maan pharma

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FINANCIAL ANALYSIS

OFMAANMAANPHARMACEUTICALSPHARMACEUTICALS LTDLTD..

AProject ReportPresented To

Mr. Jayaashish SethiFaculty Member,

Nootan Sarva Vidyalaya Kelavani MandalSanchalit,

MBA College, Visnagar.

OnJuly 15, 2005

In Partial Fulfillment of the Requirementfor The summer Training Course In The

Master of Business AdministrationProgramme

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By

HARSHADKUMAR V. PATEL(Roll No. 38)

CONTENTS

serial no. perticulars page no.

Preface I

Acknowledgement IIExecutive Summery III

GENERAL INFORMATION

1 Existing Managing Body 1

2 Introduction of The Company 2

3 Maan at a Glance 3

4 Achievement & Quality Policy 5

5 Organizational Chart 6

FINANCIAL ANALYSIS

6 Ratio Analysis 7

6.1 Profitability ratios 7

6.2 Liquidity ratios 10

6.3 Leverage ratios 11

6.4 Turnover ratios 13

6.5 Du Pont Analysis 17

6.6 Comparison of Ratios of Four Years 20

7 Horizontal Analysis 21

7.1 Comparative Profit & Loss A/c (2002-03) 217.2 Comparative Profit & Loss A/c (2003-04) 23

7.3 Comparative Profit & Loss A/c (2004-05) 25

7.4 Comparative Balance Sheet (2002-03) 31



8 Vertical Analysis 41

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8.1 Common-size Profit & Loss A/c 41

8.2 Common-size Balance Sheet 42

9 Trend Analysis 45

9.1 Trends in Sales, Expenditure & Profit 45

9.2 Trends in Assets & Liabilities 47

10 Conclusion 50

11 Annexure

A Financial Statements of The Company

Profit & Loss A/C (2002-03)

Balance sheet and its schedules(2002-03)


Balance sheet and its schedules (2003-04)


Balance sheet and its schedules (2004-05)B Product profile

12 Bibliography

LIST OF TABLES AND GRAPHS

SERIAL

NO.PERTICULARS

PAGE

NO.1 Horizontal Analysis

1.1 Growth in the Year (2002-03) 22



1.4 Comparative Growth of Last Three Years 27

1.5 Status of Income, Expenditure & Profit in Four Years 28

1.6 Sales in Four Years 29

1.7 Percent Increase in Sales & Profit 30

1.8 Analysis of Sources of Funds for the Four Years 38

1.9 Changes in the Components of Sources of Funds in 4 Years 40

2 Vertical Analysis

2.1 Composition of Shareholders Funds & Liabilities 43

2.2 Composition of Assets in Different Years 44

3 Trend Analysis

3.1 Trends in Sales, Expenditure & Profit 45

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3.2 Trends in Funds & Liabilities 48

3.3 Trends in Assets 49

NUTAN SARVA VIDYALAYA KELAVANI MANDAL

SANCHALIT,

MBA COLLEGE, VISNAGAR(Affiliated to Hemchandracharya North Gujarat University, Patan)

Sankalchand Patel Sahakar Vidyadham, Gandhinagar-Ambaji Link Road, Visnagar384 315

Tel.: (02762) 227345 Fax: (02765) 224982 E-mail: [email protected]

C E R T I F I C A T E

This is to certify that Mr. Harshad V. Patel

student of MBA, Roll No.:-38 havesatisfactorily completed his

project report regarding summer trainingduring

the period of May June 2005.

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Date: - 15th July, 2005

Place: - Visnagar

Professor in Charge: - Director: -

EXECUTIVE SUMMERY

This project report is prepared on financial analysis of Maan Pharmaceuticals Ltd. This

report containing mainly two parts General information and main theme of the reportthat is financial analysis.

The initial part of this report is the general information of the Maan Pharmaceuticals Ltd.

General information containing the introduction of the Maan and its facilities, itsorganizational structure, its managing body and its product profile.

The second part of this report containing financial analysis of Maan. The financialanalysis part containing Ratio analysis, Du Pont analysis, Horizontal analysis, Vertical

analysis, and Trend analysis and their interpretations.

Ratio analysis comprising mainly four types of ratio analysis as under: -

Profitability ratios

Liquidity ratiosLeverage ratios

Turnover ratios

There are total seventeen different ratios calculations and their analysis and

interpretations. These ratios are calculated for three and four years. Then after, there iscomparison of Maans ratios of the year 2004 with the Pharmaceuticals industry average

ratios.

Du Pont analysis containing Du Pont chart applied to Maan Pharma and extension of DuPont chart.

Another part is the Horizontal analysis. This part containing comparative Profit & Loss

account and comparative Balance Sheet of three financial years 2002-03, 2003-04 &

2004-05. This part also containing various graphs of growth and sales. Some of the

graphs are based on Profit & Loss A/C and some are on Balance Sheet.

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The vertical analysis part of this report containing common-size Profit & Loss A/C and

common-size Balance Sheet of four years. This part also containing two graphs based on

Balance Sheet. They are: -Composition of shareholders funds & liabilities in different years

Composition of assets in different years.

At last there is Trend analysis. This part containing trend analysis of various components

of Profit & Loss A/C and Balance Sheet of four years. There are three graphs of trend

analysis as under: -Trends of sales, expenditure and profit

Trends in Funds & Liabilities

Trends in Assets.

EXISTING MANAGING BOY

BOARD OF DIRECTORSNaranbhai N. Patel (Chairman)

Jayantibhai N. Patel (Director)Lalubhai M. Desai (Director)

Gunvantbhai S. Patel (Director)

BANKERS

The Mehsana Urban Co.op.Bank Ltd., Mehsana

The Mehsana Urban Co.op.Bank Ltd., Ahmedabad

I.D.B.I., AhmedabadBank of India, Ahmedabad

ADMINISTRATIVE OFFICE

106, Harikrupa Chambers,

B/h National Chambers, Ashram Road,Ahmeabad-9, Gujarat, India.

Fax: 091(079)6580950

Phone: 091(079)6589970, 6583601

E-mail: [email protected]

REGISTERED OFFICE & FACTORY

Plot No.1, G.I.D.C., Phase-2,

Modhera Road, Mehsana, Gujarat, India.Phone: 091(02762)59441

6
mailto:[email protected]:[email protected]


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The company has Tablet, Liquid Oral, Capsule and Powder sections. The company has

separate sections for B-lactum products and hormones. These sections are equipped with

semi automatic and fully automatic machineries like Tablet compression machine, FB

Dryers, Liquid auto filing machine & online automatic powder filling machine.

Quality:

Quality is the foundation of Maan culture; we demonstrate quality by developing and

providing products and services which fulfill the needs of global markets. Through our

commitment for continuous improvement, we will meet both internal and external

customer requirements at all times through our continuous efforts.

Quality is amongst the most important parameters, which can persuade a customer to buy

a product.

Consistent pursuit of Total Quality Management has always been a cornerstone of Maanand this pursuit will result in achieving greater milestones in the years to come.

We do not assess ourselves by figures on the balance sheet but by fulfilling aspirationsand demands of our customers and suppliers.

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Constant pursuit of Total Quality Management has always been a cornerstone of Maan

and this pursuit has resulted in the equipment of most modern analytical facilities in

Quality control and Quality assurance department.

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ORGANISATIONAL CHART

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ACHIEVEMENTS

We, at Maan Pharmaceuticals are making efforts in the right direction with the niche of

specialization of Good Manufacturing Practices as per WHO specification and system

implementation through ISO 9002 certification. The organization has acquired GoodManufacturing Practice as recommended by WHO and total quality and system

implementation through ISO 9002.

We have plans for approvals from FDA (USA), TGA (Australia) and MCA (UK) by

2005.

QUALITY POLICY

Quality Policy

"Health is Wealth"

We believe this and to achieve it we, at

Maan Pharmaceuticals Ltd.,

dedicatedly assuring quality health care products ataffordable price to all needy

species of the world with their entire satisfaction.

"SARVE SANTU NIRAMAYA" N.N.Patel

C.M.D.


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RATIO ANALYSIS

Ratio analysis among the most popular and widely used tools of financial analysis. Ratios

are tools providing us with clues and symptoms of underlying conditions. Analysis of a

ratio reveals important relations and bases of comparison in uncovering conditions andtrends difficult to detect by inspecting individual components comprising the ratio. This

ratio analysis contains four types of ratios as below:

Profitability ratios

Liquidity ratios

Leverage ratios

Turnover ratios

PROFITABILITY RATIOS

Two types of profitability ratios are there:1. Profit margin ratios

2. Rate of return ratios

Profit margin ratios show the relationship between profit & sales. Two popular profit

margin ratios are: -

Gross profit margin ratio

Net profit margin ratio

Gross profit margin ratio: - It shows the margin left after meeting manufacturing

costs. It measures the efficiency of production as well as pricing.

