INTRODUCTION TO FINANCIAL STATEMENT ANALYSIS:

The basis for the financial analysis of any firm is financial information. A business
firm prepares its financial statements as they provide useful financial information and are
helpful for the purpose of decision-making. Financial information is needed to predict,
compare and evaluate the firms earning ability. The profit or loss statement shows the
operating profit of the concern and the balance sheet depicts the balance value of acquired
assets and liabilities at a particular time. For the purpose of obtaining the material and
relevant information necessary for ascertaining the financial strengths and weakness to an
enterprise, it is necessary to analyze the data depicted in the financial statement. The
analysis is done by property establishing the relationship between the items of balance
sheet and profit and loss account.
Financial statement analysis is a meaningful interpretation of financial statement for
parties demanding financial information. There are certain steps, which to be taken into
consideration for statement analysis:
1. Identification of users purpose.
2. Identification of source.
3. Selecting the techniques to be used for such analysis.

MEANING AND CONCEPT OF FINANCIAL ANALYSIS:

The term financial analysis is also known as analysis and interpretation of
financial statements refers to process of determining financial strengths and weakness of
the firm by establishing strategic relationship between the items of the balance sheet
,profit and loss account and operative data. The purpose of financial analysis is to
diagnose the information contained in the financial statements so as to judge the
profitability and financial soundness of the firm. Financial statement analysis is an
attempt to determine the significance and meaning of the financial statement analysis is
an attempt to determine the significance and meaning of the financial statement data so
that the forecast may be made of the future earnings, ability to pay interest and debt
maturities and profitability of a sound dividend policy.
The term financial statement analysis includes both analysis and interpretation. The term
analysis is used to mean the simplification of financial data by methodical classification
of the data given in financial statements, interpretation means explaining the meaning the
1

meaning and significance of the data so simplified. However, both analysis and
interpretation without analysis is difficult or even impossible.

RESEARCH PROBLEM
Public limited for a company of the size of Hetero financial analysis becomes very
important to sustain the leadership position, to gain the confidence of the share holders.

OBJECTIVES OF THE STUDY

The main aim of the study is to analyze the financial performance of HETERO DRUGS
LIMITED.

To review and growth working of HETERO DRUGS LIMITED during 6 years.

To evaluate the financial analysis of its business operations.
Internal external factors that influence HETERO DRUGS LIMITED.
Management approach towards HETERO DRUGS LIMITED

SCOPE OF THE STUDY

The scope of study is limited to collecting data published in annual reports of the
company with reference to the objectives stated above and an analysis of data with a view
to understand the solutions by solutions by applying various ratios relating to balance
sheets.

NEED FOR THE STUDY

To understand the existing position of company relating to its financial position and to
know what are the factors that result an organization yield profit and loss.

METHODOLOGY
The study is based on primary as well as secondary data.
2

The primary data was gathered through personal interaction with various
Functional heads and technical personal.
The secondary data was collected from companys annual reports from 2008-2013.
Various books, News papers and Internet.

LIMITATIONS
As adequate data was not able to pool because of the secrecy maintained by the firm,
proper justification for the project was not done.
1. The study is limited to the financial analysis of HETERO DRUGS LIMITED.
2. The study is confined to the figures available on paper and no physical
verification has been done.

REVIEW OF LITERATURE
Financial Statement Analysis:
Method used by interested parties such as investors, creditors, and management to
evaluate the past, current, and projected conditions and performance of the firm.
Ratio analysis is the most common form of financial analysis.
It provides relative measures of the firm's conditions and performance. Horizontal
Analysis and Vertical Analysis are also popular forms. Horizontal analysis is used to
evaluate the trend in the accounts over the years, while vertical analysis, also called a
Common Size Financial Statement discloses the internal structure of the firm. It
indicates the existing relationship between sales and each income statement account.
It shows the mix of assets that produce income and the mix of the sources of capital,
whether by current or long-term debt or by equity funding. When using the financial
ratios, a financial analyst makes two types of comparisons:
Financial statement analysis is the process of examining relationships among
financial statement elements and making comparisons with relevant information.

It is a valuable tool used by investors and creditors, financial analysts, and others in
their decision-making processes related to stocks, bonds, and other financial
instruments.
The goal in analyzing financial statements is to assess past performance and current
financial position and to make predictions about the future performance of a
company.
Investors who buy stock are primarily interested in a company's profitability and
their prospects for earning a return on their investment by receiving dividends and/or
increasing the market value of their stock holdings.
Creditors and investors who buy debt securities, such as bonds, are more interested in
liquidity and solvency: the company's short-and long-run ability to pay its debts.
Financial analysts, who frequently specialize in following certain industries,
routinely assess the profitability, liquidity, and solvency of companies in order to
make recommendations about the purchase or sale of securities, such as stocks and
bonds.
Analysts can obtain useful information by comparing a company's most recent
financial statements with its results in previous years and with the
Results of other companies in the same industry. Three primary types of financial
statement analysis are commonly known as horizontal analysis, vertical analysis, and
ratio analysis.

METHODS OF FINANCIAL STATEMENT ANALYSIS:

The following methods of analysis are generally used:
1. COMPARATIVE STATEMENTS.
2. COMMON SIZE STATEMENTS.
3. RATIO ANALYSIS.
Financial statement refers to a set of report and schedules that an
accountant prepares at the end of time for a business enterprise.

1. Comparative statement analysis: Comparative statement analysis refers to

comparison of financial statement pertaining to two different periods by putting them side
by-side and finding out the changes in absolute and relative changes.

2. Common Size Statement analysis: Common size statement facilities

comparison of financial statement not only of a single firm over a period of time, but also
4

comparison of financial statement of different companied for any given time. Under, this
method, all the items of the statement are presented as a percentage of a particular item.
Therefore, even if the related absolute figures are in respect of vastly differently scale of
operations, a common base for comparison is created.
Increase of a common size income statement, all the items are presented as a
percentage of new sales. A common size balance sheet shows each item as a percentage of
total assets or total liabilities. A common size statement helps. In determining the relative
efficiency and soundness of a firm in understanding its financial strategy.

3. Ratio Analysis: Ratio analysis is a very important tool of financial analysis. It

is the process of establishing a significant relationship between the items of financial
statements to provide a meaningful understanding of the performance and financial
position of firm.

RATIO ANALYSIS & INTERPRETATION

TYPES OF RATIOS:
1. LIQUIDITY RATIOS
2. SOLVENCY RATIOS
3. ACTIVITY RATIOS
4. PROFITABILITY RATIO

1. LIQUIDITY RATIOS: These ratios measure the concerns ability to meet shortterm obligations as and when they become due. These ratios show the short-term financial
solvency of the concern. Usually the following two ratios are calculated for this purpose.
1. Current Ratio and
2. Quick Ratio
1. Current Ratio:
(a) Meaning: This ratio establishes a relationship between current assets and current
liabilities.
(b) Objective: The objective computing this ratio I to measure the ability of the firm to
meet its short-term obligations and to reflect the short term financial strength /solvency
of firm. In other words, the objective is to measure the safety margin available for shortterm creditors which are as under:

(I) CURRENT ASSETS: Which mean the assets which are held for their conversion
in to cash within a year and include the following?
5

Cash Balances
Marketable Securities
Bills Receivable(less provision)
Prepaid Expenses
Incomes accrued but not due
Advance Payment of tax
Tax reduced at source

Bank Balances
Debtors(less provision)
Stock of all types
Viz., Raw-Material,
Work-in-progress,
Finished goods short-term loans and
Advances (debit balances) income

Note: The Provision for bad and doubtful debts/bills is deducted from the total amount
of trade debtors/bills receivables in order to ascertain the realize value of trade
debtors/bills receivable.

(ii) CURRENT LIABLITIES: Which mean the liabilities which are accepted to be
matured within a year and include the following?
Creditors for Goods
Bills Payable
Short-term loans and Advances
Provision for tax

Creditors for Expenses

Bank Overdraft
Income received in-advance
Unclaimed Dividend

(c) Computation: This ratio is computed by dividing the current assets by the current
liabilities. This ration is usually expressed as a pure ratio e.g.2:1 in the form of a formula,
this ratio may be expressed ads under.

(d) Interpretation: It indicated rupees of quick assets available for each rupee of
current liabilities. Traditionally, a quick ratio of 1:1 is considered to be a satisfactory
ratio.

(e) Precaution: While computing and using the quick ratio, it must be ensured, (I) that
the quality of the receivable (debtors and bills receivable) has been carefully assessed and
(ii) that all Quick assets and current liabilities have been properly valued.

