Working Capital Management of Cadila Healthcare

1
Working Capital Management on Zydus Cadila
Healthcare Ltd.
Submitted to
Gujarat University for the degree of
Master in Commerce
Faculty: Commerce
Subject: Working Capital Management on Zydus Cadila Healthcare Ltd.
By
Shweta A. Chandel
H.A. Collage of Commerce
College Seat No. 14 Year 2016 .
Exam Seat No. Year 2016 .
Under the guidance of
Prof. P.C. Raval
H.A. Collage of Commerce

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H.A.Collage of Commerce.
Near Law Garden,
Ahmadabad
CERTIFICATE
This is to certify that Ms. Shweta A. Chandel has worked and completed
her/his Project Work for the degree of MASTER IN COMMERCE in the
faculty of COMMERCE in the subject of ACCOUNTANCY on Title of project
work to be written “Working Capital Management on Cadila Healthcare
Limited” under my supervision. It is her own work and facts reported by her
personal findings and investigations.
Name & Signature of Guide Date of submission:
Name & Signature of Professor in Charge/ Director/Principal of the
Institute
Stamp of the Institute with date

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Declaration by student
I the undersigned Miss. Shweta A. Chandel here by, declare that this project
work entitled “Working Capital Management on Cadila Healthcare Limited“ is
a result of my own research work and has not been previously submitted to any
other University for any other examination.
I hereby further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical conduct.
College Seat No. 14. Year 2016 .
Exam Seat No. Year .
Date Name & Signature
Shweta A. Chandel
Place: Ahmedabad Research Scholar

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PREFACE
To start any Business, First of all we need Finance and the success of that
business entirely depends on the proper management of day-to-day finance and
the management of this short-term capital of finance of the business is called
Working Capital Management.
Working Capital is the money used to pay for the everyday trading activities
carried out by the business – stationery needs, staff salaries and wages, rent,
energy bills, payments for supplies and so on.
I have tried to put my best effort to complete this task on the basis of skill that I
have achieved during the study of M.Com in the institute.
I have tried to put my maximum effort to get the accurate statistical data.
However I would appreciate if any mistakes are brought to my by the reader

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ACKNOWLEDGENIENT
In course of M.com my college had given me opportunity to prepare financial
report on Cadila Healthcare Limited. Therefore I was asked to prepare a project
report on Working Capital Management at Cadila Healthcare Limited.. Moreover
by this way I got an opportunity to be financial management practically. While
preparation of this report many people given me help and support. I would be
happy to appreciate all of them and give my thanks to all who help and give them
support during preparation of the report.
I thankful to the faculty that provide such teat opportunity to get practical
knowledge about financial management and guide us in preparation of project so I
would like to thank Prof. P.C.Raval to provide us guideline for preparation of
project report .
Date: ShwetaA.Chandel
Place: Ahmedabad

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Chapter No. Title of Chapter Page No.
Chapter :-1 Introduction 9
1.1 History of Indian Pharmaceutical Industry 10
Chapter :- 2 Introduction to Cadila Healthcare Limited 23
2.1 History and development 24
2.2 Company Profile 38
2.3 Stock performance history 43
2.4 Products plants 46
2.5 Products 49
Chapter :- 3 Research Methodology 50
3.1 Research Objective 51
3.2Scopeo ofResearch 51
3.3 Data Type. 51
14 Data Sources 51
3.5 Research Design 51
3.6 Toots used for analysis 51
3.7 Literature review 52
3.8 Limitations for the !gutty 52
Chapter :- 4
Theoretical Framework of Working Capital
Management
53
4.1 Working capital Management 54
4.2 Concept of Working Capital 56
4.3 Classification of working capital 58
4.4 Importance or Advantage the Working Capital 59
4.5 Factors determining the working capital requirements 60
4.6 Sources of working capital 61

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4.7 Different aspects of Working capital management 64
4.8 Working capital analysis 70
Chapter :- 5 Data Analysis and interpretation 74
5.1 Working Capital Statement 75
5.2 Liquidity position 78
5.3 Comparative balance sheet statement 79
5.4 Trend Percentage 89
5.5 Ratio Analysis 92
Findings 111
Suggestion 111
Conclusion 112
Bibliography 113
Annexure
Balance sheet for Cadila Healthcare limited. 114
Profit and loss account of Cadila Healthcare limited 116
Cash flow statement 118

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CHAPTER:-1
INTRODUCTION :
HISTORYOFINDIANPHARMACEUTICALINDUSTRY

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HistoryofIndianPharmaceuticalindustry
Industry Definition:-
Globally, India ranks 3rd in terms of volume and 14th in terms of value.According to
Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, the total
turnover of India's pharmaceuticals industry between 2008 and September 2009 was
US$21.04 billion. Hyderabad, Mumbai, Bangalore and Ahmedabad are the major
pharmaceutical hubs of India. While the domestic market is worth US$13.8 billion as
of 2013, and is expected to reach US$49 billion by 2020[3]
The government started to encourage the growth of drug manufacturing by Indian
companies in the early 1960s, and with the Patents Act in 1970. However, economic
liberalization in 90s by the former Prime Minister P.V. Narasimha Rao and the then
Finance Minister, Dr. Manmohan Singh enabled the industry to become what it is
today. This patent act removed composition patents from food and drugs, and though
it kept process patents, these were shortened to a period of five to seven years.
The lack of patent protection made the Indian market undesirable to the multinational
companies that had dominated the market, and while they streamed out. Indian
companies carved a niche in both the Indian and world markets with their expertise in
reverse-engineering new processes for manufacturing drugs at low costs. Although
some of the larger companies have taken baby steps towards drug innovation, the
industry as a whole has been following this business model until the present.
India's biopharmaceutical industry clocked a 17 percent growth with revenues of
Rs.137 billion ($3 billion) in the 2009-10 financial year over the previous fiscal. Bio-
pharmacy was the biggest contributor generating 60 percent of the industry's growth
at Rs.8,829 crore, followed by bio-services at Rs.2,639 crore and bio-agri at Rs.1,936
crore.
India's health care sector is estimated to reach $197 billion by 2017-18
Pharma Statistics
Top 10 Publicly Listed pharmaceutical companies in India by Market
Capitalization as of July 2015.

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Rank Company Market Capitalization 2015
(INR crores)
1 Sun Pharmaceutical 2,17,636
2 Lupin Ltd 84,193
3 Dr. Reddy's Laboratories 63,779
4 Cipla 52,081
5 Aurobindo Pharma 42,454
6 Cadila Healthcare 38,677
7 Glenmark Pharmaceuticals 29,047
8 GlaxoSmithKline
Pharmaceuticals Ltd
28,587
9 Divis Laboratories 24,847
10 Torrent Pharmaceuticals 22,320
Overview:-
Exports of pharmaceuticals products from India increased from US$6.23 billion
in 2006-07 to US$8.7 billion in 2008-09 a combined annual growth rate of
21.25%.According to PricewaterhouseCoopers (PWC) in 2010, India joined
among the league of top 10 global pharmaceuticals markets in terms of sales by
2020 with value reaching US$50 billion.[8]
Some of the major pharmaceutical
firms including Sun Pharmaceutical, Cadila Healthcare and Piramal
Enterprises.

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Pharmaceutical industry today:-
The number of purely Indian pharma companies is fairly low.
Indian pharma industry is mainly operated as well as controlled by dominant foreign
companies having subsidiaries in India due to availability of cheap labor in India at
lowest cost. In 2002, over 20,000 registered drug manufacturers in India sold $9
billion worth of formulations and bulk drugs. 85% of these formulations were sold in
India while over 60% of the bulk drugs were exported, mostly to the United States
and Russia.
Most of the players in the market are small-to-medium enterprises; 250 of the largest
companies control 70% of the Indian market. Thanks to the 1970 Patent Act,
multinationals represent only 35% of the market, down from 70% thirty years ago.
Most pharma companies operating in India, even the multinationals, employ Indians
almost exclusively from the lowest ranks to high level management. Homegrown
pharmaceuticals, like many other businesses in India, are often a mix of public and
private enterprise.
In terms of the global market, India currently holds a modest 1–2% share, but it has
been growing at approximately 10% per year. India gained its foothold on the global
scene with its innovatively engineered generic drugs and active pharmaceutical
ingredients (API), and it is now seeking to become a major player in outsourced
clinical research as well as contract manufacturing and research. There are 74 US
FDA-approved manufacturing facilities in India, more than in any other country
outside the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications
(ANDA) to the FDA are expected to be filed by Indian companies.
Growths in other fields notwithstanding, generics are still a large part of the picture.
London research company Global Insight estimates that India’s share of the global
generics market will have risen from 4% to 33% by 2007. The Indian pharmaceutical
industry has become the third largest producer in the world and is poised to grow into
an industry of $20 billion in 2015 from the current turnover of $12 billion
Patent:-
As it expands its core business, the industry is being forced to adapt its business
model to recent changes in the operating environment. The first and most significant
change was the 1 January 2005 enactment of an amendment to India’s patent law that

14
reinstated product patents for the first time since 1972. The
legislation took effect on the deadline set by the WTO’s Trade-
Related Aspects of Intellectual Property Rights (TRIPS) agreement, which mandated
patent protection on both products and processes for a period of 20 years. Under this
new law, India will be forced to recognize not only new patents but also any patents
filed after 1 January 1995.
Indian companies achieved their status in the domestic market by breaking these
product patents, and it is estimated that within the next few years, they will lose $650
million of the local generics market to patent-holders.
In the domestic market, this new patent legislation has resulted in fairly clear
segmentation. The multinationals narrowed their focus onto high-end patents who
make up only 12% of the market, taking advantage of their newly bestowed patent
protection. Meanwhile, Indian firms have chosen to take their existing product
portfolios and target semi-urban and rural populations.
Product development:-
Indian companies are also starting to adapt their product development processes to the
new environment. For years, firms have made their ways into the global market by
researching generic competitors to patented drugs and following up with litigation to
challenge the patent. This approach remains untouched by the new patent regime and
looks to increase in the future. However, those that can afford it have set their sights
on an even higher goal: new molecule discovery. Although the initial investment is
huge, companies are lured by the promise of hefty profit margins and thus a legitimate
competitor in the global industry. Local firms have slowly been investing more
money into their R&D programs or have formed alliances to tap into these
opportunities.
Small and medium enterprises:-
As promising as the future is for a whole, the outlook for small and medium
enterprises (SME) is not as bright. The excise structure changed so that companies
now have to pay a 16% tax on the maximum retail price (MRP) of their products, as
opposed to on the ex-factory price. Consequently, larger companies are cutting back
on outsourcing and what business is left is shifting to companies with facilities in the

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four tax-free states – Himachal Pradesh, Jammu & Kashmir,
Uttaranchal and Jharkhand. Consequently, a large number of
pharmaceutical manufacturers shifted their plant to these states, as it became almost
impossible to continue operating in non-tax free zones. But in a matter of a couple of
years the excise duty was revised on two occasions, first it was reduced to 8% and
then to 4%. As a result, the benefit of shifting to a tax free zone was negated. This
resulted in, factories in the tax free zones, to start up third party manufacturing. Under
this these factories produced goods under the brand names of other parties on job
work basis.
As SMEs wrestled with the tax structure, they were also scrambling to meet the 1 July
deadline for compliance with the revised Schedule M Good Manufacturing Practices
(GMP). While this should be beneficial to consumers and the industry at large, SMEs
have been finding it difficult to find the funds to upgrade their manufacturing plants,
resulting in the closure of many facilities.
Others invested the money to bring their facilities to compliance, but these operations
were located in non-tax-free states, making it difficult to compete in the wake of the
new excise tax.

