Gs Project

8/22/2019 Gs Project

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CONTENTS

CHAPTER-I

INTRODUCTION

OBJECTIVES OF THE STUDY

NEED FOR THE STUDY

METHODOLOGY

LIMITATIONS OF THE STUDY

CHAPTER-II

INDUSTRY PROFILE

CHAPTER-III

COMPANY PROFILE

CHAPTER-IV

THEORETICAL FRAME WORK OF FINANCIAL PERFORMANCE

CHAPTER-V

DATA ANALYSIS & INTREPRETATION

CHAPTER-VI

FINDINGS, SUGGESTIONS & CONCLUSION


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BIBILOGRAPHY

CHAPTER-I

INTRODUCTION


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INTRODUCTION

A Financial Statement is a collection of data organized according logical and consistent

accounting procedures. Its purpose is to convey an understanding of some financial aspects of a

business firm. It may show a position at a moment in time, as in the case of an income statement

generally refers to the two statements these are.

Income statement (or) profit and loss.

Account. Position statement (or) Balance sheet.

These statements are used to convey to management and other outsiders the profitability

and financial position of the firm. Financial statements are the outcome of summarizing process

of accounting. In the words of john Nhei the financial statements provide a summary of the

accounts of the accounts of a business enterprise. The balance sheet reflecting the asset,

liabilities and capital on a certain date and income statement showing the results of operation

during a certain period.

Financial statements are also called financial reports. In the words of Anthony, financial

statements, essentially, are interim reports, presented annually and reflect a division of the life of

the life of an enterprise onto more or less arbitrary accounting period more frequently a year.

Meaning Of Financial Analysis:

The term financial analysis also known as analysis and interpretation of financial

statement, refers to the process of determine financial strength and weakness of the firm by

establishing strategic relationship between the items of the balance sheet, profit and loss account

and other operative data.


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In the words of Myers financial factors in a business as disclosed by a single set of

statements and study of the trend of these factors as shown in a series of statements.

Meaning Of Financing Statements:

Statements are the sources of information on basis of which conclusion are drawn about

the profitability and financial position of a concern, they are the major means employed by firms

to present their financial situation of owner, creditors and the general public, the primary

objective of financial statements is to assist in decision making,. The accounting principles board

of America( APB) sates the following objectives of financial statements.

The provide reliable financial information about economic resources and obligations of a

business firm.

To provide other need information about changes in such economic resources and

obligation.

To provide reliable information about changes in resources (resources less obligations)

arising out of business activities.

To provide financial information that assists in estimating the earning potentials of

business. To disclose, to the extent possible, other information related to the financial

statements that is relevant to the needs of the users of these statements.


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Types of Financial Statements:

Financial statement primary comprise two basic statements; (1)the position statement or

the balance sheet and (2)the income statement or the profit and loss account. However,

(Generally Accepted Accounting Principle(GAAP) specifies that a complete set of financial

statements must include:

1. A Balance Sheet.

2. An income statement (profit and loss accounting.)

1. Balance Sheet:

The American institute of certified public defines balance sheet as. A tabular statement of

summary of balance(debits and credits) carried forward after an actual and constructive closing

of books of account and kept according to principles of accounting. The purpose of the balance

sheet is to show the resources that the company has, i.e. its assets, from where those resources

come from I.e. its liabilities and investment by owners and outsides.

The balance sheet is one of the important statements depicting strength of the concern. It

shows on the one hand the properties that is utilizes and on other hand the sources of these

properties. The balance sheet shows all the assets owned by the concern and all the liabilities and

claims it owners and outsiders. The balance sheet is prepared on a particular date. Right hand

side shows properties and assets and left hand side shows liability normally there is no sequences

for showing various assets and liability. The companies act, 1956 has prescribed a particular

form for showing assets and liability in the balance sheet for companies registered under this act.

These companies are also required to give figure for the previous year along with the current

years figures.


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2. Income statement (or) profit and loss Account:

Income statement is prepared to determine the operational position of the concern. It is a

statement of revenues earned and the expenses incurred for earning that revenue, if there is

excess of revenues over expenditures it will show a profit and if the expenditures are more than

the income then will be a loss. The income statement is prepared for a particular period,

generally a year. When income statement is prepared for the year ending, then all revenues and

expenditures falling due in that year will be taken into account irrespective of their receipt or

payment.

The income statements may be prepared in the form of a manufacturing account to find

out the cost of production, in the form of trading account to determine gross profit or loss. In the

form of a profit and loss account determine net profit or net loss, a statement of retained earnings

may also be repaired to show the distribution of profit.

Limitations of Financial Statement:

The financial statement are relevant and useful for the concern, still they do not present a

final picture of the concern. The utility of these statement is dependent upon a number of

factors. The analysis and interpretation of these statement should be done very carefully

otherwise misleading conclusions may be drawn; the financial statements suffer from the

following limitations:

Only interim reports

Do not give exact position

Historical costs

Impact of non-monetary reports ignored.


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Comparative statements.

Trend analysis.

Common sized statement.

Funds flow statement.

Cost-volume-analysis.

Ratio Analysis:

One of the techniques of analysis of financial statements is to calculate ratio. Ratio is the

numerical or an arithmetical relationship between two figures. It is expressed when one figure is

divided by another. If 4000 is divided by 10,000 the ration can be expressed as 4 or 2:5or 40%.

Absolute figures are valuable but they standing alone convey no meaning unless

compared with another. Accounting ration interrelationship. Which exist among various

accounting date? When relationship among various accounting data supplied by financial

statement are worked out, they are known as accounting ratios.

Classifications of Ratios:

Ratio may be classified in a number of ways keeping in view the particular purpose.

Ratio indicating profitability are calculate on the basis of the profit and loss account, those

indicating financial position are compared on the basis of the balance sheet and those which

operating efficiency or productivity or effective use of resources are calculate on the basis of

figures in the profit and loss account and the balance sheet. This classification is rather crude and

unsuitable to determine the profitability and financial position of the business. To achiever this

purpose effectively ratio may be classified as:

Profitability Ratios.

Turnover Ratios.


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Financial Ratios.

Leverage Ratios.

Profitability Ratios:

Profitability ratios are of outmost importance for a concern; these ratios are calculated to

enlighten the end results of business activities. Which is the sole criterion of the overall

efficiency of a business concern.

Turnover (Performance or Activity) Ratios:

These ratios are very importance for a concern to judge how well facilities at the disposal

of the concern are being used or to ratios are usually calculated on the basis of sales or cost of

sales and are expressed in integers rather than as percentage. Such ratios should be calculated

separately for each type of asset. Higher the turnover ratio, the profitability and use of capital or

resources will be. The following are the import turnover ratios usually calculated by a concern.

Financial Ratios:

These ratios are calculated to judge the financial position of the concern from long-term

as well as short-term solvency point of view. The following are the ratios, which are calculated

in the respect.

Leverage Ratio:

Leverage ratio to an increased means of accomplishing some purpose. In financial

management it refers to employment of funds to accelerate to owners. It may be favorable of or

unfavorable. An unfavorable leverage exists if the rate of return remains to however. It can be

used as a tool of financial planning by the finance manager.


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Financial Statements Analysis Of Limited

Introduction:

The basis for financial planning analysis and decision-making is the financial

information. Financial information is need to predict, compared decision-making-investment and

financial decision-making. The financial information of an enterprise is contained in the financial

statements or accounting reports.