Gross profit margin ratio = Gross profit/Net sales

2004-2005 2003-2004 2002-2003 2001-2002

Gross Profit 169,734,779.90 152,122,701.97 88,110,529.58 39,743,302.26

Net sales 639,743,859.00 573,740,860.00 376,733,278.00 152,048,160.00

Ratio 0.27 0.27 0.23 0.26

Ratio (%) 26.53 26.51 23.39 26.14

Gross profit margin ratio is good in 2004-05 & 2003-04.

It is lower in 2002-03 because of the increase in cost of goods sold (COGS) in2002-03 is 157 per cent which is more than increase in sales which is 147.77 per cent.

It is better in 2003-04 because of the increase in sales is 52.29 per cent and

increase in COGS is 46.08 per cent which is lower than sales.

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This is because in 2003-04 the average total assets has been increased by 38.65 per

cent against the increase in profit by 22.85 per cent.

This shows the inefficiency in the use of capital. The company can earn more profitby optimizing the use of assets.

In 2004-05, ROA again increased to 7.42 per cent because of increase in profit by

27.95 per cent is more than increase in ATA by 15 per cent. Earning power: - It is a measure of operating profitability. The earning power is a

measure of business performance which is not affected by interest & tax.

Earning power = Profit before interest & tax/Average total assets

2004-2005 2003-2004 2002-2003 2001-2002

Profit before I & T 63,486,105.31 54,567,634.62 38,028,961.04 19,507,945.24

Average total assets

336,994,969.1

2

290,908,502.0

0 209,810,028.02

Ratio 0.19 0.19 0.18

Ratio (%) 18.84 18.76 18.13

The earning power of the company has been increased to 18.84 per cent in 2004-05

from 18.13 per cent in 2002-03.

This is because the increase in profit before interest & tax (PBIT) is more thanincrease in average total assets.

In 2003-04, the PBIT is increased by 43.49 per cent while the PAT is increased by

22.85 per cent. The reason for that is increase in interest burden of the company by60.51 per cent.

In 2004-05, PBIT increased by 16.34 per cent while the PAT increased by 27.65 per

cent because of increase in interest & tax is only by 9.87 per cent which can be seen

from net profit margin ratio.

Return on equity: - It measures the profitability of equity funds invested in firm.

Return on equity = Profit after tax/Average shareholders equity

2004-2005 2003-2004 2002-2003 2001-2002

PAT or equity earning

24,991,410.8

4

19,532,892.5

8 15,900,140.63 8,251,041.45

Average shareholders eq.

91,455,173.0

5

79,414,860.6

3 68,107,934.20

Ratio 0.27 0.25 0.23

Ratio (%)

27.3

3 24.60 23.35

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Return of the equity of the company has been increased in 2004-05 to 27.33 per

cent from 23.35 per cent in 2002-03.This means that per Re.1 of shareholders equity,company earning 27 paisa.

In 2003-04,Average shareholders equity (owners capital + reserve & surplus)

has been increased by 16.60 per cent while the PAT has been increased by 22.85 per

cent and in 2004-05, increase in average shareholders equity is 15.16 per cent andincrease in PAT is 27.95 per cent. So the return on equity has increased.

Earning per share: - It measures the earning per equity shares.

Earning per share = Profit after tax/No. of equity shares

2004-2005 2003-2004 2002-2003 2001-2002

Profit after tax24,991,410.8

419,532,892.5

815,900,140.6

3 8,251,041.45

Number of equity shares 5,250,000.00 5,250,000.00 5,250,000.00 5,250,000.00

Ratio (Rs.)

4.7

6 3.72 3.03 1.57

EPS of the company is increasing every year due to increasing in profit every yearand constancy in no. of equity shares every years.

In the year 2002-03, the EPS has increased by Rs1.46 from Rs.1.57 to Rs.3.03while in the year 2003-04, the EPS increased by only by Rs.0.69 (69 paisa) from

Rs.3.03 to Rs.3.72. in 2004-05, the EPS increased by Rs.1.04 from Rs.3.72 toRs.4.76. The reason for less increase in 2003-04 is the less profit in comparison to last

year. We can see it from net profit margin ratio.

LIQUIDITY RATIOS

Liquidity refers to the ability of a firm to meet its obligations in short run, usually one

year. Liquidity ratios are generally based on the relationship between current assets (thesources for meeting short term obligations) and current liabilities.

Current ratio: - The current ratio measures the ability of the firm to meets its currentliabilities current assets get converted into cash in the operating cycle of the firm

and provide the funds needed to pay current liabilities. Apparently, the higher the

ratio, the greater the short term solvency.

Current ratio = Current Assets/Current liabilities

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2004-2005 2003-2004 2002-2003 2001-2002

Current assets

283,503,517.9

0

258,624,465.8

8

161,280,612.1

3 127,273,712.41

Current liabilities

242,470,117.4

1

232,628,846.6

9

147,730,571.2

7 93,384,750.10Ratio 1.17 1.11 1.09 1.36

Current ratio is 1.36 in 2001-02 and decreased to 1.09 in 2002-03 because currentliabilities increased by 58.20 per cent against the increase in current assets by 26.72

per cent.

But as years goes it is increasing and reached to 1.17 in 2004-05.

Acid-test ratio or Quick ratio: - The quick ratio is a fairly stringent measure of

liquidity. It is base on those current assets which are highly liquid-inventories areexcluded from the numerator of this ratio because inventories are deemed to be the

least liquid component of current assets.

Quick ratio = Quick assets/Current liabilities

2004-2005 2003-2004 2002-2003 2001-2002

Liquid assets135,097,660.9

0123,991,738.1

984,679,300.1

3 85,078,020.41

Current liabilities242,470,117.4

1232,628,846.6

9147,730,571.2

7 93,384,750.10

Ratio 0.56 0.53 0.57 0.91

Quick ratio has decreased from 0.91 in 2001-02 to 0.53 in 2003-04 and increased to0.56 in 2004-05.

The reason for increase in 2004-05 is increase in liquid current assets is more than

increase in current liabilities.

LEVERAGE RATIOS

Financial leverage refers to the use of debt finance. While debt capital is a cheaper sourceof finance, it is also a riskier source of finance. Leverage ratios help in assessing the riskarising from the use of debt capital.

Two types of ratios are commonly used to analyze financial leverage.Structural ratios

Coverage ratios

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Structural ratios are base on the proportions of debt and equity in the financial structure

of the firm. Important structural ratios are: -

Debt equity ratio

Debt assets ratio

Debt equity ratio: - This ratio shows the relative contributions of creditors andowners. The lower the ratio, the higher the degree of protection enjoyed by the

creditors.

Debt equity ratio = Debt/Equity

2004-2005 2003-2004 2002-2003 2001-2002

Total liabilities

291,136,947.4

1

287,869,369.6

9

191,004,763.4

3 127,798,070.83

Shareholder's equity

100,138,629.3

6 82,771,716.74 76,058,004.51 60,157,863.88Ratio 2.91 3.48 2.51 2.12

Debt equity ratio of the Maan increasing every year shows the increase of debt

portion in capital structure. But it has decreased to 2.91 in 2004-05 because the

reserve & surplus has increased by 20.98 per cent against the total liabilities increased

only by 1.14 per cent

In the year 2002-03, total liabilities have increased by 49.46 per cent and

shareholders equity increased by 26.43 per cent. So the D/E ratio increased by 0.39from 2.12 to 2.51.

In the year 2003-04, total liabilities is increased by 50.71 per cent while theshareholders equity increased by 8.82 per cent. So the D/E ratio increased by 0.97

from 2.51 to 3.48.

Debt assets ratio: - This ratio measures the extent to which borrowed funds supportthe firms assets.

Debt assets ratio = Debt/Assets (the balance sheet total)

2004-2005 2003-2004 2002-2003 2001-2002

Debt291,136,947.4

1 287,869,369.69 191,004,763.43 127,798,070.83

Assets

344,244,866.3

6 335,925,574.08 252,915,146.92 172,589,801.61

Ratio 0.85 0.86 0.76 0.74

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Debts assets ratio is increasing means increase in assets of the company are financed

more by debt capital.

In the year 2003-04, the debt assets ratio is 0.86 means every Re.1 of asset issupported by 86 paisa of debt capital and 14 paisa of equity capital. This can be seen

from the debt equity ratio which is increasing every year.

In 2004-05, the debt assets ratio decreased to 0.85 because of decrease in debt equityratio.

