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CHAPTER-I(INTRODUCTION)

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1.1 Introduction for the Study

The exciting world of stock markets will pay way to fortune, money and

professional challenge. In a world that is shrinking in size due to

information technology and blurring boundaries between nations, the

stock market (or the equities market) is all set to grow in size.

A quick overview of the roots

The "company" form of organization changed the way the world did

business. The company raised the capital required to do business by

issuing financial instruments (or assets) called "equity shares" to the

general public. Such a purchase of shares from the company itself is a

"primary market" activity. Such a purchase did not tie the investor to the

company forever because they could sell these shares in the "secondary

market" (or in other words, the stock exchange) unlock their

investments. Purchase of equity shares in the market offered high returns

to the investors. Apart from the dividend income that they received, the

investors also made capital gains when the share prices shot up due to

various reasons.

The emergence of professional research

Common man could not understand the nuances of stock market andequity valuation. Also, the concept of pooled funds like insurance funds,

retirement funds and mutual funds required professional investment

management. Consequently, the field of market analysis emerged and

gave rise to finance professionals who excelled at valuation of such

financial assets. Market analysis (research analysis or equity research)

work will be done for various organizations like:

Investment Banks Mutual funds

Financial Institutions

Stock Brokers

Financial newspapers

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Financial websites

In a market analysis one has to use various financial models, tools and

techniques to arrive at simple decisions like buying or selling or standing

still regarding the particular stock. If the research and analysis show that

the stock price of a particular company may rise, you "go long" (buy it). If

you have already bought it, you "hold" it. Alternatively, if the research

indicates a possible downtrend in the stock price, you would immediately

"go short" (sell it) so that you don't incur a loss (or reduced profit) at a

later date. When once the decision is taken, there is absolutely no time to

spare in implementing it.

INTRODUCTION TO EQUITIES:

Stocks, also known as Equities, are shares in a company. It is the

certificate of ownership of a corporation. In simple terms, when you invest

in a companys stock or buy its shares, you own part of a company. Thus,

as a stockholder, you share a portion of the profit the company may make,

as well as a portion of the loss a company make take. As the company

keeps doing better, your stocks will increase in value and yield higher

dividends.

Some basic terms and meanings

Dividend:

A sum of money, determined by a companys directors, paid to

shareholders of a corporation out of its earnings.

Equity:

Equity of a company is the property of the ordinary shareholder, hencethese shares are popularly known as equities.

Equity markets:

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A market where investors buy and sell securities providing ownership of a

companys shares.

Equities:

Types of securities that represent ownership in a corporation stock isequities.

STOCK MARKET:

A stock market is a market for the trading of publicly held company stock

and associated financial instruments ( including stock, options,

convertibles and stock index futures).

Financial Markets

Money market

Capital Market

Further Capital Market is divided in to two types

Primary Market

Secondary Market

Bull Market: A market in which prices are rising. A bull is a

person who expects that the market or the price of a particular

security will rise. Bear Market: A market in which prices are declining. A bear is a

person who expects that the market or the price of a particular

security will decline.

1.2 Nature of Equity Shares :

Equity shares represent an ownership of a corporation. It is true that the

equity shares must bear first impact of any adversity, but it is also true

that the equity shares is the only class of securities privileged to enjoy

maximum participation in an extensive growth of the company. The risk of 4


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the one may be regarded as commensurate with the opportunity of the

other. There is nothing certain about earnings on equity shares, and the

investor can lose as well as earn a profit.

1. Evidence of Ownership

2. Maturity of Equity Shares

3. Par Value

4. Net Asset Value and Book Value

5. Financial Analysis and Accounting Data

1.3 Need for the Study

The main need of the study is to describe the techniques andplanning in todays environment.

Apart from this the objective of this project study is to keenly

understand issues, and examinee all the essential analysis.

It incorporates sections on fundamental analysis and technical

analysis in the contexts of companies and markets.

The purpose of this study is to supply, information suitable for

guidance to retail investor. For the purpose of study, for Five different Companies of Pharma

Industry.

For the study the data collected are balance sheet, income

statement, ratio analysis and market price of shares of the

companies of past years.

1.4 Objectives of the Study

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To study the concept of equity analysis of selected companies of

Pharma Industry are: Dr.Reddy, Aurobindo, Sun Pharmacy, Ran Baxy,

NATCO.