Meaning and Concept of Financial Analysis:

The term financial analysis also known as analysis interpretation of financial

statements, refers to the process of determine financial strengths and weakness of the firm by

establishing strategic relationship between the items of the balance sheet, profit and loss account

and oilier operative data. Analysis financial statements, according to Metcalf and titard. Is a

process of evaluating the relationship between component parts of financial statement to obtain a

better understanding of firms position and performance?In the words of Myers, Financial

statement analysis is largely a study of relationship among the various financial factors in a

business as disclosed by a single set-of statement,and study of the trend of these (actors as

shown in a series of statement).

The purpose of financial analysis is to diagnose the information contained in financial

statement so as to judge the profitability and financial soundness of the firm, just like a doctor

examines ill patient by recording his body temperature, blood treatment, a financial analyst the

statement with various tools of analysis and interpretation financial statement is essential is to

bring out the mystery behind the figures in financial statements. Financial analysis is an


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attempt to determine the significance ad meaning of the financial statement date so that forecast

may be made of the future earnings, ability to pay interest and debt maturities (both current and

long-term) and profitability of a sound dividend policy.

Financial Statements:

Balance Sheet

Balance sheet is the most significant financial statement. It indicates the financial condition

or the state of affairs of a business at a particular moment of time. More specifically , balance

sheet contains information about resources and obligations of a business entity and about its

owners interest in the business at a particular point of time .Thus, the balance sheet of a form

prepared on March 31,2007 reveals the forms financial position on this specific data. In the

language of accounting balance sheet communicates information about assets, liabilities and

owners equity for the business firm as on a specific date. It provides a snapshot of the financial

position of the firm at the close of the firms accounting period.

Assets are valuable economic resources owned by the firm. The embody future benefits

and are measured in monetary terms. Assets represent:(a) stored purchasing powder(e.g., cash)

(b)money claims(e.g., receivable, stock)and (c)tangible and intangible items that can be sold or

used in business to generate earnings. Tangible items include land , building, plant, equipment or

stocks of materials and finished goods and all such other items which have physical substance.

Intangible items do not have any physical existence, but they have value to firm. They include

patents, copyrights, trade name or goodwill.

Firms obligations are called represent debts payable in the future by the firm to its

lenders and creditors. They represent economic obligations to pay cash or to provide goods or

services in some future period. Generally borrowing money or purchasing goods or services on


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credit creates liabilities .Example of liabilities are creditors, bills payable, wages and salaries

payable, interest payable, taxes payable bonds.

Financial Analysis:

The focus of financial analysis is on key in the financial statement and the significant

relationship that exists between them. The analysis of financial statement is a process of

evaluating the relationship between component parts of financial statement to obtain a better

understanding of the firm position and performance. The first task of the financial analyst is to

select the information relevant to the decision under consideration from the total information

contained in the financial statement. The second step is to arrange the information in away to

highlight significant relationship. The financial step interpretation and drawing of inference and

conclusions in brief financial analysis is the process of selection, relation and evolution.

Tools of financial analysis:

Fund flow statement

Trend analysis

Ratio analysis

Comparative statement

Common size statement analysis


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OBJECTIVES OF THE STUDY

The following are the objectives of study.

The primary objective of the study is to estimate the financial soundness of the

NATCO PHARMA LTD company.

The identify the relationship between various financial figures in the financial

statement of NATCO PHARMA LTD company.

To understand the present and future earning capacity of the company.

The possible of development in the future by making forecasts and preparing

budgets.

To derive the working experience of producing budgetary statements.

To offer limited directions cash management group to steer the organization to a

cash surplus company

Analyzing the budgetary estimations of the organization.


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IMPORTANCE OF THE STUDY

Studies of this type are useful to management, owner, investors, government, employees,

suppliers and society.

Studies of this type are useful to the research scholars who conduct in depth research.

Studies of this type are useful to the similar organization in assessing their financial

performance.


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METHODOLOGY

The study carried with the co-operation of the management who permitted to carry on the

study and provided the requisite date. The data is collected from the following sources.

Sources of Data

Primary Data

Secondary Data

Primary data:

Interviewing a few financial department heads. Officers and management bodies and staff

member of the company form of primary data.

Secondary data:

The information collected from

Annual report.

Executive and staff of financial accounting department.

Execution of other departments.


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LIMITATIONS OF THE STUDY

Every study will have its own limitations the present study is also carriers out with the

following limitations.

Analysis of the financial health is a conducted with the help of financial statements only.

Time and cost factor one another limitation.

The 7 weeks period is one of the constraints to make project much more qualitatively

Findings of the study are purely based on information provided by the company more

other non-financial factors were not considered for analysis

It depends upon support of top management


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CHAPTER-II

INDUSTRY PROFILE


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INDUSTRY PROFILE

A Global Pharmaceutical Industry Report:

The global pharmaceutical industry is a multinational industry that is a highly regulated,

capital intensive, and which is driven by large research and development expenditures. The

industry is primarily privately owned and is technologically sophisticated. The global

pharmaceutical market is forecasted to grow to US$ 842 billion in 2009, an equivalent CAGR of

6.9% over the next five years. The strong growth in the ten European market that joined the

European Union in 2004 will help to boost European sales over the next five years. Of the

leading product classes in 2005, cytostatics and angiogenesis-II inhibitors generated the greatest

year on year growth. There were sixteen blockbuster drugs in 2005, generating combined sales of

US$ 18.1 billion. The total pharmaceutical sales from the top ten companies accounted for more

than 40% of the total market.

Despite a growth rate of 7% down sliding from 2004 and the lowest since 1998, in 2005

the total global pharmaceutical sales reached US$602. Among the ten leading international

markets combined, which account for 81% of world wide sales, audited growth was just 5.7%,

down from 7.2% in 2004. Emerging markets such as China, South Korea, Brazil, Russia and

Turkey experienced double-digit growth signaling an important shift occurring in the

pharmaceutical industry. As growth in the mature markets flatten, industry attention is shifting to

smaller, developing markets that are doing exceptionally well. Many of these developing nations

are experiencing significant gross domestic product growth which helps finance the healthcare

systems, increase patient access and fuels the double digit growth. Pharmaceutical measures are

gearing up to the challenges of meeting the unmet needs of these markets.

Growth in the global pharmaceutical industry is expected to slow in 2007, marked by

slowing growth in the United States and other major markets. At the same time, pharmaceutical

industry growth in emerging markets is expected to reach double-digits, although these markets


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still represent a small percentage of global pharmaceutical sales. And 2007 will see continued

growth in both generic and specialty drugs.

The global pharmaceutical market is projected to increase between 5 and 6% in 2007 to

reach $735745 billion, according to IMS Health (Norwalk, CT). This pace is down from growth

of 67% in 2006. In the US and the five largest European markets, sales growth in 2007 is

projected at 45%, marking a historic low for the US market, according to IMS.

In several respects, 2007 marks an important inflection point for the global

pharmaceutical market, says Murray Aitkin, senior vice-president of Healthcare Insights at IMS

Health, in a company release. For the first time, the seven largest markets will contribute just

half of overall pharmaceutical growth, while seven emerging markets will contribute nearly 25%

of growth worldwide. These seven emerging markets (Brazil, China, India, Mexico, Russia,

South Korea, and Turkey) are expected to grow 1213% next year to $8590 billion, according

to IMS.

Indian Pharmaceutical Industry

Global pharmaceuticals market is of US$500bn growing at about 9% a year with North

America as the largest market accounting for almost half the total global sales. Europe and

Japan follows next. USA is also the largest generics market in the world estimated at around

US$17bn and growing at about 14%. India currently accounts for less Than 8% of the world's

pharmaceutical consumption and is the fifth largest producer of pharmaceutical products in the

world.

