% in the second quarter from a year earl ier,compared to an 8.6% on-year expansion in the first, and lifted by robustactivity in manufacturing.


3/12

Chart of Indian GDP Growth Rate:

Inf lat ion in Indian Economy

The inflation rate in India was last reported at 11.25 percent in July of2010. From1969 until 2010, the average inflation rate in India was 7.99percent reaching an histor ical h i gh of 34. 68 per cen t in Sep temb ero f 1974 and a record low o f -11 .31 percent i n May o f 1976.

I nf la ti on r at e r ef er s t o a g en er al r is e i n p ri ce s m ea su re d

ag ai ns t a sta nd ar d le ve l of purchasing power. The most well-knownmeasures o f In flat ion are the CPI wh ich measures co n s um er p r i c e s , a n d t h e G D P d e f l a t o r , w h i c h m e a s u r e s i n f l a t i on i nt h e w h o l e o f t h e domestic economy. Along with the growth of GDP, if theinflation rate also increases, then the real rate of growth would be very li tt le .

The demand in the consumer product industry is significantly a ff ec te d.T he i nd us tr ie s w h ic h c o me u n de r g o ve r nm en t p ri ce c on tr o lpo l i cy may l ose t he marke t . I f t he re i s m i l d l eve l o f i n f l at i on , i ti s good t o t he s t ock marke t bu t h i gh ra t e o f i n f l a t ion i s ha rmfu lt o t h e s t o c k m a r k e t . B u t w e c a n s e e a s t h e g o v e r n m e n t t r i e dhard to decrease the inflation.


4/12

Chart of Indian Inflation Rate:

Interest rate in India

The benchmark interest rate (reverse repo) in India was last reported at 6.00percent. In India, interest rate decisions are taken by the Reserve Bank ofIndia's Central Board of Directors. The official interest rate is the benchmarkrepurchase rate.

From 2000 until 2010, Indias average interest rate was 5.82 percent reaching anhistorical high of 14.50 percent in August of 2000 and a record low of 3.25percent in April of 2009. This page includes: India Interest Rate chart, historicaldata and news.

The interest rate affects the cost of financing to the firms. A decreasein interest rate implies lowers cost of f inance for f irms and moreprofi tab ili ty. More money is available at a lower interest rate for the brokerswho are doing business with borrowed money. Available of cheap fund ,

encourage speculation and rise in the price if shares. The interest rateIndia is h av i ng i s n e it h e r t o o l o w n o r t o o h i g h s o w e c a n s a yth at it is th e id ea l sc en ar io fo r th e investor to borrow the money fromthe market


5/12

Chart of Indian Interest Rate:


6/12

Ranbaxy Laboratories Limited is a pharmaceutical company that was incorporated in

India in 1961. The company went public in 1973 and Japanese pharmaceutical

company Daiichi Sankyo gained majority control in 2008. Ranbaxy exports its products

to 125 countries with ground operations in 46 and manufacturing facilities in seven

countries

Formation

Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a

Japanese company Shionogi. The name Ranbaxy is a combination of the names of its

first owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from

his cousins Ranbir and Gurbax. After Bhai Mohan Singh's son Parvinder Singh joined

the company in 1967, the company saw an increase in scale.

Trading

In 1998, Ranbaxy entered the United States, the world's largest pharmaceuticals

market and now the biggest market for Ranbaxy, accounting for 28% of Ranbaxy's

sales in 2005.

For the twelve months ending on 31 December 2005, the company's global sales were

at US $1,178 million with overseas markets accounting for 75% of global sales (USA:

28%, Europe: 17%, Brazil, Russia, and China: 29%). For the twelve months ending on

December 31, 2006, the company's global sales were at US $1,300 million.

Most of Ranbaxy's products are manufactured by license from foreign pharmaceutical

developers, though a significant percentage of their products are off-patent drugs that

are manufactured and distributed without licensing from the original manufacturer

because the patents on such drugs have expired.
http://en.wikipedia.org/wiki/Pharmaceuticalhttp://en.wikipedia.org/wiki/Shionogihttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Europehttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/File:Ranbaxy_Logo.svghttp://en.wikipedia.org/wiki/Pharmaceuticalhttp://en.wikipedia.org/wiki/Shionogihttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Europehttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Patent


7/12

In December 2005, Ranbaxy's shares were hit hard by a patent ruling disallowing

production of its own version of Pfizer's cholesterol-cutting drug Lipitor, which has

annual sales of more than $10 billion. In June 2008, Ranbaxy settled the patent dispute

with Pfizer allowing them to sell Atorvastatin Calcium, the generic version of Lipitor and

Atorvastatin Calcium-Amylodipine Besylate, the generic version of Pfizer's Caduet(R) in

the US starting November 30, 2011. The settlement also resolved several other

disputes in other countries.

