PROJECT REPORT

ON

WORKING CAPITAL MANAGEMENT

OF

HETERO DRUGS LTD,ERRAGADDA, HYDERABAD.

Submitted in partial fulfillment of the requirement for the award of the degree of

POST GRADUATION DIPLAMO IN MANAGEMENT

To the

BUSINESS SCHOOL

INTEGRALINSTITUTE OF ADVANCED MANGMENT

VISAKAPATANAM

By

K.VINEELA MAHESWARI

H.T.NO:-350033

INTEGRALINSTITUTE OF ADVANCED MANGMENT

VISAKAPATANAM -530017

MR.SRIMANTH

CO-ORDINATOR
 CERTIFICATE

This is to certify that K. VINEELA MAHESWARI, H.T.No: 350033 is a bonafide

student of PGDM in this college during the academic year 2022-2023. He has done the
project work entitled “WORKING CAPITAL MANAGEMENT OF HETERO
DRUGS LTD,ERRAGADDA, HYDERABAD” and completed the work in partial
fulfillment of the requirement for the award of POST GRADUATION DIPLAMO IN
MANGMENT (PGDM) course, as per the norms stipulated by the
INTEGRALINSTITUTE OF ADVANCED MANGMENT,VISAKAPATANAM

.The work is original and has not been submitted for any other degree or diploma in part
or in full.

MR. SRIMANTH

CO-ORDINATOR

INTEGRALINSTITUTE OF ADVANCED MANGMENT

VISAKAPATANAM -530017
CERTIFICATE

This is to certify that the project entitled “WORKING CAPITAL MANAGEMENT

OF HETERO DRUGS LTD, ERRAGADDA, HYDERABAD” has been prepared by
K. VINEELA MAHESWARI, H.T.No:350033 under my supervision. He has
completed this project work as per the rules prescribed by the INTEGRALINSTITUTE
OF ADVANCED MANGMENT, VISAKAPATANAM, for the partial fulfillment of
POST GRADUATION DIPLAMO IN MANGEMENT. It is a bonafide work done by
him and has not been submitted either in part or full for any other Degree or Diploma of
any other University.

(MR.SRIMANTH)

PROJECT GUIDE
 DECLARATION

I hereby declare that the Project entitled “WORKING CAPITAL MANAGEMENT

OF HETERO DRUGS LTD, ERRAGADDA, HYDERABAD” is a bonafide work
done by me as a part of requirement of POST GRADUATION DIPLAMO IN
MANGEMENT (PGDM) at INTEGRALINSTITUTE OF ADVANCED
MANGMENT, VISAKAPATANAM.

I also declare that this is the original work done by me and no part of work has been
submitted either in part or full for any Degree or Diploma of any other university or
institution.

(K.VINEELA MAHESWARI)

H.T.NO.350033
 ACKNOWLEDGEMENTS

I take this opportunity to express my thanks to HETERO DRUGS LTD,

ERRAGADDA, HYDERABAD, who gave me this opportunity to carry out my project
in their organization.

I am very thankful to Manager, SVV STYANARAYANA REDDY GARU for

his valuable guidance and their constructive criticism, which were very helpful for the
completion of the project work in this organization.

I sincerely thank MR.SRIMANTH, co-ordinator, , INTEGRALINSTITUTE OF

ADVANCED MANGMENT, VISAKAPATANAM, for giving support and
encouragement during my project work in an efficient manner.

I sincerely thank to the efforts of MR.SRIMANTH, faculty member of

INTEGRALINSTITUTE OF ADVANCED MANGMENT, VISAKAPATANAM, for
guiding and supporting me in completion of this project.

This project report is dedicated to my parents who are the source of support and
encouragement, in every aspect of my life, education and career.

K . VINEELA MAHESWARI

H.T.NO.350033
CONTENTS

S.NO CHAPTER Page No

I INTRODUCTION 01-08

II RESEARCH METHODOLOGY 09-13

III COMPANY PROFILE 14-31

IV DATA ANALYSIS AND INTERPRETATION 32-51

V CONCLUSIONS AND SUGGESTIONS 52-53

BIBLIOGRAPHY 54
 CHAPTER - I

INTRODUCTION

INTRODUCTION
Every business needs funds for two purposes, for its establishment and to carry outs
its day-to-day operations. Long term funds are required to create production facilities
though purchase of fixed assets such as plants and machinery, land, building,
furniture, etc. investments in these assets represent that part of firm’s capital which is
blocked in a permanent or fixed basis funds are also needed for short-term purposes
for that purchase of raw marital, payment of wages and other day-to-day expenses,
etc. these funds are known as working capital. In simple words, working capital refers
to that part of the firm’s capital which is required for financing short term or current
assets such as cash, marketable securities, debtor and inventories.

In the words of SHUBIN, “working capital is the amount of funds necessary to cover
the cost or operating the enterprise”.

According to GENESTENBERG, “circulating capital means current assets of a

company that are changed in the ordinary course of business from one form to
another form, as per example from cash to inventories, inventories to receivables,
receivables into cash”.

In simple words, working capital refers to that part of the firm’s capital which is
required for financing short term or current assets such as cash, marketable securities,
debtors and inventories. Funds, thus, invested in current asst keep revolving fast and
are being constantly converted into cash and this cash flows out again in exchange for
other current assets. Hence, it is also known as revolving or circulating capital or
short term capital.

That working capital refer to that difference between current assets and current
liabilities, it is excess of current assets over current liabilities.

Working capital= current assets-current liabilities

 Operating Cycle of Working Capital

It is clear that working capital is required because of the time gap between the sales
and their actual realization into cash. This time gap is technically called as “Operating
cycle” of the business.

In case of a manufacturing company the operating cycle is the length of time

necessary to complete the following cycle of events.

 Conversion of cash into raw materials.

 Conversion of raw material into work in progress.

 Conversion of work in progress into finished goods.

 Conversion of finished goods into accounts receivable, and

 Conversion of account receivable into cash.

This cycle will be repeated again and again. The speed with which the working capital
completes one cycle determines the requirements of working capital Longer the period of
the cycle larger is the requirement of working capital.

The operation cycle of manufacturing business can be shown as the following chart.

Accounts
Receivables

Cash Finished
Goods

Raw Materials Work in

Progress
Need of working capital management

The need for working capital gross or current assets cannot be over emphasized. As
already observed, the objective of financial decision making is to maximize the
shareholders wealth. To achieve this, it is necessary to generate sufficient profits can be
earned will naturally depend upon the magnitude of the sales among other things but
sales cannot convert into cash. There is need for working capital in the form of current
assents to deal with the problem arising out of lack of immediate realization of cash
against goods sold. Therefore sufficient working capital is necessary to sustain activity.
Technically this is refers to operating or cash cycle. If the company has certain amount of
cash, it will require for purchasing the raw material may be available on credit basis.

Management of working capital

Guided by the above criteria, management will use a combination of policies and
techniques for the management of working capital. These policies aim at managing the
current assets (generally cash and cash equivalents, inventories and debtors) and the short
term financing, such that cash flows and returns are acceptable.

1. Cash management: cash management identify the cash balance which allows for the
business to meet day to day expenses, but reduces cash holding costs.

2. Inventory management: inventory management identifies the level of inventory

which allows for uninterrupted production but reduces thee investment in raw material
and minimized costs and hence increased cash flows.