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Corporate Catalyst:-
Multinational Pharmaceutical Companies ranked as per active presence of sales,
marketing and business in India
Pfizer
GlaxoSmithKline
Sanofi Aventis
Merck
Johnson and Johnson
Amgen
Novartis
Roche
Bristol-Myers Squibb
Wyeth
Eli Lilly
Schering-Plough
Abbott
Takeda
Boehringer Ingelheim
Astellas
Challenges:-
Even after the increased investment, market leaders such as Ranbaxy and Dr. Reddy’s
Laboratories spent only 5–10% of their revenues on R&D, lagging behind Western
pharmaceuticals like Pfizer, whose research budget last year was greater than the
combined revenues of the entire Indian pharmaceutical industry. This disparity is too
great to be explained by cost differentials, and it comes when advances in genomics
have made research equipment more expensive than ever. The drug discovery process
is further hindered by a dearth of qualified molecular biologists. Due to the disconnect
between curriculum and industry, pharma in India also lack the academic
collaboration that is crucial to drug development in the West and so far.

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Relation between pharma and Biotech:-
Unlike in other countries, the difference between biotechnology and pharmaceuticals
remains fairly defined in India. Bio-tech there still plays the role of pharma’s little
sister, but many outsiders have high expectations for the future. India accounted for
2% of the $41 billion global biotech market and in 2003 was ranked 3rd in the Asia-
Pacific region and 13th in the world in number of biotech. In 2004-5, the Indian
biotech industry saw its revenues grow 37% to $1.1 billion. The Indian biotech
market is dominated by bio pharmaceuticals; 76% of 2004–5 revenues came from bio-
pharmaceuticals, which saw 30% growth last year. Of the revenues from bio-
pharmaceuticals, vaccines led the way, comprising 47% of sales. Biologics and large-
molecule drugs tend to be more expensive than small-molecule drugs, and India hopes
to sweep the market in bio-generics and contract manufacturing as drugs go off patent
and Indian companies upgrade their manufacturing capabilities.
Most companies in the biotech sector are extremely small, with only two firms
breaking 100 million dollars in revenues. At last count there were 265 firms registered
in India, over 92% of which were incorporated in the last five years.
The newness of the companies explains the industry’s high consolidation in both
physical and financial terms. Almost 30% of all biotech are in or around
Bangalore, and the top ten companies capture 47% of the market. The top five
companies were homegrown; Indian firms account for 72% of the bio-pharma
sector and 52% of the industry as a whole. The Association of Biotechnology-Led
Enterprises (ABLE) is aiming to grow the industry to $5 billion in revenues
generated by 1 million employees by 2009, and data from the Confederation of
Indian Industry (CII) seem to suggest that it is possible

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Top 20 Biotechnology companies in India, as of
2013.
Comparison with the US:-
The Indian biotech sector parallels that of the US in many ways. Both are filled with
small start-ups while the majority of the market is controlled by a few powerful
companies. Both are dependent upon government grants and venture capitalists for
funding because neither will be commercially viable for years. Pharmaceutical
companies in both countries have recognized the potential effect that biotechnology
could have on their pipelines and have responded by either investing in existing start-
ups or venturing into the field themselves. In both India and the US, as well as in
much of the globe, biotech is seen as a hot field with a lot of growth potential.
Rank Company
1 Serum Institute of India
2 Biocon
3 Nuziveedu Seeds Private Limited
4 Novo Nordisk
5 Syngene International
6 Reliance Life Sciences
7 Eli Lilly and Company
8 Bharat Serums
9 Biological E. Limited
10 Fortis Clinical Research
11 Novozymes South Asia
12 Ankur Seeds
14 Indian Immunologicals Limited
15 GlaxoSmithKline Pharmaceuticals Ltd
13 Bharat Biotech International
16 Tulip Group
17 Hafkine Biopharmaceutical
18 Mahyco
19 Advanced Enzymes
20 Raasi Seeds

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Relationship with IT:-
Many analysts have observed that the hype around the biotech
sector mirrors that of the IT sector. Biotech colleges have been popping up around the
country eager to service the pools of students that want to take advantage of a
growing industry.
The International Finance Corporation, the private investment arm of the World Bank,
called India the "centerpiece of IFC’s global biotech strategy." Of the $110 million
invested in 14 biotech projects investment globally, the IFC has given $43 million to
4 projects in India.
According to Dr. Manju Sharma, former director of the Department of Biotechnology,
the biotech industry could become the "single largest sector for employment of skilled
human resource in the years to come". British Prime Minister Tony Blair was
similarly impressed, citing the success of India’s biotech industry as the reason for his
own country’s own biotech opportunities.
Malaysia is also looking to India as an example for growing its own biotech industry.
Support of Indian Government:-
The Indian government has been very supportive. It established the Department of
Biotechnology in 1986 under the Ministry of Science and Technology. Since then,
there have been a number of dispensations offered by both the central government and
various states to encourage the growth of the industry.
India’s science minister launched a program that provides tax incentives and grants
for biotech start-ups and firms seeking to expand and establishes the Biotechnology
Parks Society of India to support ten biotech parks by 2010. Previously limited to
rodents, animal testing was expanded to include large animals as part of the minister’s
initiative.
States have started to vie with one another for biotech business, and they are offering
such goodies as exemption from VAT and other fees, financial assistance with patents
and subsidies on everything ranging from investment to land to utilities

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Foreign investment:-
The government has also taken steps to encourage foreign investment in its
biotech sector. An initiative passed earlier this year allowed 100% foreign direct
investment without compulsory licensing from the government.
In April, a delegation headed by the Kapil Sibal, the minister of science and
technology and ocean development, visited five cities in the US to encourage
investment in India, with special emphasis on biotech. Just two months later, Sibal
returned to the US to unveil India’s biotech growth strategy at the BIO2005
conference in Philadelphia.
Development in India :-
The Indian pharmaceuticals market is the third largest in terms of volume and
thirteenth largest in terms of value, as per a report by Equity Master. Branded generics
dominate the pharmaceuticals market, constituting nearly 70 to 80 per cent of the
market. India is the largest provider of generic drugs globally with the Indian generics
accounting for 20 per cent of global exports in terms of volume. Of late, consolidation
has become an important characteristic of the Indian pharmaceutical market as the
industry is highly fragmented.
India enjoys an important position in the global pharmaceuticals sector. The country
also has a large pool of scientists and engineers who have the potential to steer the
industry ahead to an even higher level.
The UN-backed Medicines Patent Pool has signed six sub-licences with Aurobindo,
Cipla, Desano, Emcure, Hetero Labs and Laurus Labs, allowing them to make
generic anti-AIDS medicine Tenofovir Alafenamide (TAF) for 112 developing
countries.
Market Size:-
According to India Ratings, a Fitch company, the Indian pharmaceutical industry is
estimated to grow at 20 per cent compound annual growth rate (CAGR) over the next
five years. The Indian pharma industry, which is expected to grow over 15 per cent
per annum between 2015 and 2020, will outperform the global pharma industry,

21
which is set to grow at an annual rate of 5 per cent between the
same period1. Presently the market size of the pharmaceutical
industry in India stands at US$ 20 billion. As on March 2014, Indian pharmaceutical
manufacturing facilities registered with the US Food and Drug Administration (FDA)
stood at 523, highest for any country outside the US.
Indian pharmaceutical firms are eyeing acquisition opportunities in Japan's growing
generic market as the Japanese government aims to increase the penetration of generic
drugs to 60 per cent of the market by 2017 from 30 per cent in 2014, due to ageing
population and rising health costs.
India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-
agriculture, bio-industry and bioinformatics is expected grow at an average growth
rate of around 30 per cent a year and reach US$ 100 billion by 2025. Biopharma,
comprising vaccines, therapeutics and diagnostics, is the largest sub-sector
contributing nearly 62 per cent of the total revenues at Rs 12,600 crore (US$ 1.9
billion).
Investments:-
The Union Cabinet has given its nod for the amendment of the existing Foreign Direct
Investment (FDI) policy in the pharmaceutical sector in order to allow FDI up to 100
per cent under the automatic route for manufacturing of medical devices subject to
certain conditions.
The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$
13.32 billion between April 2000 and September 2015, according to data released by
the Department of Industrial Policy and Promotion (DIPP).
Some of the major investments in the Indian pharmaceutical sector are as
follows:
Cipla announced the acquisition of two US-based companies, InvaGen
Pharmaceuticals Inc. and Exelan Pharmaceuticals Inc., for US$ 550 million.

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Glaxosmithkline Pharmaceuticals has started work on its largest
greenfield tablet manufacturing facility in Vemgal in Kolar
district, Karnataka, with an estimated investment of Rs 1,000 crore (US$ 150 million).
Lupin has acquired two US based pharmaceutical firms, Gavis Pharmaceuticals LLC
and Novel Laboratories Inc, in a deal worth at US$ 880 million.
Cadila Healthcare Ltd announced the launch of a biosimilar for Adalimumab - for
rheumatoid arthritis and other auto immune disorders. The drug will be marketed
under the brand name Exemptia at one-fifth of the price for the branded version-
Humira. Cadila’s biosimilar is the first in class and an exact replica of the original in
terms of safety, purity and potency of the product, claims the company.
Torrent Pharmaceuticals entered into an exclusive licensing agreement with Reliance
Life Sciences for marketing three biosimilars in India — Rituximab, Adalimumab and
Cetuximab.
Government Initiatives:-
The Addendum 2015 of the Indian Pharmacopoeia (IP) 2014, published by the Indian
Pharmacopoeia Commission (IPC) on behalf of the Ministry of Health & Family
Welfare, is expected to play a significant role in enhancing the quality of medicines
that would in turn promote public health and accelerate the growth and development
of pharmaceutical sector.
The Government of India unveiled 'Pharma Vision 2020' aimed at making India a
global leader in end-to-end drug manufacture. Approval time for new facilities has
been reduced to boost investments. Further, the government introduced mechanisms
such as the Drug Price Control Order and the National Pharmaceutical Pricing
Authority to deal with the issue of affordability and availability of medicines.
Romania is keen to tie up with the Indian pharmaceutical companies for research and
develop new drugs. "Romania will collaborate with India for license acquisition to
sale India's drugs in Europe," said Mr. Mario Crute, Counsellor in Ministry of health

23
in Romania at GCCI. The country will tie up with the Indian
pharmaceutical companies for research and develop new drugs.
Some of the major initiatives taken by the government to promote the pharmaceutical
sector in India are as follows:
CHAPTER:-2
INTRODUCTION TO CADILA HEALTHCARE LIMITED:

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History:-
1995
- The Company was incorporated as Cadila Healthcare Private Ltd. on
May 15, under the company act, 1956 and subsequently the Company was
Converted into a public company and then renamed as Cadila Healthcare
Ltd. effective from July 17, 1996.
- The name Cadila shall be used only for Cadila Healthcare Limited
(Zydus Cadila), Cadila Pharmaceuticals Limited (CPL) and Cadila
Laboratories Limited (CLL).
- The Company is flagship company of Zydus Cadila Group.
- The Company's operations include pharmaceuticals (human
formulations, veterinary formulations and bulk drugs); diagnostics,
herbal products, skin care products and other OTC products.
- The Company has 6 subsidiaries Indon Healthcare Ltd., Zydus
Pharmaceuticals Ltd., Zudus Aqrovet Ltd., Zoom Properties Pvt. Ltd.,
Zydus International Pvt. Ltd., Ireland and Zydus Healthcare S.A. (Pvt)
Ltd., South Africa.
- Zydus Cadila signed an agreement with Anda Biologicals, France, for
Marketing and distribution of diagnostic kits. Anda to appoint a max.
of two distributors in India.
1996
- Zydus Cadila signed an agreement with Centeon L.L.C., USA and
Centeon Pharama GMBH, Germany for Exclusive rights to sell and
distribute plasma products in India and Nepal.
- In May, Zydus Cadila signed an agreement with Acta Services Srl.,