2. SOLVENCY RATIOS: These ratios show the long-term financial solvency and
measure the enterprises. Ability to pay the interest regularly and to repay the principles
(i.e. capital amount) on maturity or in pre-determined installments at due dates. Usually,
the following ratio is calculated to judge the financial solvency of the concern:

DEBT-EQUITY RATIO:
(a) Meaning: This ratio establishes a relationship between long-term debts and
shareholders funds.
(b) Objective: The objective of computing this ratio is to measure the relative proportion
of debt and equity in financing the assets of a firm.
6

(c) Components: There are two components of this ratio which are as under:
(I) long term debts: Which mean long-term loans (whether secured or unsecured)
(ii) Shareholder funds: Which mean equity share capital plus preference share capital
plus reserves and surplus minus fictitious assets (e.g., preliminary expenses?)
(d) Computation: This ratio is computed by dividing the long-term debts by the
shareholders funds. This ratio is usually expressed as a pure ratio e.g., 2:1 .in the form of
a formula, this ratio may be expressed as under:
Debt-Equity Ratio =

Long term Debts

-----------------------Shareholder Funds

(e) Interpretation: It indicates the margin of safety to long-run creditors. A low debt
equity ratio implies the use of more equity than debt which means a larger safety margin
for creditors since owners equity it treated as a margin of safety by creditors and vice
versa.

1. ACTIVITY RATIOS: These ratios measure the effectiveness with which a firm
uses its available resources. These ratios are also called Turnover Ratios since they
indicate the speed with which the resources are being turned or converted into sales.
Usually the following turnover ratios are calculated:

Capital turnover Ratio

Fixed Assets Turnover Ratio

Net Working Capital Turnover Ratio

Stock Turnover Ratio

Debtors Turnover Ratio

Creditors Turnover Ratio

1. Capital Turnover Ratio:

(1) Meaning: This ratio establishes a relationship between net sales and capital
employed.
(2) Objective: The objectives of computing this ratio is determine the efficiency
with which the employed is utilized
(3) Components: There are two components of this ratio which Are as under: Net
Sales which mean gross sales minus sales return.
(ii) Capital Employed which means Long-term Debt plus Shareholders Funds.
7

(d)

Computation: This ratio computed by dividing the net sales by the capital

employed. This ratio is usually expressed as V number of times. In the form of a formula,
this ratio may be expressed as under

Capital Turnover Ratio =

Net Sales
-------------------Capital Employed

(e) Interpretation: It indicates the firms ability to generate sales per rupees of capital
employed. In general higher the ratio the more efficient the management and utilization of
capitals employed.
2. Fixed Assets Turnover Ratio:
(a) Meaning: This ratio establishes a relationship between net sales and fixed assets.
(b) Objective: The objective of computing this ratio is to determine the efficiency with
which the fixed assets are utilized.
(c) Components: There are two components of this ratio which are as under:
(d) Computation: This ratio is computed by dividing the net sales by the net fixed assets.
This ratio is usually express as X number of times. In the form of a formula, this ratio
may be
Net Sales fixed Asset Turnover Ratio =

Expressed as under
---------------------------------Net Fixed Assets

(e) Interpretation:
It indicates the firms ability to generate sales per rupee of investment in fixed
assets. In general, higher the ratios, the more efficient the management and utilization of
fixed assets, and vice versa, may be noted that there is no direct relationship between
sales are influenced by other factor.

3. Net Working Capital Turnover Ratio:

(a) Meaning: This ratio establishes a relationship between net sales and working capital.
8

(b) Objective: The objective of computing of this ratio is to determine the efficiency with
which the working capital is utilized.
(c) Components: There are two components of this ratio which are as under
a. Net sales which means gross sales minus sales returns
b. Working capital which means current assets minus current liabilities
(d) Computation: This ratio is computed by dividing the cost of goods sold by the
average inventory. This ratio is usually expressed as X number of times. In the formula,
this ratio may be expressed as under:
Net Sales
Working Capital Turnover Ratio = -------------------Working Capital
(4) Indicates: The firms ability to generate sales per rupee of working capital. In
general, higher the ratio, the more efficient the management and utilization of
working capital and vice versa.
4. Stock Turnover Ratio:
(a) Meaning: This ratio establishes a relationship between costs of goods sold and
average inventory.
(b) Objective: The objective of computing this ratio is to be determining effectively with
which the inventory is utilized.

(c) Components: There are two components of this ratio which area as under:
(i)

Cost of goods sold which is calculated as under.

Cost of goods Sold =

Opening Inventory + Net Purchaser + direct Expenses -Closing Inventory
(ii)

Average inventory which is calculated as under :

Average Inventory =

Opening Stock + Closing Inventory

----------------------------------------------2

(d) Computation: This ratio is computed by dividing the cost of goods sold by the
average inventory. This ratio is usually expressed as X number of times. In the form of a
formula, this ratio may be expressed as under:
Cost of goods sold
Stock Turnover Ratio = -----------------------9

Average Inventory
(e) Interpretation: This speed with which the inventory is converted sales. In general, a
high ratio indicates efficient performance since an improvement in the ratio shows that
either the same volume of sales has been maintained without any increases in the amount
of stocks.
(f) Stock Velocity: This velocity indicates the period for which sales can be generated
with the of an average stock maintained and is usually expressed in days. This velocity
may be calculated as follows:
Stock Velocity =

12 months /52weeks/365weeks
------------------------------------------Stock Turnover Ratio

5. Debtors Turnover Ratio (Or) Receivables Turnover Ratio

(a) Objective: The objective of computing this ratio is to determine the efficiency with
which the trade debtors are managed.
(c) Components: There are two components of this ratio which Areas under;

Net Credit Sales which means gross credit sales minus sales return; and
Average trade debtors (including bills receivables ) which are calculating as under

Average Trade Debtors =

Opening Trade Debtors + Closing Trade Debtors

------------------------------------------------------------2

(d) Computation: This ratio is computed by dividing the net credit sales by average trade
debtors. This ratio is usually expressed as V number of times. In the form of a formula,
this ratio may be expressed as under
Debtors Turnover Ratio =

Net Credit
---------------------------Average Trade Ratio

(e) Interpretation: It indicates the speed with which the debtors turnover on an average
each year. In general, a high ratio indicates the shorter collection period which implies
prompt payments by debtors, and a low ratio indicates a longer collection period which
implies delayed payment by debtors.
(f) Debt Collection Period (Or) Debtors Velocity:
This period shows an average period for which the credit sales remain
outstanding and measures the quality of debtors. It indicates the rapidly or slowness with
which the money is collected from debtors. This period nay is calculated as under;
10

12months /52weeks/635weeks
Debts Collection period = --------------------------------------Debtors Turnover Ratio
6. Creditors Turnover Ratio (Or) payments Turnover Ratio:
(a) Meaning: This ratio establishes a relationship between net credit purchases and
average trade creditors.
(b) Objective: The objective of comparing of computing this ratio is determined the
efficiency with the creditors are managed.
(c) Components: There are two components of this ratio which are as under;
a) Net Credit Purchases which mean gross credit purchases minus purchases return;
and
b) Average Trade Creditors ( Including bills payable ) which are calculated as under;
c) Average Trade Creditors =
Opening Trade Creditors + Closing Trade Creditors
-----------------------------------------------------------------2
(d) Computation: This ratio is computed by dividing the net credit purchases by average
trade creditors. This ratio is usually expressed as X number of times. In the form of
formula, this may be expressed as under;
Net Credit Purchases
Creditors Turnover Ratio = -------------------------------Average Trade Creditors
(e) Interpretation: It indicates the speed with which the creditors turn over on an average
each year. In general, a high ratio indicates the shorter payment period which implies both
the availability of less credit or earlier payment period which implies either the
availability or more credit or delayed payments
4. PROFITABILITY RATIOS: This ratio measures managements overall effectiveness
as shown by the returns generated on sales and investment. Usually tow type of
profitability ratio are calculated as
i. In relation to Sales
ii. In relation to investment
(A) PROFITABILITY RATIOS IN RELATION TO SALES
1

Gross Profit Ratio

(a) Meaning: This ratio measures the relationship between gross profit and net sales.
11

(b) Objective: The main objective of computing of this ratio is to determine the
efficiency with production And / or purchase operations are carried.
(c) Components: These are two components of this ratio which are as under;
1) Gross Profit
This is the excess of net sales over cost of goods sold.
Cost of Goods Sold is calculated as under

1. In the case of a trading concern

Opening Stock

Rs.
XXX

Add : Net Purchases

XXX

Add : Direct Expenses (e.g.Carrige inward)

XXX
XXX

Less : Closing Stock

Cost Good Sold

XXX

(A+B+C-D)

2. In the case of manufacturing concern

Rs.
XXX

1) Opening Stock of Finished Goods

2) Add

:Cost

of

Good

Produced

(Material

XXX

Consumed+Labor+OtherManufacturing

XXX

Expenses )

XXX

3) Less : Closing Stock of finished Goods

XXX

4) Cost of Goods Sold (A+B-C)

(ii) Net Sales: This is Gross Sales (Both Cash and Credit) minus Sales Returns
12

(d) Computation: This ratio is computed by dividing the gross profit by the net sales. It
is expressed as percentage. In the form of a formula, this ratio may be expressed as under.
Gross Profit
-----------------Net Sales

Gross Profit Ratio =

X 100

(e) Interpretation: This ratio indicates (a) an average margin earned on a sales of
Rs.100,(b) the limit beyond which the fall in sales prices will definitely result in losses,
and (c) what portion of sales is left to cover operating expenses (other than the cost of
goods sold ) and non-operating expenses.
(I)
(ii)

2.