3. Debtors management: debtors management identify the appropriate credit policy

i.e. credit terms which attract customers, such that any impact on cash flows and the cash
conversion cycle will be offset by increased revenue and hence Return on capital.

4. Short Term Financing: short term financing identify the appropriate source of
financing, given the cash conversion cycle.
 CLASSIFICATION

Working capital may be classified in to two ways:

1. On the basis of concept

2. On the basis of time

ON THE BASIS OF CONCEPT

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital management

1. Gross working capital

Gross working capital refers to the firm’s investment in current assets. Current assts are
the assets which can be convert into cash within year includes cash, short term securities,
debtors, bills receivable and inventory.

2. Net working capital

Net working capital to the difference between current assets and current liabilities.
Current liabilities are those claims of outsiders which are expected to mature for payment
within an accounting year and include creditors, bills payable and outstanding expenses.
Net working capital can be positive or negative efficient working capital management
required that firms should operate with some amount of net working capital, the exact
amount varying from firm to firm and depending, among other thins; on the nature of
industries, net working capital is necessary because the cash out flows and inflows do not
coincide. The cash out flows resulting from payment of current liabilities are relatively
predictable. The cash inflow are however difficult to predict. The more predictable the
cash inflows are the less net working capital will be required.
The concept of working capital was, first evolved by Karl Marx. Marx used the term
‘variable capital’ means outlays for payrolls advance to workers before the completion or
work. He compared this with ‘constant capital’ which according to him in nothing but
‘dead labor’. This ‘variable capital’ is nothing wage fund which remains blocked in terms
of financial management, in working process along with the other operating expenses
until it is released through sale of finished goods although Marx did not mentioned that
workers also gave credit to the firm by accepting periodical payment of wages which
funded a portioned of W.I.P. the concept of working capital, as we understand today was
embedded in his ‘variable capital’.

ON THE BASIS OF TIME:

On the basis of concept working capital can be classified as gross working capital and net
working capital. On the basis of time, working capital may be classified as:

1. Permanent working capital

Permanent or fixed working capital is minimum amount which is required to ensure

effective utilization of fixed facilities and for maintaining the circulation of current
assets. Every firm has to maintain a minimum level of raw material, work-in-process,
finished goods and cash balance. This minimum level of current assets is called
permanent or fixed working capital as this part of working is permanently blocked in
current assets. As the business grow the requirement of working capital also increase due
to increase in current assets.

2. Temporary working capital

Temporary or variable working capital is the amount of working capital which as

required to meet the seasonal demands and some special exigencies. Variable working
capital can further be classified as seasonal working capital and special working capital.
The capital required to meet the seasonal need of the enterprise is called seasonal
working capital. Special working capital is the part of working capital which is required
to meet special exigencies such as launching of extensive marketing of conducting
research, etc. temporary working capital differs from permanent working capital in the
sense that is required for short periods and cannot be permanently employed gainfully in
the business.

Objectives

The primary objective of working capital management is to ensure that sufficient cash is
available to:

1. Meet day to day cash flow needs.

2. Pay wages and salaries when they fall due

3. Pay creditors to ensure continued suppliers of goods and services

4. Pay government taxation and providers of capital dividends

5. Ensure the long term survival of the business entity.

It is critical to understand that profits is not cash. A company can be very profitable but it
can collapse simply because it has insufficient cash/liquidity to pay its relevant bill (as
stated above)

Always remember that any company liabilities are settled with cash and not by profit

Use of working capital

Working capital is the measure of a company’s ability to pay off its short term debt is the
deference between current assets and current liabilities.

Working capital is used to finance the following:

 Construction, renovation or improvements to the leasehold.

 To but furniture, fixtures, machinery, or equipment.

 To replenish inventory.
  For day to day operations of a business and payroll (expect owner’s salary).

 For down payment assistance on the purchase of real estate for the business.

Sources of working capital

There are typically five components of working capital that are important for a small
business to understand and monitor.

1. Cash and equivalents represent the most liquid form of working capital. Every
small business should understand the time dependency between cash inflow and
outflow, when peak cash is needed and the level of borrowing needed to meet
shortfalls of cash.

2. Accounts receivable represents the credit that the business extends to its
customers. Small businesses need to know the amount of accounts receivable
reasonable relative to sales, how rapidly are receivables being collected, and the
slow paying customers.

3. Inventory can be as much as 50 percent of a small business’s current assets. A

small business should know whether the levels are reasonable compared with sales
and how fast is the inventory turnover relative to industry trends.

4. Accounts payable is the amount of money owned suppliers. Every small business
should know whether the level is reasonable relative to purchase and if the
payment policy negatively impacts the business’s credit rating.

5. Accrued expenses and taxes payable are time obligations of the business and
represent a future cash outflow.
FACTOS DETERMINING THE WORKING CAPITAL
REQUIREMENTS

1. NATURE AND SIZE OF BUSINESS

The size of business also has an important impact on its working capital needs. Size
may be measured in terms of the scale of operations. A firm with large scale of
operations will need working capital than small term. The working capital
requirement of a firm are basically influenced by the nature of business trading and
financial firm has very less investment in fixed assets, but requires a large sum of
money to be invested in working capital.

2. TECHNOLOGY AND MANUFACTURING POLICY

The manufacturing cycle starts with the purchase and use of raw materials and completes
with the production of finished goods. Longer the manufacturing cycle, larger will be the
firm working capital requirements. An extended manufacturing time span means a larger
tie-up of funds in inventories. Thus if there are alternative technologies of manufacturing
a product, the technological process with the shortest manufacturing cycle may be
chooses.

3. FIRMS CREDIT POLICY

The credit policy of the firm affects the working capital by influencing the level of
debtors. The credit term to be granted to customers may depend upon the forms of the
industry to which the firm belongs.

4. AVAILABILITY OF CREDIT

Creditors also affect the working capital requirement of a firm. A firm will need less
wronging capital if liberal credit terms are available to it.
5. OPERATING EFFICIENCY

The operating efficiency of the firm relates to the optimum utilization of resources at
minimum costs. The firm will be effectively contributing in keeping the working
capital investment at a lower level if it is efficient to controlling operating costs and
utilizing current assets. The use of working capital is improved and pace of a cash
conversion cycle is accelerated with operating efficiency.

6. BUSINESS FLUCTUATIONS

Most firm experience seasonal and cyclical fluctuation in the demand for their
products and services. This business variation effects the working capital
requirements especially the temporary working capital requirement of the firm. When
there is an upward swing in the economy, sales will increase and vice-versa.

7. PRODUCTION POLICY

A steady production policy will cause inventories to accumulate during the off-season
periods and the firm will be exposed to greater inventory cost and risk. Thus, if the
cost and risks of maintaining a constant production schedules are high, the firm may
adopt the policy of varying its production schedules in accordance with change in
demand.

8. GROWTH AND EXPANSION ACTIVITIES

The working capital needs of firm increases it growth in terms of sales of fixed assets.
It it is difficult to precisely determine the relationship between volume of sales and
the working capital needs. The critical fact however that is the need for increased
working capital funds does not follow growth in business activities but precedes it.
 CHAPTER - II

RESEARCH METHODOLOGY
 RESEARCH METHODOLOGY

Good research is carefully planned and is conducted professionally and generates

dependable data. Data generated from good research can be used reliably for managerial
decision making.

1. The research should be described in details. Each step in the research process
should be explained in details so that another researcher will be able to repeat the
research. The sources of the data should be revealed and the means by which they
were obtained should be made clear.