Coverage ratios show the relationship between debt servicing commitments and the

sources for meeting these burdens. Important coverage ratio is: -

Interest coverage ratio

Interest coverage ratio: - This is a measure of the protection available to the

creditors for payment of interest charges by the company. The ratio shows whetherthe company has sufficient income to cover its interest requirements by a widemargin. A high interest coverage ratio means that the firm can easily meets its interest

burden.

Interest coverage ratio = Profit before interest & taxes/Interest

2004-2005 2003-2004 2002-2003 2001-2002

PBIT63,486,105.3

154,567,634.6

238,028,961.0

4 19,507,945.24

Interest expenses35,247,223.0

033,450,994.0

020,840,187.3

9 10,477,613.79

Ratio (times) 1.80

1.6

3 1.82 1.86

Up to 2003-04, Interest coverage ratio is decreasing because of increasing in debtequity ratio and decrease in PBIT to net sales ratio.

In the year 2002-03, the PBIT is increased by 94.94 per cent against the increase of

interest expenses by 98.90 per cent and in the year 2003-04, PBIT increased by 43.49per cent against the increase in interest expenses by 60.51 per cent. So increase in

interest expenses is higher than increase in PBIT and that makes decrease in interest

coverage ratio. In 2004-05, interest coverage ratio has improved to 1.80 because PBIT increased by

16.34 per cent which is higher than increase in interest expenses which is only 5.37

per cent.

TURNOVER RATIOS

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0

COGS/360 days 1,305,580.78 1,171,161.55 801,729.86 311,957.94

Ratio(Days) 108.40 90.18 74.09

Days to sell inventory ratio is increasing. In 2002-03, it is 74 days and in 2003-04, it

is 90 days increased by 16 days. And in 2004-05, it is 108 days increased by 18 days. The reason behind this could be companys temptation to increase the sales. But with

increase in sales, the cost of receivables is also increasing. From this we can say thatincrease in sales is at the cost of increase in receivables cost.

Debtors turnover: - Debtors turnover ratio measures the efficacy of a companys

credit and collection policy. The ratio shows the number of times each year a

companys debtors turn into cash. The ratio provides some indication of the qualityof both the debtors and the companys collection efforts. A high debtor turnover ratio

indicates that the debtors were converted frequently into cash and the quality of the

companys portfolio of debtors can be considered good.

Debtors turnover ratio = Net sales/Average debtors

2004-2005 2003-2004 2002-2003 2001-2002

Net Sales639,743,859.0

0573,740,860.0

0376,733,278.0

0 152,048,160.00

Average debtors

118,571,973.9

3 91,909,839.36

55,784,286.6

3

Ratio (times) 5.40 6.24 6.75

Debtors turnover ratio has decreased from 6.75 to 5.40. The reason for decreasingthe debtors turnover ratio is the increase of average debtors at a higher rate thanincrease in sales.

Percentage of debtors of net sales is increasing. It is 14.81 per cent in 2002-03, 16.02

per cent in 2003-04 and18.53 per cent in 2004-05.

This shows the inefficient receivables management of the company.

Average collection period: - This ratio represents the no. of days worth of credit

sales that is locked in debtors (Account receivables). In simple terms it measures the

number of days it takes, on an average, to collects accounts receivables.

Average collection period = Average debtors/Average daily credit sales

2004-2005 2003-2004 2002-2003 2001-2002

Average debtors118,571,973.9

391,909,839.3

655,784,286.6

3

Net sales/360 days 1,777,066.2 1,593,724.61 1,046,481.33

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8

Ratio (Days) 66.72 57.67

53.3

1

The average collection period that is no. of days it takes to collect accountsreceivables has increased from 53 days to 58 days in 2004 to 68 days in 2004-05.

The credit terms of the sales are 40 days and the collection period is 68 days reflects

the one or more of the following conditions: - poor collection efforts, delay incustomer payments, customer in financial distress.

Fixed assets turnover: - This ratio measures sales per rupee of investment in fixed

assets. This ratio supposed to measure the efficacy with which fixed assets are

employed. A high ratio indicates a high degree of efficacy in assets utilization and

vice versa.

Fixed assets turnover ratio = Net sales/Average net fixed assets

2004-2005 2003-2004 2002-2003 2001-2002

Net sales639,743,859.0

0573,740,860.0

0376,733,278.0

0 152,048,160.00

Average net FA105,254,087.6

1103,837,528.6

8 78,739,741.81

Ratio 6.08 5.53 4.78

A fixed asset turnover ratio has increased reflects the efficient use of fixed assets.

In 2003-04, the average net fixed assets have been increased by 31.87 per centand the net sales are increased by 52.29 per cent. So the fixed assets turnover ratio has

increased from 4.78 to 5.53.

In 2004-05, the average net fixed assets increased by 1.36 per cent and the net

sales increased by 11.50 per cent. So the net fixed assets turnover ratio increased to

6.08.

Total assets turnover: - This ratio measures how efficiently assets employed overall.

Total assets turnover ratio = Net assets/Average total assets

2004-2005 2003-2004 2002-2003 2001-2002

Net sales

639,743,859.0

0

573,740,860.0

0

376,733,278.0

0 152,048,160.00

Average total assets 336,994,969.1 290,908,502.0 209,810,028.0

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2 0 2

Ratio (times) 1.90 1.97 1.80

Total assets turnover ratio has increased in 2003-04 that shows the efficient utilization

of total assets of the company.

But in 2004-05, it has decreased from 1.97 to 1.90 because the average total assetshave been increased by 15.84 per cent which is higher than increase in sales by 11.50

per cent.

This year the average total assets have been increased by 29.54 per cent against theincrease in sales by 52.29 per cent. So the total assets turnover ratio has increased

from 1.80 to 1.97.

DU PONT ANALYSIS

A useful system of analysis which considers important interrelationships based on

information found in financial statements.

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The basic Du Pont analysis may be extended to explore the determinants of the Return on

Equity (ROE).

Return on equity= Asset turnover * Net profit margin*leverage

(Net profit/Equity)= (Net profit/Sales)*(Sales/Total assets)*(Total assets/Equity)

(ROE) (NPM) (TATR) 1/ (1-DR)

The third component on the right hand side is the Total Assets divided by Equity is equalto 1 divided by 1 minus DR. [where DR is the Debt Ratio: Debt (D)/ Assets (A)]

The extension of Du Pont chart as applicable to Maan Pharmaceuticals Ltd. is as follows:

EXTENSION OF DU PONT CHART (2003-04)

25

Return on Equity

24.60 %

Net Sales

639,743,859.00

Net Profit

Margin3.91 %

Average Fixed

Assets

105,254,087.61

Average

Investments1,550,001.00

Average NetCurrent Assets

230,190,880.51

Net Sales

639,743,859.00

Average TotalAssets

336,994,969.12

Total AssetsTurnover

1.90

Return onTotal Assets

7.42 %


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EXTENSION OF DU PONT CHART (2004-05)

Breaking ROE into these three parts allows evaluation of how well one can manage the

companys assets, expenses, and debt. A manager has basically three ways of improvingoperating performance in terms of ROA and ROE. These are:

Increase capital asset turnover

Increase operating profit margins Change financial leverage

Each of these primary drivers is impacted by the specific decisions on cost control,efficiency productivity, marketing choices etc.

Importance of Dupont Analysis: Any decision affecting the product prices, perunit costs, volume or efficiency has an impact on the profit margin or turnoverratios. Similarly any decision affecting the amount and ratio of debt or equity used

will affect the financial structure and the overall cost of capital of a company.

Therefore, these financial concepts are very important to evaluate as every business

is competing for limited capital resources. Understanding the interrelationshipsamong the various ratios such as turnover ratios, leverage, and profitability ratios

helps companies to put their money areas where the risk adjusted return is the

maximum.