Higher Sales Prices with constant cost of Goods Sold;

Lower cost of Goods Sold with constant Sales Prices;
(iii) A Combination of aforesaid two factors.

Operating Profit Ratio

(a) Meaning: This ratio measures the relationship between operating profit and net

sales.
(b) Objective: The main objective of computing this ratio which are as under:
(I)

Operating Profit: This is the excess of Gross Profit Over other operating

Expenses (e.g. Office and Administrative Expenses, Selling and distribution Expenses,
Discount, Bad debts, Interest on short-term debts) and
2) Net Sales :This means Gross Sales (Both Cash and Credit) minus Sales Returns
(c) Computation: This ratio is computed by dividing the operation profit by the net sales.
It is expressed as a percentage. In the form of a formula, this ratio may be expressed as
under.
Operating Profit Ratio

Operating Profit
---------------------Net Sales

(e) Interpretation: This ratio indicates (a) an average operating margin earned on a sales
of ars.100 and (b) what portion of sales is left to cover non-operating expenses, to pay
dividend and to create reserves. Higher the ratio, the more efficient is the operating
management. This ratio may increases due to any one of the following factors:
a. Higher Gross Profit ;
13

b. Lower Operating Expenses;

c. A combination of aforesaid two Factors.
3. Net Profit Ratio
(a) Meaning: This ratio measures the relationship between but profit and net sales.
(b) Objective: The main objective of computing this ratio is determining the overall
profitability due to various factors such as operational efficiency, trading on equity etc.
(c) Components: There are two components of this ratio which are as under:

Net Profit

Net Sales

(d) Computation: This ratio is computed by dividing the Net profit by the net sales. It is
expressed as a percentage. In the form of a formula, this ratio may be expressed as under.

(e) Interpretation: This ratio indicates

An average net margin earned on a sales of Rs.100
What portion of sales is left to pay dividend and to creative reserves, and
Firms capacity to with stand adverse economic conditions when selling price is
declining, cost of production is rising and the demand for the product is falling.
Higher the ratio, grater is the capacity of the firm to withstand adverse economic
condition and vice versa.
4. Operating Ratio

Meaning: This ratio measures the relationship between operating cost and net
sales.

(b) Objective: The main objective if computing this ratio is to determine the operational
efficiency with which production and/or and selling operations are carried on.
(c) Components: There are two components of this ratio which are as under:
(l) Operating cost which comprise (a) Cost of Goods Sold and (b) other Operating
Expenses (e.g., Administrative Expenses, Selling and Distribution Expenses, interest on
short-term loans, Discount allowed and Bad Debts) (All) Net Sales which means gross
sales minus sales returns.

14

(d) Computation: This ratio is computed by dividing the operation cost by the net sales.
This ratio is expressed as a percentage. In the form of a formula, this ratio may be
expressed as under.
Operating Ratio

Operating Cost
-----------------------Net Sales

X 100

(e) Interpretation: This ratio indicates an average operating cost incurred on a sales of
goods Rs.100. Lower the ratio, greater is the operating profit to cover the non-operating
expense, to pay dividend and to are preserves and vice versa.

(B) PROFITABILITY RATIOS IN RELATION TO INVESTMENT Since the term

investment may refer to Total Assets. Capital Employed or Shareholders funds, the
return of Investment (ROI) can be calculated in any one of the following ways :
1. Return on Shareholder funds (Or) Return on Equity:
(a) Meaning: This ratio measures a relationship between net profit after interest, and tax,
and shareholders funds.
(b) Objective: The objective of computing this ratio to find out how efficiency the funds
supplied by the equity shareholders have been used.
(c) Components: There are two components of this ratio as under:
Net Profit after interested and Tax;
Shareholder share funds which mean equity share capital plus preference
share capital plus Reserves and Surplus minus Fictitious Assets (If any).
(d) Computation: This ratio is computed by dividing the net profit after interest and tax
by shareholder funds. It is expressed as a percentage. In the form of a formula, this ratio
may be expressed as under:
Return on Shareholder Funds =

Net Profit after interest and tax

----------------------------------------Shareholder Fund

X 100

(e) Interpretation: This ratio indicates the firms ability of generating profit per rupee of
shareholder finds. Higher the ratio, the more efficiency the management and utilized of
shareholder funds.
15

2. Earnings per Share (EPS)

(a) Meaning: This ratio measures the earning available to an equity shareholder on a per
share basis.
(b) Objective: The objective of computing this ratio is to measure the profitability of the
firm on per equity share basis.
(c) Components: There are two components of this which are as under:
I. Net Profit after interest ,Tax and Preference dividend
II. Number of equity Shares
(d) Computation: This ratio is by dividend by dividing the net profit after interest, tax
and preference dividend by the number of equity shares. It is expressed as an absolute
figure. In the form of a formula, this ratio may be expressed as under:
Earnings per Share

Net Profit after interest, Tax and preference Dividend

----------------------------------------------------------------Number of Equity Shares.

(e) Interpretation: In general, higher the figure, better it is and vice versa. While
interpreting this ratio, it must be seen whether there is any increases in equity
shareholders Funds as a result of retained earnings without any change in number of
outstanding shares.
(3) Proprietary Ratio
(a) Meaning: This ratio measures a relationship between proprietors Fund and the
Total Assets.
(b) Objective: The objective of computing this ratio is finding out how the proprietors
have financial the assets
(c) Components: There are two components of this ratio which are as under:
i.

Proprietors Funds (excluding fictitious assets like preliminary exp)

ii.

Total Assets

iii.
(d) Computation: This ratio is computed by dividing the Proprietors Fund by Assets. It
is expressed in percentage. In this form of a formula, this ratio may be expressed as
under:
Property Ratio
Property Ratio = ------------------------Total Assets

X 100
16

Note:

Proprietors Funds means Shareholders Funds.

(5) Interpretation: This ratio indicates the extent to which the assets of the firm
have been financed out of Proprietors Funds.

INDUSTRY PROFILE
INTRODUCTION TO BULK DRUG INDUSTRY:
Since the achievement of independence, India pharmaceutical industry registered a
substantial progress and has become one of the countrys leading industries. India is now
providing large quantities of varied bulk drugs and pharmaceutical products of late.
Especially during 80s India acquired a status of one of the major exports of drugs and
pharmaceutical in the international market.
Prior to the launching of second five year plans, the manufacture of pharmaceuticals
was limited largely to processing to bulk-imported drugs into tablets,
Capsules and other formalities. Later the Indian manufacturer were encouraged to make
up the manufacture of basic drugs wherever it is economically possible and technically
feasible, resulting in the growth of bulk drugs industry and leading to self sufficiency in
the production of these raw material s called as bulk drugs. The number of bulk drugs and
pharmaceutical chemicals manufactured in the country by the Indian change in the pattern
of production; the industry has now emerged as an exporter of basic chemicals,
intermediaries and finished production. Thus bulk drugs are poised to become the new
start in the export firmament.
Pharmaceuticals are medicinally effective chemicals, which are converted to
dosage forms suitable for patients to imbibe. In it basic chemical from, pharmaceuticals
are called bulk drugs and the final dosage forms are known as formulations. Usage of
pharmaceuticals is governed by the underlying medical science. The four primary medical
sconces are as under:
Allopathic or modern medicine has gained global popularity.
Ayurveda, an ancient Indian science, mainly uses herbal remedies.