To analyze and interpret the trend of equity and share price

movement of selected above said companies.

To evaluate performance of the above said companies.

1.5 Scope of the Study

The study is restricted only to Five Companies of Pharma Industry

Dr.Reddy, Aurobindo, Sun Pharmacy, Cipla, NATCO.

The performance evaluated only on the equity and share price

movement. The study may provide exact status and position of the companies

in the industries.

It may vary from time to time and situation to situation.

1.6 Methodology & Data base

The study is purely based on the secondary source of data which

has been collected from the records of ISE.

Part of the information is collected from the journals, text books and

websites.

The project is presented by using tables, graphs and with other

interpretations.

1.7 Limitations of the Study

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Due to time constraint, a comprehensive and meticulous study was not

possible. As a result, there might be change of errors creeping in.

Owing to the busy schedule of the executives and the staff in the

company, exhaustive primary data couldnt be collected. Which

might affect the result of the study?

Recommendations of the study are only personal options. Hence judgments may not be considered as ultimate and standard

solution.

CHAPTER-II(EQUITY ANALYSIS AN OVERVIEW)

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2.1 A Theoretical Back Ground of Equity Analysis

Equity represents an ownership position in a corporation. It is residual

claim in the sense that creditors and preference shareholders must be paid

as scheduled before equity shareholders can receive payment. In

bankruptcy equity holders are principle entitled only to assets remaining

after all prior claimants has been satisfied. Thus risk is highest with equity

shares and so must be its expected return. When investors buy equity

shares, they receive certificates of ownership as proof of their being partowners of the company. The certificate states the number of shares

purchased and their par value. The attitude towards equity shares varied

from extreme pessimism to optimism from time to time.

The main advantages of equity shares are listed below:

Potential for Profit: The potential for profit is greater in equity shares

than in any other investment security. Current dividends yield may be

low but potential of capital gains is great. The total yield or yields to

maturity may be substantial over a period of time.

Limited Liability: In corporate form of organization, its owners have,

generally, limited liability. Equity shares is usually fully paid.

Shareholders may lose their investments, but no more. They are not8


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further liable for any failure in the part of corporation of meet its

obligation.

Hedge against Inflation: The equity share is good hedge against

inflation though it does not fully compensate for the declining

purchasing power as it is subject to money-rate risk. But when interest

rates are high, shares tend to be less attractive, and prices tend to bedepressed.

Share in Growth:The major advantage of investment in equity shares

is its ability to increase in value by sharing in the growth of company

profits over the long run.

Tax Advantage: Equity shares also offers tax advantage to the

investors. The larger yield on equity shares results from an increase in

principal of capital gains, which are taxed at lower rate than other

incomes in most of the countries.

EQUITY CAPITAL TERMINOLOGY:

The important terms used in equity capital are listed below :

Authorized Capital: The authorized capital is the maximum

number of shares of each type that may be issued by the company.

To change this number, or provision of any class of shares, the

company requires the formal approval of shareholders.

Issued Capital: Issued capital is the part of the authorized capital

that has been issued for cash, property, or service.

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Paid up Capital: Fully paid shares are those shares for which the

corporation has received full payment up to the par-value, or up to

the amount established as the selling price of no-par-shares. Partly

paid shares are those shares that have been issued for less than par-

value or the agreed subscription.

FUNDAMENTAL ANALYSIS

The analysis of movement of share prices is known as equity analysis.

Equity analysis has two approaches, which are used in the analysis of

share.

1. Fundamental Analysis

2. Technical Analysis

MEANING OF FUNDAMENTAL ANALYSIS

Its a logical and systematic approach to estimating the future dividends &

share price, as these two constitute the return from investing in shares.

According to this approach, the share price of a company is determined by

the fundamental factors affecting the Economy/Industry/Company such as

Earnings Per Share, D/P ratio, Competition, Market Share, Quality of

Management etc. it calculates the true worth of the share based on its

present and future earning capacity and compares it with the current

market price to identify the miss-priced securities. Fundamental Analysis

helps to identify fundamentally strong companies, whose shares are

worthy to be included in the investors portfolio, by providing an analytical

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framework, known as Economy Industry Company framework, for rational

investment decision making .