RATIOS OF THE MAAN PHARMACEUTICAL 0F THREE YEARS

26

Total Assets to

Equity Ratio3.66

Return on

Total Assets6.71 %

Return on Equity27.33 %

Total Assets to

Equity Ratio

3.68

Return on

Total Assets

7.42 %


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RATIO FORMULA 2001-02 2002-03 2003-04 2004-05

Gross profit margin ratio

(%)

Gross profit

Net sales26.14 23.39 26.51 26.53

Net profit margin ratio

(%)

Net profit

Net sales

5.45 4.22 3.40 3.91

Return on asses (%)Net income (profit)

Average total assets_ 7.58 6.71 7.42

Earning power (%)Profit before interest & tax


Return on equity (%)Profit after tax

Average shareholders equity_ 23.35 24.60 27.33

Earning per share (Rs.)Profit after tax

No. of equity shares1.57 3.03 3.72 4.76

Current ratioCurrent Assets

Current liabilities1.36 1.09 1.11 1.17

Quick ratio Quick assetsCurrent liabilities

.91 0.57 0.53 0.56

Debt equity ratioDebt

Equity2.12 2.51 3.48 2.91

Debt assets ratio

Debt

Assets (the balance sheettotal)

0.74 0.76 0.86 0.85

Interest coverage ratioProfit before interest & taxes

Interest1.86 1.82 1.63 1.80

Inventory turnover ratio(Times)

Cost of goods soldAverage inventory

_ 4.86 3.99 3.32

Days to sell inventory(Days)

Average inventoryCost of goods sold/360 days

_ 74.09 90.18 108.40

Debtors turnover ratio

(Times)

Net sales

Average debtors_ 6.75 6.24 5.40

Average collection

period (Days)

Average debtors

Average daily credit sales_ 53.31 57.67 66.72

Fixed assets turnover

ratio

Net sales

Average net fixed assets_ 4.78 5.53 6.08

Total assets turnover

ratio

Net sales


HORIZONTAL ANALYSIS

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A simple approach to financial statement analysis known as horizontal analysis is to calculate

amount changes and percentage changes from the previous year to the current year.

COMPARATIVE PROFIT & LOSS ACCOUNT OF M/S MAAN PHARMACEUTICALS

LTD. FOR THE YEAR ENDED MARCH 31

PERTICULARS 2002-2003 2001-2002

INCREASE/(DECREASE)

AMOUNTPER

CENT

INCOME

SALES376,733,278.0

0152,048,160.0

0 224,685,118.00 147.77

OTHER INCOME 120,775.00 131,288.00 (10,513.00) (8.01)

376,854,053.0

0

152,179,448.0

0 224,674,605.00 147.64

EXPENDITURE

RAW MATERIAL CONSUMED227,337,502.0

0 89,826,073.75 137,511,428.25 153.09

MANUFACTURING EXPENSES 35,955,153.77 12,097,326.99 23,857,826.78 197.22

EMPLOYEE'S EMOLUMENTS 25,330,092.65 10,381,457.00 14,948,635.65 143.99

OTHER EXPENDITURE 47,530,604.22 19,150,205.29 28,380,398.93 148.20

INTEREST 20,840,187.39 10,477,613.79 10,362,573.60 98.90

DEPRECIATION 2,671,739.32 1,216,439.73 1,455,299.59 119.64

359,665,279.3

5

143,149,116.5

5 216,516,162.80 151.25

PROFIT/(LOSS) FOR THE YEAR 17,188,773.65 9,030,331.45 8,158,442.20 90.34

PROVISION FOR TAXATION1,288,633.0

2 779,290.00 509,343.02 65.36

PROFIT/(LOSS) FOR THE YEAR

15,900,140.6

3

8,251,041.4

5 7,649,099.18 92.70

Here the sales of maan have increased very high by 147.77 per cent. Expenditure of the maan also has increased by 151.25 per cent which is more than

income increased by 147.64 per cent.

Profit after tax has increased by 92.70 per cent.

The overall growth in this year is very good due to starting of new injectable and

ors units in the company.

28


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GROWTH IN THE YEAR 2002-03

PERTICULARS

GROWTH IN PER CENT

2002-03Income 147.64

Expenditure 151.25

Profit/(Loss) For The Year 90.34

Provision For Taxation 65.36


growth in percentage of the year 2002-03

147.64 151.25

90.34

65.36

92.70

0.0020.0040.0060.0080.00

100.00120.00140.00160.00

Income Expenditure Profit/(Loss)

For The

Year

Provision

For

Taxation

Profit/(Loss)

For The

Year

percentage(%

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COMPARATIVE PROFIT & LOSS ACCOUNT OF M/S MAAN PHARMACEUTICALS LTD.

FOR THE YEAR ENDED MARCH 31

PERTICULARS 2003-2004 2002-2003

INCREASE/(DECREASE)

AMOUNTPER

CENT

INCOME

SALES 573,740,860.00 376,733,278.00 197,007,582.00 52.29

OTHER INCOME 225,000.00 120,775.00 104,225.00 86.30

573,965,860.00 376,854,053.00 197,111,807.00 52.30

EXPENDITURE

RAW MATERIAL CONSUMED 320,264,941.31 227,337,502.00 92,927,439.31 40.88MANUFACTURING EXPENSES 57,572,893.79 35,955,153.77 21,617,740.02 60.12



INTEREST 33,450,994.00 20,840,187.39 12,610,806.61 60.51

DEPRECIATION 4,857,785.26 2,671,739.32 2,186,045.94 81.82

552,849,219.38 359,665,279.35 193,183,940.03 53.71


PROVISION FOR TAXATION 1,583,748.05 1,288,633.02 295,115.03 22.90


In 2003-04, the sales registered a growth of 52.29 per cent over 2002-03. But theprofit for the year is increased only by 22.85 per cent.

Expenditure is increase by 53.71 per cent which is slightly more than increase in

income by 52.30 per cent.

Other income and other expenditure are increased very high by 86.30 per cent &

95.50 per cent accordingly.

This year sales, expenditure and profit increases but the growth in this year is low incompare to the last year. The reason for that is last year (in 2002), the company had

started new injectable and ORS units and because of that the increase in sales,

expenditure and profit of that year is much higher than this year.

30


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PERTICULARS

GROWTH IN PER CENT

2003-04

Income 52.30Expenditure 53.71




growth in percentage of the year 2003-04

52.30 53.71

22.85 22.90 22.85

0.00

10.00

20.00

30.00

40.00

50.00

60.00


For The

Year

Provision

For Taxation

Profit/(Loss)

For The

Year

percentage(%)

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COMPARATIVE PROFIT & LOSS ACCOUNT OF M/S MAAN PHARMACEUTICALS LTD.


PERTICULARS 2004-05 2003-2004

INCREASE/(DECREASE)

AMOUNT

PER

CENT

INCOME

SALES 639,743,859.00 573,740,860.00 66,002,999.00 11.50

OTHER INCOME 225,000.00 225,000.00 0.00 0.00

639,968,859.00 573,965,860.00 66,002,999.00 11.50

EXPENDITURE

RAW MATERIAL CONSUMED 369,608,870.69 320,264,941.31 49,343,929.38 15.41

MANUFACTURING EXPENSES 54,258,058.13 57,572,893.79 -3,314,835.66 (5.76)



INTEREST 35,247,223.00 33,450,994.00 1,796,229.00 5.37

DEPRECIATION 5,115,933.80 4,857,785.26 258,148.54 5.31

611,729,976.69 552,849,219.38 58,880,757.31 10.65


PROVISION FOR TAXATION 3,247,471.47 1,583,748.05 1,663,723.42 105.05


In 2004-05, the sales registered a growth of only 11.50 per cent over 2003-04.

This year profit is increased by 27.95 per cent which is more than last year.

Another thing is last two years, the increase in profit was less than increase insales but this year increase in profit is more than increase in sales.

Expenditure increased by 10.65 per cent which is less than increase in sales by

11.50 per cent. The increase in expenditure was also higher than increase in salesin last two years.

This year the provision for taxation is increased by 105 per cent.


32


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PERTICULARS

GROWTH IN PER CENT

2004-05

Income 11.50

Expenditure 10.65Profit/(Loss) For The Year 33.73



Growth in percentage in the year 20

11.50 10.65

33.73

105.05

27.95

0.00

20.00

40.00

60.00

80.00100.00

120.00

Income ExpenditureProfit /(Loss)

For The

Year

Provision

For Taxation

Profit/(Loss)

For The

Year

percentage(%)

COMPARATIVE GROWTH OF LAST THREE YEARS

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PERTICULARS GROWTH IN PER CENT

2002-03 2003-04 2004-05

Income 147.64 52.30 11.50

Expenditure 151.25 53.71 10.65Profit/(Loss) For The Year 90.34 22.85 33.73

Provision For Taxation 65.36 22.90 105.05

Profit/(Loss) For The Year 92.70 22.85 27.95

Comparative growth of last three years

0.0020.0040.0060.0080.00100.00

120.00140.00160.00


For The

Year

Provision

For Taxation

Profit/(Loss)

For The

Year

perce

2002-03 2003-04 2004-05

The difference in the growth of the Maan in three years is very large.

In the year 2002-03, the company registered a very high growth.

In the year 2002-03, the sales and profit of the Maan was increased by 147.64 percent and 92.70 per cent accordingly. But in the year 2003-04, sales and profit

increased only by 52.30 per cent and 22.85 per cent accordingly. In both the years

increase in profit is less than increase in sales. While in the year 2004-05, sales areincreased by 11.50 per cent and profit is increased by 27.95 per cent which is more

than increase in sales.