17

 Unani having Chinese Origin is prevalent in South East Asia.

Homeopathy, founded by a German Physician, was fairly popular in the
early 19th century.

RESEARCH DRIVEN INDUSTRY:

Pharmaceutical industry is driven by a global need to conquer disease.
Medicines are developed to treat new diseases or improve upon the existing treatment. An
in-depth understanding of human physiology and disease mechanism is a pre-requisite to
pharmacy R&D. to facilitate research, companies usually concentrate on select
therapeutic areas such as anti-ulcer, anti-cancer etc., major diseases for which new drugs
are continuously being researched
Globally are AIDS, Alzheimers disease, arthritis (rheumatics), cancer, depression,
diabetes, heart disease, osteoporosis and stock. Basic Vs process R&D basic research
deals with discovery / invention of new medicinally effective chemical. Process R&D is
basically reverse engineering of a molecule through slight process modifications. Basic
research is both time and cost intensive. Hundred of molecules need to be analyzed to
determine possible effectiveness. Following such laboratory testing, actual clinical trials
are then carried out to determine the drugs efficiency on patents. The process this requires
around 12-15 years and cost us $ 350-400 mm per new chemical entity (NCE). Process
R&D is far easier and costs are negligible compared to basic research.

MANUFACTURING PROCESS:
Bulk drugs prepared by appropriate chemical reactions of natural/ synthetic
intermediaries under controlled conditions. Formulations manufacture is a branch mixing
process. Right dosage of bulk drug (active ingredient) is compounded with compatible
substances, to make the formulations palatable. Packed as per the physical from-bottle
(for liquid), blister strips (for tablets / capsules) or ampoules (for powers), each
formulation pack has the expiry date and storage instructions printed on it. Stringent
quality control is exercised at all stage of Therapeutic segments.
For ease of prescription, bulk drugs and their formulations are classified as per there and
use i.e. therapeutic effectiveness against particular disease or ailment. For e.g. Medical

18

are categorized as anti-tuberculosis etc, the major therapeutic categories and the key
drugs there in are detailed wise-later.

BENEFIT TO MANKIND:
Between 1920 and 1960, the death rate, due to disease, in a year fell from 12,120 noses
per million people to 8,800 no permission persons. Every 4 years since 1965, one
additional year has added to life expectancy at birth due to advances in pharmacy R&D.
Presently in USA, the average life expectancy is over 75 years. As antibiotics enabled
people to survive more advanced ages, researches focused on call biochemistry to fine
cures for more complex chronic diseases: Drug researches are now targeting to cure the
underlying causes of diseases that are rooted in human molecular structure.

GROWTH:
Pharmaceutical is a continuous growth industry, immune to economic recession and
commodity cycle, rising populations, new disease incidence or resurgence of certain
diseases spurs that growth. Therapeutic usage of pharmaceuticals varies across the
globe.Hypertention and cardiac diseases like typhoid, tuberculosis etc., are largely
prevented in developing nations.

INDUSTRY SIZE:
The global pharmaceutical industry, presently valued as US $ 305 bin, is projected to
grow at a CAGR of 8% pa in the next 5 years. In 1998 market grew by 7% as against
6.6% in the previous years. Growth rate differ across nations, with the developing nations
like South Korea, Taiwan, India etc., nothing high growth in range of 12-15% pa. This
can be attributed to healthcare cost
containment pressure keeping pharmaceutical prices low like developed countries, while
export opportunities and low domestic per capita consumption have provide higher
growth potential in the developing nations.

INDIAN SCENARIO:
Drawbacks:
In the 50 years independence, the Indian pharmaceutical industry has evolved
significantly. Initially, the MNCS had a near monopoly. They imported and marketed
formulations in India, mainly low cost generics for the mosses and also few specialties,
19

life saving, high priced products. With the government increasing pressure against
imports of finished products. The MNCs setup formulations units and continued
importing the bulk drugs. In the 60s the Indian government laid the foundation of the
domestics pharmaceutical industry by promoting Hindustan Antibiotics Ltd., (HAL) and
Indian drugs.Hpowever, MNCs maintain a lead due to backing of their global R&D.
High costs for basic research deterred local players (in the private sector).

PRESENT SCENARIO:
Over 20,000 registered pharmaceutical manufacturers exist in the country. The
market share of MNCs has fallen from 75% in1971 to around 35% in the Indian
pharmaceutical market, While the share of Indian companies. Have increased from 20%
in 1971 to nearly 65%.pusses have almost lost completely.
The secret has undergone several policy as well as attitudinal changes over the
past two year. It was the one of the major beneficiaries from the budget proposals. Some
of the positive steps taken were.
Pharmaceutical industry as knowledge based industry. The government has plans to
increase the investment in research and Development. Rationalization of excise duty and
reduction in interest rates in export financing.
Foreign direct investments permit up to 74% through automatic route. Additional
deductions under income tax laws for R&D expense. Setting up to high-level comities to
review drug policy for strengthening Red capabilities, reducing the price control regime.
Beside the Indian parliament has enacted the required changes in the Indian Patent Act
1790 (IPR) regarding mailbox arrangements and Exclusive Marketing Right (EMR).For
while the main Pharmacy companies have a recorded a measure of 1.4% increase in sales
and 7.4% fall in profits, the Indian pharmacy have companies have recorded a21%
growth in sales companies has decreased frtom1.8% if sales to 1.6% in case of MNC
Pharmacy companies has increased 3.8 to 4.4%.So while the MNC companies did not
make many new launches (make a hue & cry about increasing competition from the
generics, delay in patent regime, unfavorable price cuts). But the Indian companies too,
everything in stride and went out all cylinders firing-launching new products, entering
generics market, recognizing the marketing structure, focusing on growth segments like
cardiac, and psychiatry among a host of other initiatives. Indian pharmaceutical exports,

20

among the top three contributors to the world pharmacy trade, are poised to grow 3.25%
this year to torch $ 1.5 billion, according to CII estimates.
The country is potential to rank among top three tins the world has suppliers of the
generic drugs by 2010, of the government paves why for creating a conductive business
environment by framing new policies for the sector, said ran boxy chief executive officer
D.S. Barr.

SWOT ANALYSIS FOR THE INDIAN PHARMA INDUSTRY:

STRENGTHS:

Cost competitiveness
Well-developed industry with strong manufacturing base
Well Established network of laboratories and R&D infrastructure.
Across to pool of highly trained scientists, both in India and abroad.
Strong marketing and distribution network.
Rich Bio-Diversity.
Competencies in chemistry and process developments.

WEAKNESS:
Low investments in innovative R&D.
Lack of resources to complete with other MNCs for new Drug Discovery
research and commercializes molecules on the world wide basis.
Lack of strong linkages between industry and academia.
Lack of culture of innovation in industry.
Inadequate regularity standards.
Production of spurious and low quality drugstarnishesthe image of the

industry at home.
And abroad.

OPPORTUNITIES:
Significant export potential
Licensing deals with MNCs for NECs and NDDs.
Marketing alliances to sell arrangements with MNCs.
Contract manufacturing India as a center for international clinical trials.
Niche player in global pharmaceutical R&D.
21

THREATS:
Product patent regime poses a serious challenge to domestic industry unless it
invests in research and development.
R&D efforts of India pharmaceutical companies hampered by lack of enabling
regulatory requirement.
Drug price control of India pharmaceutical companies from generating
inevitable surplus.
Export effort by procedural hurdles in India as well as non-tariff barriers imposed
abroad.
Lowering of tariff protection.

COMPANY PROFILE
22

Pharmaceutical Industry in India has risen leaps and bounds in the past two decades.
During the early 80s multinational companies ruled the Industry; whereas the large
Indian companies have taken the leadership position. Now one such company of Indian
origin is Hetero drugs

BRIEF HISTORY OF THE COMPANY:

April, 1993, saw the rise of a new organization, Hetero Drugs under the
stewardship of Dr. Parthasarathi Reddy, a technocrat with a vast experience in the field of
research and development for designing the processes with a team of highly component
professionals with expertise in their respective fields of operation.
Established in the year 1993, with the motto to be the best in the API manufacture,
hetero today embodies the vision of a top notch player in developing and
commercializing products catering to a variety of the therapeutic categories, integrating
into a leading finished dosage manufacture.
With full-fledged marketing capabilities, the company has been able to market
its products in over 80 countries in Asia, Middle-east, Eastern Europe and Latin America.
With its compliance to the most stringent regulatory requirements, Hetero has today
gained foothold to market several of its APIs in the United States, Canada, and Europe.

