Financial Analysis of Ranbaxy Laboratories Limited

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Project report on
Financial Analysis of
Ranbaxy Laboratories Limited


S. No. Content Page No.

1Executive Summary of ‘Ranbaxy Laboratories Limited’ 3 2Capital Expenditure at Ranbaxy7
3Account Balances for properties, plant and equipment8
4Capital Structure at Ranbaxy9
5Beta measure of the company11
6Weighted Average cost of capital13
7Debt-Equity ratio14
8 Du Pont Analysis15
9Comments on16
a)Working Capital Position
b)Cash position
c)Short –term financing
d)Credit policy
e)Inventory management policy
10 Bibliography 19


Executive Summary

Indian Pharmaceutical Industry

The Indian Pharmaceutical Industry today is in the front rank of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology India, which is the 3rd Largest Producer of Pharmaceuticals Across the World- is already a US$ 8.2 Billion pharmaceutical market. The Indian pharmaceutical industry is further expected to grow by 10% in the year 2010. It ranks very high 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.

Pharmaceutical Industry provides employment to millions and ensures that essential drugs at affordable prices are available to the vast population of India.

Indian Pharma Industry is playing a key role in promoting and sustaining development in the vital field of medicines. Around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and vaccines is met by Indian pharmaceutical industry. A number of Indian pharmaceutical companies adhere to highest quality standards and are approved by regulatory authorities in USA and UK.

In 2007-08, India exported drugs worth US$7.2 billion in to the US and Europe followed by Central and Eastern Europe, Africa and Latin America.

Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units and is very top heavy. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. There are also 5 Central Public Sector Units that manufacture drugs. These units produce complete range of pharmaceuticals, which include medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations. India is largely self-sufficient in case of formulations. More than 85% of the formulations produced in the country are sold in the domestic market. Some life saving, new generation under-patent formulations are imported, by MNCs, which they market in India. Over 60% of India's bulk drug production is exported. The balance is sold locally to other formulators.

Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market.

Indian pharmaceutical industry got a major boost with the signing of General Agreement on Tariffs and Trade in January 2005 with which India began recognizing global patents. After...
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