2. Researcher should take care to protect the privacy of the respondents. The
researcher should be taking into consideration the welfare of the participants of
the studies as well as that of their client.

3. Data obtained from research should be used to justify the conclusion. Personal
interpretations or experiences of the researcher should be avoided.

4. Any drawback in the design should be revealed by the researcher and its effects
on the finding should be estimated.

BENEFITS OF RESEARCH:

1. Research can help businesses to communicate with their stake holders like
customers, suppliers etc. they can device important conclusions through business
research.
 2. Research helps businesses to identify the opportunities and threats.

3. Risks and uncertainties can be minimized through business research. Research is

very important for evaluating the progress of the business and to exploit more
opportunities

4. It can help the business to track their benchmark and to avoid any loss which they
can incur without having market and business information.

OBJECTIVES OF THE STUDY:

The following are the objective of the study.

1. To study the working capital management of HETERO DRUGS LIMITED.

2. To examine the feasibility of present system of managing cash, debtor and

inventory.

3. To study the management of current assets and current liabilities of HETERO

DRUGS LIMITED.

4. To evaluate the financial position of the company.

5. To know the liquidity position of the company.

6. To examine the working capital turnover of the company.

7. To give suggestions for better working capital management.

SCOPE OF THE STUDY:

The following are the scope of the study.

1. The scope was limited to the operations of HETERO DRUGS LIMITED.

2. The study was confined to the evolution of last five years report (2007-2011).
 3. The study focuses on analyzing the working capital management.

4. The information obtained from primary and secondary sources was limited to
HETERO DRUGS LIMITED.

LIMITATIONS OF THE STUDY:

The followings are the limitations of the study.

1. As the study period was very short, the complete financial status of the company
was not done.

2. The study having limited scope of gathering sufficient information as it is

confidential.

3. The study is limited up to the data and information provided by HETERO

DRUGS LIMITED.

4. The study has concentrated only on the working capital of the company. The other
financial aspects or components were ignored.

5. This study is confined to the HETERO DRUGS LIMITED.

COLLECTION OF DATA

Research methodology is a systematic procedure of collecting information in order to

analyze and verify a phenomenon. Data collection is a term used to describe a process of
preparing and collecting data.

Data collection is important aspects of any type of research study, inaccurate data can
impact the result of the study and ultimately lead to invalid results.

Data collection sources are two types:

1 .primary data

2. Secondary data

1. Primary Data:

In primary data collection, the data will be collected by using questionnaires and
interviews.

There are many methods of collecting primary data and the main methods include:

1. Interviews

2. Observation

2. Secondary Data:

Secondary data available from publishers, in-house database, research

agencies etc. it constitutes readymade information that can be used for research
purpose with minimal analysis. However, the research should bear in mind
secondary data is published for purpose other than the current research.

Secondary data helps researchers to save time. While primary research

takes a considerable amount of time in the form of collecting and analyzing the
data, secondary data offers readymade solutions.

SOURCES OF DATA

Methodology is systematic process of collecting information in order to analyze

and verify a phenomenon, the collection of the data two principles process.

1. Primary data

2. Secondary data

1. Primary data

The data that is collected first time for any statistical investigation and is used
in the statistical analysis is termed as primary data.

The primary data is obtained by having personal interviews with the officials of
the company, interacting with the manager & other concerned executives at the
administrative office of the company.

2. Secondary data

the data whether published, which have been already collected and processed
by some agency or person and take over from them and used by any other agency
or person for their statistical work are termed as secondary data.

The secondary data was collected mainly from the following source.

1. Annual report
2. Manuals and magazines.

3. Reference to journals, text books and news papers.

4. Company website .com.

CHAPTER - III

COMPANY PROFILE
 COMPANY PROFILE

1. History of HETERO

2. Founder of HETERO

3. Manpower of HETERO

4. Management of HETERO

5. HETERO units

6. Vision & values of HETERO

7. Business focus of HETERO

8. Drug discovery

9. Alliances & partnerships

10. Research & development

11. HETERO DRUGS culture

12. Workplace ethics

13. Social responsibilities

 14. News& events

15. Awards & allocates

Type Private

Industry Pharmaceuticals

Founded 1993

Headquarters Hyderabad, India

Key people Dr. B. Partha Saradhi Reddy (CMD)

Employees Over 7,778

Website www.heterodrugs.com
 Hetero is a research based global pharmaceutical company focused on
development, manufacturing and marketing of Active Pharmaceutical Ingredients (APIs),
Intermediate Chemicals & Finished Dosages. Ever since its establishment in 1993,
Hetero showed a tradition of excellence and deep sense of commitment in developing
cost effective processes to offer wide range of affordable drugs.

Hetero is building on the strengths of vertical integration in discovery research,

process chemistry, API manufacturing, formulation development and commercialization.
Hetero is a leading international supplier with a rich portfolio of over 200 products from
wide range of therapeutic categories both in active pharmaceutical ingredients and
finished dosages.

Hetero’s manufacturing facilities are cGMP compliant meeting global standards

in terms of infrastructure and systems. Majority of them are approved by the various
regulatory authorities of USFDA, WHO-Geneva, Australian TGA, Spanish agency of
medicines & health care products, ANVISA-Brazil, IDA-Netherlands etc.With full-
fledged marketing capabilities, the company has been able to market its products in over
138 countries across the globe.

HISTORY OF HETERO:

Established in the year 1993, with the motto to be

the best in the API manufacturing, Hetero today
embodies the vision of a top notch player in
developing and commercializing products catering
to a variety of therapeutic categories, integrating
into a Leading finished dosage manufacturer.
True to the Statement, "Where the Future Started Yesterday", with a foresight on the
current trends in the Pharmaceutical Market, Hetero has grown from strength to strength,
combining its Research Strengths, Manufacturing Capabilities, and Human Resources
and well established quality management system.
With full-fledged marketing capabilities, the company has been able to market its
products in over 100 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.
With all six manufacturing facilities being supported by excellent infrastructure and
compliance to the GMP requirements, Hetero has crossed numerous milestones in a
comparatively short period since its inception.

Founder:

"Where the future started yesterday....

... Works a day ahead of future...."

A Visionary Scientist

Dr. Bandi Parthasaradhi Reddy, Chairman & Managing Director of Hetero group is
academically endowed with a Post Graduate and Doctoral degrees with distinction in the
field of synthetic chemistry. Prior to founding of Hetero Drugs Limited, Dr. B.P.S Reddy
had a stint in leading pharmaceutical companies as the head of the Research &
Development division. His sharp analysis and ability to synthesize various chemical
compounds lead to the discovery of new processes, cost effective schemes for
manufacturing of various pharmaceutical products. During the said period Dr.B.P.S
Reddy has the credit of introducing many new molecules for the first time in Indian
pharmaceutical market.

A visionary the world knows as Dr. B.P.S.Reddy, is the driving force behind this growing
pharmaceutical phenomenon called “HETERO”. Dr.B.P.S.Reddy’s dream child, Hetero
was born in the year 1993 as a small API unit. Today, 17 years later, the name is
synonymous with leadership in pharmaceuticals with more than 18 manufacturing units
and 8000 employees. An entity that is grown in stature by virtue of its combined strength
in research, manufacturing and marketing.