Pharmaceutical industry in India is highly fragmented with about 24,000 players around

330 in the organized sector and remaining in the unorganized sector. The industry comprises

large, medium and small-scale operators out of which some 330 companies' together account

for nearly 90 per cent of the domestic market, while the rest is accounted for by a large number
http://www.imshealth.com/http://www.imshealth.com/


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of small companies. The top ten companies make up for more than a third of the market. The

revenues generated by the industry are approximately US$ 7 bn and have grown at an average

rate of 10% over last five years. The Indian Parma industry accounts for about 1 % of the

world's Parma industry in value terms and 8% in volume terms. The largest formulation players

occupies market share of less than 6%. The industry manufactures about 400 bulk drugs and

almost the entire range of formulations. About a third of India's production - close to US $ 3.5

billion - is exported and exports are growing at 25% per annum. Half a billion dollars worth of

exports is to the US alone, while Germany, Russia, the UK, Canada, Italy and Japan are among

others. .

The signing of the Trade Related Intellectual Property Rights (TRIPS) agreement in

1995, which committed India to honor the WTO mandated product patent regime from 2005,

marked the beginning of a fresh chapter in the industry's evolution and India has finally

transited into product patent regime from process patent.


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The Top 10 Indian companies in terms of Turnover are

S.No Company Name Turn Over

(Rs core)

Turn Over

(US Mill)

1 Ranbaxy Laboratories Ltd. 4243.00 987.00

2 Cipla Ltd. 2055.00 478.00

3 Dr. Reddys Laboratories

Ltd.1839.00 428.00

4 Nicholas Piramal India Ltd. 1440.00 335.00

5 Aurobindo Pharma Ltd. 1341.00 312.00

6 GlaxoSmithKline

Pharmaceuticals Ltd.1242.00

289.00

7 Lupin Ltd. 1233.00 287.00

8 Cadila Healthcare Ltd 1172.00 273.00

9 Sun Pharmaceutical Indus.

Ltd.936.00 218.00

10Wockhardt Ltd. 767.00

178.0

0


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MAJOR PLAYERS

Cipla Limited

The Chemical, Industrial & Pharmaceutical Laboratories which came to be popularly known as

Cipla was founded by Dr K.A. Hamied in 1935. A Mumbai-based company currently Cipla is a

leading domestic Indian pharmaceutical company with a market share of about 5.85% and

crossed Rs20bn mark in revenues during FY04

Cipla's businesses are broadly divided into the following segments:

Formulations

Bulk drugs & Intermediates

Technology services

Ranbaxy Laboratories

Established in 1961, Ranbaxy Laboratories is India's largest pharmaceutical and ranks

9th worldwide as a generics drug manufacturer. The company went public in 1973 and began

the first of its several strategic alliances through a joint venture in Nigeria in 1977. The Ranbaxy

research foundation was initiated in 1985 and several more production facilities were in place by

1987. Its plant in Toansa, Punjab, which is the largest manufacturer of antibiotics, got US FDA

approval in 1988. By 2005, Ranbaxy had opened its third state-of-the-art R&D facility in India

and also entered the Canadian market. The company has strong growth rates with an expanding

international presence in the USA, UK, France, Germany, India, China, Brazil etc. Ranbaxy

leverages its Indian competitiveness to launch quality products into global markets.


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Ranbaxy Laboratories Limited has managed to lead the industry and strengthen its global

presence by successfully implementing the following Market Busine moves

Radically improve the productivity

Capitalize on second-order effects of shifts in constraint

Glen mark Pharmaceutical

Glen mark Pharmaceuticals Limited (Glen mark) was established in 1977 in Mumbai

(India) and was listed on the Indian bourses in 1999.The company is actively engaged in New

Drug Discovery Research, the major areas of research being inflammation and metabolic

disorders. Glen mark is a key player in the development, manufacturing and marketing of

Branded Generic and Generic Drug Formulations and API (active pharmaceutical ingredient). It

has presence in over ten therapeutic segments with a strong product portfolio in dermatology,

pediatrics, gynecological, anti-diabetes, and cardiovascular. Its API Manufacturing facilities are

located at Ankles war, Kurkumbh and Soapier and its generic formulation is located at Goa,

Baddi and Nasik.The Success factors of Glenmark include Leveraging strategic partnerships

and Product development with the API advantage.

GlaxoSmithKline (GSK)

It is the number one prescription generator in India. It is ranked first

by general/consulting physicians and general surgeons. With an overall

market share of 6.5 per cent, the company has held a leading position in

the Indian market for over last two decades. It enjoys the highest sales

force among global MNCs in India. GSK's coverage spans over 9 segments,with top ranking in 8 out of 12 doctor segments. It is the leader in anti-

infective, anti-inflammatory, analgesic, gastroenterological, ant allergic and

dermatological (corticosteroids) segments.


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Cadila Healthcare Limited

Cadila Healthcare Ltd., the flagship company of the Ahmedabad based Zydus Group, is

one of the top five pharmaceutical companies in the domestic formulations market, with a

market share of 3.85%. It is also a leading producer of bulk drugs. The company headed by Mr.

Pankaj Patel, Chairman& MD, comprises of nine subsidiaries and two IV companies namely

Zydus Atlanta and Sarabhai Zydus. While Zydus Atlanta manufactures intermediates of

Pantoprazole and conducts clinical research on new molecules, Sarabhai Zydus is the leading

animal health care company in India.

The Company's activities comprises of:

Manufacturing and marketing of domestic formulations.

Manufacturing bulk drugs and API

Contract manufacturing services


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CHAPTER-III

COMPANY PROFILE


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COMPANY PROFILE

NATCO Pharma Limited is an Indian enterprise molded by global aspirations. This hasalways demanded a preparedness and long- term organizational vision that can encompass the

turbulences and paradoxes of shifting terms and terrain's of business.

Beginning:

NATCO PHARMA was promoted by Mr. V.C. Nannapaneni in the year 1981 as a

Private Limited Company to be in the business of Research, Developing, Manufacturing and

Marketing of Pharmaceutical Substances and Finished Dosage forms for Indian and International

markets. NATCO PHARMA began operations in 1984 in Andhra Pradesh, India.

The Journey:

NATCO PHARMA was ranked 82nd in sales among Indian Pharmaceutical companies in

1994. NATCO also has the credit of being one of the largest contract manufacturers in India.

Some of the well-known companies like Ranbaxy, Dr. Reddy's Laboratories, and John Wyeth

etc. get their products manufactured.

Today:

NATCO PHARMA LIMITED, which began its operations as a single unit with 20

employees, today has four manufacturing facilities and employs around 1500 people. It has an

on-line data for analysis and decision making. Consistently ranked among the fastest growing

pharmaceutical companies in the country, Natco is utilizing its collective experience to kick start

its future plans as a global company. Respected for Quality, Performance, Care, Responsibility

and for creation and maximization of wealth for its Shareholders NATCO Pharma Limited, the

post-merger organization represents a strategic stage in NATCOs constant evolution as the

Complete Pharma Company.


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MISSION:

An Indian pharmaceutical industry, with significant international presence. Today it is

more innovative and active than ever across the entire spectrum in pharmaceuticals - from basic

research, bulk actives & intermediates to finished dosage forms and clinical trials. In the

emerging industry patterns of the twenty-first century, based on new technologies, NATCO

recognizes that innovative product development has to be complemented with cost effective

therapeutic solutions to address a better informed and a more demanding fraternity. To achieve

this, the company has harnessed all its strengths compact productive teams, modern facilities.