MANAGEMENT:
The member of the Board of Directors of the company.

Name

Designation:

1. Dr. Parthasarathi Reddy

Chairman & Managing

Director
2. B. Nagi Reddy
3. M. Pera Reddy
4. A.V. Narsa Reddy
5. C. Bhaskara Reddy
6. J. Sambi Reddy
7. M. Srinivasa Reddy
8. B. Vamshi Krishna

Executive Director
Director - Finance
Director - Corp. Tech
Director - Quality control
Director -Production
Director
Director

Company Secretary: C. Gopala Krishna

HETEROS MANUFACTURING FACILITIES

The company is having manufacturing facilities in and around Andhra Pradesh. Hetero
has expanded its manufacturing facilities to cater to the growing demand for the active
pharmaceutical ingredients of a wide range of therapeutic categories.
23

VISION AND VALUES:

Hetero visualizes itself as an aggressive player in the global pharmaceutical
scenario, supplying gentries developed, combining intellectual property, research
strengths and strong human resource inputs.
The company values the concepts of having social responsibilities in the course of
its assent to greater heights. It strongly believes in focusing on customer requirements
and delivering the products at the right pace.
Heteroconsiders its human resources as the core of all its capabilities and believes in
tapping and honing the talents of its members to reach the zenith of success
It believes in continuous evaluation and improvement in all the factors that contribute in
transforming the organization into a global force to reckon with.
Hetero takes due cognizance to the fact that the processes that it develops should be all
eco-friendly and should not result in any consequence that harms the ecological harmony.

MISSION:
Heteros Mission is to be globally acclaimed pharmaceutical company, Meeting the
requirements of Healthcare imbibing the philosophy of the both commercial and social
concerns, driven by research and manufacturing capabilities.

QUALITY SYSTEM / POLICIES:

Manufacture and marketing of pharmaceutical products following an integrated of quality
systems meeting the customer and regulatory requirements to ensure quality, safety and
efficacy of the product.

Striving for excellence through continuous upgrading of the resources and facilities to
meet the ever changing demands with respect to the technologies and systems, aiming
at, continuous quality improvement and customer satisfaction giving the consideration
for the protection of the environment. The approval of Heteros APIfaculty by USRDA
and finished dosage faculty by WHO bear a testimony to this fact. Providing training,
safe working environment and opportunities for all its employees to grow along with
the organization and striving for the better course of society.
24

HETERO RESEARCH FOUDATION:

Heteros emphasis has always been on research and development .The emphasis was to
ensure that processes been g adapted for the products are cost effectives, safe to handle
and with optimum advantage in terms of yield and quality. Having laid solid foundation
towards the end heteros R&D approach has also taken cognizance of the present scenario
where stringent has been and is involved in developing non-infringing processes for its
products. With its ability to explore high and achieve the best, hetero has been able to file
patents for several of its processes.
From an organization, which was concentrating on developing processes for APIs hetero,
has now a full- fledge R&D facility for formulation development.
Hetero research capabilities have been proven with its ability to carry out a wide range of
reaction, which are difficult to carry out. Given its research capabilities hetero has today
has initiated contract research. Towards the end, the company has already evolved its
strategies and is into discussions with renowned companies for carrying out the contract
research. Custom synthesis is one area where the company has been concentrating on and
has initiation work on several projects.
In addition to the above, the company is now on the threshold of commencing basic
research activities to develop and screening new chemical entities for different therapeutic
categories.

HETEROS STRENGTH:
Strong Emphasis on research and development
Ability to orient and adapt to the changing facets of industry, particularly
in terms of regulations, intellectual property and manufacturing
capabilities.
Cohesive team fog skilled professionals in all wings related to research,
manufacture and marketing.
Strong customer base and market presence
25

 Strong commitment towards the society to provide timely support by

providing life saving drugs at relatively low cost, short span of time.

CAREERS:
Hetero considers its human recourse as its core strengths. The company believes in the
fact that its present position has on aggressive layer can be attributed to the efforts on art
of ail employees working in different departments in realizing its goal of being a topNotch company.
The company offers the best of the opportunities to work, where the potential and
capabilities of personnel. The latent talents are boned to meet the challenges faced by the
organization and achieve the best.
Hetero believes in recognizing and rewarding contributions of its employees. To meet its
staff requirements, hetero has several openings in different departments for those who are
ready to take up the challenge and deliver the go

HETERO RECOGNITION AND AWARDS:

The efforts of hetero towards achieving the recognition as an organization to reckon with
in the pharmacy sector have yielded fruits, crossing numerous mile stones, in its journey
to success. To name a few Hereto was awarded the National Award for the best efforts in
Research and Development by the department of scientific and industrial research,
ministry of science and technology, Government of India.

QUALITY ACCRIDITIONS

Quality of products and organization as a whole.

Quality systems in every department R&D to marketing.
ISO 9002 certification for manufacture and marketing of APIs.
CGMP and WHO certification for the APIs.
USFDA approved manufacturing facility.
Corporation Analytical Research Wing for establishing in house specifications.

26

DATA ANYLYSIS &PRESENTATION

BALANCE SHEET OF HETERO DRUGS LTD. FOR THE YEAR ENDING 31ST MARCH 2009-10
PARTICULARS

31-03-2009

PERCENTAGE

31-03-2010

OF CHANGE
SOURCES OF FUNDS
SHARE HOLDER FUNDS
Share capital
Reserves & Surplus
LOAN FUNDS
Secured loans
Unsecured loans
DIFERRED TAX
LIABILITY(Net)
TOTAL
APPLICATION OF FUNDS
FIXED ASSETS
Gross Block
Less: Depreciation
Net Block

PERCENTAGE
OF CHANGE

34500000
826961437

2.10
50.45

34500000
768783995

2.36
52.63

555991459
123979573
97712415

33.91
7.56
5.96

609933051
47324672
NILL

41.76
3.24
0

1639144884

100

1460541718

100

624427126
99440569
524986557

38.09
6.06
32.02

541650837
73006804
468644033

37.08
4.99
32.08

27

INVESTMENTS
CURRENT ASSETS

168101191

10.25

54988654

3.76

578425269
648167571
1951568
118081570
1364190038

35.28
39.54
0.11
7.20
83.25

508179559
766647618
21728135
799937438
1376492750

34.79
52.49
1.48
5.47
94.24

Provisions
Current liabilities
Provisions
NET CURRENT ASSETS
MISCLLANEOUS

391151250
27005656
946033132
24004

23.86
1.64
57.71
0.001

410623831
29000000
936868919
10112

28.11
1.98
64.14
0.002

EXPENDITURE
TOTAL

1639144884

100

1460541718

100

LOANS & ADVANCESS

Inventories
Sundry Debtors
Cash & Bank Balances
Loans & Advances
TOTAL
Less: Current Liabilities &

INTERPRETATION:
1.An analysis of current assets of both the years shows the percentage of current assets to
that of total assets is 83% in the year 2009 and reduced to 94% in the year 2010 and in the
both the years the company is having adequate working capital. The percentage of current
liabilities is less than that both current assets of the both years, the inventories share
greater value in current assets.
2. An analysis of current liabilities to that of share holders funds shows that the
percentage of debt is less than the equity that is good sign i.e., the companys solvency is
sound. To run the company it has to depend on working capital. That is the most of
working capital procurement has been done from the topic earned and reserves
maintained by the company.
3. Companies reserve capacity is very good. All the fixed assets are well utilized and
investments are made regularly.