Economic Analysis:

Economic factors play major role in any investment decisional, which is

made for making a gain and better returns. Economic analysis and

forecasting company performance and of returns is necessary for making

investments.

Any investment is risky and as such investment decision is difficult to

make. Investment decision is based on availability of money and

information on the economy. Companies are a part of the industrial and

business sector, which in return is a part of overall economy.

Thus the performance of a company depends recession or stagnation, the

performance of the companies will be bed in general, with sum exceptions

however, on the other hand, if the economy is booming, incomes are

raising and the demand is good, then the industries and the companies is

general may be prosperous, with some exceptions however.

In the Indian economy, the matters to be considered in the first place all

the behavior of the monsoon and the performance of agriculture. India has

a mixed economy, where the public sector plays a vital role. The

government being the biggest investor and spender, the trends in public

investment and expenditure would indicate the likely performance of the

Indian economy. Concomitant with this, the government budget policy,

tone levies and government borrowing program along with the extent of

deficit financing will have a major influence on the performance of the

Indian economy. The monitory situation along with the budgetary policy

influences the movement in price inflation do have a major influence onthe economy .

The economy and political stability in the form of stable and long term

economic policies and a stable political with no uncertainty would also be

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necessary for a good performance of the economy in general and of

companies in particular.

All the above factor of the economy influences the corporate performance

and the industry in general. In the investment analysis, a broad picture of

their factor and a forecast of the growth of the economy and of industry

would be necessary to decide when to invest and what to invest in.

Industry Analysis:

On the economic analysis is made and the forecast of the economy is

known the investor will then have some ides of the likely growth of the

economy and its trend. After that, the analyst would look into the industry

groups that are promising in the coming year or years and then only he

will be able to choose the companies in those industry groups.

At any point of time, there may be industries, which are on the up swing of

the cycle called sunshine industries and those, which are on the decline

called sunset industries. In India, there are some growth industries like

electronics and Tele communications, which are the key industries. The

engineering, petrol chemicals and capital goods industries are in the core

sector. A few industries like diamonds, engineering etc. are in the export

sector. Jute and cotton textiles are the decedent industries. At present,

Tele communications, energy etc., are some examples of sunrise

industries.

The key characteristics that are to be considered in the analysis, which

have a bearing on the prospects of the company are: -

Demand Supply Gap.

Competitive conditions in the industry.

Permanence.

Growth Rate of the Industry.

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Attitude of Government towards the industry.

Labors Conditions.

Supply of Raw Materials.

Cost Structure.

Past Sales & Earnings Performance.

Growth Rate of the Industry etc. The gap between Demand and Supply in an industry is a fairly good

indicator of its short-term or medium-term prospects. Excess supply

reduces the profitability of the industry through a decline in the unit-price

realization. On the contrary, insufficient supply tends to improve the

profitability through higher unit-price realization. In an industry where

supply exceeds Demand and there are many competing firms, the

increased rivalry among the firms leads to price cuts and heavyadvertising. In such a situation, the companies lose their competitive edge

and their profitability gets erode.

In this age or rapid technological change, the important factor to be

considered is the permanence of an industry, which is related to the

products and the technology used by the industry. Another factor to beobserved is the Cost structure of the Industry i.e., the proportion of the

fixed costs to the

Variable costs that determines the level of Break-even point. The industry

with lower break-even point is to be given more importance.

Company Analysis:

Company Analysis is the final stage of the Fundamental Analysis, which is

to be done to decide the company in which the investor should invest. The

Economy Analysis provides the investor a broad out line of the prospects

of growth in the economy. The industry analysis helps the investor to

select the industry in which the investment would be rewarding. Company

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Analysis deals with the estimation of the Risks and Returns associated with

individual shares.

The stock price has been found on depend on the intrinsic value of the

companys share to the extent of about 50% as per many research

studies. Graham and Dodd in their book on security analysis have

defined the intrinsic value as that value which is justified by the facts of assets, earnings and dividends. These facts are reflected in the earnings

potentials of the company. The analyst has to project the expected future

earnings per share and discount them to the present time, which gives the

intrinsic value of the share. Another method to use is to take the expected

earnings per share and multiplying it by the industry average price earning

multiple.