25
Rome for distribution of Diagnostic instrument Acto 1 Analyser
manu. By Acta.
- In June, Zydus Cadila signed an agreement with China Resources
Gulin Pharma, Works, China, for exclusive supply of Artesunate
Granules to Zydus Cadila.
- In July, Zydus Cadila signed an agreement with Shimizu Chemical
Corporation, Japan, for Marketing of specified products by Zydus
Cadila in India.
1997
- A Scheme of Arrangement and Amalgamation was sanctioned by
honorable High Court of Gujarat by order passed on May 2 issued on
August 16th.
- Zydus Cadila would issued 1,48,423 fully paid-up equity shares of
Rs 10/- each to the shareholders of Patel Group in exchange for the
assets transferred to them of Transferor companies.
- Zydus Cadila has also tied-up with Regional Research Laboratory
Jammu, to develop Enzymatic Resolution for Paroxetine HCL and some
other Enzymatic products.
1998
- In February, Zydus Cadila signed an agreement with Apotex SA Pty.
Ltd. for manufacturer of Amoxycillin, Ampicillin, Co - trimoxazole,
paracetamol.
- Zydus Cadila has also entered into a joint venture with Korea Green Cross
Corporation, Korea, to manufacture and market recombinant
Hepatitis B vaccine in India.

26
1999
- In April, Zydus Cadila signed an agreement with Ethical Holdings
Plc, Beta Pharma, and Ethical Pharma South America S.A. for Know-how
Licence Agreement to manufacture, marketing and sell transdermal
pharmaceutical formulations.
- In September, Zydus Cadila signed an agreement with Cherry Valley
Farms Ltd., UK for supply of vaccine eggs.
- Zydus Cadila has entered into a 50:50 joint venture with Byk Gulden
of Germany, a renowned, research-oriented Pharma company of Germany
and the world-wide patent holder of the novel proton pump inhibitor,
Pantoprazole.
- During the year under report, the Company had issued 2,00,000 12%
Cumulative Redeemable Preference shares of Rs. 100/- each fully paid
to the members of the Company, which are redeemable at par on 1st
July, 2001.
- During the year under report, Indon Healthcare Limited and Zydus
Aqrovet Limited, have become wholly owned subsidiaries of the company.
- During the year under report, the Company has undertaken to set up
a new project for manufacturing the bulk drug-Losartan at Ankleshwar.
- The Company laid the foundation for a new feed supplement plant, at Vatwa. The
feed supplement for poultry and cattle has been developed by Tie Company’s R & D
bio-tech department.
- The Company has set up a joint venture company to manufacture the
break-through molecule Pantoprazole. The Company is also undertaking

27
discovery research projects with Byk Gulden as a pan of the
Joint
Venture.
-The Company has entered into a technical-cum-marketing tie-up with the Swiss
Serum and Vaccine Institute, Berne, Institute to launch arange of vaccines in India.
- The Company has entered into a joint venture with the Haffkine
institute to undertake research in the field of human vaccine and
equine sera.
- A new State-of-Art Research & Development centre being set-up with
the capital cost of approximately Rs. 25.00 crores in the Village:
Moraiya. Taluka:Sanand, Dist.: Ahmedabad.
- During the year under report the Company has launched several new
products in the market : Vac Typh, HB Vac, Xylodac, Losartan, Losacar
was the first to be launched in India & Matergam P.
- The Company has set up manufacturing premises to manufacture the
feed supplement - Improval at GIDC Vatwa.
- Shir Pranlal Bhogilal was appointed as an additional Director of the Company with
effect from 15th December, 1998 pursuant to Section 260 of the Companies Act,
1956.
- Shri Mukesh M. Patel Director of the Company retires by rotation
and he is eligible for reappointment.
- A new welfare policy has been introduced for employees of the
Company.
2000
- The Company is setting up wholly owned subsidiaries abroad and

28
plans to acquire overseas companies to market products.
- The Company has entered into License Agreement for phased
manufacture and technical know-how transfer with Swiss Serum
and Vaccine Institute, Switzerland for the manufacture of Purified
Cuck Embroy Vaccine.
- The Country's fifth largest pharmaceutical company, is considering
offering stocks to its employees through an employees' stock option
scheme.
- The Company has launched two drugs for the treatment of human
immunodeficiency virus.
- The Bulk Drugs at Ankleshwar in Gujarat has an ISO 9002
certification for the manufacture and supply of a number of
molecules.
- Public Issue of 1,48,86,000 No. of Equity shares (Issue) of Rs 5/-
each issued for cash at a premium of Rs [] per share aggregating Rs
million. The Issue includes a Book Built Portion of 1,33,97,400
No. of equity shares and a Fixed price portion of 14,88,600 No. of Equity Shares
- Authorised share capital of the Company is Rs 500 million divided
into 9,00,00,000 No. of Equity Shares of Rs 5/- each and 5,00,000
Preference Shares of Rs 100/- each.
- During the year under report, the Company has been recognise as a
Prestigious Unit and granted adhoc eligibility for Sales Tax deferment by the
Industries Commissionerate, Gandhinagar, under New
Incentive Policy - Capital Investment Incentive to Premier/ Prestigious unit scheme
1995-2000.

29
- During the year under report Zydus Pharmaceuticals Limited
and Zoom
Properties Limited have become Wholly Owned Subsidiaries of the
Company.
- The Company has formed a JV Company in the name of Zydus By Healthcare
Limited with an equal participation in collaboration with By Gulden Lomberg
Chemische Fabrik GmbH, Germany, for manufacturing of Bulk Drugs, Formulations
and R & D.
- The Company has also formed a JV Company in the name of Sarabhai
Zydus Animal Health Ltd. in collaboration with Ambalal Sarabhai
Enterprises Ltd., Baroda, with an equal participation to carry on the
business of animal health segments.
- The company has also entered into a technical collaboration with
Ethical Holdings of U.K. to manufacture and market transdermal
patches in India.
- The Company launched block-buster molecules Atorvastatin (Atorva),
Lamivudine (Lamidac 100) and Celecoxib (Zycel), Meloxicam (Mel-OD)
and Carvedilol (Carvil) during the year.
- The company was the first to launch the anti-hypertensive drug
Losartan in India.
- Currently ranked 6th largest pharmaceutical company in India,
Cadila Healthcare is one of the fastest growing pharmaceutical
companies in the country.
- It has also entered into a technical collaboration with Ethical
Holdings of the UK to manufacture and market transdermal patches in
India.

30
- Zydus Cadilla has also entered into a technical collaboration
with
Ethical Holdings of the UK to manufacture and market transdermal
patches in India.
- Cadlia Healthcare (CHL) has signed an MoU with Rs 54 crore Recon
Limited, whereby it will acquire all the 8 formulation brands of the
Bangalore based comapny, as well as its distribution network.
- The new company, `Recon Healthcare Ltd' is now a subsidiary of
Zydus Cadila with Zydus holding 90 per cent stake.
- Cadila Healthcare Ltd is setting up wholly owned subsidiaries
abroad and plans to acquire overseas companies to market products.
- Cadila also launched zidovudine, which is imported and marketed
under the brand name Zydowin. Zidovudine, commonly called AZT, is an
AIDS-retardant drug made by Glaxo Wellcome.
- Zydus Alidac, the marketing arm of Cadila Healthcare Ltd., has
launched www.penegra.org.

31
-The Ahmedabad-based Cadoila Healthcare has completed the
phase III clinical trials and the bioequivalence study of the
wonder drug
sildenafil citrate (Viagra).
2001
- Cadila Healthcare has signed a three year collaborative R&D
agreement with Danish biotech company Pantheco in the field of
anti-bacterials.
- The neurosciences division launched by the company has introduced
anxiolytic paroxetine for the first time in the country.
- Cadila Healthcare Ltd has posted a 14.75 per cent increase in net
profit at Rs 21.86 crore for the quarter ended September 30,
2001.YEAR EVENTS 1995
- The Company was incorporated as Cadila Healthcare Private Ltd. on
May 15, under the company act, 1956 and subsequently the Company was
converted into a public company and then renamed as Cadila Healthcare
Ltd. effective from Juy 17, 1996.
- The name Cadila shall be used only for Cadila Healthcare Limited
(Zydus Cadila), Cadila Pharmaceuticals Limited (CPL) and Cadila
Laboratories Limited (CLL).
- The Company is flagship company of Zydus Cadila Group.
- The Company's operations include pharmaceuticals (human
formulations, veterinary formulations and bulk drugs); diagnostics,
herbal products, skin care products and other OTC products.

32
- The Company has 6 subsidiaries Indon Healthcare Ltd., Zydus
Pharmaceuticals Ltd., Zudus Aqrovet Ltd., Zoom Properties Pvt.
Ltd., Zydus International Pvt. Ltd., Ireland and Zydus Healthcare S.A. (Pvt) Ltd.,
South Africa.
- Zydus Cadila signed an agreement with Anda Biologicals, France, for
Marketing and distribution of diagnostic kits. Anda to appoint a max.
of two distributors in India.
-Cadila Healthcare Ltd has informed BSE that at the meeting of the
Board of Directors of the company held on August 20, 2002 it has been
decided to issue/allot Secured Redeemable Non Convertible Debentures
for an aggregate face value of Rs 700 million by private placement
basis at an interest rate of 8.40% p.a.
2003
-Mr.UpenShah has been designated as the Company Secretary and
Compliance Officer
of Cadila Healthcare Ltd.
-Zydus Cadila, the ahmedabad based healthcare has bagged global
marketing rights
of an anti-rabies vaccine of vaxirab a swiss company Berna Biotech.
-Cadila Healthcare receives Mumbai High court approval for the scheme
of amalgamation
with German Remedies Ltd and Zoom Properties Ltd.