28

BALANCE SHEET OF HETERO DRUGS LTD. FOR THE YEAR ENDING 31ST MARCH 2010-11
PARTICULARS

31-03-2010

PERCENTAGE

31-03-2011

OF CHANGE
SOURCES OF FUNDS
SHARE HOLDER FUNDS
Share capital
Reserves & Surplus
LOAN FUNDS
Secured loans
Unsecured loans
DIFFERED TAX

PERCENTAGE
OF CHANGE

34500000
768783995

2.36
52.63

34500000
826961437

2.10
50.45

609933051
47324672
NILL

41.76
3.24

555991459
123979573
9771124115

33.91
7.56
5.96

1460541718

100

1541432469

100

541650837
73006804
468644033
54988654

37.08
4.99
32.08
3.76

624427126
99440569
524986557
168101191

38.09
6.06
32.02
10.25

508179559
766647618
21728135
799937438
1376492750

34.79
52.49
1.48
5.47
94.24

578425269
648167571
19515628
118081570
1364190038

35.28
39.54
1.19
7.20
83.22

Provisions
Current liabilities
Provisions
NET CURRENT ASSETS
MISSCLLANEOUS

410623831
29000000
936868919
10112

28.11
1.98
64.14
0.002

691151250
27005656
946033132
24004

23.86
1.64
57.71
0.001

EXPENDITURE
TOTAL

1460541718

100

154432469

100

LIABILITY(Net)
TOTAL
APPLICATION OF FUNDS
FIXED ASSETS
Gross Block
Less: Depreciation
Net Block
INVESTMENTS
CURRENT ASSETS
LOANS & ADVANCESS
Inventories
Sundry Debtors
Cash & Bank Balances
Loans & Advances
TOTAL
Less: Current Liabilities &

29

INTERPRETATION:
1.An analysis of current assets of both the years shows rhea percentage of current assets
to that of total assets is 94% in the year 2010 and reduced to 83% in the year 2011 and in
the both the years the company is having adequate working capital. The percentage of
current liabilities is less than that both current assets of the both years, the inventories
share greater value in current assets.
2. An analysis of current liabilities to that of share holders funds shows that the
percentage of debt is less than the equity that is good sign i.e., the companys solvency is
sound. To run the company it has to depend on working capital. That is the most of
working capital procurement has been done from the topic earned and reserves
maintained by the company.
3. Companies reserve capacity is very good. All the fixed assets are well utilized and
investments are made regularly.

30

BALANCE SHEET OF HETERO DRUGS LTD. FOR THE YEAR ENDING 31ST MARCH 2011-12
PARTICULARS

31-03-2011

PERCENTAGE

31-03-2012

OF CHANGE

PERCENTAGE OF
CHANGE

SOURCES OF FUNDS
SHARE
HOLDER
FUNDS
Share capital
Reserves & Surplus

34500000
826961437

2.10
50.45

71000000
1036208772

3.30
48.2

Secured loans

555991459

33.91

868106038

40.3

Unsecured loans

123979573

7.56

51584509

2.39

DIFERRED TAX

97712415

5.96

122772126

5.7

LIABILITY(Net)
TOTAL

1639144884

100

2149671445

100

624427126
99440569
524986557
168101191

38.09
6.06
32.02
10.25

797011304
130400660
666610644
52497262

37.07
6.06
31.00
2.44

578425269
648167571
19515628

35.28
39.54

714978242
1024629827
14496599

33.25
47.66

LOAN FUNDS

APPLICATION
OFFUNDS
FIXED ASSETS
Gross Block
Less: Depreciation
Net Block
INVESTMENTS
CURRENT ASSETS
LOANS & ADVANCESS
Inventories
Sundry Debtors
Cash & Bank Balances

118081570
1364190038

1.19
7.20
83.22

Provisions
Current liabilities
Provisions
NET CURRENT ASSETS
MISCLLANEOUS

691151250
27005656
946033132
24004

EXPENDITURE
TOTAL

1639144884

Loans & Advances

TOTAL
Less: Current Liabilities &

189641570
1943446239

0.67
8.80
90.40

23.86
1.64
57.71
0.001

601369325
71521570
1270555343
7896

27.97
3.32
59.10
0.0003

100

2149671445

100

INTERPRETATION:
1.An analysis of current assets of both the years shows the percentage of current assets to
that of total assets is 83% in the year 2011 and reduced to 90% in the year 2012 and in the
both the years the company is having adequate working capital. The percentage of current
31

liabilities is less than that both current assets of the both years, the inventories share
greater value in current assets.
2. An analysis of current liabilities to that of share holders funds shows that the
percentage of Debt is less than the equity that is good sign i.e., the companys solvency is
sound. To run the company it has to depend on working capital. That is the most of
working capital procurement has been done from the topic earned and reserves
maintained by the company.
3. Companies reserve capacity is very good. All the fixed assets are well utilized and
investments are made regularly.

BALANCE SHEET OF HETERO DRUGS LTD. FOR THE YEAR ENDING 31ST MARCH 2012-13
PARTICULARS

31-03-2012

PERCENTAGE
OF CHANGE

SOURCES OF FUNDS
SHARE
HOLDER
FUNDS

32

31-03-2013

PERCENTAGE OF
CHANGE

Share capital
Reserves & Surplus
LOAN FUNDS
Secured loans
Unsecured loans
DIFERRED TAX

71000000
1036208772

3.30
48.2

34500000
14400730045

1.17
47.7

868106038
51584509
122772126

40.3
2.39
5.7

1280091497
48119721
172716522

43.59
1.63
5.8

2149671445

100

2936157785

100

797011304
130400660
666610644
52497262

37.07
6.06
31.00
2.44

1252543214
1960261894
1056517020
171566882

42.65
6.67
35.9
5.84

714978242
1024629827
14496599
189641570
1943446239

33.25
47.66
0.67
8.80
90.40

944109125
1074534824
97153728
350191763
2465989440

32.15
36.59
3.30
11.92
83.98

Provisions
Current liabilities
Provisions
NET CURRENT ASSETS
MISCLLANEOUS

601369325
71521570
1270555343
7896

27.97
3.32
59.10
0.0003

648091167
110080953
1707817320
256563

22.07
3.74
58.16
0.008

EXPENDITURE
TOTAL

2149671445

2936157785

100

LIABILITY(Net)
TOTAL
APPLICATION
OFFUNDS
FIXED ASSETS
Gross Block
Less: Depreciation
Net Block
INVESTMENTS
CURRENT ASSETS
LOANS & ADVANCESS
Inventories
Sundry Debtors
Cash & Bank Balances
Loans & Advances
TOTAL
Less: Current Liabilities &

100

INTERPRETATION:
1.An analysis of current assets of both the years shows the percentage of current assets to
that of total assets is 90% in the year 2012 and reduced to 83% in the year 2013 and in the
both the years the company is having adequate working capital. The percentage of current
liabilities is less than that both current assets of the both years, the inventories share
greater value in current assets.
2. An analysis of current liabilities to that of share holders funds shows that the
percentage of debt is less than the equity that is good sign i.e., the companys solvency is
sound. To run the company it has to depend on working capital. That is the most of
working capital procurement has been done from the topic earned and reserves
maintained by the company.

33

3. Companys reserve capacity is very good. All the fixed assets are well utilized and
investments are made regularly.

BALANCE SHEET OF HETERO DRUGS LTD. FOR THE YEAR ENDING 31ST MARCH 2013-14
PARTICULARS

31-03-2013

PERCENTAGE

31-03-2014

OF CHANGE

PERCENTAGE
OF CHANGE

SOURCES OF FUNDS
SHARE HOLDER
FUNDS
Share capital
Reserves & Surplus
LOAN FUNDS
Secured loans
Unsecured loans
DIFERRED TAX
LIABILITY(Net)
TOTAL
APPLICATION OF

34500000
14400730045

1.17
47.7

34500000
2238083518

0.79
51.89

1280091497
48119721
172716522

43.59
1.63
5.8

1792249027
44588001
203202275

41.55
1.03
4.71

2936157785

100

4312622821

100

FUNDS

34

FIXED ASSETS
Gross Block
Less: Depreciation
Net Block
INVESTMENTS
CURRENT ASSETS

1252543214
1960261894
1056517020
171566882

42.65
6.67
35.9
5.84

1785079415
256237673
1528841742
239339398

41.39
5.94
35.45
5.54

LOANS & ADVANCESS

Inventories
Sundry Debtors
Cash & Bank Balances
Loans & Advances
TOTAL
Less: Current Liabilities &

944109125
1074534824
97153728
350191763
2465989440

32.15
36.59
3.30
11.92
83.98

1199191291
2231501170
72561496
574515948
4077769905

27.80
51074
1.68
13.32
94.55

Provisions
Current liabilities
Provisions
NET CURRENT ASSETS
MISCLLANEOUS

648091167
110080953
1707817320
256563

22.07
3.74
58.16
0.008

1419396130
127080953
2531292822
13148859

32.91
2.94
58.69
0.30

EXPENDITURE
TOTAL

2936157785

100

4312622821

100

INTERPRETATION:
1. An analysis of current assets of both the years shows the percentage of current assets to
that of total assets is 83% in the year 2013 and reduced to 94% in the year 2014 and in the
both the years the company is having adequate working capital. The percentage of current
liabilities is less than that both current assets of the both years, the inventories share
greater value in current assets.
2. An analysis of current liabilities to that of share holders funds shows that the
percentage of debt is less than the equity that is good sign i.e., the companys solvency is
sound. To run the company it has to depend on working capital. That is the most of
working capital procurement has been done from the topic earned and reserves
maintained by the company.
3. Companys reserve capacity is very good. All the fixed assets are well utilized and
investments are made regularly.