On 23 June 2006, Ranbaxy received from the United States Food & Drug

Administration a 180-day exclusivity period to sell simvastatin (Zocor) in the U.S. as a

generic drug at 80 mg strength. Ranbaxy competes with the maker of brand-name

Zocor, Merck & Co.; IVAX Corporation (which was acquired by and merged into Teva

Pharmaceutical Industries Ltd.), which has 180-day exclusivity at strengths other than

80 mg; and Dr. Reddy's Laboratories, also from India, whose authorized generic

version (licensed by Merck) is exempt from exclusivity.

In June 2008, Japan's Daiichi Sankyo Company agreed to take a majority (50.1%)

stake in Ranbaxy, with a deal valued at about $4.6 billion. Ranbaxy's Malvinder Singh

remained as CEO after the transaction.

On 16 September 2008, the Food and Drug Administration issued two Warning Letters

to Ranbaxy Laboratories Ltd. and an Import Alert for generic drugs produced by two

manufacturing plants in India. By February 25, 2009 the U.S. Food and Drug

Administration said it halted reviews of all drug applications including data developed at

Ranbaxy's Paonta Sahib plant in India because of a practice of falsified data and test

results in approved and pending drug applications. "Investigations revealed a pattern of

questionable data," the FDA said.

On December 1, 2011, Ranbaxy got the much-awaited approval from the US Food and

Drug Administration to launch the generic version of drug lipitor in the United States ofAmerica after its patent got expired.

Acquisition
http://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/Cholesterolhttp://en.wikipedia.org/wiki/Lipitorhttp://en.wikipedia.org/wiki/Food_&_Drug_Administrationhttp://en.wikipedia.org/wiki/Food_&_Drug_Administrationhttp://en.wikipedia.org/wiki/Simvastatinhttp://en.wikipedia.org/wiki/Generic_drughttp://en.wikipedia.org/wiki/Merck_&_Co.http://en.wikipedia.org/wiki/Dr._Reddy's_Laboratorieshttp://en.wikipedia.org/wiki/Daiichi_Sankyohttp://en.wikipedia.org/wiki/United_States_of_Americahttp://en.wikipedia.org/wiki/United_States_of_Americahttp://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/Cholesterolhttp://en.wikipedia.org/wiki/Lipitorhttp://en.wikipedia.org/wiki/Food_&_Drug_Administrationhttp://en.wikipedia.org/wiki/Food_&_Drug_Administrationhttp://en.wikipedia.org/wiki/Simvastatinhttp://en.wikipedia.org/wiki/Generic_drughttp://en.wikipedia.org/wiki/Merck_&_Co.http://en.wikipedia.org/wiki/Dr._Reddy's_Laboratorieshttp://en.wikipedia.org/wiki/Daiichi_Sankyohttp://en.wikipedia.org/wiki/United_States_of_Americahttp://en.wikipedia.org/wiki/United_States_of_America


8/12

In June 2008, Daiichi-Sankyo acquired a 34.8% stake in Ranbaxy, for a value $2.4

billion. In November 2008, Daiichi-Sankyo completed the takeover of the company from

the founding Singh family in a deal worth $4.6 billion by acquiring a 63.92% stake in

Ranbaxy.
http://en.wikipedia.org/wiki/Daiichi-Sankyohttp://en.wikipedia.org/wiki/Ranbaxyhttp://en.wikipedia.org/wiki/Daiichi-Sankyohttp://en.wikipedia.org/wiki/Daiichi-Sankyohttp://en.wikipedia.org/wiki/Ranbaxyhttp://en.wikipedia.org/wiki/Daiichi-Sankyo


9/12

COMPANY ANALYSIS

BALANCE SHEET:

Sources Of Funds Dec '10 Dec '09 Dec '08 Dec '07 Dec '06

Total Share Capital 210.52 210.21 210.19 186.54 186.34

Equity Share Capital 210.52 210.21 210.19 186.54 186.34

Share ApplicationMoney

6.6 175.85 175.66 1.18 0.88

Preference ShareCapital

0 0 0 0 0

Reserves 4,915.28 3,748.54 3,330.92 2,350.68 2,162.79

Revaluation Reserves 0 0 0 0 0

Networth 5,132.40 4,134.60 3,716.77 2,538.40 2,350.01

Secured Loans 195.39 175.83 162.07 365.07 224.29

Unsecured Loans 4,065.33 3,172.55 3,563.30 3,137.96 2,954.31

Total Debt 4,260.72 3,348.38 3,725.37 3,503.03 3,178.60

Total Liabilities 9,393.12 7,482.98 7,442.14 6,041.43 5,528.61

Application Of Funds Dec'10 Dec'09 Dec'08 Dec'07 Dec'06

Gross Block 2,857.63 2,620.92 2,386.75 2,261.48 2,133.57

Less: Accum.Depreciation

1,145.52 1,027.52 930.07 791.96 699.54

Net Block 1,712.11 1,593.40 1,456.68 1,469.52 1,434.03

Capital Work inProgress

330.18 414.92 428.77 327.42 301.88

Investments 3,804.44 3,833.69 3,618.03 3,237.55 2,679.95

Inventories 1,489.91 1,230.48 1,198.52 976.07 954.91

Sundry Debtors 1,292.63 1,534.65 1,024.54 882.91 1,013.75

Cash and Bank Balance 22.44 25.56 49.86 69.38 27.06

Total Current Assets 2,804.98 2,790.69 2,272.92 1,928.36 1,995.72

Loans and Advances 1,470.45 1,967.65 2,351.98 882.99 581.18Fixed Deposits 2,689.85 728.56 1,885.08 111.07 44.09