33
-Cadila Healthcare Ltd has acquired US base Alpharma Inc's
French
Subsidiary Alpharma SAS France for a consideration of Euro 5.5 million.
-Mr.H.K.Bilpodiwala, Mr.H.Dhanarajgir and Mr.A.S Diwanji have been
appointed as the
additional directors on the board of the company.
-Zydus Cadila Healthcare Ltd has signed a pact with Schering AG,
Germany which allows
the Indian Pharmaceuticals major to market Schering's patented
products in India.
-Duphar Interfran, a subsidiary of Fermenta Biotech Ltd signed an
agreement with
Cadila Ltd for the sale of FBL's global patents of Chiral Building
blocks and process
teechnology for the manufacture of Lisinopril and Benazepril.
-Zydus forges marketing pact with Schering
2004
-Zydus Cadila sets up Zydus Pharmaceuticals USA, Inc
-Zydus Cadila inks strategic pact with Boehringer Ingelheim
-Zyndus Altana Healthcare - the JV between Altana Pharma AG and
Zyndus Cadila, has been accredited with the ISO 9001-2000
certificate.
2005

35
- Zydus Cadila receives approval from the USFDA to market the
anti-hypertensive drug, Atenolol, and an anti-infective drug,
Clindamycin on 31 Jan and 1 Feb.
-Zydus Cadila unveils 'Pitavastatin' to control cholesterol on
February 21, 2005
-Cadila ties up with Tyco unit to sell generic drugs in US
- Launches NuPatch - India's first indigenously manufactured
Diclofenac transdermal patch for pain relief.
-Cadila Healthcare & Mayne signs agreement to set up JVC to
manufacture specialty oncology products
-Cadila Healthcare - German Remedies launches Fludara Oral for
Lymphocytic Leukaemia
-Zydus Cadila receives tentative approval for Divalproex Sodium DR
Tablets from US FDA
-Cadila Healthcare receives approval for Promethazine Tablets from
USFDA
-Cadila Healthcare enters into JV with BSVL
2006
-Zydus Cadila forges alliance with French firm
-Zydus Cadila receives USFDA approval for Simvastatin Tablets

36
-Zydus Cadila to acquire Nutralite - India's largest selling
cholesterol-free margarine
-Sarabhai Zydus to roll out immuno-diagnostics kits
-Cadila Healthcare has given the Bonus in the Ratio of 1:1
2007
-Cadila Healthcare Ltd on April 19, 2007 has announced the
acquisition of Nippon Universal Pharmaceutical Ltd.
- Cadila Healthcare Ltd has announced that its second overseas
acquisition this year, the Company signed an agreement to acquire
100% stake in Quimica e Farmaceutica Nikkho do Brasil Ltda.
-Zydus Cadila acquires Nippon Universal, strengthens its presence in
Japan
-Zydus Cadila, the first to launch revolutionary anti-obesity drug
Slimona in India
-Zydus Cadila acquires Brazilian Company Nikkho
2008
-Zylus Cadila, Karo Bio to jointly develop new drugs
-Zydus Cadila & Karo Bio of Sweden sign research agreement for a
novel drug to treat inflammatory diseases
-Zydus Cadila acquires Etna Biotech, a subsidiary of Crucell N.V.

38
-Zydus scores with first day launch of Venlafaxine
Hydrochloride in the US
2009
-Zydus Cadila announces research collaboration to discover and
develop new cardiovascular medicines
-Zydus Research Centre Receives AAALAC Accreditation
2010
-CHL announces Bonus Shares in the ratio of 1:2
- India unveiled its first indigenous H1N1 vaccine, which was
developed by drug firm Cadila Healthcare and this vaccine will
provide immunity from the H1N1 virus strain for one year.
2011
-Company has signed an Agreement with Bayer HealthCare to set up
50:50 Joint Venture Company in the name of Bayer Zydus Pharma
-Cadila gets USFDA nod for diabetes drug trial
-Cadila Health acquires Bremer Pharma from ICICI Venture
2012
-Cadila Healthcare enters into a settlement and license agreement
with Somaxon for Silenor

39
-Cadila Healthcare gets USFDA nod for Aripiprazole orally
disintegrating tablets
2013
-Zydus Cadila receives tentative approval for Doxepin Hcl tablets
-Zydus and IDRI sign agreement for the development of IDRI’s Vaccine
Candidate for Visceral Leishmaniasis (Kala-Azar)
-Zydus and Pieris Sign Broad Co-Development Alliance for Novel
Anticalin® Therapeutics
-Zydus Pharmaceuticals (USA) Inc agreement with Warner Chilcott
Company LLC
2014
-Zydus and gilead enter into a generic licensing agreement to
manufacture breakthrough treatment for hepatitis c
-Zydus launches world’s first biosimilar of Adalimumab
-Cadila Healthcar - Lipaglyn - India's first NCE launched in the
market
-Zydus and IDRI sign agreement for the development of IDRI's
-Zydus and Pieris Sign Broad Co-Development Alliance for Novel
2015

40
-Zydus Cadila has completed the single ascending dose (SAD)
range
-Zydus launches SoviHep - the breakthrough therapy for Hepatitis C in
alliance with Gilead Sciences
-Cadila Healthcare Ltd has purchased the remaining 50 per cent shares
of its joint venture firm, Zydus BSV Pharma Pvt Ltd (Zydus BSV)
-Cadila Healthcare Ltd has received the final approval from USFDA for
Pyridostigmine Bromide Tablets
-Cadila Healthcare Ltd has received the market authorisation from the United States
Food and Drug Administration to market drug for the treatment of chronic pain or
cancer related pain.
-Cadila Healthcare Ltd has received final approval from the USFDA to
market Amiloride Hydrochloride Tablets USP, 5 mg
-Zydus launches 'Tenglyn', the most affordable gliptin for diabetics
in India

41
2.2 Company Profile :-
Founder:- Late Mr. Ramanbhai B. Patel.
Key Executives :-
Chairmen & Managing Director :- Pankaj R. Patel
Deputy Managing Director :- Sharvil P Patel
Director :- Mukesh M. Patel
Director :- H Dhanrajgir
Bord of Directores :-
Chairmen & Managing Director :- Pankaj R Patel
Deputy Managing Director :- Sharvil P Patel
Director :- Mukesh M. Patel
Director :- H Dhanrajgir
A S Diwanji
Company Secretory :- Upen H Shah
Director :- Nitin Raojibhai Desai
Bankers :-
Bank of Baroda
BNP Paribas
Citibank N A
Credit Agricole Cor & Inv
Export – Import Bk of India
HDFC Bank Ltd
ICICI Bank Ltd

42
IDBI Bank
Standard Chartered Bank
Stat Bank of India
Auditors :-
Mukesh M Shah & Co.
Registered and Corporate Offices :-
Register Address :-
“ Zydus Tower “
Satelite Cross Road ,, Sarkhej- Gandhinagar Highway
Ahmedabad Gujarat 380015
Tel: 079-26868100
Fax: 079-26862365,079-26862366
Email: investor.grievance@zyduscadila.com
Website: http://www.zyduscadila.com
Group: Zydus Cadilla Group
Registrars
Sharepro Services (India) Pvt.Ltd. 13 AB, Samhita Warehousing Complex,
2nd Floor, Sakinaka Telephone Exchange Lane,
Off Andheri-Kurla Road, Mumbai - 400072
Maharashtra
Misson :-
Zydus Cadila is Dedicate to life…….
In all its dimensions Our World is shaped by a passion for innovation commitment to
partners and concern for people in an effort to create healthier communities ,
globally.

43
“We will discover, develop and successfully market
pharmaceutical products to prevent, diagnose, alleviate and cure diseases.
We shall provide total customer satisfaction and achieve leadership in chosen
markets, products and services across the globe, through excellence in technology,
based on world-class research and development.
We are responsible to the society. We shall be good corporate citizens and will be
driven by high ethical standards in our practices.”
Vision:-
“Our vision is to be a leading pharmaceutical company in India and to become a
significant global player by providing high quality, affordable and innovative
solutions in medicine and treatment.”

46
Stock Performance :-
Last one year stock performance of Cadila Healthcare Limited and
comparison with Sun Pharma
Stock performance Cadila Healthcare Limited of Last year and compare it with
Sun Pharma
Cadila Health care has give completely upside of stock performance in last year .

47
Pharmaceutical Company rank wise :-
As performance wise Cadila Healthcare Limited is on 5th
rank from the other
competitor.
Peer Competition :-
Company Name Net Sales (Rs. Cr.) Net Profit (Rs. Cr.) Total Assets
(Rs.Cr.)
Cipal 10,131.78 1,181.09 12,251.91
Dr Reddy Labs 10,011.00 1,679.40 13,658.70
Lupin 9,752.47 2,397.35 8,875.88
Cadila Health Care 5,284.40 1,271.10 5,741.30
Torrent Pharma 3,475.49 623.18 4,640.62

48
Above Chart showing Cadila Health care is stable in competition to other competitor
and net profit is also stable than other by considering net assets and net sales . It is
sign of good and efficient management of Cadila Healthcare Limited.
Dividend
0
2000
4000
6000
8000
10000
12000
14000
16000
Cipala Dr Reddy
Labs
Lupin Cadila Health
Care
Torrent
Pharma

49
2.4 Product Plants:-
From Nine Pharmaceuticals production in India as well as a
Zydus Cadila develop and manufacture a large range of pharmaceuticals as well as
diagnosis , herbal products , skin care products and other OTC products.
The company makes active pharmaceuticals ingredients at three sites in India :
Ankleshwar Plants – Zydus Cadila ‘s plant complex at Ankleshwar in Bharuch
District of Gujarat, has been producing drug material since 1972. There are around 12
plants in the complex , which is ISO 9002 and ISO 14001 certified approved by the
U.S. Food and drug administration (FDA). Total plant capacity in Ankleshwar is
around 180 million tones .
Vadodara Plants – Zydus Cadila’s Plant at Dhabhasa , in Vadodara District ‘s Padra
taluka (in the eastern part of the district ) in Gujarat , was commissioned in 1997 by a
company called Banyan Chemicals , and acquired by Zydus Cadila in 2002. The
plant has a 90 million tones capacity . it is approved by the U.S. FDA and is also
approved to World Health Organization (WHO) good manufacturing practice (GMP)
guidelines.
Patalganga plants - Zydus Cadila acquired an API plant at Patalganga in
Maharashtra State , 70 km from Mumbai, about 859 km from Nagpur , in the 2001
German Remedies deal . this plant operates to WHO GMP standards.
Others
Navi Mumbai plants - This operation in, Navi Mumbai in Maharashtra , is a
50/50 joint venture with Nycomed Pharma of US , makes intermediates of the drug
pantoprazole.
Mumbai Business Office - This office houses Business unit India – 2 or German
Remedies. This office belong to German Remedies (I) Ltd. This Company was
acquired in 2000. This was the biggest takeover in the History of Indian
Pharmacological Industry. German is now a Registered Trademark of Cadila
Healthcare Ltd.

50
Goa Plants – The Company’s plants at Ponda in the southern
Indian state of Goa do formulation work as well as manufacture
oncology drugs and a herbal laxative branded Agiolax based on Psyllium seeds. This
plant belonged to German Remedies (I) Ltd. too and now are part of Business Unit –
Manufacturing of the Company .
Baddi Plant – In 2004 Zydus commissioned at formulation plant at Baddi, in
Himachal Pradesh state of northern India . The Baddi plant makes solid oral
pharmaceuticals.
Sikkim Plant - In 2008 Zydus commissioned at formulation plant at Majhitar , in
Sikkim state of eastern India. The Sikkim plant makes solid oral pharmaceuticals and
hormones. This plant now caters almost all Domestic Formulation need s of the
company .
In Gujarat, India
Zydus Plant (Changodar)- Zydus Cadila Plant at Changodar , 20 kilometers from
Ahmedabad on the city's outskirts, manufactures fine chemicals. Zydus is current
constructing a facility at Changodar to make vaccines for hepatitis B and rabies.
Zydus Research Centre (ZRC)(Changodar) – Zydus's NCE, NME, MBE research
facility is the largest of its kind in Indian, with more than 500 post graduate scientists
it is working towards the prosperous future of the company and Indian Pharmaceutical
Industry.
Zydus Hospira Oncology Pvt. Ltd. (SEZ, Matoda) – Zydus's JV venture with
Hospira Inc. of US manufactures Anti Cancer Injectables at this plant. This plant is
also U.S. FDA approved and situated in Special Economy Zone, about 25 kilometers
from Ahmedabad. This SEZ is developed by Zydus Infrastructure Pvt. Ltd., another
group company of

51
Zydus. Zydus – BSV(SEZ, Matoda) – Zydus's JV with Bharat
Serum and Vaccine Ltd.'s Plant isanother facility located in the
same SEZ.
Zydus Technologies Ltd.(SEZ, Matoda) – Zydus's JV with Noveltech Inc.Plant is
another world class facility located in the same SEZ for Novel DrugDelivery Systems.
Nutralite Manufacturing Fascility (Changodar) – Zydus manufactures and sells,
Nutralite a health, butter substitute. This plant comes under the banner of Zydus
Wellness Ltd. This company also manufactures and sales, popular brands as
SugraFree, Everyouth, Everyouth Men'z and D'lite.
Corporate control : Zydus Cadila's major shareholder remains the Patel family.
Pankaj Patel (born 1951), son of the founder, is CEO. In 2004 Pankaj Patel was
included by Forbes magazine in its annual List of India's richest people. Forbes
estimated Patel's net worth at US$510m, making him India's 26th richest person.[2]
However in 2005 Patel dropped off the Forbes list due to a fall in the stock price of
Cadila Healthcare. Moreover, there is a team of nine senior level executives, known
as the Executive Committee, who are heads of different operations look after the
overall management processes. None of the members except Pankaj Patel are on the
Board of Directors. The Indian pharmaceutical industry has become the third largest
producer in the world and is poised to grow into an industry of $ 20 billion in
2015 from the current turnover of $ 12 billion.