By this method, let the analyst estimate the intrinsic value or fair value of share and compare it with the market price to know whether the stock is

over valued or under valued. The investment decision is to buy under

valued stock and sell over valued stock.

Financial Analysis:

Share price depends partly on its intrinsic worth for which financial

analysis for a company is necessary to help the investor to decide whether

to buy or not the shares of the company. The soundness and intrinsic

worth of a company is known only by such analysis. An investor needs to

know the performance of the company, its intrinsic worth as indicated by

some parameters like book value, EPS, P/E multiple etc., and come to a

conclusion whether the share is rightly priced for purchase or not. This, in

short is the importance of financial analysis of a company to the investor.

Financial analysis is analysis of financial statement of a company to assess

its financial health and soundness of its management. Financial

statement analysis involves a study of the financial statement of the14


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company to ascertain its prevailing state of affairs and the reasons there

of. Such a study would enable the public and investors to ascertain

whether one company is more profitable than the other and also to state

the cause and factors that are probably responsible for this.

Method or devices of Financial Analysis:

The term Financial statement is used in modern business refers to thebalance sheet, or the statement of financial position of the company at a

point of time and income and expenditure statement or the profit and loss

statement over a period.

Interpret the financial statement; it is necessary to analyze them with the

object of formation of an opinion with respect to the financial condition of

the company.

The following methods of analysis are generally used.

1. Comparative statement

2. Trend analysis

3. Common size statement

4. Fund flow analysis

5. Cash flow analysis

6. Ratio analysis

Fundamental Analysis has a very broad scope. One aspect looks at the

general (qualitative) factors of a company. The other side considers

tangible and measurable factors (quantitative). This means crunching

and analyzing numbers from the financial statements. If used in

conjunction with other methods, quantitative analysis can produce

excellent results.

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Ratio analysis isn't just comparing different numbers from the balance

sheet, income statement, and cash flow statement. It's comparing the

number against previous years, other companies, the industry, or even the

economy in general. Ratios look at the relationships between individual

values and relate them to how a company has performed in the past, and

might perform in the future. For example current assets alone don't

tell us a whole lot, but when we divide them by current liabilities

we are able to determine whether the company has enough money

to cover short-term debts.

Efficient Market Hypothesis

This theory presupposes that the Stock Markets are so competitive and

efficient in processing all the available information about the securities

that there is immediate price adjustment to the changes in theeconomy, industry and company. The Efficient Market Hypothesis model is

actually concerned with the speed with which information is incorporated

into the security prices.

The Efficient Market Hypothesis has three Sub-hypothesis:

Weakly Efficient : This form of Efficient Market Hypothesis states

that the current prices already fully reflect all the information

contained in the past price movements and any new price change is

the result of a new piece of information and is not

related/independent of historical data. This form is a direct

repudiation of technical analysis.

Semi-Strongly Efficient : This form of Efficient Market Hypothesis

states that the stock prices not only reflect all historical information

but also reflect all publicly available information about the company

as soon as it is received. So, it repudiates the fundamental analysis

buy implying that there is no time gap for the fundamental analyst in16
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which he can trade for superior gains, as there is an immediate price

adjustment.

Strongly Efficient : This form of Efficient Market Hypothesis states

that using both publicly available information as well as private or

insider information cannot beat the market.

But even though the Efficient Market Hypothesis repudiates bothFundamental and Technical analysis, the market is efficient precisely

because of the organized and systematic efforts of thousands of analysts

undertaking Fundamental and Technical analysis.

Technical Analysis

Introduction

It is process of identifying trend reversals at earlier stage to formulate the

buying and selling strategy. With the help of several indicators they

analyzed the relationship between price volume and supply demand for

the overall market and the individual stock. Volume is favorable on the

upswing i.e., the number of share traded is greater than before and on the

downside the number of shares traded dwindles. If it is the other way

round, tread reversals can be expected.

There are two major types of analysis for predicting the performance of a

company's stock - fundamental and technical. The latter looks for peaks,

bottoms, trends, patterns, and other factors affecting a stock's price

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movement and then making a buy/sell decision based on those factors. It

is a technique many people attempt; though very few are truly successful.

Today, the world of technical analysis is huge. There are literally hundreds

of different patterns and indicators investors claim to be successful. There

are different types of stock charts and the various technical analysis tools.