So, growth in income in 2003-04 is about 1/3 of the growth in income in the year2002-03 and growth in profit in 2003-04 is about 1/4 of the growth in profit in the

year 2002-03.

The reasons for this large difference in growth are:

o The company has renovated its plant in 2002

o The company has started new injectable unit and ORS unit.

STATUS OF INCOME, EXPENDITURE AND PROFIT IN FOUR YEARS

34


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PERTICULARS 2001-2002 2002-2003 2003-2004 2004-2005

Income 152,179,448.00 376,854,053.00 573,965,860.00 639,968,859.00

Expenditure 143,149,116.55 359,665,279.35 552,849,219.38 611,729,976.69

Profit/(loss) of the year 8,251,041.45 15,900,140.63 19,532,892.57 24,991,410.84

0.00

100,000,000.00

200,000,000.00

300,000,000.00

400,000,000.00

500,000,000.00

600,000,000.00

700,000,000.00

Income Expenditure Profit/(loss) of

the year2001-2002 2002-2003 2003-2004 2004-2005

0.00

100,000,000.00

200,000,000.00

300,000,000.00400,000,000.00

500,000,000.00

600,000,000.00

700,000,000.00

2001-2002 2002-2003 2003-2004 2004-2005

Income Expenditure Profit/(loss) of the year

From the above two graph, we can see that the income, expenditure and profit ofthe Maan are increasing every year. It shows the very progressive status of the

company.

The profit of the Maan is very low in every year in compare to sales or revenuedue to the high level of expenditure. The reason for that is the company is developing

presently. Maan doing lots of expenditure for the attainment of quality standards and

expansion of its production and distributions.

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SALES IS INCREASING

2001-2002 2002-2003 2003-2004 2004-05

SALES (Rs.)

152,048,160.0

0

376,733,278.0

0

573,740,860.0

0 639,743,859.00

SALES is increasing year to year

376,733,278.00

152,048,160.00

639,743,859.00

573,740,860.00

0.00

100,000,000.00200,000,000.00

300,000,000.00

400,000,000.00

500,000,000.00

600,000,000.00

700,000,000.00

2001-2002 2002-2003 2003-2004 2004-05

From the above graph, it is clear that the company is making growth at itsoperation as well as its marketing and selling. The sales of the Maan are increasing

every year. This is the positive sign of the company.

In the year 2003-04, the sales of the company were increased by 147.77 per cent

to 376,733,278.00. In the year 2003-04, the sales of the Maan increased by 52.29 per

cent which is low in compare to the last year and in the year 2004-05, the growth in

sales is only 11.50 per cent which is very low.

The sales of the Maan will increase in future also due to the expansionprogramme of the company. The company is going to establish one another plant at

uttranchal with Research & Development (R & D) department.

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PER CENT INCREASE IN SALES & PROFIT

2002-03 2003-04 2004-05

Sales 147.77% 52.29% 11.50%Profit 92.70% 22.85% 27.95%

147.77%

92.70%

52.29%

22.85%11.50%

27.95%

0.00%

50.00%

100.00%

150.00%

2002-03 2003-04 2004-05

Percent increase in sales & profit

Sales Profit

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COMPARATIVE BALANCE SHEET OF M/S MAAN PHARMACEUTICALS LTD.

AS ON MARCH 31

PERTICULARS AS AT31-03-03

AS AT31-03-02

INCREASE/(DECREASE)

AMOUNTPAR

CENT

SOURCES OF FUNDS

SHAREHOLDER'S FUND

SHARE CAPITAL 52,000,000.00 52,000,000.00 0.00 -

RESERVE & SURPLUS 24,058,004.51 8,157,863.88 15,900,140.63 194.91

76,058,004.51 60,157,863.88 15,900,140.63 26.43

LOAN FUNDSSECURED LOANS 133,582,950.25 78,018,617.00 55,564,333.25 71.22

UNSECURE LOANS 43,274,192.16 34,413,320.73 8,860,871.43 25.75

176,857,142.41112,431,937.7

3 64,425,204.68 57.30

TOTAL 252,915,146.92

172,589,801.6

1 80,325,345.31 46.54

APPLICATION OF FUNDS

FIXED ASSETS

GROSS BLOCK 108,444,594.93 62,233,354.39 46,211,240.54 74.25

LESS:DEPRICIATION 7,935,102.52 5,263,363.19 2,671,739.33 50.76

NET BLOCK 100,509,492.41 56,969,991.20 43,539,501.21 76.43

INVESTMENTS 1,550,001.00 1,550,001.00 0.00 -

CURRENT ASSETS, LOANS

& ADVANCES

INVENTORIES 76,601,312.00 42,195,692.00 34,405,620.00 81.54

SUNDRY DEBTORS 71,145,793.26 40,422,780.00 30,723,013.26 76.00

CASH & BANK BALANCE 4,784,381.13 1,855,486.54 2,928,894.59 157.85

OTHER CURRENT ASSETS 3,457,890.74 731,743.87 2,726,146.87 372.55

LOANS & ADVANCES 5,291,235.00 42,068,010.00 (36,776,775.00) (87.42)

161,280,612.13

127,273,712.4

1 34,006,899.72 26.72

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Cont

Cont

LESS:CURRENT LIABILITIES& PROVISIONS

LIABILITIES 14,046,924.02 14,723,460.73 (676,536.71) (4.59)

PROVISIONS 100,697.00 642,672.37 (541,975.37) (84.33)

14,147,621.02 15,366,133.10 (1,218,512.08) (7.93)

NET CURRENT ASSETS 147,132,991.11111,907,579.3

1 35,225,411.80 31.48

MISC. EXP. NOT WRITTENOFF 3,722,662.40 1,773,670.20 1,948,992.20 109.88

DEFFERE & REVENUE EXP. 0.00 388,559.90 (388,559.90) (100.00)(TO THE EXTENT NOT

WRITTEN OFF)

3,722,662.40 2,162,230.10 1,560,432.30 72.17

TOTAL 252,915,146.92

172,589,801.6

1 80,325,345.31 46.54

Reserve & surplus has been increased by 194.91 per cent (Rs.15, 900,140.63).This is because the company has transferred all the profit of the year 2002-03 to theReserve & Surplus A/C.

Secured loans of the company have been increased by 71.22 per cent. Thiscontains cash credit and term loans from BOI and IDBI.

Total funds of the company have increased by 46.54 per cent against the increase

of sales by 147.77 per cent which shows the efficient use of funds.

Fixed assets also increased at a lower rate than the sales growth rate.

Inventories and sundry debtors increased by 81.54 per cent and 76.00 per cent

respectively.

Cash on hand decreased by 11.21 per cent and bank balance increased by 163.67per cent.

Loan & Advances has been decreased by 87.42 per cent because last year (2001-

02), the loans & advances for capital goods were Rs. 37,069,013.07 and this year(2002-03) it is zero. And other part of that are loans & deposits have been increased

by 5.85 per cent.

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Current liabilities have been decreased by 4.59 per cent. No sundry creditors for

capital goods, no customer advances this year and decrease in sundry creditors forexpenses. There is only increase in sundry creditors for goods by 43.03 per cent.

COMPARATIVE BALANCE SHEETS OF M/S MAAN PHARMACEUTICALS LTD.

AS ON MARCH 31

PERTICULARSAS AT

31-03-04

AS AT

31-03-03

INCREASE/(DECREASE)

AMOUNTPER

CENT

SOURCES OF FUNDS

SHAREHOLDER'S FUND

SHARE CAPITAL 52,000,000.00 52,000,000.00 0.00 -

RESERVE & SURPLUS 30,771,716.74 24,058,004.51 6713712.23 27.91

82,771,716.74 76,058,004.51 6713712.23 8.83

LOAN FUNDS

SECURED LOANS

197,913,334.3

4

133,582,950.2

5 64330384.09 48.16

UNSECURE LOANS 55,240,523.00 43,274,192.16 11966330.84 27.65

253,153,857.3

4176,857,142.4

1 76296714.93 43.14

TOTAL

335,925,574.0

8

252,915,146.9

2 83010427.16 32.82


FIXED ASSETS

GROSS BLOCK

119,958,452.7

3

108,444,594.9

3 11513857.80 10.62LESS:DEPRICIATION 12,792,887.78 7,935,102.52 4857785.26 61.22

NET BLOCK

107,165,564.9

5

100,509,492.4

1 6656072.54 6.62

INVESTMENTS 1,550,001.00 1,550,001.00 0.00 -

40


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& ADVANCES

INVENTORIES

134,632,727.6

9 76,601,312.00 58031415.69 75.76

SUNDRY DEBTORS

112,673,885.4

5 71,145,793.26 41528092.19 58.37CASH & BANK BALANCE 2,106,002.31 4,784,381.13 (2678378.82) (55.98)