52
2.5 Products:Tablets:-
Tablets
Bulk
Drugs
Injections
Capsules
Dry Powder
Injectibles Liquids
Processing Charges Ointments
Dry Syrup,
Powder & Injectibles Other Fiscal Benefits
Suppositories Others Cosmetics

53
CHAPTER :3
RESEARCH AND METHODOLOGY

54
3.1 RESEARCH OBJECTIVE:
Objective of research is to analyses financial position and performance of Cadila
Healthcare Limited by Analyzing working capital management .
3.2 SCOPE OF RESEARCH:-
I have studied working capital management, inventory management and cash
management of the Cadila Healthcare Limited by Analyzing their profit and loss
account and balance sheets for the year last four year.
3.3 DATA TYPE:-
Secondary Data
3.4 DATA SOURCES:
Internet, Reference Books, Annual Reports, Audit Reports
3.5 RESEARCH DESIGN:
Exploratory Research.
3.6 TOOLS USED FOR ANALYSIS:
• Working capital requirement Analysis
• Financial Ratios
• Liquidity position

55
3.7 LITERATURE REVIEW:-
The idea of the topic of the research was drawn from the various mediums which I
gone through are as follows:
• I have gone through the various books providing guidance regarding working
capital and inventory management like Pandey I.M., Khan & Jain and
Prasanna Chandra.
• The various project reports which I have undergone namely working capital
and inventory management of Amul, Financial analysis of Hetro
Pharmaceuticals,Financial analysis of Ranbaxy lab and Finanacial analysis of
VRN Ceramic ltd.
3.8 LIMITATIONS FOR THE STUDY:-
No proper response from the trade associations.
Primary data is limited
It is not possible to get cent percent correct information. The research was
made according to the information available from related departments and
through annual reports published.

56
CHAPTER :4
THEORETICAL FRAMEWORK OF WORKING
CAPITAL MANAGEMENT

57
4.1 Working Capital Management:-
Working capital refers to that part of the firm’s capital which is required for financing
short term or current assets such as cash, marketable securities, debtors & inventories.
Funds, thus, invested in current assts keep revolving fast and are being constantly
converted in to cash and this cash flows out again in exchange for other current assets.
Hence, it is also known as revolving or circulating capital or short term capital.
Working capital management is concerned with the problems arise in attempting to
manage the current assets, the current liabilities and the inter relationship that exist
between them.
The term current assets refers to those assets which in ordinary course of business can
be, or, will be, turned in to cash within one year without undergoing a diminution in
value and without disrupting the operation of the firm.The major current assets are
cash, marketable securities, account receivable and inventory.
Current liabilities ware those liabilities which intended at their inception to be paid in
ordinary course of business, within a year, out of the current assets or earnings of the
concern. The basic current liabilities are account payable, bill payable, bank overdraft,
and outstanding expenses.
The goal of working capital management is to manage the firm’s current assets and
current liabilities in such way that the satisfactory level of working capital is
mentioned.

58
Definition:-
According to Park & Gladson
“ The excess of current assets of a business (i.e.
cash, accounts receivables, inventories) over current items owned to employees
and others (such as salaries & wages payable, accounts payable, taxes owned to
Government)”.
Capital required for a business can be classified under two main categories via,
1) Fixed Capital 2)Working Capital
Every business needs funds for two purposes for its establishment and to carry
out its day to day operations. Long terms funds are required to create
production facilities through purchase of fixed assets such as p&m, land,
building, furniture, etc. Investments in these assets represent that part of firm’s
capital which is blocked on permanent or fixed basis and is called fixed capital.
Funds are also needed for shortterm purposes for the purchase of raw material,
payment of wages and other day – today expenses etc.

59
4.2 CONCEPT OF WORKING CAPITAL:-
There are two concepts of working capital:
1. Gross working capital
2. Net working capital
The gross working capital is the capital invested in the total current assets of
the enterprises current assets are those assets which can convert in to cash
within a short period normally one accounting year.
CONSTITUENTS OF CURRENT ASSETS :-
1) Cash in hand and cash at bank
2) Bills receivables
3) Sundry debtors
4) Short term loans and advances
5) Inventories of stock as:
a. Raw material
b. Work in process
c. Stores and spares
d. Finished goods
6) Temporary investment of surplus funds.
7) Prepaid expenses
8) Accrued incomes.
9) Marketable securities.

60
In a narrow sense, the term working capital refers to the net
working. Net working capital
is the excess of current assets over current liability, or, say:
NET WORKING CAPITAL = CURRENT ASSETS – CURRENT
LIABILITIES.
Net working capital can be positive or negative. When the current assets
exceeds the current liabilities are more than the current assets.Current liabilities
are those liabilities, which are intended to be paid in the ordinary course of
business within a short period of normally one accounting year out of the
current assts or the income business.
CONSTITUENTS OF CURRENT LIABILITIES :-
1. Accrued or outstanding expenses.
2. Short term loans, advances and deposits.
3. Dividends payable.
4. Bank overdraft.
5. Provision for taxation, if it does not amt. to app. of profit.
6. Bills payable.
7. Sundry creditors.

4.3 CLAS
Working ca
On
On
On the basi
net working
Amount o
Cap
Temporary
Permanent
Time
Time
SSIFICAT
apital may b
the basis o
the basis o
is of concep
g capital. O
of Working
pital
capital
Capital
ION OF W
be classified
of Concept
of time
pt working c
n the basis
Perman
Tempor
g
l
WORKING
d in two way
t
capital can
of time, wo
nent or fixed
rary or varia
G CAPITA
ys:
be classifie
orking capita
d working c
able workin
AL:-
ed as gross w
al may be c
capital.
ng capital
working cap
classified as
pital and
:
61

62
PERMANENT FIXED WORKING CAPITAL:-
Permanent or fixed working capital is minimum amount which is
required to ensure effective utilization of fixed facilities and for maintaining the
circulation of current assets. Every firm has to maintain a minimum level of raw
material, working process, finished goods and cash balance. This minimum level of
current assets is called permanent or fixed working capital as this part of working is
permanently blocked in current assets.
TEMPORARY OR VARIABLE WORKING CAPITAL:-
Temporary or variable working capital is the amount of working capital which is
required to meet the seasonal demands and some special exigencies. Variable working
capital can further be classified as seasonal working capital and special working
capital. The capital required to meet the seasonal need of the enterprise is called
seasonal working capital. Special working capital is that part of working capital which
is required to meet special exigencies such as launching of extensive marketing for
conducting research, etc.
4.4 IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL
:-
SOLVENCY OF THE BUSINESS:-
Adequate working capital helps in Maintaining the solvency of the business by
providing uninterrupted of production.
Goodwill:
Sufficient amount of working capital enables a firm to make prompt payments
and makes and maintain the goodwill.
Easy loans:

63
Adequate working capital leads to high solvency and
credit standing can arrange loans from banks and other on
easy and favorable terms.
Cash Discounts :
Adequate working capital also enables a concern to avail cash discounts on the
purchases and hence reduces cost
Regular Supply of Raw Material:
Sufficient working capital ensures regular supply of raw material and
continuous production.
Regular Payment Of Salaries, Wages And Other Day TO Day
Commitments:
It leads to the satisfaction of the employees and raises the morale of its
employees, increases their efficiency, reduces wastage and costs and enhances
production and profits.
Ability to Face Crises:
A concern can face the situation during the depression.
4.5 FACTORS DETERMINING THE WORKING CAPITAL
REQUIREMENTS:-
1. NATURE OF BUSINESS:-
The requirements of working is very limited in public utility undertakings such as
electricity, water supply and railways because they offer cash sale only and supply
services not products, and no funds are tied up in inventories and receivables. On the

64
other hand the trading and financial firms requires less
investment in fixed assets but have to invest large amt. of
working capital along with fixed investments.
2. SIZE OF THE BUSINESS:
Greater the size of the business, greater is the requirement of working capital.
3. PRODUCTION POLICY:
If the policy is to keep production steady by accumulating inventories it will require
higher working capital.
4. LENTH OF PRDUCTION CYCLE:
The longer the manufacturing time the raw material and other supplies have to be
carried for a longer in the process with progressive increment of labor and service
costs before the final product is obtained. So working capital is directly proportional
to the length of the manufacturing process.
4.6 Sources of working capital:-
The company can choose to finance its current assets by
1. Long term sources
2. Short term sources
3.A combination of them
Long term sources of permanent working Capital includes equity and
preference shares, retained earnings, debentures and other long term debts from
public deposits and financial institution. The long term working capital needs
should meet through

65
long term means of financing. Financing through long term
means provides stability, reduces risk or payment and increases
liquidity of the business concern.
Various types of long term sources of working capital are summarized as
follow:
1. Issue of shares:
It is the primary and most important sources of regular or permanent
working capital. Issuing equity shares as it does not create and burden on the income
of the concern. Nor the concern is obliged to refund capital should preferably raise
permanent working capital.
2. Retained earnings:
Retain earning accumulated profits are a permanent sources of regular working
capital. It is regular and cheapest. It creates not charge on future profits of the
enterprises.
3. Issue of debentures:
It creates a fixed charge on future earnings of the company.
Company is obliged to pay interest. Management should make wise choice in
procuring funds by issue of debentures.
Short term sources of temporary working capital Temporary working
capital
Temporary Working Capital is required to meet the day to day business expenditures.
The variable working capital would finance from short term sources of funds. And

66
only the period needed. It has the benefits of, low cost and
establishes closer relationships with banker.
Some sources of temporary working capital are given below:
1. Commercial bank:
A commercial bank constitutes significant sources for short term or temporary
working capital. This will be in the form of short term loans, cash credit, and
overdraft and though discounting the bills of exchanges.
2. Public deposits:
Most of the companies in recent years depend on this source to meet
their short term working capital requirements ranging from six month to
three years.
3. Various credits:
Trade credit, business credit papers and customer credit
are other sources of short term working capital. Credit from suppliers,
advances from customers, bills of exchanges, etc helps to raise
temporary working capital
4. Reserves and other funds:
Various funds of the company like depreciation fund. Provision for tax
and other provisions kept with the company can be used as temporary
working capital. The company should meet its working capital needs
through both long term and short term funds.