It commands over chemical technologies and economies of scale - into a synergistic organic

entity, continuously creating and nurturing high quality products and technologies. NATCO

believes that in the new order of symbiotic drug industry, it will emerge a powerful player with

specialized skills to address encompassing opportunities in pharmaceuticals. Attracting industry

leaders with the constancy of its purpose. NATCO's emergence from a major business re-

engineering exercise further fuels its ambition to be among the select top leaders in the industry

with the power to turn shared DREAMS into REALITY.

VISION

NATCO will be the global organization most respected for quality, service and social

commitment in health care and other areas of business.

NATCO is a group of companies associated with

1. NATCO PHARMA LIMITED

2. NATCO PHARMA DIVISION

3. NATCO CHEMICAL DIVISION

4. TIME CAP PHARMA LABS PVT.LTD

5. K.N. BIOTECH PVT.LTD

6. NATCO CHEMICAL AND R&D DIVISION


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MANUFACTURING FACILITIES

FORMULATION

PARENTERALS

BULK DRUGS

R&D

MANUFACTURING LOCATIONS:

KOTHUR:

The company has one manufacturing factory at Kothur, situated in 52, 80 sq. m site.

This factory has attained the ISO-9002, 14002 certification and it is engaged in the

manufacturing of tablets, capsules, liquids and drug syrups.

The biotechnology unit of NATCO is located at Kothur. This factory is one of the few

factories available in India, which manufactures fungal diastase for digestive image. It is

equipped with one of the finest equipments and technology.

MEKAGUDA:

This factory is a chemical division located at Mekaguda spread over 100 acres; this

factory incorporates the latest technology and immense capacities. It is one of the latest synthetic

bulk activities manufacturing units in India. This factory also possesses an effluent treatment

plant which adds miles in the direction of being environmentally friendly.

NAGARJUNA SAGAR:

This factory is a parental division located at Nagarjuna Sagar, which is around 180km

from Hyderabad. This factory is one of the biggest single unit manufactures for the

manufacturing of small and large volume parentarals.


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SANATH NAGAR:

This is chemical and R&D division located at Sanath nagar, Hyderabad. It is the only

manufacturing factory in India that manufactures the worlds best known anti depressant

fluoxetine, HCL. It also manufactures other bulk drugs including isosorbides etc.

INFRASTRUCTURE:

30,000 sq. ft of Laboratory Space.

30,000 sq. ft space available for further expansion.

7 Laboratories for synthesis

4 Laboratories for analytical method development and analytical instrumentation.

A Laboratory for natural actives and Biotech oriented research.

Centralized library housing over 3000 books, journals, periodicals etc.

Computer Database for on line literature search and patent scan.

RESEARCH AND DEVELOPMENT:

NATCO`s research and development effort is multi disciplinary. With the help of NATCO

research centre, centralized support, networking and integration of group requirements is

facilitated. The center has a core team of dedicated scientists backed by advanced facilities and

equipments.

Currently R&D is involved in the development of new controlled release drug delivery

system which include specialized gels, micro/nano sponges and liposomes technologies. The

company conducts research in peptide synthesis through fermentation process, microbiological

and through stain improvement techniques are also undertaken.


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NATCO has been sanctioned an assistance of Rs.130 lakhs under the SPONSERED

RESEARCH AND DEVELOPMENT PROGRAMME(SPREAD) by industrial credit and

investment corporation of India for carrying research projects in association with leading

National Research Labs.

NATCO conducts research in peptide synthesis along with Center for Cellular and

Molecular Biology, Hyderabad. NATCO works in close collaboration with Central Leather

Research Institute, Madras for the development or oral vaccines.

NATCO has entered in strategic alliance with Hyderabad Central University and Birla

Institute of Technology and Science, Pilani to conduct research in the field of Synthetic

chemistry.

NATCO out sources selective research and development project to Nizam`s Institute of

Medical Sciences, Hyderabad.

OPERATIONAL REVIEW & FUTURE OUTLOOK

NATCO is the current leader in Oncology segment. Generic formulations from NATCO

are launched in USA, Canada and few countries in EU.

FINISHED DOSAGE FORMULATION DIVISION

The finished dosage formulation unit has turned out exceptionally good

performance, basically driving by the oncology segment. The company continues to make in

road into the segment and now starts as number one in terms of revenues, from amongst the

Indian companies operating in the segment. Revenues from this segment have crossed Rs. 6

crores per month and are likely to grow further. During the year 2005-07 revenue from the

oncology segment alone grew to rupees 56 crores from rupees 33 crores during 2005. Revenues

from the formulation division grew to rupees 102 crores. The year 2006 witnessed the launch of

number of products both in oncology and non-oncology segments.

Some of the significant launches include BANDRONE (injection and tablets) and

BORTENNTS & PAMNAT injections in the oncology segments and anorest tablets in non-

oncology segments.


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The company has also launched TARANA, world class oral contraceptives for

women, with fewer side effects. It is a combination of drospironene 3mg and ethinyl estradlol

0.03mg. it is first international brand.

Finished Dosage Facility:

1. US FDA

2. UK, MHRA

3. TGA,AUSTRALIA

4. HEALTH CANADA

5. GERMAN HEALTH AUTHORITY

6. DANISH HEALTH MINISTRY

7. INFARMED PORTUGAL

8. GREECE HEALTH AUTHORITY

9. BYELORUSSIAN HEALTH MINISTRY

Bulk Activities Facility:

1. US FDA

2. GERMAN HEALTH AUTHORITY

3. TGA, AUSTRALIA

EXPANSION, GLOBALIZATION AND DIVERSIFICATION:

NATCO as a part of globalization plant finalized an investment proposal for setting up a

formulation unit in New Jersey, USA at an estimate cost of US $ 6 Million. The EXIM Bank of

India is likely to fund team loan finance equivalent to US $ 4.08 Million and the company will

invest the balance. The proposed US project is expected to be highly beneficial to the company

both financially and technologically, besides earning foreign exchange to our country.


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INTERNATIONAL BUSINESS:

NATCO pharma services markets are across the globe. Some of the countries where its

presence is felt are USA , UK, Canada, Columbia, Brazil, Spain, Denmark, Ireland, Greece,

Bangladesh, China , Hong Kong, Belgium, Russia, Cyprus, Pakistan, Italy, South Africa, Egypt,

Poland, Australia etc.

NATCO pharma is one of the first Indian companies to set up a unit in USA: NATCO

PHAMALLIC (New Jersey)

The exports have shown a study increase in previous years. NATCO pharma production

facility has received the World Health Organization (WHO) Certificate for maintaining good

manufacturing practice (GMP).

NATCO pharma has a distinction of launching the formulations of Samaritan the first Anti

Migraine for the first time in Asia. NATCO pharma is one of the first Indian Companies to have

achieved ISO 9002 certification for its quality standards.

NATCO pharma has pioneered and developed the concept of time-release dosage

preparation for which it has earned enormous goodwill in India. The company today is specially

recognized with time release preparation.

NEW PROJECTS

Future-Focused Organizations understand core competencies not to mean repetitive

activities that have meant past profits ;but the ability to concentrate in undisputed streams

towards new frontiers , the collective experience of a radical past.

To connect to respond to galvanize accumulated momentum on to terrain that unleashesits full potential. This is what the credo of NATCO demands. Into its second decade NATCO`s

new projects display tenacity whose fruitfulness thus far guarantees a rewarding future.


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Organizational Structure of NATCO Ltd.