OTHER CURRENT ASSETS 2,756,376.17 3,457,890.74 (701514.57) (20.29)

LOANS & ADVANCES 6,455,474.26 5,291,235.00 1164239.26 22.00

258,624,465.8

8

161,280,612.1

3 97343853.75 60.36

Cont

Cont

LESS:CURRENT LIABILITIES

& PROVISIONS

LIABILITIES 21,740,145.00 14,046,924.02 7693220.98 54.77

PROVISIONS 12,975,367.35 100,697.00 12874670.35 12,785.56

34,715,512.35 14,147,621.02 20567891.33 145.38

NET CURRENT ASSETS223,908,953.5

3147,132,991.1

1 76775962.42 52.18

MISC. EXP. NOT WRITTEN OFF 3,301,054.60 3,722,662.40 (421607.80) (11.33)

DEFFERE & REVENUE EXP. 0.00 0.00 0.00

(TO THE EXTENT NOT WRITTEN

OFF)

3,301,054.60 3,722,662.40 (421607.80) (11.33)

TOTAL335,925,574.0

8252,915,146.9

2 83010427.16 32.82

The reserve and surplus has been increased by 27.91 per cent (Rs.6, 713,712.23)

which is 34.37 per cent of profit of the year 2003-04. The remaining 65.63 per cent

has been used to make provisions for differed tax. The loan fund of the company has been increased by 43.14 per cent. Secured

loans and unsecured loans have been increased by 48.16 per cent and 27.65 per cent

respectively.

The total fund of the company has been increased by 32.82 per cent which is less

than increase in sales by 52.29 per cent which shows the efficient use of capital.

41


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43/59

COMPARATIVE BALANCE SHEETS OF M/S MAAN PHARMACEUTICALS LTD.

AS ON MARCH 31

PERTICULARS

AS AT

31-03-05

AS AT

31-03-04

INCREASE/(DECREASE)

AMOUNT

PER

CENT

SOURCES OF FUNDS

SHAREHOLDER'S FUND

SHARE CAPITAL 52,000,000.00 52,000,000.00 0.00 -

RESERVE & SURPLUS 48,138,629.36 30,771,716.74 17366912.62 56.44100,138,629.36 82,771,716.74 17366912.62 20.98

LOAN FUNDS

SECURED LOANS 195,439,407.00 197,913,334.34 (2473927.34) (1.25)

UNSECURE LOANS 48,666,830.00 55,240,523.00 (6573693.00) (11.90)

244,106,237.00 253,153,857.34 (9047620.34) (3.57)

TOTAL 344,244,866.36 335,925,574.08 8319292.28 2.48


FIXED ASSETS

GROSS BLOCK 121,251,431.85 119,958,452.73 1292979.12 1.08

LESS:DEPRICIATION 17,908,821.58 12,792,887.78 5115933.80 39.99

NET BLOCK 103,342,610.27 107,165,564.95 (3822954.68) (3.57)

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INVESTMENTS 1,550,001.00 1,550,001.00 0.00 -


& ADVANCES

INVENTORIES 148,405,857.00 134,632,727.69 13773129.31 10.23

SUNDRY DEBTORS 124,470,062.41 112,673,885.45 11796176.96 10.47

CASH & BANK BALANCE 2,677,103.67 2,106,002.31 571101.36 27.12

OTHER CURRENT ASSETS 129,819.56 2,756,376.17 (2626556.61) (95.29)

LOANS & ADVANCES 7,820,675.26 6,455,474.26 1365201.00 21.15

283,503,517.90 258,624,465.88 24879052.02 9.62

Cont

Cont

LESS:CURRENT LIABILITIES

& PROVISIONS

LIABILITIES 26,493,631.84 21,740,145.00 4753486.84 21.87

PROVISIONS 20,537,078.57 12,975,367.35 7561711.22 58.28

47,030,710.41 34,715,512.35 12315198.06 35.47

NET CURRENT ASSETS 236,472,807.49 223,908,953.53 12563853.96 5.61

MISC. EXP. NOT WRITTEN OFF 2,879,447.60 3,301,054.60 (421607.00) (12.77)

DEFFERE & REVENUE EXP. 0.00 0.00

(TO THE EXTENT NOT WRITTEN

OFF)

2,879,447.60 3,301,054.60 (421607.00) (12.77)

TOTAL 344,244,866.36 335,925,574.08 8319292.28 2.48

Reserve & surplus is increased by 56.44 per cent. This year also the company has

transferred all the profit to the reserve & surplus and out of that company has

make provision for taxation. The loan funds of the Maan are decreased by 3.57 per cent. Secured loan

decreased by 1.25 per cent while the unsecured loans by 11.90 per cent.

The total funds of the Maan increased only by 2.48 per cent which is too less with

compare to last two years.

This year the fixed assets decreased by 3.57 per cent because the addition in fixedassets this year is very less and depreciation provided this year is more compare to

last years.

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Inventories increased by 10.23 per cent are lower than increased in sales and

increase in inventories in last year.

Cash & bank balance increased by 27.12 per cent which was decreased by 55.98per cent last year.

Other current assets have decreased more this year also by 95.29 per cent.

Current liabilities increased by 35.47 per cent which is very less compare to lastyear increased by 145.38 per cent.

Miscellaneous expenses this year also get decreased by 12.77 per cent.

ANALYSIS OF SOURCES OF FUNDS FOR THE THREE YEARS

SOURCES OF FUNDS ON 31 MARCH 20 0

UNSECURE

LOANS

20 %

SHARE

CAPITAL

30 %

RESERVE &

SURPLUS

5%

SECURED

LOANS

45 %

SOURCES OF FUNDS ON 3 1 M ARCH 2003

RESERVE &

SURPLUS10 %

UNSECURD

LOANS

17 %

SHARE

CAPITAL

21 %

SECURED

LOANS

52 %

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SOURCES OF FUNDS ON 31 MARCH 2004

UNSECURE

LOANS

16%

SHARE

CAPITAL

15%

RESERVE &SURPLUS

9%

SECURED

LOANS

60%

SOURCES OF FUNDS ON 31 MARCH 2

SECURED

LOANS

57%

UNSECURE

LOANS

14%

RESERVE &

SURPLUS

14 %

SHARE

CAPITAL

15%

From these four charts, we can see that the portion of secured loans is increasing and

portion of unsecured loans is decreasing every years. This is because the Maan is

raising more and more secured loans from banks (BOI, IDBI, and MUCB).

The portion of share capital which is Rs. 52,000,000.00 has been same in three years

shows decreasing trend in percentage due increase in other funds.

46


47/59

The Reserve & Surplus has been tripled from 5 per cent to 14 per cent in four years.

In last year 2004-05 the proportion of share capital is same as last year. The reserve &

surplus has increased to 14 per cent from 9 per cent that is major change.

This year secured loans are decreased from 60 per cent to 57 per cent which was

increasing every year. As the every year unsecured loans further decreased to 14 per

cent from 16 per cent.

CHANGES IN THE COMPONENTS OF SOURCES OF FUNDS IN THREE

YEARS

Particulars As at 31-03-02 As at 31-03-03 As at 31-03-04 As at 31-03-05Share Capital 52,000,000.00 52,000,000.00 52,000,000.00 52,000,000.00

Reserve & Surplus 8,157,863.88 24,058,004.51 30,771,716.74 48,138,629.36

Secured Loans 78,018,617.00 133,582,950.25

197,913,334.3

4 195,439,407.00

Unsecured Loans 34,413,320.73 43,274,192.16 55,240,523.00 48,666,830.00

SOURCES OF FUND

0.00

50,000,000.00

100,000,000.00

150,000,000.00

200,000,000.00

250,000,000.00

Share Capital Reserve &

Surplus

Secured Loans Unsecure Loans

As at 31-03-02 As at 31-03-03 As at 31-03-04 As at 31-03-05

The sources of funds for the Maan presently are Share capital, Reserve & Surplus,

Secured loans and unsecured loans.

The share capital is remaining constant at Rs. 52,000,000.00 throughout the four

years.

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48/59

The main source of fund for the company is secured loans because of easily

availability of loans. Another reason for taking more secured loans from the banks isdecreasing of its interest rates. Presently the rate of interest is about 11 & 11.5 per

cent and in past it was 14 & 15 per cent

The Reserve & Surplus is also an important source of funds for the company that it

ploughs back its profit every year. Reserve & Surplus is increasing every year. At 31-03-03 it has increased to Rs.24,058,004.51 by 194.91 per cent and at 31-03-04 it has

increased to Rs.30,771,716.74 by 27.91 per cent. In 2004-05, the same is increased by

56.44 per cent to 48,138,629.36.