Dr. B.P.S.Reddy steered Hetero towards the forefront of global pharmaceutical industry
with his vision to be recognized as an aggressive company that combines its strength of
R&D and manufacturing with definite advantages in terms of cost and chemistry with a
strong emphasis on quality of the products.

Dr. B.P.S.Reddy is now focusing on giving new dimensions to Hetero in terms of

research and innovation programs in discovery research to take the company to greater
heights.

MANPOWER IN HETERO GROUP:

1. Hetero Drugs Limited 1737

2. Hetero Labs Limited 5789
3. Cirex 180
4. Clinse 22
5. Hetero Infra 50

Total Employees: 7778

MANAGEMENT:

S.NO. NAME DESIGNATION

1. Dr.B. ParthaSaradhi Reddy Chairman &Managing Director

2. M.Srinivasa Reddy Director

3. B.Nagi Reddy Executive Director

4. K. Rajesh Kumar Finance Director

5. A.V.Narasa Reddy Technical Director

6. Dr.Ratnakar R&D

7. B.Vamsi Krishna Director

8. C.Bhaskar Reddy Quality Control Director

9. J.Sambi Reddy Production Director (Unit-I)

10. C.Mohan Reddy Production Director

11. V.Vishwanatha Raju Director

12. k.madhu kumar Projects Director

13. Dr.r.Raji Reddy Director

14. Dr.P.Khadgapathi Director

Human resource structure:

Managing Director

General Manager

Deputy General Manager

Assistant General Manger

Manager

Assistant Manager

Senior Executive

Executive

Junior Executive

Assistant Executive

Trainee

Vision and values:

Hetero believes in “WHERE THE FUTURE STARTED YESTERDAY……

WORKS A DAY AHEAD OF FUTURE………….”

HETERO’S Ambition is to be an aggressive player in pharmaceutical markets combining
IIPR skills, manufacturing capabilities, strong human resources inputs and marketing
strengths.

Values in pursuit of excellence:

 Innovation
 Creativity
 Reliability
 Accessibility
 Cost effectiveness
 Quality
 Accuracy
 Customer delight
 Eco friendly
Hetero visualizes itself as an aggressive player in the global pharmaceutical scenario;
supplying generics developed combining intellectual property research strength and
strong human resource inputs

The company values the concepts of having social responsibilities in the course of its
assents to greater heights. It strongly believes in focusing on customer requirements and
delivering the products at the right pace. Hetero considers its human resource as the core
of all its capabilities and believes in tapping and honing the talent 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 to reckon. Hetero
takes recognize the fact that the processes that it develops all eco friendly and it should
not result in any consequence that harms the ecological harmony.

Mission:

Hetero’s mission is to be a globally acclaimed pharmaceutical company, meeting the

requirement of healthcare imbibing the philosophy of both commercial and social
concerns, driven by research and manufacturing capabilities.
Strength:

 Strong emphasis on research and development

 Ability to develop processes for a large range of therapeutic categories
 Ability to orient and adapt to the changing facets of industry particularly in
terms of regulations, intellectual property and manufacturing capabilities
 Cohesive teams of skilled professionals in all wings related to research,
manufacturing and marketing
 Strong customer base and market presence
 A strong commitment towards the society to provide timely support by
providing life saving drugs at relatively low costs, short span of time.
Global presence:

Hetero exports its products across different regions – USA, Canada, Europe, Japan,
Latin America, Africa, Middle East, Far East, Australia, Russia & CIS,   in the world
and is catering to the requirements of around 138 countries in the world.

Business focus:

Active pharmaceutical ingredients:

Hetero is one of the largest manufacturer and supplier of Active Pharmaceutical

Ingredients (API’s) catering to the ever increasing requirements of the global
pharmaceutical market.

The infrastructure available with Hetero for manufacturing of Active Pharmaceutical

Ingredients and the intermediate chemicals is one of the best, with State-of-the- Art
facilities designed to meet the global standards and cGMP.
With 11 API manufacturing facilities in operation, Hetero has been able to manufacture
more than 200 APIs, and supply to different markets. 6 of the API facilities are approved
by USFDA, TGA, EU, PMDA, KFDA and WHO.

Hetero is a trusted supplier of several APIs in wide range of therapeutic categories and
the largest supplier of complete range in antiretroviral products. Hetero also has
dedicated facility for manufacturing of Oncology products.

Finished dosages

Hetero has world-class facilities for manufacturing wide range of finished dosages. As a
leading innovation-driven corporation, Hetero is developing a growing portfolio of
pharmaceutical products to meet some of the world's most urgent medical needs. Today
Hetero is manufacturing product portfolio of over 200 products in major therapeutic
areas, with an emphasis on antiretroviral, gastro-intestinal, cardiovascular,
antidepressants /antipsychotic, anti diabetics, pain management, anti-infective,
dermatology and oncology. Hetero has

 Four finished dosage manufacturing facilities, out of which two are USFDA,
approved facilities.
 Dedicated Oncology facility
 Offers
1. Injectables
2. Solid/Liquid oral dosages
3. Ointments
4. Soft gelatin capsules
5. Inhalers
Crams
Hetero initiated customer-centric division that will provide Custom Research and
Manufacturing Services (CRAMS) for large, mid-sized and emerging biotech and
pharmaceutical entities globally.
Hetero will partner with these companies and cultivate opportunities to research,
manufacture and develop compounds across the entire drug life cycle. This division will
deliver fully-consolidated or customized manufacturing solutions for APIs, intermediate
chemicals, pre-formulations and formulations across each stage of the pharmaceutical life
cycle. Hetero provides premium solutions for product life cycle management including
life cycle extensions and line extensions.

Biotechnology

Hetero is focusing on the development and manufacturing of bio-generics for domestic

and international markets. Five biosimilars are in the various stages of development. Two
products are expected to be commercialized in India for oncology and nephrology \
indications by 2011-12.

Drug discovery:

 Hetero started discovery research with the focus on developing NCEs in selected
therapeutic areas. Scientists at Drug Discovery Division are working on the
following projects:
o ANTI-HIV Research
o ANTI-HCV Research
o Diabetes Research
Our business strategy is to out license early stage discovery molecules and to explore
early stage discovery collaborations to maximize the potential of our discovery projects.

Alliances / Partnerships:

At Hetero, we value alliances/partnerships. Hetero has developed productive alliances

and partnerships that advance our capacity to develop innovative medicines at lower
costs. Our collaborations have produced strong, enduring partnerships and yielded
consistent success in the market place. A glance at our track record highlights some of
our achievements while illustrating the diversity among our partners and the products.
Hetero is regarded as one of the best companies in the world to work for, and generations
of Hetero employees have sustained a culture that values excellence, integrity, and
respect for people.

Research & Development:

Research & Development is the foundation of Hetero’s philosophy of developing cost-

effective, high quality and safe medicines to society. Hetero Research Foundation is one
of the most innovative, productive, and respected scientific research organizations which
are recognized by the Department of Science & Technology, Government of India.

Hetero Research Foundation (HRF) has a team of over 400 dedicated scientists
working in the areas of Process, Analytical and Discovery Research. R & D centre
conforms to international standards and has advanced equipment for both basic and
applied research.

Process R&D

HRF has developed process for 150 plus molecules for various markets. The R& D team
actively involved in process development, scaling-up technology transfer and associates
with manufacturing team through out life cycle of product.

HRF has always been emphasizing to ensure that the processes being adopted for the
products are cost effective, safe to handle and with optimum advantage in terms of yield
and quality.