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CHAPTER-IV

THEORETICAL FRAME

WORK


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THEORETICAL FRAMEWORK

Ratio Analysis:

A Ratio is the numerical or Quantitative relationship between two variables which are

compared RATIO ANALYSIS is essentially concerned with the calculation of relationships

which after proper identification and interpretation may provide information about the operations

and state of affairs of a business enterprise.

Financial ratio analysis is th e calculation and comparison of ratios which are derived

from the information in a companys financial statements.

Ratio analysis is the process of determining and interpreting numerical relationship based

on financial statements. A ratio is a statistical yard stick that provides a measure of the

relationship between variables of figures. This relationship can be expressed as a percentage on

as quotient. Ratio analysis is a powerful tool of financial analysis. In finance analysis ratio is

used as a bench mark of a firm.

The absolute accounting figures reported in the financial statements do provide a

meaning full understanding of the performance and financial position of the firm. Ratio help to

summarize large quantities of financial data and to make qualitative judgment about the firms

financial performances.

Ratio analysis is the systematic use of ratio to interpret the financial statements so that

strength and weakness of firm as well as its historical performance and current position can be

determined.


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Definition Of Ratio:

According to Prof. Spring field, Prof. Mass & Merriam defined formally as the indicted

quotient of two mathematical expression and as the relationship between tow o more

variables.

How To Select Ratio:

The utility of ratio is based on its selection. The ratio selected should match with the

purpose. It is better to use the standard ratio to avoid misinterpretation.

Interpretation:

It refers to evaluating the ratio in terms of laid out standards or norms. Identify the

possible needs of improvement o to arrest the decline in the performance of the company.

Financial ratio analysis groups the ratios into categories which tell us about different

facets of companys finances and operations. LIQUIDITY RATIOS which give a picture of a

companys short term financial situation or solvency.

Although financial ratio analysis i8s well-developed and the actual ratios are well-known,

practicing financial analysts often develop their own measures for particular industries and even

individual companies. Analysts will often differ drastically in their conclusions from the same

ratio analysis.

Ratio analysis is one of the most important powerful tools of financial analysis. It is the

process of establishing and interpreting various ratios.


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Financial ratios allow for comparisons

Between Companies

Between Industries

Between Different Time Periods For One Company

Between A Single Company And Its Industry Average

The ratios of firms in different industries, which face different risks , capital

requirements, and competition, are not usually comparable. The analysis is used to provide

indicators of past performance in terms of critical success factors of a business. This assistance

in decision-making reduces reliance on guesswork and intuition and establishes a basis for sound

judgment.

Significance Of Ratio Analysis:

Ratio analysis is of great help of commercial bankers, trade creditors and institutional

lenders. They judge the ability of borrowing enterprises buy observing various ratios like the

current ratio, acid test ratio turnover of receivables, Inventory turnover coverage of interest by

the level of earnings.

Ration analysis also helps long term creditors in knowing the ability of borrowing

enterprises to pay interest principle in case earning decline they find valuable ratios of total debt

to equity and total debt to total assets.


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Ratio analysis is of great use of the management in firms. Management of the firms are

interested in eve aspects of ratio as it is their overall responsibility to see that the resources of the

firm are used most effectively and efficiently.

Ratio analysis is effective tool of financial analysis available to a financial analyst. Ratio

analysis is one of the techniques of financial analysis. The other tools of financial analysis are:

1. Comparative Financial Statement Analysis .

2. Common Size Statement Analysis.

3. Trade Analysis.

4. Ratio Analysis.

5. Fund Flow Analysis.

6. Cash Flow Analysis.

Advantages Of Ratio Analysis:

Ratio analysis facilitates understanding of financial statements. It narrates

the whole story of changes in financial condition of the business.

It facilitates inter firm comparison to highlight the relative performers of

the organizations in different areas.

It helps in planning the operation of the organization during the period of

existence of the organization to develop certain norms or an changes in the norms passes

on the right message for the course of action to be followed.


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It facilitates management to concentrate at the area where its intervention

for better utilization of time and other resources.

Classification Of Ratios:

Ratio as tools of measuring liquidity, profitability, efficiency and financial position of a

company can be classified into different categories as follows.

Ratios Can Be Classified On The Basis Of Data Available As Follows:

Income or profit and loss statement ratios

Balance sheet ratios

Inter-Statement ratios

Classification On The Basis Of Purpose:

On the basis of purpose, ratios may be classified as under:

Profitability Ratios:

Profitability ratio is defined as a ratio which explains the profitability of a company

during a specific period of time. It explains how profitable a company is. These ratios can be

compared during different financial years to see the overall performance of a company. Some of

the profitability ratios are:

Gross Profit Ratio

Net Profit Ratio and Operating Net Profit Ratio

Expenses Ratio

Operating Ratio


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Net Profit to Networth Ratio

Net Profit to Fixed Assets Ratio

Return on Investment or Capital Employed

Return on Equity Capital

Earning per share

Activity Or Performance Or Turnover Ratios:

Accounting ratios that measure a firms ability to convert different accounts within their

balance sheets into cash or sales. Companies will typically try to turn their production into cash

or sales as fast as possible because this will generally lead to higher revenues. Some of the

turnover ratios are:

Stock or Inventory Turnover Ratio

Total Capital Turnover Ratio

Fixed Assets Turnover Ratio

Working Capital Turnover Ratio

Debtors Turnover Ratio

Creditors Turnover Ratio

Financial Ratios:

Liquidity ratios or short term financial solvency ratios:

Liquidity Ratio can be defined as a ratio that indicates what proportion of a companys

assets can be readily converted into cash in the short term. Some of the liquidity ratios are:

Current Ratio

Liquidity Ratio


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Solvency Ratios Or Long Term Financial Ratios

Debt-equity Ratio

Total Debt Ratio

Interest Coverage or Debt Service Ratio

Fixed Asset Ratio

Proprietary Ratio

Solvency Ratio or Debt to Total Funds Ratio

Capital Gearing Ratio

The following are some of the ratios that have been used in this for analyzing the

financial performance of the company with particular reference to NATCO PHARMA LTD

1. CURRENT RATIO:

This ratio indicates the firms commitment to meet short liabilities. The ideal current

ratio is 2:1 but a very high current ratio also not preferable. Current assets means assets that

with either be used up used or converted into cash with in a year time at normal operating

cycle. Current ratio is calculated by using below formula.

CURRENT ASSETS

CURRENT RATIO = ------------------------------------

CURRENT LIABILITIES

2. QUICK RATIO:-


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Another important ratio which determines the financial solvency positions of the

company is quick asset ratio. Which is also called acid test ratio or liquid ratio

This ratio is ascertained by comparing liquidity assets with current liabilities.

Liquid assets are those current assets other than stock and prepaid expenses. This

ratio is calculated as follows-

QUICK ASSETS

QUICK RATIO = ------------------------------------

CURRENT LIABILITIES

3. ABSOLUTE LIQUID RATIO:

It measures the short term debt paying ability. This ratio is obtained by dividing cash

and trade investment or marketable securities by current liabilities.

Cash in hand +cash at bank + marketable securities ABSOLUTE

LIQUID RATIO = ----------------------------------------------------------

Current liabilities


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4. GROSS PROFIT RATIO:

The gross profit is also known as gross margin ratio, trading margin ration etc. it is

expressed as a percent ratio. The difference between net sales and cost of goods sold is

known as gross profit. The ratio expresses the relationship between gross profit and net

sales.

Gross profit

GROSS PROFIT RATIO = ------------------ * 100

Net sales

5. NET PROFIT RATIO:

This ratio indicates relationship net profit and net sales. This ratio indicates net

margin earned on sales of Rs 100. this ratio helps in determining the efficiency with which

affairs of the business are being managed. This ratio is thus an effective measure to check

the profitability of business. This ratio is calculated as follows.