35

BALANCE SHEET OF HETERO DRUGS LTD. FOR THE YEAR ENDING 31ST MARCH 2010-14
PARTICULARS

31-03-2010

31-03-2011

31-03-2012

31-03-2013

31-03-2014

34500000
768783995

34500000
826961437

71000000
1036208772

34500000
14400730045

34500000
2238083518

609933051
47324672
NILL

555991459
123979573
97712415

868106038
51584509
122772126

1280091497
48119721
172716522

1792249027
44588001
203202275

1460541718

1639144884

2149671445

2936157785

4312622821

541650837
73006804
468644033
54988654

624427126
99440569
524986557
168101191

797011304
130400660
666610644
52497262

1252543214
1960261894
1056517020
171566882

1785079415
256237673
1528841742
239339398

508179559
766647618
21728135
799937438
1376492750

578425269
648167571
19515628
118081570
1364190038

714978242
1024629827
14496599
189641570
1943446239

944109125
1074534824
97153728
350191763
2465989440

1199191291
2231501170
72561496
574515948
4077769905

SOURCESOFFUNDS
SHAREHOLDER
FUNDS
Share capital
Reserves & Surplus
LOAN FUNDS
Secured loans
Unsecured loans
DIFERRED TAX
LIABILITY(Net)
TOTAL
APPLICATION OF
FUNDS
FIXED ASSETS
Gross Block
Less: Depreciation
Net Block
INVESTMENTS
CURRENTASSETS
LOANS &ADVANCESS
Inventories
Sundry Debtors
Cash & Bank Balances
Loans & Advances
TOTAL
Less: Current Liabilities
&Provisions

36

Current liabilities

410623831

691151250

601369325

648091167

1419396130

Provisions
NETCURRENTASSETS
MISCLLANEOUS

29000000
936868919
10112

27005656
946033132
24004

71521570
1270555343
7896

110080953
1707817320
256563

127080953
2531292822
13148859

EXPENDITURE
TOTAL

1460541718

1639144884

2149671445

2936157785

4312622821

BALANCE SHEET SHOWING TRENDS IS PERCENTAGES OF HETERO DRUGS LTD.

FOR THE YEAR ENDING 31ST MARCH 2010-14
PARTICULARS

31-03-2010

31-03-2011

31-03-2012

31-03-2013

31-03-2014

100
100

100
107.56

205.79
134.78

100
182.2

100
291.12

100
100
0

91.16
261.98
0

142.32
109
0

209.87
101.68
0

293.84
94.21
0

100

112.23

147.18

201.03

295.27

100
100

112.02
305.7

142.24
95.46

225.44
312

326.22
435.25

100
100
100
100
100

113.82
84.55
89.81
147.72
99.1

141.69
133.65
66.72
236.86
141.19

185.78
140.16
447.13
438.08
179.15

235.98
291.07
333.95
718.71
296.24

Provisions
Current liabilities
Provisions
NET CURRENT ASSETS
MISCLLANEOUS

100
100
100
100

95.25
93.12
100.99
59.84

146.45
246.63
131.62
19.68

157.83
379.59
182.29
639.62

345.67
438.21
270.18
32780.36

EXPENDITURE
TOTAL

100

112.23

147.18

209.03

295.27

SOURCES OF FUNDS
SHAREHOLDERFUNDS
Share capital
Reserves & Surplus
LOAN FUNDS
Secured loans
Unsecured loans
DIFERRED TAX
LIABILITY(Net)
TOTAL
APPLICATION OF
FUNDS
FIXED ASSETS
Net Block
INVESTMENTS
CURRENT ASSETS
LOANS&ADVANCESS
Inventories
Sundry Debtors
Cash & Bank Balances
Loans & Advances
TOTAL
Less: Current Liabilities &

NOTE: Assuming the values are base year i.e., 2010 as 100%

INTERPRETATION:
CURRENT ASSETS: As per the above table of trend percentages of balance sheet of
hetero drugs limited. The position of current assets is improved year after year. During the
37

year 2011 the current assets were at 99.1%, but it gradually increased and in the year
2014 it is 296%. This increasing trend is due to increase in the value of cash & Bank
balances and loans and advances.
FIXED ASSETS: As per the above table of trend percentages of balance sheet of hetero
drugs limited. There is a continuous increase in the value of fixed assets. During the year
2014 it is at 326%. It is a positive sign.
INVESTMENTS: As per the above table of trend percentages of balance sheet of hetero
drugs limited. There is a continuous trend. But during the year 2011 its value reduced
significantly. However company was able to hope this situation the fixed assets show and
increasing trend thereafter and during the year 2014 it is at 435%.
CURRENT LIABILITIES: As per the above table of trend percentages of balance sheet
of hetero drugs limited. There is a continuous trend. From the year 2010 to 2014 there is
increase in current liabilities that indicates the credit worthiness, its reputation in the
credit market.

FINDINGS
The following are the findings and conclusions that have been drawn by researcher
38

Thus, the overall position. Working capital utilization etc. indicated that the firm is
in a satisfactory level.
FINDINGS AND SUGGETIONS:
On the basis of the analysis and interpretations of various ratios and financial statements
in chapters 4 &5, the following findings and suggestions are made.
The profitability position of the company is good and it can be improved by
looking into the factors contributing to the companys profile.
The current and quick ratio of the company is so far so good but further reduction
is advised.
The companys total assets and fixed assets turn over ratios are satisfactory, and
can be improved.
Though the financial position is considered to be strong, the company is advised
to maintain consistency in improving its reserve capacity.
The companys aim should be to strive for the maximization of share holders
wealth.
The credit management policy needs to be emended in order to reach the idle
debtors turnover ratio. The company is advised to further improvise its policies in
this matter.
Hetero Drugs Ltd. is one of rising star in the bulk drugs and pharmaceutical
industry, which is investing more of its funds and personnel on research &
Development activities in order to produce new drugs in the country.

CONCLUSSION
On the whole, the performance of HETERO DRUGS LIMITED is good, but a lot of
improvement is required especially in utilizing funds, investments, amendments in credit
management policies, etc., the company has to achieve its set targets by striving for its
fulfillment.

39

BIBLIOGRAPHY

References

Author/ Source

1. Financial Management

Prasanna Chandra

2. Financial Management

I.M. pandey

3. Advanced Accountancy

Hani & Mukharjee

40

4. Annual Reports for the Financial

Year 2008-2013

Hetero Drugs Ltd.,

Website: www.heterodrugs.com

APPENDIX-A
COMPARATIVE BALANCE SHEETOF HETERO DRUGS LTD.
FOR THE YEAR ENDING 31MARCH 2009-10
PARTICULARS
SOURCES OF FUNDS
SHAREHOLDER FUNDS
Share capital
Reserves & Surplus
LOAN FUNDS
Secured loans
Unsecured loans
DIFERRED TAX
LIABILITY(Net)
TOTAL
APPLICATION OFUNDS
FIXED ASSETS
Gross Block
Less: Depreciation
Net Block
INVESTMENTS
CURRENT ASSETS
LOANS & ADVANCESS
Inventories
Sundry Debtors
Cash & Bank Balances
Loans & Advances
TOTAL

31-03-2009

31-03-2010

INCREASE /

PERCENTAGEINCR

DECREASE

EASE/DECREASE

-58177442

-7.035085241

34500000
826961437

34500000
768783995

555991459
123979573
97712415

609933051
47324672
NILL

53941592
-76654901

9.701874215
-61.82865382

1639144884

1460541718

-178603166

-10.89611832

624427126
99440569

541650837
73006804

-82776289

-13.256357

524986557
168101191

468644033
54988654

-26433765
-56342524
-113112537

-26.58247561
-10.73218414
-67.28836145

578425269
648167571
1951568
118081570
1364190038

508179559
766647618
21728135
799937438
1376492750

-70245710
118480047
19776567
681855868
12302712

-12.14430174
18.27923091
1013.368071
577.444785
0.901832711

41

Less: Current Liabilities &

Provisions
Current liabilities
Provisions
NET CURRENT ASSETS

391151250
27005656
946033132

410623831
29000000
936868919

19472581
1994344
-9164213

4.978274005
7.384912257
-0.968698948

MISCLLANEOUS

24004

10112

-13892

-57.87368772

EXPENDITURE
TOTAL

1639144884

-178603166

-10.89611832

1460541718

COMPATIVE BALANCE SHEET OF HETERO DRUGS LTD.

