Interfirm financial comparison of Cipla and Torrent Pharmaceuticals

1. Inter-firm comparison of
Cipla andTorrent
Pharmaceuticals
Presentation by:
Varun Nigam
Varun Balakrishnan
Soumya Mukherjee
Saurabh Mhase

2. Indian
Pharmaceutical
Market
India is the 14th
largest Pharma
Market in the
world!
Valued
at
Rs. 600 bn
15-17%
Growth
Rate
Dominated by Brande
d
Generic
s

3. 0
100
200
300
400
500
600
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
Indian Pharma Market
INR in billion

4. Growth
Drivers
Growin
g
Populat
ion
Increase in
Drug
Income level
Increase
Growing
incidence of
Chronic Ailments
Improving
Medical
Infrastrutu
re
Increased
Government
spending on
Healthcare
Availability of
new forms of
Treatment

5. Swot Analysis: Cipla
S W
O T
Support to cancer
patients
P. falciparum malaria
‘No Touch Breast
Scan’
Foremost player in
anti-infective and anti-
asthmatic
formulations
Strong employee
force
Limited market
share
Negative Campaign
of AHF
Venture into
Alzheimer’s disease
medication
Can use Viramune
generic to achieve
higher growth
Increased investment
Constant price
rises in the
Indian
The Indian
Rupee
depreciated
Fluctuations in

6. Swot Analysis: Torrent
S W
O T
High market Share
High Growth Rate
Strong Innovation
Global Presence
Low Employee
Strength
High Debts
Aquisations
Product Expansion
Emerging Markets
Constant price
rise
The Indian
Rupee
depreciated
Fluctuations in
currency

7. Cipla overview
• Cipla Limited is a pharmaceutical company based in Mumbai
• Cipla makes drugs to treat cardiovascular disease, arthritis etc.
• Market capitalization is US$ 5.6 billion (2013)
• Cipla has 34 manufacturing units in 8 locations across India and
has presence in 170 countries
• It has over 2000 products in 65 therapeutic categories

8. History of Cipla
• 1935- Founded in by Dr. K. A. Hamied
• Vision:To make India self-sufficient in healthcare
• 1939- Encouraged by Mahatma Gandhi by visiting the company
• 1960- API manufacturing technology
• 1996-World’s first transparent dry powder inhaler
• 2001- HIV medicines
• 2005- Anti bird-Flu drug invented within 2-3months
• 2012- Reached 20000 employees level

9. Overview ofTorrent Pharma
• Torrent Pharmaceuticals Ltd. is the flagship company of theTorrent Group
• Initially was named asTrinity Laboratories Ltd
• Operates in more than 50 countries with over 1000 product
• It has 7 fully owned subsidiaries

10. History ofTorrent Pharma
• 1970 – Founded by Mr. U N Mehta
• 1992- President's award for highest pharmaceuticals exports of Rs. 1570
million
• 1994- Almost doubled its manufacturing capacity
• 2001- India's ninth best company among capital intensive companies in
terms of ROCE in a study by ETIG-BCG

11. Current Market Price
Rs. 423.5 Rs. 526.3
As of 23-01-2014

12. Some of the Products
Cipla Drugs Purpose Cost (in Rs.)
Escitalopram Anti-depressant 840
Isotroin AcneTreatment 108
Entavir Chronic Hep-B 1400
Triomune HIV/AIDS 662
Oseltamivir Swine Flu 5022
Asthalin Asthma 67
Levoflox chemotherapeutic antibiotic 46
Cefoprox anti-bacterial 91.22
Montair anti-allergic 120
Vanlid anti-bacterial 900
Tachyra Cardiac 48

13. Some of the Products
Torrent Pharma
Drugs
Purpose Cost (in Rs.)
Enselin Cardiac 85
Azukon Pregnancy,Lactation 43
Calcigard Hypertension 12.39
Domstal Acute Nausea,Vomiting 35
Symbal Diabetes 112
Dilzem Calcium Channel blockers 23.84
Hexidol schizophrenia 38
Diclomax Arthritis 15
Promotil Cardiovascular 30.25
Zaplon Insomnia 60.14
Macrotor Respiratory 72

14. Key financials of the Companies (Year-to-Year)
Cipla
Item Mar ‘13 Mar ‘ 12 Mar ‘11 Mar ‘10 Mar ‘09
Total Income (Rs. In crores) 8,722.30 7,114.56 6,561.49 5,915.49 5,208.33
Percentage change in income
from previous year
22.6% 8.42% 10.92% 13.6% -
Total expenses (Rs. In crores) 6,374.03 5,384.4 5,149.1 4,408.85 4,103.0
Net Profit (Rs. In crores) 1,507.11 1,123.96 960.39 1,081.49 776.81
Percentage change in Net
Profit
34.08% 17.03% -11.2% 39.22% -
Total Equity Dividend (Rs. In
crores)
160.58 160.58 224.81 160.58 155.46
Shares in issue (in Lacs) 8,029.21 8,029.21 8,029.21 8,029.21 7,772.91
Earnings Per Share (Rs.) 18.77 14 11.96 13.47 9.99
Book value (Rs.) 110.47 94.04 82.36 73.55 55.86
TotalAssets (Rs. In crores) 9,835.33 7,562.48 7,053.43 5,919.16 5,290.99