Every year its sources of funds are increasing due to its requirements of present as

well as future for development and expansion.

VERTICAL ANALYSIS

Vertical analysis is the proportional expression of each item on a financial statement tothe statement total. The results of vertical analysis are presented in the form of common-

size statements in which all the elements are expressed as percentages of some commonnumber and always add up to 100. The items in Profit & Loss account are usually

expressed as percentage of sales, while the balance sheet items are given as percentage of

total shareholders fund and liabilities or of total assets. Vertical analysis helps in makingcomparisons of companies that differ in size since the financial statements are expressed

in comparable common-size format. Further, a comparison of common-size statements

for several years may reveal important changes in the components from one year to the

next.

OMMON-SIZE PROFIT & LOSS ACCOUNT OF M/S MAAN PHARMACEUTICALS LTD.


PERTICULARS 2001-2002 2002-2003 2003-2004 2004-05

es & Other Income

152179448.0

0

376854053.0

0

573965860.0

0 639,968,859.00

penditure

143149116.5

5

359665279.3

5

552849219.3

8 611,729,976.69

ofit/(Loss) For The Year 9030331.45 17188773.65 21116640.62 28,238,882.31

ovision For Taxation 779290.00 1288633.02 1583748.05 3,247,471.47

ofit/(Loss) For The Year 8251041.45 15900140.63 19532892.57 24,991,410.84

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PERTICULARS 2001-2002 2002-2003 2003-2004 2004-05

es & Other Income 100.00% 100.00% 100.00% 100%

penditure 94.07% 95.44% 96.32% 95.59%

ofit/(Loss) For The Year 5.93% 4.56% 3.68% 4.41%

ovision For Taxation 0.51% 0.34% 0.28% 0.51%ofit/(Loss) For The Year 5.42% 4.22% 3.40% 3.91%

COMMON-SIZE BALANCE SHEETS OF M/S MAAN PHARMACEUTICALS LTD.

AS ON DECEMBER 31

PERTICULARS 2001-02 2002-03 2003-04 2004-05

SHAREHOLDERS' FUNDS &

LIABILITIES

Share Capital 52,000,000.00 52,000,000.00 52,000,000.00 52,000,000.00

Reserves & Surplus 8,157,863.88 24,058,004.51 30,771,716.74 48,138,629.36

Secured Loans 78,018,617.00 133,582,950.25 197,913,334.34 195,439,407.00

Unsecured Loans 34,413,320.73 43,274,192.16 55,240,523.00 48,666,830.00

Current Liabilities & Provisions 15,366,133.10 14,147,621.02 34,715,512.35 47,030,710.41

TOTAL FUNDS

187,955,934.7

1 267,062,767.94 370,641,086.43 391,275,576.77

ASSETS

Fixed Assets 56,969,991.20 100,509,492.41 107,165,564.95 103,342,610.27

Investments 1,550,001.00 1,550,001.00 1,550,001.00 1,550,001.00

Inventories 42,195,692.00 76,601,312.00 134,632,727.69 148,405,857.00

Sundry Debtors 40,422,780.00 71,145,793.26 112,673,885.45 124,470,062.41

Cash & Bank Balance 1,855,486.54 4,784,381.13 2,106,002.31 2,677,103.67

Other Current Assets 731,743.87 3,457,890.74 2,756,376.17 129,819.56

Loans & Advances 42,068,010.00 5,291,235.00 6,455,474.26 7,820,675.26

Misc. Exp. Not Written Off 2,162,230.10 3,722,662.40 3,301,054.60 2879447.6

TOTAL ASSETS

187,955,934.7

1 267,062,767.94 370,641,086.43 391,275,576.77

PERTICULARS 2001-02 2002-03 2003-04 2004-05

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LIABILITIES

Share Capital 27.67% 19.47% 14.03% 13.29%

Reserves & Surplus 4.34% 9.01% 8.30% 12.30%

Secured Loans 41.51% 50.02% 53.40% 49.95%

Unsecured Loans 18.31% 16.20% 14.90% 12.44%Current Liabilities & Provisions 8.18% 5.30% 9.37% 12.02%

TOTAL FUNDS 100.00% 100.00% 100.00% 100.00%

ASSETS

Fixed Assets 30.31% 37.64% 28.91% 26.41%

Investments 0.82% 0.58% 0.42% 0.40%

Inventories 22.45% 28.68% 36.32% 37.93%

Sundry Debtors 21.51% 26.64% 30.40% 31.81%

Cash & Bank Balance 0.99% 1.79% 0.57% 0.68%

Other Current Assets 0.39% 1.29% 0.74% 0.03%

Loans & Advances 22.38% 1.98% 1.74% 2.00%

Misc. Exp. Not Written Off 1.15% 1.39% 0.89% 0.74%

TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%

COMPOSITION OF SHRAHOLDERS FUNDS & LIABILITIES IN DIFFERENT

YEARS


LIABILITIES2001-02 2002-03 2003-04 2004-05

Share Capital 27.67% 19.47% 14.03% 13.29%

Reserves & Surplus 4.34% 9.01% 8.30% 12.30%Secured Loans 41.51% 50.02% 53.40% 49.95%

Unsecured Loans 18.31% 16.20% 14.90% 12.44%

Current Liabilities & Provisions 8.18% 5.30% 9.37% 12.02%

TOTAL FUNDS 100.00% 100.00% 100.00% 100.00%

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Shareholders' Funds & Liabilities

0.00%

10.00%

20.00%30.00%

40.00%

50.00%

60.00%

Share Capital Reserves &

Surplus

Secured

Loans

Unsecured

Loans

Current

Liabilities &

Provisions2001-02 2002-03 2003-04 2004-05

The proportion of both shareholders funds and unsecured loans is decreasing in total

funds.

While the proportion of secured loans is increasing till 2003-04 but it has decreased in

2004-05.

Proportion of Current liabilities & provisions has decreased in 2002-03 but then after

it has increased.

Proportion of Reserve & Surplus has increased in 2002-03 but it has decreased in2003-04 and in 2004-05 again it has increase.

COMPOSITION OF ASSETS IN DIFFERENT YEARS

ASSETS 2001-02 2002-03 2003-04 2004-05

Fixed Assets 30.31% 37.64% 28.91% 26.41%

Investments 0.82% 0.58% 0.42% 0.40%

Inventories 22.45% 28.68% 36.32% 37.93%

Sundry Debtors 21.51% 26.64% 30.40% 31.81%Cash & Bank Balance 0.99% 1.79% 0.57% 0.68%

Other Current Assets 0.39% 1.29% 0.74% 0.03%

Loans & Advances 22.38% 1.98% 1.74% 2.00%

Misc. Exp. Not Written Off 1.15% 1.39% 0.89% 0.74%

TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%

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ASSETS

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

Fixed Asse ts Investments Inventor ies Sundry

Debtors

Cash &

Bank

Balance

Other

Current

Assets

Loans &

Advances

Misc. Exp .

Not Written

Off2001-02 2002-03 2003-04 2004-05

Here the percentage of fixed assets in total assets has increased in 2002-03 but it has

decreased drastically to 28.91 per cent in 2003-04 and 26.41 per cent in 2004-05.

Proportion of investment is decreasing.

Inventories & sundry debtors are increasing every year.

Cash & bank balance shows the same trend as fixed assets.

Loans & advances has decreased drastically from 22.38 per cent to 1.98 per cent in

2002-03 and 1.74 per cent in 2003-04. it has increased in 2004-05 to 2.00 per cent.

This is one of the reasons of increasing the proportion of other components in total

assets in the following years. In 2001-02 & 2002-03, the fixed assets are the main components but in 2003-04 &

2004-05, the inventory and sundry debtors have become the major components oftotal assets.

TREND ANALYSIS

Trend analysis involves calculation of percentage changes in financial statement items for

a number of successive years. It is an extension of horizontal analysis to several years.Trend analysis is carried out by first assigning a value of 100 to the financial statement

items in a past financial year used as the base year, and then expressing financial

statement items in the following years as a percentage of the base year value.