(Net profit or net loss)

NET PROFIT RATIO = ----------------------------- * 100


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Net sales

6. OPERATING EXPENSES RATIO:

The Operating Expenses Ratio is a yardstick of operating efficiency. This ratio is

computed by dividing operating expenses with sales. Operating Expenses include cost of

goods sold plus selling expenses, general expenses and administration expenses. The

operating ratio indicates the average aggregate variations in expenses where some of the

expenses may be in increased level while others may be failing. Operating expenses ratio is

effected to by a number of factors such as internal factors of the employee, managerial

efficiency and external factors.

Operating expenses

OPERATING EXPENSES RATIO: = ------------------------- * 100

Net sales

7. WORKING CAPITAL TURNOVER RATIO:

This is also known as working capital leverage ratio. This ratio indicates whether or

not working capital has been effectively utilized in making sales. In case a company can

achieve higher volume sales with relatively small amount of working capital, it is an

indication for the operating efficiency of the company. The ratio is calculated as follows

Cost of goods sold

WORKING CAPITAL TURNOVER RATIO = -------------------------------

net working capital

8. FIXED ASSETS TURNOVER RATIO:


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Fixed Assets Turnover Ratio is the relationship between sales or cost of goods sold

and fixed assets employed in a business. This is calculated by using the formula as follows

Net sales

FIXED ASSETS TURNOVER RATIO = -------------------

Fixed assets

9. INVENTORY TURNOVER RATIO:

Every firm ha to maintain a certain level of inventory of finished goods so as to be

able to meet the requirements of the business but the level of inventory should neither be too

high nor too low it is harmful to hold more inventory. The following is the formula used to

decide how much of inventory has to be maintained

Net sales

INVENTORY TURNOVER RATIO = -------------------

Inventory

10. TOTAL ASSETS TRUNOVER RATIO:

The ability of the firms to produce a large amount of sales for a given amount of

assets is the most important aspect of its pertaining performance. Unutilized and under


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utilized assets increase the firms need for financing as well as expenses for maintenance

and for further developments within the firms.

Sales

TOTAL ASSETS TRUNOVER RATIO = -------------------

Total assets

11. SOLVENCY RATIO:

It tells about the solvency position of the organization. How this ratio is effective

that much the organization is effective.

Outside Liability

SOLVENCY RATIO = ------------------------

Net Total Assets

12. PROPRIETARY RATIO:

It measures the conservation of capital structure and shows the extent of the share

holders funds in the total assets employed in the business. Where the total share holder


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funds is calculated by summing up the Equity Share Capital, Preference Share Capital

and Reserves and Surplus.

Total Share Holder Funds

PROPRIETARY RATIO = --------------------------------

Net Total Assets

13. FIXED ASSETS TO NETWORTH RATIO:

This ratio indicates the proportion of fixed assets financed by the owner. In other

worlds it indicates as to what extent the owners have invested funds on the fixed assets

which constitute the main structure of the business. This was find out by using the

formula

Fixed Assets

FIXED ASSETS TO NETWORTH RATIO = -------------------

Net worth

14. CURRENT ASSETS TO NETWORTH RATIO:

This ratio indicates the contribution of current assets to net sales. There is no

standard or ideal current assets turnover ratio. Yet the inference is that a high current


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assets turnover ratio is an indication of a better utilization of current assets on the other

hand, a low current assets turnover ratio suggests that the current assets have not been

utilized effectively. This is calculated by using the below formula

Current Assets

CURRENT ASSETS TO NETWORTH RATIO = -------------------

Net worth

15. CURRENT LIABILITIES TO NETWORTH RATIO:

This ratio provides the information about the long term creditors. This helps to

know the adequate coverage of long term creditors.

Current Liabilities

CURRENT LIABILITIES TO NETWORTH RATIO = ----------------------

Net worth

TREND ANALYSIS

This analysis is an important tool of horizontal financial analysis. This method is

immensely helpful in making a comparative study of the financial statement to several years.

Under this method trend percentage are calculated for each item of the financial statement taking

the figure of base years as 100. The starting year is usually taken as the base year. The trend


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percentage shows the relationship of each item with its preceding years percentage. This

percentage can also be presented in the form of index numbers showing relative change in the

financial date of certain period.

CHAPTER-V

DATA ANALYSIS & INTERPRETATION


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DATA ANALYSIS AND INTERPRETATION

1. CURRENT RATIO:

CURRENT ASSETS

CURRENT RATIO = -------------------------------

CURRENT LIABILITIES

CURRENT RATIO TABLE.


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Current Ratio Chart

Year Current assets Current liabilities Current ratio

2008-2009 10559941.4 3015885.75 3.50

2009-2010 11873060.8 2894194.65 4.10

2010-2011 8132150.86 3563115.73 2.28

2011-2012 7694390.22 4246346.79 1.81

2012-2013 6265800.79 3651369.29 1.71


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3.54.1

2.28 1.81 1.71

0

1

2

3

4

5

2008-20092009-2010-2010-20112010-20112011-20122012-2013

Interpretation of Current Ratio:

From the above table it is understood that current ratio has the highest as 4.1 in the

year 2009 2010 but in year 2011-2012 to 2012 2013 it decreased to 1.81 and 1.71. it is not

satisfactory to any organization. It is low when compared with current liabilities. Normally the

current ratio 2:1 is satisfactory to any organization. Is shows decreasing trend in current ratio.

2. QUICK RATIO:


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QUICK ASSETS

QUICK RATIO = ---------------------------------

CURRENT LIABILITIES

QUICK RATIO TABLE

Year Quick assets Current liabilities Quick ratio

2008-2009 10518356.4 3015885.75 3.48

2009-2010 11796674.9 2894194.65 4.08

2010-2011 8080191.86 3563115.73 2.26

2011-2012 7638733.22 4246346.79 1.79

2012-2013 6173567.64 3651369.29 1.69


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QUICK RATIO CHART

3.48

4.07

2.261.79 1.69

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Interpretation of quick ratio:

From the above we can see that in the year 2008 2009 quick ratio is 3.48 and next year

it is 4.07 which has been increase and which further decreased in next three year to 2.26 ,

1.79 and 1.69. it is a satisfactory state. The normal quick ratio which is satisfactory to

any organization is 1:1. Here it shows decreasing trend quick ratio.


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3. ABSOLUTE LIQUID RATIO:

Cash in hand +cash at bank + marketable securities

ABSOLUTE LIQUID RATIO = -------------------------------------------------------------

Current liabilities

Absolute liquid ratio table


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ABSOLUTE LIQUID RATIO CHART

Year

Cash in hand cash

at bank

Marketable

securities

Current

liabilities

Absolute liquid

ratio

2008-2009 3697929.51 3015885.75 1.22

2009-2010 3257976.39 2894194.65 1.12

2010-2011 641360.83 3563115.73 0.18

2011-2012 509561.61 4246346.79 0.12

2012-2013 339748.38 3651369.29 0.09


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1.221.12

0.180.12

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2008-2009 2009-2010 2010-2011 2011-2012

Interpretation of Absolute Liquid Ratio:

From the above it can be seen that the Absolute Liquid Ratio is decreasing from year to

year that is from 1.22 in year 2008 2009 to 0.09 in year 2009 2010. This shows the company

is able to repay its short term liabilities from year to year.