Analytical R&D

Analytical research at HRF is equipped to conduct complete physical and chemical

characterization of API’s/ NCE’s. Further, the team is well versed with regulatory filings
and has vast experience in documentation. The infrastructure includes advanced
instruments like LC-MS-MS, GC-MS, NMR, and Powder XRD apart from several HPLC
systems.

Manufacturing infrastructure:
Hetero group as a whole has 18 Manufacturing facilities at various locations
encompassing manufacturing of Active Pharmaceutical Ingredients and Finished Dosage
Products.
Committed to quality, safety and environment, most of our manufacturing facilities
have been inspected and approved by the US FDA, WHO-Geneva, Spanish Agency of
Medicines & Health care products, ANVISA-Brazil, IDA-Netherlands etc.,

Products:

1. API's - for Regulated Market

2. API's - for Semi Regulated Market
3. Finished Dosages
4. Intermediate Chemicals

Careers at HETERO:

Hetero’s strength lies in the talent and commitment of the people who work for us.
Hetero is on the path of progress and expanding very fast in all its verticals. Opportunities
exist in for talented people of diverse backgrounds in various departments. Hetero creates
an environment for personal and professional growth of employees.

A healthy work-life balance is supported through knowledge-driven work environment

where ideas and skills are valued; where people can realize their full potential through
dedicated training programs; and where individual contribution is respected, recognized
and rewarded.

The Hetero drugs limited culture:

 Customer Focused and Performance Driven where both external and internal
customers are accorded the highest priority and where everyone is sensitive to
Commitments, time & cost and focuses on delivering innovative affordable
medicines globally.
  Entrepreneurial and innovative where genuine mistakes are tolerated,
intelligent risk – taking is encouraged and people feel a sense of empowerment.
 Egalitarian and Trusting where rank and status consciousness is low, leadership
walks the talk, where credibility & trustworthiness are championed and leaders
provide access to people, resources and information.
 Flexible and Adaptive where change is welcome and initiatives are implemented
with sincerity and commitment, diversity is understood and accepted and mutual
respect for diversity and various ethnic cultures coexist.
Work place ethics:

Open door communication:

Hetero Drugs maintains an open-door culture for communication to assist with employee
concerns. If employee does not feel comfortable discussing concerns with his /her
supervisor or manager, they contact the next level of management. Hetero Drugs
believes that open communication is essential to a successful work environment and all
employees should feel free to raise concerns without fear of reprisal.

Courtesy:

They develop an attitude or helpfulness towards their customers, suppliers, vendors, and
their fellow employees. Courtesy is a major component of good human relations. Good
telephone etiquette is also important when dealing with others, both inside and outside of
Hetero Drugs.

Dress code:

Employees are bet advised to be formally attired on all weekdays so as to reflect

confidence and professionalism. On weekends (2nd and 4th Fridays at head office and all
working Saturdays at all 3 locations), employees could wear informal wear as follows.

Male employees:

Business casual (weekdays): collared shirts, Trousers, leather shoes (Black/Brown)

Casual (Fridays): Shirts/ collared T-shirts, Trousers and sports shoes

Female employees:

Formal wear: Sarees, Sal war kames, formal shirts, full skirts, trousers and sandals

Informal wear: collared T-shirts, full skirts, shirts, trousers, and sandals.

ID Cards:

All employees are issued an id card within one week of joining, and it is advised that the
cards are always worn on person while on duty. In case of the card being lost or
damaged, the personnel department needs to be informed immediately.

Leaves:

Employees are requested to avail leave as per eligibility unless exigencies demand
otherwise. Planned leave need be approved by the in-charge, in the prescribed form
available with the personnel department.

Social responsibility:

Hetero recognizes its obligations towards the society and as a socially responsible
organization; we strive to take care of the less privileged sections of our society. We
extend our expertise to transform the lives of our people and make a difference to the
society. In this initiative, Hetero has adapted few villages for their overall development.
Education:
Hetero assists in setting up of schools where there is no access to education
facilities, providing financial assistance to the poor students who have promising
academic record, adapting schools.

Sports:
Sponsors athletics from various educational institutions to participate in National
and International level competition.
Medical:
Hetero conducts periodical medical camps at various locations in socially backward
areas to provide timely medical assistance to the needy. Hetero has liberally donated
medicines to the Government of India, Government of A.P. and to various Hospitals.

News & Events:

April'2010
Hetero launches one of the India’s largest finished dosages manufacturing facility in
Special Economic Zone (SEZ) at Jadcherla. Hetero launches its new formulations
facility (SEZ) at Jadcherla, Andhra Pradesh, India. Strategically located just 60 kms from
Hyderabad International airport, off NH 7, the project situated in the state's first green
industrial park.

The total unit area is 75 acres and with two manufacturing facilities. This facility offers a
huge production capacity of 18 billion tablets and capsules per annum. It has a dedicated
Oncology facility with a production capacity of 200 million tablets & capsules, 15
million liquid injectable vials & 15 million lyophilized Injectables.

This World-class facility is meeting the cGMP and regulatory requirements, with
integrated quality management system in place. All quality control Instruments are 21-
CFR compliant. Walk in type stability chambers with global requirements for stability
study and Integrated building management system from Honey well -USA , Lyophilizer
VIRTIS -USA, Liquid Filling machine from BOSCH – Germany, makes this
manufacturing facility at par with the best in the world.

April'2010

Hetero receives tentative approval for Tenofovir disoproxil fumarate tablets from
USFDA
Hetero is pleased to announce that it has received the tentatively approval for Tenofovir
disoproxil fumarate from the US Food & Drug Administration (USFDA).

A Tenofovir tablet 300 mg is generic equivalent to Viread tablets 300 mg of Gilead

Sciences. Tenofovir belongs to a class of antiretroviral drugs known as nucleotide
analogue reverse transcriptase inhibitors (nRTIs), which block reverse transcriptase, an
enzyme crucial to viral production in HIV-infected people. Tenofovir is indicated in
combination with other antiretroviral agents for the treatment of HIV-1 infection in adults
Nov'2009

Hetero receives tentative approval of Lamivudine and Tenofovir fixed dose combination
tablets, 300mg/300mg tablets from USFDA

On November 5, 2009, using expedited review procedures developed to support the President's
Emergency Program for AIDS Relief (PEPFAR1), the US Food and Drug Administration
(FDA), granted tentative approval for Lamivudine and Tenozfovir disoproxil fumarate fixed dose
combination tablets, 300mg/300mg.

The fixed dose combination product, indicated for use in combination with other antiretroviral
for the treatment of HIV-1 infection.

Awards & Accolades:

Hetero has been scaling new heights on a continual basis. These achievements have been the
result of concerted efforts on the part of different functions within the organization to achieve the
organizational goal of being a leader.

In its path to success, Hetero has seen many a milestone being crossed and achieved many
awards on various fronts. Awards for exemplary work in R&D and marketing are just a few to
name.

A track of few events that saw Hetero reaching its Zenith of glory is: sss

2009

 Top Pharmexcil Gold Patent award.

 Top Pharmexcil Outstanding Export Performance award in Drugs and Pharmaceuticals.
2006

 Chemexil Trishul export award for outstanding export performance 2001 Excellence &
National Integration award in recognition of the efforts for excellence with affairs
connected with educational specialties and creating teaching skills besides promoting
harmony at all levels in the college.
1999

 Highest exporter award against stiff competition from internationally recognized

domestic competitors.