67
SOURCES OF ADDITIONAL WORKING
CAPITAL:-
Sources of additional working capital include the following
1. Existing cash reserves
2. Profits (when you secure it as cash)
3. Payables (credit from suppliers)
4. New equity or loans from shareholder
5. Bank overdrafts line of credit
6. Long term loans
If we have insufficient working capital and try to increase sales, we can easily over
stretch the financial resources of the business.
This is called overtrading. Early warning signs include
1. Pressure on existing cash
2.Exceptional cash generating activities. Offering high discounts for clear cash
payment
3. Bank overdraft exceeds authorized limit
4. Seeking greater overdrafts or lines of credit
5. Part paying suppliers or there creditor.
6. Management pre occupation with surviving rather than managing.
4.7Different Aspects of Working Capital Management :-
Management of Inventory
Management of Receivables/Debtors
Management of Cash
Management of Payables/Creditors

68
MANAGEMENT OF INVENTORY:-
Inventories constitute the most significant part of current assets of a large majority of
companies. On an average, inventories are approximately 60% of current assets.
Because of large size, it requires a considerable amount of fund. The inventory
means and includes the goods and services being sold by the firm and the raw
material or other components being used in the manufacturing of such goods and
services.
Nature of Inventory:
The common type of inventories for most of the business firms may be classified as
raw material, working progress, finished goods.
Raw material:
it is basic inputs that are converted into finished
products through the manufacturing process. Raw materials inventories are
those units which have been purchased and stored for future productions.
Work–in–process: Working process :
It is semi manufactured products. They represent products that need more
work before them become finished products for sale.
Finished goods:
These are completely manufactured products which are ready for sale.
Stocks of raw materials and working process facilitate production, while
stock of finished goods is required for smooth marketing operations.
So operating cycle can be known as following:

70
Need to hold inventories:-
Maintaining inventories involves trying up of the company’s
funds and incurrence of storage and holding costs. There are three general motives for
holding inventories:
Transactions Motive:-
IT emphasizes the need to maintain inventories to facilitate
smooth production and sales operation.
Precautionary Motive:-
It necessitates holding of inventories to guard against the risk of unpredictable
changes in demand and supply forces and other factors.
Speculative Motive:-
It influences the decision to increase or reduce inventory levels to take advantage of
price fluctuations.
Management of Receivables/Debtors :-
The Receivables (including the debtors and the bills) constitute a significant portion
of the working capital. The receivables emerge whenever goods are sold on credit and
payments are deferred by customers. A promise is made by the customer to pay cash
within a specified period. The customers from whom receivable or book debts have to
be collected in the future are called trade debtors and represents the firm’s claim or
assets. Thus, receivable is s type of loan extended by the seller to the buyer to
facilitate the purchase process. Receivable Management may be defined as
collection of steps and procedure required to properly weight the costs and benefits
attached with the credit policy. The Receivable Management consist of matching the
cost of increasing sales (particularly credit sales) with the benefits arising out of
increased sales with the objective of maximizing the return on investment of the firm.

71
Nature:-
The term credit policy is used to refer to the combination of three decision variables:
1.Credit standards:-
It is the criteria to decide the type of customers to whom goods could be sold on
credit. If a firm has more slow –paying customers, its investment in accounts
receivable will increase. The firm will also be exposed to higher risk of default.
2.Credit terms:-
It specifies duration of credit and terms of payment by Customer Investment in
accounts receivable will be high if customers are allowed extended time period for
making payments.
3.Collection efforts:-
It determine the actual collection period. The lower the collection period, the lower
the investment in accounts receivable and vice versa.
Management of Cash:-
Cash management refers to management of cash balance and the bank balance and
also includes the short terms deposits. Cash is the important current asset for the
operations of the business. Cash is the basic input needed to keep the business running
on a continuous basis. It is also the ultimate output expected to be realized by selling
the service or product manufactured by the firm. The term cash includes coins,
currency, and cheque held by the firm and balance in the bank accounts.

72
Factors of Cash Management:-
Cash management is concerned with the managing of
1. Cash flows into and out of the firm
2. Cash flows within the firm and
3.Cash balance held by the firm at a point of time by financing deficit or investing
surplus cash. Sales generate cash which has to be disbursed out. The surplus cash has
to be invested while deficit has to borrow. Cash management seeks to accomplish this
cycle at a minimum cost and it also seeks to achieve liquidity and control.
Management of Payables/Creditors:-
Creditors are a vital part of effective cash management and should be managed
carefully to enhance the cash position. Purchasing initiates cash outflows and an
overzealous purchasing function can create liquidity problems.
Consider the Following:-
Who authorizes purchasing in our company is it tightly managed or spread
among a Number of people?
Are purchase quantities geared to demand forecasts?
Do we use order quantities which take account of stockholding and purchasing
costs?
Do we know the cost to the company of carrying stock?
Do we have alternative source of supply?
How many of our suppliers have a returns policy?
Are we in a position to pass on cost increases quickly through price increase?

73
MANAGEMENT OF WORKING CAPITAL:-
Management of working capital is concerned with the problem
that arises in attempting to manage the current assets, current liabilities. The basic
goal of working capital management is to manage the current assets and current
liabilities of a firm in such a way that a satisfactory level of working capital is
maintained, i.e. it is neither adequate nor excessive as both the situations are bad for
any firm. There should beno shortage of funds and also no working capital should be
ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its
probability, liquidity and structural health of the organization. So working capital
management is three dimensional in nature as
It concerned with the formulation of policies with regard to profitability,
liquidity and risk.
It is concerned with the decision about the composition and level of current
assets.
It is concerned with the decision about the composition and level of current
liabilities.
4.8 WORKING CAPITAL ANALYSIS:-
As we know working capital is the life blood and the centre of a business. Adequate
amount of working capital is very much essential for the smooth running of the
business. And the most important part is the efficient management of working capital
in right time. The analysis of working capital can be conducted through a number of
devices, such as:
1. Ratio analysis
2. Fund flow analysis.
3. Budgeting.
METHODS OF WORKING CAPITAL ANALYSIS
There are so many methods for analysis of financial statements but Following
techniques are used most .:

74
Comparative size statements
Trend analysis
Cash flow statement
Ratio analysis
A detail description of these methods is as follows:
COMPARATIVE SIZE STATEMENTS:-
When two or more than twoyears figures are compared to each other than we called
comparative size statements in order to estimate the future progress of the business, it
is necessary to look the past performance of the company. These statements show the
absolute figures and also show the change from one year to another.
TREND ANALYSIS:-
To analyze many years financial statements uses this method. This indicates the
direction on movement over the long time and help in the financial statements.
CASH FLOW STATEMENT:-
Cash flow statements are the statements of changes in the financial position prepared
on the basis of funds defined in cash or cash equivalents. In short cash flow statement
summaries the cash inflows and outflows of the firm during a particular period of
time..
RATIO ANALYSIS:-
Ratio analysis is the process of the determining and presenting the relationship of the
items and group of items in the statements.
Types of ratio:-
Liquidity ratio: They indicate the firms’ ability to meet its current
obligation out of current resources.
• Current ratio: Current assets / Current liabilities

75
• Quick ratio: Liquid assets / Current
liabilities
Liquid assets =Current assets – Stock Prepaid expenses
Leverage or Capital structure ratio:
This ratio discloses the firm’s ability to meet the interest costs regularly
and long term solvency of the firm.
• Debt equity ratio: Long term loans / Shareholders funds or net
Worth
• Debt to total fund ratio: Long terms loans/ share holder funds
+long term loan
• Proprietary ratio: Shareholders fund/ shareholders fund +long
term loan
• Activity ratio or Turnover ratio:
They indicate the rapidity with which the resources available to the
concern are being used to produce sales.
• Stock turnover ratio: Cost of goods sold/Average stock (Cost of
goods sold= Net sales/ Gross profit, Average stock=Opening stock
+closing stock/2)
• Debtors turnover ratio: Net credit sales/ Average debtors
+Average B/R
• Average collection period : Debtors+ B/R /Credit sales per (Credit
sales per day=Net credit sales of the year/365)
Creditors Turnover Ratio:- Net credit purchases/ Average Creditors + Average B/P

76
Average Payment Period:- Creditors + B/P/ Credit purchase
per day.
Fixed Assets Turnover ratio:-Cost of goods sold/Net fixed Assets (Net Fixed
Assets=FixedAssets–depreciation)
Working Capital Turnover Ratio:- Cost of goods sold/ Working Capital
(Working capital= current assets – current liability)
Profitability Ratios or Income ratios: The main objective of every
business concern is to earn profits. A business must be able to earn
adequate profit in relation to the risk and capital invested in it.
• Gross profit ratio : Gross profit / Net Sales * 100
(Net sales= Sales – Sales return)
• Net profit Ratio : Net profit / Net sales * 100 (Operating Net
Profit=operating net
profit/ Net Sales *100 or operating Net profit= gross profit – operating
expenses)
• Operating Ratio : Cost of goods sold + Operating expenses/Net Sales * 100
(Cost of goods sold = Net Sales – Gross profit, Operating expenses = office
administration expenses + Selling distribution expenses + discount + bad debts
+ interest on short term loans)
• Earnings per share(E.P.S.) : Net Profit – dividend on preference share /
No. of equity shares
• Dividend per share (D.P.S.): Dividend paid to equity share Holders / No.
of equity shares *100.
• Dividend Payout ratio(D.P.) : D.P.S. / E.P.S. *100

77
CHAPTER:-5
DATA ANALYSIS AND INTERPRETATION

78
5.1 Working Capital Statement of Cadila Healthcare
Limited of Last Five Year (in Rs. Cr).
The average size of working capital of the firm since last five years is 960.16
crore which shows the sound situation of the firm.
The average current ratio of the firm since last five year is 1.98 in approx
which is better as reviews of the Tondon committee.
The liquid ratio of the firm also shows the better position of the firm for short
term future also.
The company’s result shows on an average of 6% return on the investment of
the current assets which shows the worst result of the firm and shows the
ineffective output of the current assets.
The average working capital has been utilized from the generation of revenue
at only 11% which shows dissatisfactory result.
Amt in Crore
Current
Assets
2009-10 2010-11 2011-12 2012-13 2013-14
Stock 380.8 464.5 501.2 587.2 663.5
Debtors 400.8 475.1 581.2 683 722
Cash Balance &
Bank Balance
7.6 14.1 118.3 91.6 89.4
Fixed Deposits 20.6 28.3 0 0 0
Advances 395.9 537.2 799.6 947.4 1115.8
Total Current
Assets
1205.7 1519.2 2000.3 2309.2 2590.7
Current
Liabilities
Current Liabilities 531.2 654 884.9 781 904.5
Provision 151.7 180.4 227.1 212 297.5
Total Current
Liabilities
682.9 834.4 1112 993 1202
Net Working Capital Required 522.8 684.8 888.3 1316.2 1388.7
Current
Ratio
1.77 1.82 1.8 2.33 2.16

0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Compone
Percenta
_________
Interpret
Above tabl
capital. It
percentage
Year
2010
2011
2012
2013
2014
0
2
3
4
5
6
7
8
9
2010
ents Of
ge :-
__________
tation:
e depicts th
shows tha
in working
Invent
Worki
Capita
0.73
0.68
0.56
0.45
0.48
2011 20
Work
__________
he proportio
at each co
g capital
tory to
ing
al
De
wo
ca
0.7
0.6
0.5
0.4
0.4
012 2013
king Cap
__________
on of compo
mponent o
ebtors to
orking
apital
77
69
56
45
48
3 2014
pital Re
__________
onents of cu
of current
o
Cash
Bank
Working
Capital
0.015
0.021
0.133
0.070
0.064
Inve
Debt
Cash
Capi
Loan
Wor
spective
__________
urrent assets
assets cont
&
to
g
Loa
Adv
0.76
0.78
0.90
0.72
0.80
ntory To Wor
tors To Worki
h & Bank To W
ital
ns & Advance
rking Capital
_________
s in the net w
tribute how
ns &
vances
6
8
0
2
0
rking Capital
ing Capital
Working
es To
working
w many
79