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4. GROSS PROFIT:

Gross profit

GROSS PROFIT RATIO = ------------------ * 100

Net sales

GROSS PROFIT TABLE:

Year Gross profit Net sales Gross profit ratio

2008-2009 2068323.01 32455669.3 6.37

2009-2010 2409115.31 25629192.5 9.39

2010-2011 3104152.6 22620341.2 13.72

2011-2012 4436319.59 27301171.4 16.25

2012-2013 5075056.44 29417718.8 17.25


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GROSS PRIFIT CHART

6.379.39

13.7216.25 17.25

0

2

4

6

8

10

12

14

16

18

20

2009 2009-2010 2010-2011 2011-2012 2012-2013

Interpretation of Gross Profit Ratio:


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The gross profit ratio in year 2008 - 2009 is 6.37. 2007 2013 it increased to 9.39,

13.72, 16.25, 17.25. To improve gross profit the company should decrease its costs and increase

it sales.

5. OPERATING EXPENSES:

Operating expenses

OPERATING EXPENSES RATIO: = ------------------------- * 100

Net sales

OPERATING EXPENSES RATIO TABLE

Year Operating cost Net Sales Operating ratio

2008-2009 4636372.03 32455669.3 0.14

2009-2010 47414085.71 25629192.5 1.85

2010-2011 4163461.98 22620341.2 0.18

2011-2012 4741982.29 27301171.4 0.17

2012-2013 4322485.52 29417718.8 0.14


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OPERATING EXPENSES RATIO CHART


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0.14

1.85

0.18 0.17 0.140

0.5

1

1.5

2

2008-20092009-20102010-20112011-20122012-2013

Interpretation of operating expenses ratio:

The operating expenses ratio is 0.14 in 2008-2009 and 2009-2010 increases the ratio

very high is 1.85 and operating ratio are 0.18, 0.17, 0.14 in respect of 2010-2011, 2011-

2012, 2012-2013.


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6. WORKING CAPITAL TURNOVER RATIO :

Cost of goods sold

WORKING CAPITAL TURNOVER RATIO = -------------------------------

net working capital

WORKING CAPITAL TURNOVER RATIO TABLE


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YearCost of goods

sold

Net working

capital

Working capital

turnover ratio

2008-2009 30387345.3

7544056.7

4.03

2009-2010 23220067.2 8978865.2 2.59

2010-2011 19516189.6 4569034.13 4.28

2011-2012 22864851.9 3448044.43 6.63

2012-2013 24342661.4 2614431.5 9.31


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WORKING CAPITAL TURNOVER RATIO CHART

4.032.59

4.286.63

9.31

0

2

4

6

8

10

2008-

2009

2009-

2010

2010-

2011

2011-

2012

2012-

2013

Interpretation of working capital turnover ratio:

The working capital turnover ratio of NATCO PHARMA LTD is showing increasing

trend from 2009 -2010 to 2012 2013 that are 2.59, 4.28, 6.63 and 9.31 respectively.


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7. SOLVENCY RATIO:

Outstanding Liability

SOLVENCY RATIO = ------------------------

Net Total Assets

SOLVENCY RATIO TABLE

Year Outstanding Liabilities Net Total Assets Solvency Ratio

2008-2009 3015885.75 13069084.9 0.23

2009-2010 2894194.65 13738148.2 0.21

2010-2011 3563115.73 7670118.9 0.46

2011-2012 4246346.79 6007236.8 0.71

2012-2013 3651369.29 16512877 0.22


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SOLVENCY RATIO CHART:

0.23 0.210.46

0.71

0.220

0.10.2

0.30.40.50.60.70.8

2008-

2009

2009-

2010

2010-

2011

2011-

2012

2012-

2013

Interpretation of Solvency Ratio:

From the above the solvency ratio is 0.23 in the year 2008-2009 and decreased 2009-

2010 the ratio is 0.21 and increase to 0.46 to 0.71 in year 2010-2011, 2011-2012 and 2012-2013

is 0.22. it very low value of the compare all previous years


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9. INVENTROY TO WORKING CAPITAL:

Inventory

INVENTORY TO WORKING CAPITAL = ---------------------

Working capital

INVENTROY TO WORKING CAPITAL TABLE

Year inventory working capitalInventory to working

capital

2008-2009 41584 7544056.7 0.005

2009-2010 76385.9 8978865.2 0.008

2010-2011 51959 4569034.13 0.011

2011-2012 55657 3448044.43 0.016

2012-2013 9223.15 2614431.5 0.035


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INVENTROY TO WORKING CAPITAL CHART


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780.47

335.52435.35 490.52

318.95

0

100

200

300

400

500

600

700

800

900

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Interpretation of inventory working capital ratio:

The inventory working capital ratio are increased to 0.005, 0.008, 0.011, 0.016, 0.035 in

2008 -2009, 2009-2010, 2010-2011,2011-2012,2012-2013.

10. CURRENT ASSETS TO FIXED ASSETS:


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Current assets

CURRENT ASSETS TO FIXED ASSETS = ----------------------------

Fixed assets

CURRENT ASSETS TO FIXED ASSETS TABLE

Year Current assets Fixed assets Current assets to fixed

assets

2008-2009 10559941.4 3076985.1 3.43

2009-2010 11873060.8 3235512.1 3.67

2010-2011 8132150.86 3311142.1 2.46

2011-2012 7694390.22 3321828.1 2.32

2012-2013 6265800.79 9313620.1 0.67


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CURRENT ASSETS TO FIXED ASSETS CHART

3.43 3.67

2.46 2.32

0.67

0

0.5

1

1.5

2

2.5

3

3.54

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Interpretation of current assets to fixed asset

The current asset to fixed assets ratio is 3.43 in year 2006 -2007 and increase ratio is 3.67

in year of 2009-2010 and 2010 -2011, 2011-2012,2012-2013 are 2.46, 2.32, 0.67 it low value

compare the previous years.


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11 FIXED ASSETS TURNOVER RATIO:

Net sales

FIXED ASSETS TURNOVER RATIO = -------------------

Fixed assets

FIXED ASSETS TURNOVER RATIO TABLE

Year Net Sales Fixed Assets Fixed Assets Turnover Ratio

2008-2009 32455669.3 3076985.1 10.55

2009-2010 25629192.5 3235512.1 7.92

2010-2011 22620341.2 3311142.1 6.83

2011-2012 27301171.4 3321828.1 8.22

2012-2013 29417718.8 9313620.1 3.16


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FIXED ASSETS TURNOVER RATIO CHART

10.557.92 6.83

8.22

3.160

2

4

6

8

10

12

2008-20092009-2010 2010-2011 2011-20122012-2013

Interpretation of Fixed Asset Turnover Ratio:


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From the above we can see that fixed assets turnover ratio started reducing from the

year 2008 2009 to 2009 2010 as 10.55, 6.83. and next year slowly increased 8.22 in 2011

2012 and 2012 2013 reduced the fixed assets least of from above years it is 3.16.

12. INVENTORY TURNOVER RATIO:

Net sales

INVENTORY TURNOVER RATIO = -------------------

Inventory

INVENTORY TURNOVER RATIO TABLE


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INVENTORY TURNOVER RATIO CHART

Year Net Sales InventoryInventory Turnover

Ratio

2008-2009 32455669.3 41584.23 780.47

2009-2010 25629192.5 76385.9 335.52

2010-2011 22620341.2 51959.5 435.35

2011-2012 27301171.4 55657.65 490.52

2012-2013 29417718.8 9223.15 318.95


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780.47

335.52435.35 490.52

318.95

0

100

200

300

400

500

600

700

800

900

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Interpretation of inventory turnover ratio:

In the year 2008 2009 the inventory turnover ratio is 780.47 which has been reduced to

335.52 in year 2009 -2010 and increased to 435.35 and 490.52 in years 2010 -2011 and 2011 -

2012 again decreased to 318.95 in year 2012 2013. So the company should maintain certain

level of inventory of finished goods so as to be able to meet the requirement s of the business.