1998-1996

 Top Chemexil award for Exports.

 National award for "Best Efforts in Research and Development" from the Department
of Scientific and Industrial Research, Ministry of Science and Technology, Government
of India, in the year 1996.
 CHAPTER - IV

DATA ANALYSIS

AND

INTERPRETATION
STATEMENT SHOWING CHANGES IN WORKING CAPITAL

FOR THE YEAR ENDED 2007-2008

(Rs. In Crores)

As on 31st December Changes in Working capital

PARTICULARS

2007(Rs) 2008(Rs) Increase(Rs) Decrease(Rs)

CURRENT ASSETS

Inventories 30.40 34.51 4.11 ---

Sundry Debtors 28.32 7.28 --- 21.04

Cash and Bank Balance 52.11 1.78 --- 50.33

Loans and advances 27.08 9.55 --- 17.53

TOTAL CURRENT ASSETS (A) 137.91 53.12 4.11 88.90

CURRENT LIABILITIES

Current liabilities 18.11 18.02 0.9 ---

Provisions 39.51 4.33 35.18 ---

TOTAL CURRENT LIABILITIES(B) 57.62 22.35 35.27 ---

NET WORKING CAPITAL =(A-B) 80.29 30.77 39.38 88.90

Increase / Decrease in Net Working --- 49.52 49.52 ----

Capital
 TOTAL 80.29 80.29 88.90 88.90

INTERPRETATION:

From the above table, it can be observed that

1. Inventories were increased by Rs.4.11 crores, due to increased purchase of raw materials.
2. Sundry debtors were decreased by Rs.21.14 crores, due to decrease in credit sales.
3. Cash and bank balances were decreased by Rs.50.33 crores, due to decrease in sales.
4. Loans and advances were decreased by Rs.17.53 crores, due to decrease in loans
provided by the company.
5. Current liabilities were decreased by Rs.0.09 crores, due to the payment of pending
claims.
6. Provisions were decreased by Rs.35.18 crores, due to decrease in current liabilities.
7. The overall net working capital has been decreased by Rs.49.52 crores, due to decrease in
current assets.
8. The company should improve its net working capital position.
STATEMENT SHOWING CHANGES IN WORKING CAPITAL

FOR THE YEAR ENDED 2008-2009

(Rs. In Crores)

PARTICULARS As on 31st December Changes in Working capital

2008(Rs) 2009(Rs) Increase(Rs) Decrease(Rs)

CURRENT ASSETS

Inventories 34.51 54.81 20.30 ---

Sundry Debtors 7.28 22.84 15.56 ---

Cash and Bank Balance 1.78 1.26 --- 0.52

Loans and advances 9.55 17.70 8.15 ---

TOTAL CURRENT ASSETS (A) 53.12 96.61 44.01 0.52

CURRENT LIABILITIES

Current liabilities 18.02 18.49 --- 0.47

Provisions 4.33 15.16 --- 10.83

TOTAL CURRENT LIABILITIES(B) 22.35 33.65 --- 11.03

NET WORKING CAPITAL =(A-B) 30.77 62.96 44.01 11.82

Increase / Decrease in Net Working 32.19 --- --- 32.19

 Capital

TOTAL 62.96 62.96 44.01 44.01

INTERPRETATION:

From the above table, it can be observed that

1. Inventories were increased by Rs.20.30 crores, due to increased purchase of chemicals.

2. Sundry debtors were increased by Rs.15.56 crores, due to increase in credit sales.
3. Cash and bank balances were decreased by Rs.0.52 crores, due to increase in advances
provided to suppliers.
4. Loans and advances were increased by Rs.8.15 crores, due to the company provided
loans to the employees.
5. Current liabilities were increased by Rs.0.47 crores, due to the credit purchases of raw
materials.
6. Provisions were increased by Rs.10.83 crores, due to increased current liabilities.
7. The overall net working capital has been increased by Rs.32.19 crores, due to increased
current assets.
8. The net working capital position of the company was satisfactory.
STATEMENT SHOWING CHANGES IN WORKING CAPITAL

FOR THE YEAR ENDED 2009-2010

(Rs. In Crores)

PARTICULARS As on 31st December Changes in Working capital

2009(Rs) 2010(Rs) Increase(Rs) Decrease(Rs)

CURRENT ASSETS

Inventories 54.81 70.25 15.44 ---

Sundry Debtors 22.84 62.01 39.17 ---

Cash and Bank Balance 1.26 3.57 2.31 ---

Loans and advances 17.70 35.68 17.98 ---

TOTAL CURRENT ASSETS (A) 96.61 171.51 74.90 ---

CURRENT LIABILITIES
 Current liabilities 18.49 26.58 --- 8.09

Provisions 15.16 11.10 4.06 ---

TOTAL CURRENT LIABILITIES(B) 33.65 37.68 4.06 8.09

NET WORKING CAPITAL =(A-B) 62.96 133.83 78.96 8.09

Increase / Decrease in Net Working 70.87 --- ---- 70.87

Capital

TOTAL 133.83 133.83 78.96 78.96

INTERPRETATION:

From the above table, it can be observed that

1. Inventories were increased by Rs.15.44 crores, due to increased purchases.

2. Sundry debtors were increased by Rs.39.7 crores, due to increase in credit sales.
3. Cash and bank balances were increased by Rs.2.31 crores, due to increased cash sales.
4. Loans and advances were increased by Rs.17.98 crores, due to the company have
provided more loans to the employees and also advanced to the suppliers of raw
materials.
5. Current liabilities were increased by Rs.8.09 crores, due to increase in creditors.
6. Provisions were decreased by Rs.4.06 crores, due to increased cash and bank balances.
7. Total current assets were increased by Rs.74.9 crores, due to increased debtors and loans
and advances.
8. The overall net working capital has been increased by Rs.70.87 crores. Hence, the
working capital position of the company satisfactory.
STATEMENT SHOWING CHANGES IN WORKING CAPITAL

FOR THE YEAR ENDED 2010-2011

(Rs. In Crores)

PARTICULARS As on 31st December Changes in Working capital

2010(Rs) 2011(Rs) Increase(Rs) Decrease(Rs)

CURRENT ASSETS

Inventories 70.25 74.50 4.25 ---

Sundry Debtors 62.01 67.01 5.0 ---

Cash and Bank Balance 3.57 4.53 0.96 ---

Loans and advances 35.68 45.34 9.66 ---

TOTAL CURRENT ASSETS (A) 171.51 191.38 19.87 ---

 CURRENT LIABILITIES

Current liabilities 26.58 31.06 --- 4.48

Provisions 11.10 8.55 2.55 ---

TOTAL CURRENT LIABILITIES(B) 37.68 39.61 2.55 4.48

NET WORKING CAPITAL =(A-B) 133.83 151.77 22.42 4.48

Increase / Decrease in Net Working 17.94 --- --- 17.94

Capital

TOTAL 151.77 151.77 22.42 22.42

INTERPRETATION:

From the above table, it can be observed that

1. Inventories were increased by Rs.4.25 crores, due to increased purchases.

2. Sundry debtors were increased by Rs.5.00 crores, due to increase in credit sales.
3. Loans and advances were increased by Rs.9.66 crores, due to company provided
advances to suppliers.
4. Current liabilities were increased by Rs.4.48 crores, due to increase in creditors.
5. Provisions were decreased by Rs.2.55 crores, due to increased bank balances.
6. The overall net working capital has been increased by Rs.17.94 crores, due to increase in
current assets.
7. The net working capital position of the company was satisfactory.
STATEMENT SHOWING CHANGES IN WORKING CAPITAL