Total CA, Loans &Advances

6,965.28 5,486.90 6,509.98 2,922.42 2,620.99

Deffered Credit 0 0 0 0 0

Current Liabilities 2,491.08 3,082.89 3,840.11 1,177.35 985.57

Provisions 927.82 763.03 731.2 738.14 522.67

Total CL & Provisions 3,418.90 3,845.92 4,571.31 1,915.49 1,508.24


10/12

Net Current Assets 3,546.38 1,640.98 1,938.67 1,006.93 1,112.75

Miscellaneous Expenses 0 0 0 0 0

Total Assets 9,393.11 7,482.99 7,442.15 6,041.42 5,528.61

Contingent Liabilities 276.13 261.05 252.85 201 159.4

Book Value (Rs) 121.74 94.16 84.24 68.01 63.03

PROFIT AND LOSS ACCOUNT:

Percitulars Dec'10 Dec'09 Dec'08 Dec'07 Dec'06

Income

Sales Turnover 5,687.33 4,797.49 4,676.21 4,344.39 4,218.98Excise Duty 40.96 15.9 24.17 51.37 53.86

Net Sales 5,646.37 4,781.59 4,652.04 4,293.02 4,165.12

Other Income 562.45 485.66 -1,587.64

551.13 -28.65

Stock Adjustments 161.43 33.96 115.59 40.66 44.7

Total Income 6,370.25 5,301.21 3,179.99 4,884.81 4,181.17

Expenditure

Raw Materials 2,181.22 1,916.58 2,049.30 1,861.17 1,708.23

Power & Fuel Cost 132.75 109.57 108.83 90.35 80.7

Employee Cost 608.28 582.5 472.65 420.04 328.45Other ManufacturingExpenses

96.68 89.94 94.65 82.6 79.52

Selling and AdminExpenses

1,332.70 1,306.25 1,402.77 1,341.03 1,234.42

Miscellaneous Expenses 185.14 158.07 383.26 123.9 146.23

Preoperative ExpCapitalised

0 0 0 0 0

Total Expenses 4,536.77 4,162.91 4,511.46 3,919.09 3,577.55

Perticulars Dec'10 Dec'09 Dec'08 Dec'07 Dec'06

Operating Profit 1,271.03 652.64 256.17 414.59 632.27

PBDIT 1,833.48 1,138.30 -1,331.47

965.72 603.62

Interest 54.19 39.47 145.83 93.43 58.44

PBDT 1,779.29 1,098.83 -1,477.30

872.29 545.18


11/12

Depreciation 228.35 148.2 154.47 118.73 106.75

Other Written Off 0 0 0 0 0

Profit Before Tax 1,550.94 950.63 -1,631.77

753.56 438.43

Extra-ordinary items 21.88 111.42 17.76 35.46 19.34

PBT (Post Extra-ord Items) 1,572.82 1,062.05 -1,614.01

789.02 457.77

Tax 415.48 488.86 -574.24 156.69 62.43

Reported Net Profit 1,148.73 571.98 -1,044.80

617.72 380.54

Total Value Addition 2,355.55 2,246.33 2,462.16 2,057.93 1,869.31

Preference Dividend 0 0 0 0 0

Equity Dividend 84.21 0 0 317.15 316.89

Corporate Dividend Tax 13.99 0 0 53.9 44.44

Per share data (annualised)

Shares in issue (lakhs) 4,210.41 4,204.17 4,203.70 3,730.71 3,726.87

Earning Per Share (Rs) 27.28 13.61 -24.85 16.56 10.21Equity Dividend (%) 40 0 0 170 170

Book Value (Rs) 121.74 94.16 84.24 68.01 63.03


12/12

ANALYSIS OF COMOANY

Particulars Dec'10 Dec'09 Dec'08 Dec'07 Dec'06

P/E RATIO 13.92962 27.92065 -15.2918 22.94686 37.21841

EPS 27.28 13.61 -24.85 16.56 10.21

DPS 0.200004 0 0 0.850106 0.850285

D/P RATIO (%) 40 0 0 170 170

ROE 5.456631 2.720993 -4.97074 3.311461 2.042181

CAGR= SALES OF THE ENDING YEARSALES OF THE BEGNING YEAR

= 5,687.334,218.98= 1.34803

CAGR= PROFIT OF THE ENDING YEARPROFIT OF THE BEGNING YEAR

= 1,148.73380.54

= 3.01868

eic of ranbaxy

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