What is Technical Analysis?

There are two major types of analysis for predicting the performance of a

companys stock fundamental and technical. The latter looks for peaks,

bottoms, trends, patterns, and other factors affecting a stocks price

movement and then making a buy/sell decision based on those factors. It

is a technique many people attempt; though very few are truly successful.

Today the world of technical analysis is huge. There are literally hundreds

of different patterns and indicators investors claim to be successful. There

are different types of stock charts and the various technical analysis tools.

Technical analysis is a method of evaluating securities by analyzing

statistics generated by market activity, past prices, and volume. Technical

analysts do not attempt to measure a security's intrinsic value; instead

they look for patterns and indicators on stock charts that will determine a

stocks future performance.

Technical analysis has become popular over the past several years, as

more and more people believe that the historical performance of a stock is

a strong indication of future performance. The use of past performance

should not come as a big surprise. People using fundamental analysis have

always looked at the past performance by comparing fiscal data from

previous quarters and years to determine future growth. The difference

lies in the

technical analysts belief that securities move with very predictable trends

and patterns. These trends continue until something happens to change

the trend, and until this change occurs, price levels are predictable.

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Technical analyst believes that share prices are determined by the

demand and supply forces operating in the market. These demand and

supply forces in turn are influenced by a number of fundamental factors as

well as certain psychological or emotional factors. The combined impact of

this entire factor is reflected in the share price movement.

A technical analyst concentrates on the movement of share prices. Heclaims that by examining past share price movements, future share prices

can be accurately predicted.

Technical analysis is the name given to forecasting techniques that

utilize historical share price data.

Although past shares prices are the major data used by the technical

analysts, other statistics such as volume of trading and stock marketindices are also utilized to some extent. A technical analyst, therefore,

analyses the price and volume movements of individual securities as well

as the market index. Thus technical analysis is really a study of past or

historical price and volume movements so as to predict the future stock

price behavior.

Basic principles of the technical analysis:

The basic principles on which technical analysis is based are as follows:

The market value of a security is related to demand and supply

factors operating in the market.

There are both rational and irrational factors which surround the

supply and demand factors of a security.

Security prices behave in a manner that their movement is

continuous in a particular direction for some length of time. Trends in stock prices have been to change when there is shift in

demand and supply factors

The shifts in demand and supply can be detected through charts

prepared specially to show market action

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Patterns which are projected by charts record price movement and

these recorded patterns are use by analysts to make forecasts about

the movement of prices in future.

Mathematical Indicators:

Share prices do rise or fall in straight lines. The movements are

erratic. This makes it difficult for the analyst to gauge the underlying

trend. He can use the mathematical tool of

Moving averages are the mathematical indicators of the

underlying trend of the price movement.

Two types of moving average are commonly used by the analysts are as

follows: Simple Moving Average calculates a set of averages for a specific

number of days, each average being calculated be including a new price

and excluding an old price. Exponential Moving Average(EMA) is calculated by using the

following formula:

EMA = (Current closing price-Previous

EMA)* Factor+Previous EMA

Note: Factor =

Oscillators are calculated with the help of closing price data which

helps to identify overbought and oversold conditions and also the

possibility of trend reversals. These indicators are called oscillators

because they move across a reference point. They are of two types:

Relative Strength Index is a powerful indicator that signals buying

and selling opportunities ahead of the market. RSI for a share is

calculated by using the following formula:

RSI =100-[100/ (1+RS)]

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Note: RS =

2.1 Review of literature

Title : How Stocks Trade & How Price Movement

take Place

Author : Abhishek Parka

Journal : Fundamental of stock market

Keywords : Articles, BSE, EP knowledge center, Indian

stock.

market, NSE

Abstract :

At the most fundamental level, supply and demand in the marketdetermines stock prices. Price times the number of shares outstanding

(market capitalization) is the value of a company, comparing just the share

price of two companies is meaningless. Theoretically, earnings are what

affect investors valuation of a company, but there are other indicators

that investors use to predict stock price. Remember, it is investors21


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sentiments, attitudes and expectations that ultimately affect stock prices.

There are many theories that try to explain the way stock prices move the

way they do. Unfortunately, there is no one theory that can explain

everything.