FOR THE YEAR ENDED 2011-2012

(Rs. In Crores)

PARTICULARS As on 31st December Changes in Working capital

2011(Rs) 2012(Rs) Increase(Rs) Decrease(Rs)

CURRENT ASSETS

Inventories 74.50 69.19 --- 5.31

Sundry Debtors 67.01 55.17 --- 11.84

Cash and Bank Balance 4.53 6.80 2.27 ---

 Loans and advances 45.34 49.21 3.87 ---

TOTAL CURRENT ASSETS (A) 191.38 180.37 6.14 17.15

CURRENT LIABILITIES

Current liabilities 31.06 18.72 12.34 ---

Provisions 8.55 9.56 --- 1.01

TOTAL CURRENT LIABILITIES(B) 39.61 28.28 12.34 1.01

NET WORKING CAPITAL =(A-B) 151.77 152.09 18.48 18.16

Increase / Decrease in Net Working 0.32 --- --- 0.32

Capital

TOTAL 152.09 152.09 18.48 18.48

INTERPRETATION:

From the above table, it can be observed that

1. Inventories were decreased by Rs.5.31 crores, due to decreased purchases.

2. Sundry debtors were decreased by Rs.11.84 crores, due to decrease in credit sales.
3. Cash and bank balances were increased by Rs.2.27 crores, due to collection of amount
from sundry debtors.
4. Loans and advances were increased by Rs.3.87 crores, due to the company provided
loans to the employees.
5. Current liabilities were decreased by Rs.12.34 crores, due to decrease in amount of credit
purchases.
6. Provisions were increased by Rs.1.01 crores, due to decrease in sundry debtors.
7. The overall net working capital has been increased by Rs.0.32 crores, due to increase in
current assets.
8. The net working capital position of the company was showing average performance.

CURRENT RATIO:

Current ratio is the common ratio for measuring liquidity, being related to working
capital analysis; it is also called as the current ratio, which expresses the relationship between
current assets and current liabilities. The current ratio is the ratio of total current asset to total
current liabilities. It is calculated by dividing current assets by current liabilities.

FORMULA:

Current Assets

Current ratio= ---------------------------

Current Liabilities
Standard Current Ratio: Generally 2:1 is considered as ideal for the concern

CURRENT RATIO TABLE: (Rs. In Crores)

Years Current Assets(Rs) Current liabilities (Rs) Ratio

2007-2008 53.12 22.35 2.37

2008-2009 96.61 33.65 2.87

2009-2010 171.51 37.68 4.55

2010-2011 191.38 39.61 4.83

2011-2012 180.37 28.28 6.37

Average Current Ratio 692.99 161.57 4.28

 INTERPRETATION:

1. The analysis shows that the current ratio of the company has been showing an increasing
trend during the period of the study.
2. The increase in the current ration is 4.28:1 due to the increase of current assets over the
current liabilities.
3. The average current ratio is 4.28:1. So the company’s liquidity position is satisfactory.
4. The current ratio reveals that the company’s short-term funds are locked in current assets.
5. It shows the inefficient management of current assets.

QUICK RATIO:

Quick ratio is also known as liquidity ratio or acid test ratio or near money ratio. It is the ratio
between quick or liquid and current liabilities. This ratio is calculated by dividing the quick
assets by the current liabilities.

FORMULA:

Quick Assets

Quick ratio= --------------------------------

Current Liabilities

Standard for Quick Ratio: Generally 1:1 is considered as ideal for the concern.

QUICK RATIO TABLE: (Rs. In Crores)

Years Current Assets Current liabilities Ratio

 (Rs) (Rs)

2007-2008 18.61 22.35 0.83

2008-2009 41.8 33.65 1.24

2009-2010 101.26 37.68 2.68

2010-2011 116.88 39.61 2.95

2011-2012 111.18 28.28 3.93

Average Quick Ratio 389.73 161.57 2.41

 INTERPRETATION:

1. The analysis shows that the quick ratio was increasing from year to year during the
period of the study.
2. In the year 2011-2012 the ratio was satisfactory, because of increased quick assets.
3. The average quick ratio is 2.41:1. So, the liquidity position of the company is
satisfactory.
4. Ever though the liquidity position is good, the analysis showing that there are idle funds
locked in quick assets.
5. It reflects the inefficient management of short-term funds, it should be avoided.

WORKING CAPITAL TURNOVER RATIO:

This ratio indicated the velocity of the utilization of net working capital. This ratio indicates
the number of times the working capital is turned over into sales in the course of a year. The
ratio measures the efficiency with which the working capital is being used by a firm. A
higher ratio indicates the efficient utilization of working capital and a low ratio indicates
otherwise.

FORMULA:

Cost of goods sold

Working capital turnover ratio = ---------------------------

Working capital

Working capital = Current assets-Current Liabilities

WORKING CAPITAL TURNOVER RATIO TABLE: (Rs. In Crores)

Years Current Assets Current liabilities Ratio
(Rs) (Rs)

2007-2008 107.82 30.77 3.50

2008-2009 151.37 62.96 2.40

2009-2010 160.78 133.83 1.20

2010-2011 204.46 151.77 1.34

2011-2012 269.64 152.09 1.77

Average Working 894.07 531.42 1.68

Capital Turnover Ratio
 INTERPRETATION:

1. By observing the above working capital turnover ratio table, the ratio was showing
fluctuating trend during the study period.
2. The ratio was showing an increasing trend from 2010-2011 to 2011-2012, due to
increased net sales.
3. In the year 2009-2010. It is having a less working capital turnover ratio of 1.20 times,
because of increased expenses.
4. The average working capital turnover is 1.68:1. So, the company is not efficiently
managing its working capital.

ABSOLUTE LIQUID RATIO:

Absolute liquid ratio is also called as cash position ratio. This ratio established the
relationship between the absolute liquid assets and current liabilities. Absolute liquid
assets include cash in hand, cash at bank, and marketable securities.

The optimum value for this ratio should be one, i.e., 1:2

Formula:

Absolute liquidity ratio = ( Cash In Hand and Bank + Marketable Securities )/

Current Liabilities

ABSOLUTE LIQUID RATIO TABLE: (Rs. In Crores)

Years Absolute liquid Current liabilities Ratio
Assets (Rs) (Rs)

2007-2008 1.78 53.12 0.033

2008-2009 1.26 96.61 0.013

2009-2010 3.57 171.51 0.021

2010-2011 4.53 191.38 0.024

2011-2012 6.80 180.37 0.038

Average Absolute 17.94 692.99 0.026

Liquid Ratio
INTERPRETATION:

1. By observing the above absolute liquid ratio table, it is fluctuating year to during the
period of the study.
2. The ratio was showing an decreasing trend from 2007-2008 to 2008-2009, due to
decreased cash and bank balances.
3. In the year 2010-2011 to 2011-2012, the absolute liquid ratio is in better position by
comparing the other years.
4. The average absolute liquid ratio is 0.026 times. So, the company’s liquidity position of
the company is satisfactory.
INVENTORY RATIO:

In order to ascertain that there is no overstocking, the ratio of inventory to working capital
should be calculated. It is worked out as follows:

FORMULA:

Inventory

Inventory Ratio = -------------------------

Working capital

INVENTORY RATIO TABLE: (Rs. In Crores)

Years Inventory (Rs) Working capital (Rs) Ratio

2007-2008 30.40 80.29 0.37

2008-2009 34.51 30.77 1.12

2009-2010 54.81 62.96 0.87

2010-2011 70.25 133.83 0.52

2011-2012 74.50 151.77 0.49

Inventory Ratio 264.47 459.62 0.674

INTERPRETATION:

1. The analysis shows that the Inventory Ratio was decreased from year to year
during the period of study.

2. In the year 2008 to 2009 the inventory was satisfactory, because of increased
inventory ratio.

3. By observing the above Inventory Ratio table, it is fluctuating year to during the
period of the study.

4. From the year 2008-2012 the ratio was continuously decreasing.

5. The company’s Inventory Management is not satisfactory.

CHAPTER - V

CONCLUSIONS

AND

SUGGESTIONS
CONCLUSIONS

1. During the study period inventories have been showing an increasing trend, except in the year

2011-2012.

2. Current assets were increased during the study period.

3. The analysis reveals there are more idle funds in current assets.

4. The analysis shows that the company is showing more funds in quick assets than the required

5. Loans and advances were increased during the study period.

6. During the study period sundry debtors have been showing an increasing trend, except in the

Year 2011-2012.

7. Cash and bank balances were increased during the study period.

8. During the study period the company is having more funds in current assets. It shows that
there are Non Performing Assets with company.
SUGGESTIONS

1. The company has to take proper measures to improve its working capital position.
2. It is better to offer credit facility to the same extent to its customers in order to increase
the sales.
3. The company has to maintain cash balances to meet daily requirements as per standards.
4. The company has to manage current assets properly to improve liquidity position.
5. The company has to manage its funds in quick assets properly.
6. The company has to make policies to improve its efficiency in managing inventory and
Debt management services.
7. The idle funds, which were locked in current assets, should be utilized properly.
BIBLIOGRAPHY
BIBLIOGRAPHY

TITLE OF THE BOOK AUTHOR PUBLISHERS

Management Accounting, Shashi K Gupta & R.K.Sharma Kalyani

Financial Management, M.Y.Khan and P.K.Jain Tata

McGraw-Hill

Financial Management, S.N. Maheshwari Sultan Chand &

Sons

WEBSITES

www.heterodrugs.com

www.moneycontrol.com
APPENDIX
Balance sheet HETERO DRUGS Ltd.

Balance Sheet ------------------- in Rs. Cr. -------------------

Mar
Mar '11 Mar '10 Mar '09 Mar '08
'12

12
12 mths 12 mths 12 mths 12 mths
mths

Sources Of Funds
Total Share Capital 24.45 24.15 12.08 8.26 7.98
Equity Share Capital 24.45 24.15 12.08 8.26 7.98
Share Application Money 0.00 0.00 0.00 0.00 0.03
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 137.53 136.88 133.83 43.37 23.67
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 161.98 161.03 145.91 51.63 31.68
Secured Loans 91.93 70.13 39.51 39.55 25.37
Unsecured Loans 17.52 11.04 1.14 1.14 1.13
Total Debt 109.45 81.17 40.65 40.69 26.50
Total Liabilities 271.43 242.20 186.56 92.32 58.18
Mar
Mar '11 Mar '10 Mar '09 Mar '08
'12

12
12 mths 12 mths 12 mths 12 mths
mths

Application Of Funds
Gross Block 117.27 51.65 32.88 26.87 24.01
Less: Accum. Depreciation 23.45 8.21 6.29 4.60 3.20
Net Block 93.82 43.44 26.59 22.27 20.81
Capital Work in Progress 21.98 37.78 17.03 4.33 3.83
Investments 0.03 2.69 2.69 2.69 2.69
Inventories 69.19 74.50 70.25 54.81 34.51
Sundry Debtors 55.17 67.01 62.01 22.84 7.28
Cash and Bank Balance 6.80 4.53 3.57 1.26 1.78
Total Current Assets 131.16 146.04 135.83 78.91 43.57
Loans and Advances 49.21 45.34 35.68 17.70 9.55
Fixed Deposits 0.00 0.00 0.00 0.00 0.00
Total CA, Loans & Advances 180.37 191.38 171.51 96.61 53.12
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 18.72 31.06 26.58 18.49 18.02
Provisions 9.56 8.55 11.10 15.16 4.33
Total CL & Provisions 28.28 39.61 37.68 33.65 22.35
Net Current Assets 152.09 151.77 133.83 62.96 30.77
Miscellaneous Expenses 3.51 6.53 6.39 0.06 0.07
Total Assets 271.43 242.21 186.53 92.31 58.17

Contingent Liabilities 1.04 1.07 0.97 1.67 1.29

Book Value (Rs) 6.63 6.67 12.08 62.53 39.68

Source : Dion Global Solutions Limited

Profit & Loss HETERO DRUGS Ltd.

Profit & Loss account ------------------- in Rs. Cr. -------------------

Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Income
Sales Turnover 287.80 218.63 177.19 168.31 120.67
Excise Duty 18.16 14.16 16.41 16.94 12.85
Net Sales 269.64 204.47 160.78 151.37 107.82
Other Income 3.02 2.26 1.56 3.03 1.35
Stock Adjustments -13.64 4.56 15.05 19.78 12.12
Total Income 259.02 211.29 177.39 174.18 121.29
Expenditure
Raw Materials 173.52 140.63 113.33 110.14 74.87
Power & Fuel Cost 5.88 3.20 2.89 2.43 2.36
Employee Cost 10.30 5.97 3.79 3.14 2.67
Other Manufacturing Expenses 4.45 8.37 10.45 11.57 10.32
Selling and Admin Expenses 17.86 12.23 9.51 8.56 6.44
Miscellaneous Expenses 0.91 0.72 0.71 0.69 0.63
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Total Expenses 212.92 717.12 140.68 136.53 97.29
Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
 12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 43.08 37.91 35.15 34.62 22.65

PBDIT 46.10 40.17 36.71 37.65 24.00
Interest 16.50 10.59 7.48 8.34 4.78
PBDT 29.60 29.58 29.23 29.31 19.22
Depreciation 2.76 1.92 1.70 1.41 0.95
Other Written Off 1.69 1.67 1.60 0.01 0.01
Profit Before Tax 25.15 25.99 25.93 27.89 18.26
Extra-ordinary items -4.11 -3.22 0.00 -0.10 -0.41
PBT (Post Extra-ord Items) 21.04 22.77 25.93 27.79 17.85
Tax 7.86 4.83 9.61 9.82 4.68
Reported Net Profit 13.19 17.95 16.32 18.08 13.59
Total Value Addition 39.40 30.49 27.35 26.39 22.42
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 0.00 2.42 1.93 1.81 0.61
Corporate Dividend Tax 0.00 0.41 0.33 0.31 0.10
Per share data (annualised)
Shares in issue (lakhs) 2,444.60 2,415.20 1,207.60 82.56 79.76
Earning Per Share (Rs) 0.54 0.74 1.35 21.89 17.04
Equity Dividend (%) 0.00 10.00 8.00 15.00 10.00
Book Value (Rs) 6.63 6.67 12.08 62.53 39.68

Source : Dion Global Solutions Limited