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13. TOTAL ASSETS TURNOVER RATIO:

Sales

TOTAL ASSETS TRUNOVER RATIO = -------------------

Total assets

TOTAL ASSETS TURNOVER RATIO TABLE

Year Sales Total Assets

Total Assets Turnover

Ratio

2008-2009 3245576.3 1524620.3 2.13

2009-2010 2562919.5 1670287.7 1.53

2010-2011 2262036.2 1303750.8 1.74

2011-2012 2730117.4 1261261.6 2.16

2012-2013 2941778.8 1716854.2 1.71


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TOTAL ASSETS TURNOVER RATIO

2.13

1.53

1.742.16

1.71

0

0.5

1

1.5

2

2.5

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Interpretation of Total Assets Turnover Ratio:

From the above the Total Assets Turnover Ratio decreased from the year 2008 2009 to

2009 -2010 from 2.13 to 1.53 and increased to 1.74 to 2.16 in year 2010 -2011 to 2011 -2012 and


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again reduced to 1.71 in year 2012 2013. This should not be decreased further; this has to be

strictly controlled.

TREND ANALYSIS:

In financial analysis the direction of changes over a period of year is of crucial importance.

Time series or trend analysis of ratio indicates the direction of change. This kind of analysis is

particularly applicable to the items of profit and loss account.

For trend analysis, the use of index number in generally advocated. Procedure followed is to

assign the number 100 to items of the base year and to calculate percentage changes in each item

of other years is relation to the base year. This procedure may be called as Trend-percentage

Method.


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Trend analysis of NATCO PHARMA LTD as on 2008-2009to 2009-2010

2008-2009 % 2009-2010 %

Shareholders funds:

Share capital 12,50,000 100 1250000 100

Reserve & surplus 1,96,91,358 100 30066602 152.6

Loan funds

Secured loan 1,20,35,339 100 9998319 83.07

Un secured loan 3,38,887 100 822089 242.2

Current liabilities

Current liabilities 3,89,71,451 100 35239150 90.42

provisions 33,887 100 304402

Other liabilities

Differed tax liabilities 4,69,940 100 738616 157.17

Total funds 73095862 100 78419178 107.28

Application of funds

Net fixed assets 2672721 100 2992948 111.9

Investment 3217235 100 3398232 105.6Current Assets,loan&

Advances

Inventories 65210526 100 65455962 100.3

Sundry debtors 1073219 100 1129316 105.2

Cash &bank Balance 270534 100 278359 102.8

Other current assets

Loan &Advances 6516275 100 6164361 94.5

Total assets 73095826 100 78419178 107.28


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2009-2010 % 2010-2011 %

Shareholders funds:

Share capital 1250000 100 1250000 100

Reserve & surplus 30066602 100 18201314 600.5

Loan funds

Secured loan 9998319 100 9899074 99.0

Un secured loan 822089 100 728393 88.6

Current liabilities

Current liabilities 35239150 100 42318514 120.08

provisions 304402 100 270400 88.8

Other liabilities

Differed tax liabilities 738616 100 888223 120.2

Total funds 78419178 100 79805228 101.7


Net fixed assets 2992948 100 2782349 92.9

Investment 3398232 100 3408235 100.2

Current Assets,loan&

Advances

Inventories 65455962 100 63432772 96.9

Sundry debtors 1129316 100 1491194 132.0



Loan &Advances 6164361 100 6231391 101.08

Total assets 78419178 100 76680573 97.7


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2010-2011 % 2011-2012 %

Shareholders funds:

Share capital 1250000 100 1250000 100

Reserve & surplus 18201314 100 16323525 89.6

Loan funds

Secured loan 13023729 100 10024658 76.9

Un secured loan 728393 100 554366 76.1

Current liabilities


provisions 270400 100 224605 83.06

Other liabilities


Total funds 76680573 100 71227579 92.8


Net fixed assets 2782349 100 2723496 97.8

Investment 3408235 100 3097352 105.1

Current Assets,loan&Advances

Inventories 63432772 100 57553467 90.7

Sundry debtors 1491194 100 1270217 123.4




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Loan &Advances 6231391 100 6315616 101.3

Total assets 76680573 100 71227579 92.8


2011-2012 % 2012-2013 %

Shareholders funds:

Share capital 1250000 100 1250000 100

Reserve & surplus 16323525 100 22145728 135.6

Loan funds

Secured loan 10024658 100 9827415 98.03

Un secured loan 554366 100 341384 61.5

Current liabilities


provisions 224605 100 341384 151.9

Other liabilities


Total funds 71227579 100 71043728 99.7


Net fixed assets 2723496 100 2532624 92.9

Investment 3097352 100 3113379 100.5

Current Assets,loan&Advances

Inventories 57553467 100 63260320 109.9

Sundry debtors 1270217 100 1231792 96.9

Cash &bank Balance 267431 100 263447


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Loan &Advances 6315616 100 641769 101.6

Total assets 71227579 100 71043728 99.7

Interpretation:

The share capital is same from 2009 to 2013. The trend has not changed. The secured loans

have been decreased in the year 2009 to2013.the current liabilities and provisions have been

fluctuating in all the years. The total funds and net fixed assets fluctuating all the years. The

current assets, loans and advances have been increasing all the years. The deferred tax liability

have been fluctuating in all years.


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CHAPTER-VI

FINDINGS, SUGGESTIONS & CONCLUSIONS


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FINDINGS

The company in spite of its expansion programs has not been concentrating on the sales

figure, which has been reflected in each and every aspect of the management.

The capital structure of the company seems to be unleveled.

The company has been maintaining huge amounts in the form of liquid its assets.

The inventory turnover ratio is very high during the year 2008-2009 is 780.47.

The working capital turnover ratio is 9.31 in year 2012 -2013 which is high compared

to previous years.

The cash position ratio during the year 2012 2013 is 0.09 which has been decreased

as compared to previous year ratio 0.12.

The company is going in losses from year to year it has not taken any measures to

overcome its losses.


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SUGGESTIONS

From the personal observations and the above analysis various subjective

recommendations which can be given to the company as follows:

It is the right time to cut down the employees force, by giving them voluntary

retirement or by any other method and give chance to new guns.

Use better &high tech methods of advertising, so that more &more subscriber attract

towards NATCO PHARMA LTD.

Should try to decrease expenditure especially in the employees remuneration benefit

area.

Should increase the services quality as well as better customer care services

Provide better customer care service and provide them maximum satisfaction.


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CONCLUSION

From the above finding and analysis various inferences can be drawn out which are as

follows:

NATCO PHARMA LTD is having highest current ratio which represents that NATCO

PHARMA LTD is having very good liquidity position and can pay off their short term

liability very easily as they are maintaining huge cash reserves.

From Earning per Share as the companys earning potential have been increased

irrespective of the increase in competition in the Indian telecom market.

NATCO PHARMA LTD are facing the capital problem because of which financial

Position of NATCO PHARMA LTD are affected.

NATCO PHARMA LTD is paying more taxes. Because of paying more taxes, financial

Position of NATCO PHARMA LTD is affected.


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Bibliography

Books:

Title of book Author

Financial management - Shashi K.

Gupta

Financial management - Prasanna chandra

Financial management - I.M.Pandey

Advanced accountancy - S.N.Maheswari
http://www.tutorsonnet.com/

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