80
In The year 2010 inventory to net working capital ratio is 0.73
i.e. which change each year due to change in the amount of
inventory to 0.67, 0.56 0.45, 0.48 in the year 2011, 2012, 2013 & 2014 respectively
Similarly, the contribution of debtors in working capital is highest in the year 2013 is
0.77 lowest in 2010 is 0.52.This change takes place due to change in amount of
debtors every year.
Talking about cash bank balance to working capital, it is 0.01 , 0.02, 0.13,0.07 and
0.06 respectively in 2010 , 2011 2012.2013 and 2014 marginally fluctuation due to
change in amount of cash bank balance
Likewise, loans advance shows highest contribution to net working capital in the year
2010 its 0.76 , in the year 2011 its marginally goes up with 0.78 , in the year 2012 its
goes up 0.90 and in the year 2013 its comes down to 0.72 . year 2014 its goes up 0.80
This shows that in the current year company hasreduced their inventory, but debtors
of the company has increased maintaining cash balance in a proper manner because it
shows reduction in cash balance in the year 2012

81
5.2 LIQUIDITY POSITION:
Liquidity position measures the ability of the from to meets its
current obligation liquidity position established relationship between current assets
and current liabilities of the company
Interpretation:-
The above table shows liquidity position of the company for the different years.
It shows that current assets of the company are continuously increasing every year.
Similarly current liabilities of the company are also increasing.
But comparing current assets and current liabilities the current assets of the company
is more than its current liabilities. The current assets of the company is increasing at a
faster than its current liabilities which can be known from the mean of the both. It
shows good liquidity position of the company.
Table also explains the company in the net working capital of the company.
Year
Current
Assets
Current
Liabilities
Net Working
Capital
Amount
2010
1205.7 682.9 522.8
2011 1519.2
834.4
684.8 162
2012 2000.3
1112
888.3 203.5
2013 2309.2
993
1316.2 427.9
2014 2590.7
1202
1388.7 72.5
Total 9625.1 4824.3 4800.8 865.9
Mean 1925.02 964.86 960.16 173.18
Growth 20% 20% 20% 20%

82
Talking the year 2010 as the base year, working capital of the
company is increasing in the year 2011& 2012; similarly it also
increases in the year 2013 and in the year 2014 as compared to previous year.
It shows that company is maintaining its working capital as when required.
5.3 COMPARATIVE BALANCE SHEET STATEMENTS:-
The effects of the conduct of a business are reflected in its balance sheet by increase
or decrease in assets, liabilities and proprietary capital. These changes can be known
by a comparison of the balance sheets of two or more different dates of previous
years. Knowledge of these changes is of considerable value in framing an operation
regarding the progress of the business unit. While a single balance sheet reveals the
financial status at a specific point of time, a comparative balance sheet analysis shows
the changes in it. These changes may be result operations, the conversion of assets
and liabilities and capital forms into other and the various interactions among assets,
liabilities and capital. In the comparative balance sheets not only absolute change (in
terms of rupees) but also relative changes (in percentage as rate of change) would be
studied in fact the relative change are more important than there to the analyst.
Information regarding relative changes must modify the analysis operation based on
absolute changes.
In the computation of percentages it should be noted that if ascertain items has a value
in one year and does not exist the next year the percentage of decrease is 100% But if
the item has no value in the first year and has an value in the second no percentage
can be shown because if an number is divided zero the quotient is infinity.

83
Comparative Statement of Balance Sheet for 2011-2012 (In Rs. Cr.)
Particulars 2011 2012
Increase /
Decrease
Change in %
Sources Of Funds
Total Share Capital 102.4 102.4 0 0
Equity Share Capital 102.4 102.4 0 0
Share Application Money 0 0 0
Preference Share Capital 0 0 0
Reserves 1,987.50 2,454.70 467.20 23.5069182
Net worth 2,089.90 2,557.10 467.20 22.3551366
Secured Loans 499 749.2 250.2 50.1402806
Unsecured Loans 25.1 346.6 321.5 1280.87649
Total Debt 524.1 1095.8 571.7 109.082236
Total Liabilities 2,614.00 3,652.90 1,038.90 39.7436878
Mar '11 Mar '12
12
moths
12
moths
Application Of Funds
Gross Block 1,485.40 1,749.80 264.40 17.7999192
Less: Revaluation Reserves 0 0 0
Less: Accum. Depreciation 448.8 532.1 83.3 18.5606061
Net Block 1,036.60 1,217.70 181.10 17.4705769
Capital Work in Progress 233.7 311.7 78 33.3761232
Investments 698.8 1212.2 513.4 73.4688037
Inventories 464.5 501.2 36.7 7.90096878
Sundry Debtors 475.1 581.2 106.1 22.3321406
Cash and Bank Balance 42.4 118.3 75.9 179.009434
Total Current Assets 982 1200.7 218.7 22.2708758
Loans and Advances 510.7 776.9 266.2 52.124535
Fixed Deposits 0 0 0
Total CA, Loans & Advances 1,492.70 1,977.60 484.90 32.4847592
Deferred Credit 0 0 0
Current Liabilities 661.9 839.2 177.3 26.7865236
Provisions 185.9 227.1 41.2 22.1624529
Total CL & Provisions 847.8 1066.3 218.5 25.7725879
Net Current Assets 644.9 911.3 266.4 41.30873
Miscellaneous Expenses 0 0 0
Total Assets 2,614.00 3,652.90 1,038.90 39.7436878
Contingent Liabilities 602.6 1256.6 654 108.529705
Book Value (Rs) 102.07 124.89 22.82 22.3572058

84
Interpretation:-
Total current assets and loan advance of the company in 2011-12 Are increased by
484.90 cr with compare to previous year and total current liabilities and provisions are
increased by 218.50 cr with compare to previous year. It shows net positive working
Capital increased by 1038.90cr with compare to previous year so that it seen that the
working capital position of the company is satisfactory but long term investment on
fixed assets is not possible from working capital fund .
The liquidity position of the company in also satisfactory as all current assets has
increased in 2011-2012

85
Increase /
Decrease
Change in %
Sources Of Funds
Reserves 2,454.70 2,809.10 354.40 14.44
Net worth 2,557.10 2,911.50 354.40 13.86
Secured Loans 749.2 1052.5 303.3 40.48318206
Unsecured Loans 346.6 593 246.4 71.09059435
Total Debt 1095.8 1645.5 549.7 50.16426355
Total Liabilities 3,652.90 4,557.00 904.10 24.75
Mar '12 Mar '13
12
moths
12
moths
Gross Block 1,749.80 2,125.50 375.70 21.47
Net Block 1,217.70 1,497.10 279.40 22.94
Capital Work in Progress 311.7 463.8 152.1 48.79692012
Investments 1212.2 1279.9 67.7 5.584886982
Inventories 501.2 587.2 86 17.15881883
Sundry Debtors 581.2 683 101.8 17.5154852
Cash and Bank Balance 118.3 91.6 -26.7 -22.569738
Total Current Assets 1200.7 1361.8 161.1 13.41717332
Total CA, Loans & Advances 1,977.60 2,309.20 331.60 16.77
Current Liabilities 839.2 781 -58.2 -6.93517636
Provisions 227.1 212 -15.1 -6.64905328
Total CL & Provisions 1066.3 993 -73.3 -6.87423802
Total Assets 3,652.90 4,557.00 904.10 24.75

86
Interpretation:-
Total current assets and loan advance of the company in 2012-2013 are increased by
331.60cr with compare to previous year and total current liabilities and provisions are
decreased by -73.3 cr with compare to previous year.. It shows net positive working
Capital increased by 904.10 cr with compare to previous year. so that it seen that the
In the year 2012-2013 current liabilities and provision is decreased and current assets
and advances is increase so liquidity position of company is also satisfactory.
Contingent Liabilities 1256.6 1238.1 -18.5 -1.47222664
Book Value (Rs) 124.89 142.2 17.31 13.86019697

87
Increase /
Decrease
Change in %
Sources Of Funds
Reserves 2809.1 3527.5 718.4 25.5740273
Net worth 2911.5 3629.9 718.4 24.6745664
Secured Loans 1052.5 888.4 -164.1 -15.5914489
Unsecured Loans 593 522.8 -70.2 -11.8381113
Total Debt 1645.5 1411.2 -234.3 -14.2388332
Total Liabilities 4557 5041.1 484.1 10.623217
Mar
'13
Mar
'14
12
moths
12
moths
Gross Block 2125.5 2288.9 163.4 7.68760292
Net Block 1497.1 1564.1 67 4.47531895
Capital Work in Progress 463.8 530.6 66.8 14.4027598
Investments 1279.9 1557.7 277.8 21.7048207
Inventories 587.2 663.5 76.3 12.9938692
Sundry Debtors 683 722 39 5.71010249
Cash and Bank Balance 91.6 89.4 -2.2 -2.40174672
Total Current Assets 1361.8 1474.9 113.1 8.30518431
Total CA, Loans & Advances 2309.2 2590.7 281.5 12.190369
Current Liabilities 781 904.5 123.5 15.8130602
Provisions 212 297.5 85.5 40.3301887
Total CL & Provisions 993 1202 209 21.0473313
Total Assets 4557 5041.1 484.1 10.623217
Contingent Liabilities 1238.1 1242.2 4.1 0.33115257
Book Value (Rs) 142.2 177.29 35.09 24.676512

88
Interpretation:-
281.5 cr with compare to previous year and total current liabilities and provisions are
increased by 209 cr with compare to previous year.. It shows net positive working
Capital increased by 484.1 cr with compare to previous year. so that it seen that the

89
Increase /
Decrease
Change in %
Sources Of Funds
Total Share Capital
102.4 102.4 0 0
Equity Share Capital
102.4 102.4 0 0
Share Application Money
0 0 0
Preference Share Capital
0 0 0
Reserves
3527.5 4423 895.5 25.3862509
Net worth
3629.9 4525.4 895.5 24.6701011
Secured Loans
888.4 737.4 -151 -16.996848
Unsecured Loans
522.8 525.8 3 0.57383321
Total Debt
1411.2 1263.2 -148 -10.487528
Total Liabilities
5041.1 5788.6 747.5 14.8281129
Mar
'14
Mar
'15
12
moths
12
moths
Gross Block
2288.9 2714 425.1 18.5722399
Less: Revaluation Reserves
0 0 0
Less: Accum. Depreciation
724.8 945.9 221.1 30.5049669
Net Block
1564.1 1768.1 204 13.0426443
Capital Work in Progress
530.6 366.9 -163.7 -30.851866

90
Investments
1557.7 2209.1 651.4 41.8180651
Inventories
663.5 804.3 140.8 21.2207988
Sundry Debtors
722 1056.1 334.1 46.2742382
Cash and Bank Balance
89.4 129.4 40 44.7427293
Total Current Assets
1474.9 1989.8 514.9 34.9108414
Loans and Advances
1115.8 1003.5 -112.3 -10.064528
Fixed Deposits
0 0 0
Total CA, Loans & Advances
2590.7 2993.3 402.6 15.5402015
Deferred Credit
0 0 0
Current Liabilities
904.5 1148.8 244.3 27.0093975
Provisions
297.5 400 102.5 34.4537815
Total CL & Provisions
1202 1548.8 346.8 28.8519135
Net Current Assets
1388.7 1444.5 55.8 4.01814647
Miscellaneous Expenses
0 0 0
Total Assets
5041.1 5788.6 747.5 14.8281129
Contingent Liabilities
1242.2 1420.4 178.2 14.345516
Book Value (Rs)
177.29 221.02 43.73 24.6658018