TRENDS IN SALES, EXPENDITURE & PROFIT OF MAAN

PHARMACEUTICALS LTD

PERTICULARS 2004-05 2003-2004 2002-2003 2001-2002

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Sales & Other Income

639,968,859.0

0

573,965,860.0

0

376,854,053.0

0 152,179,448.00

Expenditure 611,729,976.6

9

552,849,219.3

8

359,665,279.3

5

143,149,116.55

Profit/(Loss) For The Year 28,238,882.31 21,116,640.62 17,188,773.65 9,030,331.45

Provision For Taxation 3,247,471.47 1,583,748.05 1,288,633.02 779,290.00Profit/(Loss) For The Year 24,991,410.84 19,532,892.57 15,900,140.63 8,251,041.45

PERTICULARS 2004-05 2003-2004 2002-2003 2001-2002

Sales & Other Income 420.54 377.16 247.64 100.00

Expenditure 427.34 386.21 251.25 100.00

Profit/(Loss) For The Year 312.71 233.84 190.34 100.00

Provision For Taxation 416.72 203.23 165.36 100.00

Profit/(Loss) For The Year 302.89 236.73 192.70 100.00

Trend analysis (Base Year: 2001-02)

0.00 100.00 200.00 300.00 400.00 500.00

Sales & Other Income

Expenditure

Profit/(Loss) For The Year

Provision For Taxation

Profit/(Loss) For The Year

2004-05 2003-2004 2002-2003 2001-2002

The sales & other income in 2003-04 are 3.77 times and in 2004-05 are 4.21 times

2001-02 sales & other income.

Expenditure in 2003-04 is 3.86 times of expenditure in 2001-02 and 4.27 times ofexpenditure in 2001-02.

In 2003-04, the sales and expenditure shows the rise of 277.16 and 286.21 per centrespectively and in 2004-05, shows the rise of 320.54 and 327.34 per cent

respectively. The profit in 2003-04 is 2.37 times of the profit in 2001-02, a rise of 136.73 per cent

and in 2004-05 it is 3.03 times of profit in 20001-02, a rise of 202.89 per cent.

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ASSETS

Fixed Assets 103,342,610.27 107,165,564.95 100,509,492.41 56,969,991.20

Investments 1,550,001.00 1,550,001.00 1,550,001.00 1,550,001.00

Inventories 148,405,857.00 134,632,727.69 76,601,312.00 42,195,692.00

Sundry Debtors 124,470,062.41 112,673,885.45 71,145,793.26 40,422,780.00

Cash & Bank Balance 2,677,103.67 2,106,002.31 4,784,381.13 1,855,486.54

Other Current Assets 129,819.56 2,756,376.17 3,457,890.74 731,743.87Loans & Advances 7,820,675.26 6,455,474.26 5,291,235.00 42,068,010.00

Misc. Exp. Not Written Off 2879447.6 3,301,054.60 3,722,662.40 2,162,230.10

TOTAL ASSETS 391,275,576.77 370,641,086.43 267,062,767.94 187,955,934.71

PERTICULARS 2004-05 2003-04 2002-03 2001-02


LIABILITIES

Share Capital 100.00 100.00 100.00 100.00

Reserves & Surplus 590.09 377.20 294.91 100.00

Secured Loans 250.50 253.67 171.22 100.00

Unsecured Loans 141.42 160.52 125.75 100.00

Current Liabilities & Provisions 306.07 225.92 92.07 100.00

TOTAL FUNDS 208.17 197.20 142.09 100.00

ASSETS

Fixed Assets 181.40 188.11 176.43 100.00

Investments 100.00 100.00 100.00 100.00

Inventories 351.71 319.07 181.54 100.00

Sundry Debtors 307.92 278.74 176.00 100.00

Cash & Bank Balance 144.28 113.50 257.85 100.00

Other Current Assets 17.74 376.69 472.55 100.00

Loans & Advances 18.59 15.35 12.58 100.00

Misc. Exp. Not Written Off 133.17 152.67 172.17 100.00

TOTAL ASSETS 208.17 197.20 142.09 100.00

TRENDS IN FUNDS & LIABILITIES


LIABILITIES2004-05 2003-04 2002-03 2001-02

Share Capital 100.00 100.00 100.00 100.00

Reserves & Surplus 590.09 377.20 294.91 100.00

Secured Loans 250.50 253.67 171.22 100.00

Unsecured Loans 141.42 160.52 125.75 100.00

Current Liabilities & Provisions 306.07 225.92 92.07 100.00

TOTAL FUNDS 208.17 197.20 142.09 100.00

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Trend analysis (Base Year:2001-02)

0.00 100.00 200.00 300.00 400.00 500.00 600.00 700.00

Share Capital

Reserves & Surplus

Secured Loans

Unsecured Loans

Current Liabilities & Provisions

TOTAL FUNDS

2004-05 2003-04 2002-03 2001-02

Reserve & Surplus shows the rise of 277.20 per cent in 2003-04 and 490.09 per cent

in 2004-05.

Secured loans rose by 153.67 per cent and unsecured loans raised by 60.52 per cent in

2003-04 while in 2004-05 both the things have decreased and shows the rise of

150.50 per cent and 41.42 per cent in secured loans and unsecured loans respectively.

Current liabilities & Provisions raised by 206.07 per cent.

Total funds have risen by 108.17 per cent, 2.08 times of total funds in 2001-02.

TRENDS IN ASSETS

ASSETS 2004-05 2003-04 2002-03 2001-02

Fixed Assets 181.40 188.11 176.43 100.00

Investments 100.00 100.00 100.00 100.00Inventories 351.71 319.07 181.54 100.00

Sundry Debtors 307.92 278.74 176.00 100.00

Cash & Bank Balance 144.28 113.50 257.85 100.00

Other Current Assets 17.74 376.69 472.55 100.00

Loans & Advances 18.59 15.35 12.58 100.00

Misc. Exp. Not Written Off 133.17 152.67 172.17 100.00

TOTAL ASSETS 208.17 197.20 142.09 100.00

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Trend analysis (Base Year: 2001-02)

0.00 50.00 100.00 150.00 200.00 250.00 300.00 350.00 400.00 450.00 500.00

Fixed Assets

Investments

Inventories

Sundry Debtors

Cash & Bank Balance

Other Current Ass ets

Loans & Advances

Misc. Exp. Not Written Off

TOTAL ASSETS

2004-05 2003-04 2002-03 2001-02

Fixed assets show the rise of 76.43 per cent and 88.11 per cent in 2002-03 & 2003-04

respectively. It is 1.88 times of FA in 2001-02 but it has decreased in 2004-05 and it

has becomes 1.81 times of FA in 2001-02. Inventories shows the rise of 251.71 per cent and sundry debtors shows the rise of

207.92 per cent in 2003-04.

Cash & bank balance and other current assets were 2.58 and 4.73 times higher in

2002-03. But they have decreased to 1.44 and 0.18 times in 2004-05.

Total assets show the rise of 108.17 per cent in 2004-05.

CONCLUSION

Ratio & Du Pont analysis The profitability ratios of the company are good. Infect, all the profitability ratios

have improved this year (2004-05) especially gross profit margin ratio.

Liquidity position of the company has also improved this year as the current andquick ratio has improved this year.

All the leverage ratios were worst in 2003-04, but they have improved in 2004-05

especially debt-equity ratio and interest coverage ratio.

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Inventory and debtors turnover ratios are decreasing every year. Its require

improvement in inventory and receivables management so that the workingcapital can be used efficiently. Fixed assets turnover ratio has improved this year.

Return on total assets has improved in 2004-05 because of increase in net profit

margin from 3.40 per cent to 3.91 per cent. Reason for increasing net profit

margin is the decrease in manufacturing expenses this year by 5.76 per cent.

Horizontal analysis

Maan Pharmaceuticals has made good growth in last three years in sales as wellas profit. Here the growth in sales is decreasing but in the year 2004-05 the

growth in expenditure is lower than growth in sales that is notable things in this

year as in last two years the growth in expenditure were high than growth in sales.The profit also has increased more this year by 27.95 per cent against the increase

in sales by 11.50 per cent.

Vertical analysis

It shows that expenditure of the company is accounting for higher percentage ofsales around 95 per cent every year and because of that the net profit is less. So

for the increment of profit in future, the company is requiring to optimize itsexpenditure on the side of operating as well as administrative.

As far as debtequity proportion is concern, it has improved this year. In last two

years the proportion of inventories and sundry debtors accounting for higher percentage in total assets that shows the locking of funds in inventories and

sundry debtors that make the cash and operating cycle slower. So, on that side it

requires improvement.

Trend analysis

It shows good trend in sales and profit but as above said, expenditure also risingthat dampens the profit of the company. Reserve and surplus also shows good

trend.

BIBLIOGRAPHY

Bernstein, Leopold A.; Wild, John J. Financial Statement Analysis: Theory, Application,

and Interpretation. McGraw Hill, 1998.

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Narayanaswamy, R. Financial Accounting: A Managerial Perspective. Prentice Hall

India. 429-471 pp.

Chandra, Prasanna. Financial Management: Theory and Practice. Tata McGraw Hill. 727-

768 pp.

maan pharma

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