FOR THE YEAR ENDING 31ST MARCH 2010-11
PARTICULARS

31-03-2010

SOURCES OF FUNDS
SHARE HOLDER FUNDS
Share capital
Reserves & Surplus
LOAN FUNDS
Secured loans
Unsecured loans
TOTAL
APPLICATION OF FUNDS
FIXED ASSETS
Gross Block
Less: Depreciation
Net Block
INVESTMENTS
CURRENT ASSETS

31-03-2011

INCREASE /

PERCENTAGE

DECREASE

INCREASE/DECREASE

34500000
768783995

34500000
826961437

0
58177442

0
7.056746269

609933051
47324672
1460541718

555991459
123979573
1541432469

-53941592
76654901
80890751

-8.843854569
161.9766134
5.538407428

541650837
73006804
468644033
54988654

624427126
99440569
524986557
168101191

82776289
26433765
56342524
113112537

15.28222304
36.20726227
12.02245629
205.7015926

508179559
766647618
21728135
799937438
1376492750

578425269
648167571
19515628
118081570
1364190038

70245710
-118480047
-2212507
3814132
-12302712

13.82300975
-15.45430315
-101826825
47.71748126
-0.893772379

Provisions
Current liabilities
Provisions
NET CURRENT ASSETS
DIFERRED TAX

410623831
29000000
936868919
NILL

691151250
27005656
946033132
-97712415

-19472581
-1994344
9164213

-4.742194566
-6.877048276
0.978174515

LIABILITY(Net)
MISCLLANEOUS

10112

24004

-16108

-40.15755884

EXPENDITURE
TOTAL

1460541718

154432469

-1306109249

-89.42635687

LOANS & ADVANCESS

Inventories
Sundry Debtors
Cash & Bank Balances
Loans & Advances
TOTAL
Less: Current Liabilities &

COMPATIVE BALANCE SHEET OF HETERO DRUGS LTD.

FOR THE YEAR ENDING 31ST MARCH 2011-12

42

PARTICULARS

31-03-2011

31-03-2012

INCREASE /

PERCENTAGE

DECREASE

INCREASE/DECREASE

SOURCES OF FUNDS
SHARE HOLDER
FUNDS
Share capital

34500000

71000000

Reserves & Surplus

LOAN FUNDS

826961437

1036208772

36500000
209247335

105.7971014
25.3031551

Secured loans

555991459

868106038

312114579

56.13657799

43

Unsecured loans
DIFERRED TAX

123979573
97712415

51584509
122772126

-72395064
25059711

-58.39273539
25.64639406

LIABILITY(Net)
TOTAL

1639144884

2149671445

510526561

31.14590821

Gross Block

624427126

797011304

Less: Depreciation
Net Block

99440569
524986557

130400660
666610644

172584178
30960091

27.63880216
31.13426573

141624087

26.97670733

INVESTMENTS

168101191

52497262

-115603929

-68.77044018

Inventories

578425269

714978242

136552973

23.60771223

Sundry Debtors

648167571

1024629827

Cash & Bank Balances

Loans & Advances

19515628
118081570

14496599
189641570

376462256
-5019029

58.08100757
-25.71799893

TOTAL

1364190038

1943446239

71560000
579256201

60.60217526
42.4615475

& Provisions
Current liabilities

691151250

601369325

Provisions
NET CURRENT

27005656
946033132

71521570
1270555343

-89781925
44515914

-12.99019932
164.8392248

ASSETS
MISCLLANEOUS

24004

7896

324522211
-16108

34.30347205
-67.10548242

EXPENDITURE
TOTAL

1639144884

2149671445

APPLICATIONOF
FUNDS
FIXED ASSETS

CURRENT ASSETS LOANS

& ADVANCESS

Less: Current Liabilities

510526561

31.14590821

COMPARITIVE BALANCE SHEET OF HETERO DRUGS LTD.

FOR THE YEAR ENDING 31ST MARCH 2012-13
PARTICULARS

31-03-2012

31-03-2013

SOURCES OF FUNDS

INCREASE /

PERCENTAGE

DECREASE

INCREASE/DECREASE

SHAREHOLDER FUNDS

Share capital
Reserves & Surplus
LOAN FUNDS
Secured loans
Unsecured loans
DIFERRED TAX

71000000
1036208772

34500000
14400730045

-36500000
13364521273

-51.4084507
1289.751798

868106038
51584509
122772126

1280091497
48119721
172716522

411985459
-3464788
49944396

47.45796492
-6.716721875
40.68056621

2149671445

2936157785

786486340

36.58635099

FIXED ASSETS
Gross Block
Less: Depreciation

797011304
130400660

1252543214
1960261894

455531910

57.15501245

Net Block
INVESTMENTS

666610644
52497262

1056517020
171566882

1829861234
389906376
119069620

1403.260715
58.49087162
226.8111049

LIABILITY(Net)
TOTAL
APPLICATIONOF FUNDS

44

CURRENT ASSETS
LOANS &ADVANCESS
Inventories
Sundry Debtors
Cash & Bank Balances

714978242
1024629827
14496599

944109125
1074534824
97153728

189641570
1943446239

350191763
2465989440

Provisions
Current liabilities
Provisions
NET CURRENT

601369325
71521570
1270555343

648091167
110080953
1707817320

ASSETS
MISCLLANEOUS

7896

EXPENDITURE
TOTAL

2149671445

Loans & Advances

TOTAL
Less: Current Liabilities &

229130883
49904997

32.04725257
4.870539163

82657129
160550193
522543201

570.1829029
84.65981008
26.88745336

46721842
38559383

7.769242636
53.91294263

256563

437261977
248667

34.415028
3149.278116

2936157785

786486340

36.58635099

COMPARITIVE BALANCE SHEET OF HETERO DRUGS LTD.

FOR THE YEAR ENDING 31ST MARCH 2013-14
PARTICULARS

SOURCES OF FUNDS
SHARE HOLDER FUNDS
Share capital
Reserves & Surplus
LOAN FUNDS
Secured loans
Unsecured loans
DIFERRED TAX
LIABILITY(Net)
TOTAL
APPLICATIONOFFUNDS
FIXED ASSETS
Gross Block
Less: Depreciation
Net Block
INVESTMENTS
CURRENT ASSETS
LOANS & ADVANCESS
Inventories
Sundry Debtors
Cash & Bank Balances
Loans & Advances
TOTAL
Less: Current Liabilities &
Provisions
Current liabilities
Provisions
NET CURRENT ASSETS

31-03-2013

31-03-2014

INCREASE

PERCENTAGE

INCREASE/DECREASE

DECREASE
34500000
14400730045

34500000
2238083518

837353473

59.77978955

1280091497
48119721
172716522

1792249027
44588001
203202275

512157530
-3531720
30485753

40.00944707
-7.33944405
17.65074507

2936157785

4312622821

1376465036

46.87980472

1252543214
1960261894

1785079415
256237673

532536201

42.51639345

1056517020
171566882

1528841742
239339398

-1704024221
472324722
67772516

-86.92839596
44.70583181
39.50209691

944109125
1074534824
97153728
350191763
2465989440

1199191291
2231501170
72561496
574515948
4077769905

255082166
1156966346
-24592232
224324185
1611780465

27.01829262
107.6713681
-25.3127003
64.05752753
65.36039607

648091167
110080953
1707817320

1419396130
127080953
2531292822

771304963
17000000
823475502

119.0117999
15.44318026
48.21800859

45

MISCLLANEOUS

256563

13148859

12892296

5025.002046

EXPENDITURE
TOTAL

2936157785

4312622821

1376465036

46.87980472

APPENDIX-B

ORGANISATION STRUCTURE
BOARD OF DIRECTORS

CHAIRMAN
MANAGING DIRECTOR
DIRECTORS

MANAGING DIRECTOR

ADVISOR

GENERAL
CORPOREATE
OFFICE
CORPOREATE
PLANNING
OPERATIONS

MANAGER
(R&D)
R&D
QUALITYASSURAN
GENERAL

CE
QUALITY

MANAGER

CONTROL
EQUIPMENT

(Commercial)
FINANCE

DEVELOPMENT

ACCOUNTS
PURCHASE
STORES
DISPATCH

46

GENERAL
MANAGER
(Sales)
MARKETING
SALES