91
Interpretation:
402.6cr with compare to previous year and total current liabilities and provisions are
increased by 346.8 cr with compare to previous year.. It shows net positive working
Capital increased by 747.5cr with compare to previous year. so that it seen that the

92
5.4 TREND PERCENTAGES:-
Trend percentages are immensely helpful in making a comparative study of financial
statements for several years. The method of calculating trend percentages involves the
calculation of percentages relationships that each item bears to the same item in base
year. Any year may be taken as the base year. It is usually the earliest year. Any
intervening year may also be taken as the base year. Each item of base year is taken as
100 and the percentages for each of the items of each of the years are calculated these
percentages can also be taken as index numbers showing relative changes in the
financial data resulting with passage of time. The method of trend percentages is
useful analytical devices for the management since by substitution of percentages for
large amounts the brevity and readability are achieved. However percentages are not
calculated for all the items in the financial statements. They are usually calculated
only for major items since the purpose is to highlight important changes. But there is a
danger of over emphasis being given to percentages. In the case where the base is a
small number alight change might be greatly exaggerated by percentages of change.
Statement Showing Trend Percentage in Assets During 2010-2015 (In Rs. Cr )
Trend Percentage
Particulars 2010-11 2011-12 2012-13 2013-142014-15 2010-11 2011-12 2012-13 2013-14 2014-15
Current Assets 982 1200.7 1361.8 1474.9 1989.8 100 122.271 113.417 108.305 134.911
Inventories 464.5 501.2 587.2 663.5 804.3 100 107.901 117.159 112.994 121.221
Sundry Debtors 475.1 581.2 683 722 1056.1 100 122.332 117.515 105.71 146.274
Cash & Bank
Balance
42.4 118.3 91.6 89.4 129.4 100 279.009 77.4303 97.5983 144.743
Loans And
Advances
510.7 776.9 947.4 1115.8 1003.5 100 152.125 121.946 117.775 89.9355
Fixed Deposits 0 0 0 0 0 100 0 0 0 0
Investments 698.8 1212.2 1279.9 1557.7 2209.1 100 173.469 105.585 121.705 141.818

93
Statement Showing Trend Percentage in Assets During 2010-2015 (In Rs. Cr )
Trend Percentage
Particulars 2010-11 2011-12 2012-13 2013-142014-15 2010-11 2011-12 2012-13 2013-14 2014-15
Current Assets 982 1200.7 1361.8 1474.9 1989.8 100 122.271 113.417 108.305 134.911
Inventories 464.5 501.2 587.2 663.5 804.3 100 107.901 117.159 112.994 121.221
Sundry Debtors 475.1 581.2 683 722 1056.1 100 122.332 117.515 105.71 146.274
Cash & Bank
Balance
42.4 118.3 91.6 89.4 129.4 100 279.009 77.4303 97.5983 144.743
Loans And
Advances
510.7 776.9 947.4 1115.8 1003.5 100 152.125 121.946 117.775 89.9355
Fixed Deposits 0 0 0 0 0 100 0 0 0 0
Investments 698.8 1212.2 1279.9 1557.7 2209.1 100 173.469 105.585 121.705 141.818

94
Analysis of Trend Percentages:-
Interpretation:
The above trend analysis revels that the inventories have been in decreasing trend and
the percentage increase is the highest in 2014-15 at 121.221 when compared with
.2013-14 debtors has also been increasing trend except in the year 2012-13 & 2013-14
. The percentage decrease in 2014 is 105.71. Cash and bank balances are increase in
2011-12 percentage increase in 2011-12 is highest at 279.009 This has also registered
highest percentage increase in comparison with all the other current assets. Loans and
advances is also an increasing trend and the highest percentage increase in 2012-13 is
121.946
Current liabilities and provision have been increasing trend except in the year 2013
the percentage in 2013 is 93.0648. Capital has increased 100 in 2011 and 100 in 2012
and 100 in 2013 and 100 in 2014 and 100 in 2015 it shows for that the company
didn’t go for additional capital. The reserves of the company are also on an increasing
trend it shows a healthy profitability position of the company, the percentage increase
in reserves is highest in 2013-14 & 2014-15 125.574 &125.386 times .

5.5 RATI
The Curren
measure of
The higher
current liab
current rati
Table show
Particular
Current A
Current L
Current R
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
IO ANAL
nt Ratio is t
f the firms sh
r the curren
bility conven
o may indic
wing the de
r
Assets
Liabilities
Ratio
LYSIS CU
the ratio of
hort term so
nt ratio the
ntionally a
cative of sla
etails of Cu
2010-2
982
661.9
1.48
Current Ratio
URRENT
total Curre
olvency i.e.
larger the
current ratio
ack managem
rrent Ratio
2011 201
120
839
1.43
o
RATIO:-
ent assets to
, its ability
amount of
o of 2 is con
ment .
o in Rs. Cr
11-12 20
00.7 13
9.2 78
3 1.7
-
o total curre
to meet sho
rupees ava
nsidered sat
:
012-13 20
361.8 14
81 90
74 1.
2010-2
2011-2
2012-2
2013-2
2014-2
ent liabilitie
ort term obli
ailable for r
tisfactory. A
013-14 2
474.9
04.5
.63
2011
2012
2013
2014
2015
s. It is a
igations.
rupee of
A higher
2014-15
1989.8
1148.8
1.73
95

96
Interpretation:-
This ratio attempts, to measure the utilization and effectiveness of the use current
assets and current liabilities. This ratio reveals the relation.tip between the current
assets and current liabilities. In the year 2011 this ratio was 1.48 times but in the year
2012 it come down to 1.43 times. In year 2013 this ratio was increase 1.74 times and
in year 2014 it has decreased to 1.63 times, and in year 2015 1.73 it has increase this
was due to increase in current liabilities.
Generally, companies would aim to maintain a current ratio of at least 1 to ensure that
the value of their current assets cover at least the amount of their short term
obligations. However, a current ratio of greater than 1 provides addition. Cushion
against unforeseeable contingencies that may arise in the short term, Here is Current
ratio is more than one and its maintain by Cadila Healthcare limited.
From 2011-2012 current ratio is in a decreasing mild in the current ratio may suggest
a deteriorating liquidity position of the business or a leaner working capital cycle of
the company through the adoption of more efficient management practices
In 2015, Current ratio is increase 1.63 to 1.73 which suggests improved liquidity of
the company or a more conservative approach to working capital management.
This ratio is stable with minor fluctuations. It has marginally improved but not
satisfactorily.

Quick Ra
An indicat
company's
this reason
follows:
Quick ra
= (cash and
Current L
The quick r
of current l
liquid asset
ratio, the b
or "quick a
Table Sho
Partic
Quick
atio :-
tor of a c
ability to m
n, the ratio
tio = (curr
d equivalen
iabilities
ratio measu
liabilities. T
ts available
etter the co
ssets ratio."
owing the
culars
Ratio
company's
meet its sho
excludes in
rent assets -
nts +marke
ures the rupe
Thus, a quic
e to cover e
ompany’s liq
"
details of Q
2010-2011
1.23
short-term
ort-term ob
nventories f
- inventorie
etable secur
ee amount o
ck ratio of
each 1.1 of
quidity pos
Quick rati
1 2011-20
1.31
liquidity.
ligations w
from curren
es) / curren
rities +
of liquid ass
1.5 means t
f current lia
ition. Also
io :-
012 2012-
1.7
The quick
with its mos
nt assets, an
nt liabilities
account
sets availabl
that a comp
abilities. Th
known as t
-2013 201
73
Quick Ratio
ratio mea
st liquid ass
nd is calcu
s, or
ts Rece
le for each p
pany has Rs
he higher th
the “acid-te
13-2014
1.6
o
asures a
sets. For
ulated as
eivable)/
payment
s.1.50 of
he quick
est ratio"
2014-2015
1.41
97

98
Interpretation:-
It establishes the It establishes the relationship between quick or liquid assets and
liabilities. An asset is liquid if it can be convened into cash immediately without loss.
A ratio 1:1 is considered ideal. In the year 2011, this ratio was 1.23 this was marginally
increased to 1.31 in the year 2012 and had increased in 2013 and reached 1.31 and in
the year 2013, it comes down in 1.6. Here Quick ratio is increasing manner over
period of time which shows efficiency of management. Quick Ratio is satisfactory

Particu
Cash
Curren
Liabili
Cash R
Cash Rat
The ratio o
current liab
liquidity. It
short-term
debt, if any
The cash ra
liabilities th
accounts re
pan of man
but simply
0
5
10
15
ulars
nt
ties
Ratio
tio:-
of a compan
bilities. The
t can theref
debt. A str
y, they woul
atio is gener
han many o
eceivable ar
ny companie
as one facto
2010-2011
Formula
Cash
Current
Liabiliti
ny’s total c
e cash ratio
fore determ
rong cash ra
d be willing
rally a more
other liquid
re left out o
es, this ratio
or in determ
2011-2012
a 20
/
t
es
42
66
6.4
cash and ca
o is most co
ine if, and
atio is usef
g to extend t
e conservativ
dity ratios. T
of the equat
o should no
mining liquid
2012-2013
010-2011
2.4
61.9
41
ash equivale
ommonly u
how quickl
ful to credit
to the askin
ve look at a
This is due
tion. Since t
ot be used in
dity.
2013-2014
2011-
2012
118.3
839.2
14.10
ents to its
sed as a m
ly, the com
tors when d
g party.
a company’s
to the fact
these two a
n determini
2014-2015
2012-
2013
91.6
781
11.73
measure of c
mpany can r
deciding ho
s ability to c
that invent
accounts are
ing compan
5
Cash
2013-
2014
89.4
904.5
9.88
company
repay its
w much
cover its
tory and
e a large
ny value,
h Ratio
2014-
2015
129.4
1148.8
11.26
99
8

100
Interpretation :-
This ratio is also known as absolute liquid ratio. This ratio will reveal how much
percentage of current liabilities is held in cash. 3% or 6.41 is considered as ideal. In
the year 2011 company's cash ratio was 14.10, In the year 2012, it slightly decreased
to 11.73 In 2013 and 2014 is 9.88 and 2015 is 11.26
Company's cash ratio is satisfactory and is stable. Improvement was seen.
ACTIVITY RATIOS :-
WORICING CAPITAL TURNOVER RATIO:-
Working Capital Turnover Ratio indicates the velocity of utilization of net working
capital. It indicates the number of times W.C, is turned over in the course of a year. It
is a measure of the firm's efficiency to utilize its working capital. A higher ratio
indicates efficient utilization of working capital and a low ratio indicates otherwise.
However a very high ratio is not a good situation for any firm and hence care tn. be
taken while interpreting the ratio.
Particulars Formula 2010-2011 2011-2012 2012-2013
2013-
2014 2014-2015
Sales
Sales /
Working
Capital
2920.3 3150.8 3675.7 4042.1 5284.4
Working
Capital
Turnover Ratio
522.8 684.8 888.3 1316.2 1388.7
Ratios 5.59 4.60 4.14 3.07 3.81

Working Capital Management of Cadila Healthcare

Working Capital Management of Cadila Healthcare

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