15. Key financials of the Companies (Year-to-Year)
Torrent Pharmaceuticals
Item Mar ‘13 Mar ‘ 12 Mar ‘11 Mar ‘10 Mar ‘09
Total Income (Rs. In crores) 2,970.84 2,162.69 1,873.17 1,429.14 1,196.22
Percentage change in income
from previous year
37.4% 15.5% 31.06% 19.5% -
Total expenses (Rs. In crores) 2,197.51 1,698.06 1,418.23 1,032.11 929.16
Net Profit (Rs. In crores) 546.42 311.25 290.86 207.37 186.73
Percentage change in Net
Profit
75.6% 7.01% 40.3% 11.05% -
Total Equity Dividend (Rs. In
crores)
194.61 71.92 67.69 50.77 33.84
Shares in issue (in Lacs) 846.11 846.11 846.11 846.11 846.11
Earnings Per Share (Rs.) 64.58 36.79 34.38 24.51 22.07
Book value (Rs.) 195.14 154.17 129.18 104.11 86.59
TotalAssets (Rs. In crores) 2,230.25 1,764.65 1,665.09 1,403.26 1,214.75

16. Key financials of the Companies (Q to Q)
Cipla
Item Sept ‘13 June ‘ 13 Mar ‘13 Dec ‘12 Sept ‘12
Net Profit for the period (Rs.
Crores)
376.03 474.9 267.56 338.78 500.01
Percentage change in Net
profit
-20.81% 77.5% -21.02% -32.24% -
Torrent Pharmaceuticals
Item Sept ‘13 June ‘ 13 Mar ‘13 Dec ‘12 Sept ‘12
Net Profit for the period (Rs.
Crores)
114 182 214 153 83.84
Percentage change in Net
profit -37.36% -14.95% 39.86% 82.5% -

17. Cash Flow Comparison
Item Cipla
Torrent
Pharmaceuticals
Net Cash FromOperating
Activities (Rs. In crores)
1,381.34 -68.69
Net Cash (used in)/from
investing Activities (Rs. In
crores)
-2,064.16 -89.48
Net Cash (used in)/from
Financing Activities (Rs. In
crores)
732.83 25.49
Net (decrease)/increase In Cash
and Cash Equivalents (Rs. In
crores)
50.01 -132.68

18. Financial Ratios Comparison
Ratios Cipla Torrent Pharma
InventoryTurnover Ratio 3.5 3.98
DebtorsTurnover Ratio 5.18 4.46
InvestmentsTurnover Ratio 3.5 3.98
Fixed AssetsTurnover Ratio 1.65 2.35
Total AssetsTurnover Ratio 0.83 1.25
AssetTurnover Ratio 0.94 1.38

19. Ratio Analysis-
FY2013
Face value
2 5
Comment: The Interest rates are lower than the Bond’s
Coupon Rate for Torrent- Bonds are sold at a premium.
The nominal value or rupee value of a
security stated by the issuer.

20. Ratio Analysis-
FY2013
Current Ratio
1.95 1.59
Comment: Cipla can better meet its liabilities which are
due over the next 12 months and save more money.
=Current Assets/ Current Liabilities

21. Ratio Analysis-
FY2013
Quick Ratio
1.68 1.24
Comment: The position of Cipla is better.
=Quick Assets/ Current Liabilities

22. Ratio Analysis-
FY2013
Debt Equity
Ratio
0.11 0.3
5
Comment: Torrent has a high debt load than Cipla
=Total Debt/ Shareholder Equity

23. Ratio Analysis-
FY2013
Net Profit
Margin
17.87
%
18.85
%
Comment: Torrent more efficient in converting Sales into
actual Profit
=PAT/ Revenue

24. Ratio Analysis-
FY2013
Return on Capital Employed
(ROCE)
20.79
%
33.14
%
Comment: The Rate at which Torrent borrows is good
=EBIT/ (Total Assets-Current Liabilities)

25. The Better One – In terms of growth rate
Year toYear
highest
39.22% 75.6%
Quarter to
Quarter highest
77.5% 82.5%

26. The Better One – In terms of ratios
More Liquidity Better Net
Profit Margin
Less Debt Better ROCE