Title : Effect of Mergers on the Share Price

Movement of the Acquiring

Firms: A UK study

Author : J.C Dodds*, J.P. Quek*

Journal : journal of business finance & accounting

Abstract :

The profitability of mergers in Britain has not received the same attention

as in the USA. This study examines mergers for the UK industrial sector as

a whole for a period (1974-76) when merger activity was relatively slack. A

standard methodology is used, but the size effects and the activeness of

acquirers as well as the financing of the acquisition are examined. The

conclusions contradict to some extent those found by other researchers in

that the evidence was incenses-tent with the efficient markets hypothesis.

The effect of taking firm size into account was found to reduce the

standard deviations of the sample and it would appear that the cash

mergers were viewed as less desirable by the market compared to equity

exchange. For the separation of merger active Hon active firms it was

found that there was less dispersion of the residuals for non-merger active

firms.

ARTICLE

EQUITY ANALYSIS: A PROFESSIONAL APPLICATION

Article from:

Academy of Accounting and Financial Studies Journal22


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Article date:

January 1, 2006

Author:

Ricks, Robber; Witcher, Chad; Mattson, Kyle

ABSTRACT:

An exercise to link senior-level investment courses with real world, equities

analysis is described. Whereas many students fulfill the academic

requirements during their course work in investment analysis, few truly

grasp the real world application of the theories and thus fail to fully

develop the skills being taught. The result is that students often gain only

a basic-level, academic knowledge of securities analysis and their research

product is of inferior quality.

Recognizing this, a proposed senior-level investments course syllabus is

described in detail. In essence, rather than focusing solely upon studying

and discussing the principles of investing, the focus.

Title : Equity valuation and corporate control

Author : Deangelo, Linda Elizabeth

Journal : Accounting review

Publisher : American accounting association

Last updated: 1990

Abstract :

The difference between open-market share prices and equity exchange

value is illustrated by the large premiums offered for large public

corporations during takeover battles. Equity valuations, independent

appraisals of equity value, are usually demanded by shareholders in

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takeover fights. The use of accounting to estimate equity exchange values

rather than justifying values to public stakeholders and interests indicates

that accounting information plays a broad role in corporate governance

and equity valuation. equity valuations demand a type of accounting

information that is distinct from information typically demanded by

management. Accounting information used for equity valuations affects

shareholder wealth by affecting real source allocations during assertions of

corporate control.

CHAPTER-III24


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(PROFILE OF THE ORGANIZATION)

3.1 COMPANY PROFILE

INTER-CONNECTED STOCK EXCHANGE OF INDIA

LTD.

CONCEPT:

Inter-connected stock exchange of India limited [ISE] has been

promoted by 14 Regional stock exchanges to provide cost-effective trading

linkage/connectivity to all the members of the participating Exchanges,with the objective of widening the market for the securities listed on these

Exchanges. ISE aims to address the needs of small companies and retail

investors with the guiding principle of optimizing the existing

infrastructure and harnessing the potential of regional markets, so as to

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transform these into a liquid and vibrant market through the use of state-

of-the-art technology and networking.

The participating Exchanges of ISE in all about 4500 stock brokers,

out of which more than 200 have been currently registered as traders on

ISE. In order to leverage its infrastructure and to expand its nationwide

reach, ISE has also appointed around 450 Dealers across 70 cities other

than the participating Exchange centers. These dealers are

administratively supported through the regional offices of ISE at Delhi

[north], Kolkata [east],Coimbatore and Hyderabad [south] and Nagpur

[central], besides Mumbai.

ISE has also floated a wholly-owned subsidiary, ISE securities and

services limited [ISS], which has taken up corporate membership of the

National Stock Exchange of India Ltd. [NSE] in both the Capital Market and

Futures and Options segments and The Stock Exchange, Mumbai In the

Equities segment, so that the traders and dealers of ISE can access other

markets in addition to the ISE markets and their local market. ISE thus

provides the investors in smaller cities a one-stop solution for cost-

effective and efficient trading and settlement in securities.

With the objective of broad basing the range of its services, ISE has started

offering the full suite of DP facilities to its Traders, Dealers and their

clients.

OBJECTIVES

Create a single integrated national level solution with access tomultiple markets for providing high cost-effective service to millions

of investors across the country.

Create a liquid and vibrant national level market for all listed

companies in general and small capital companies in particular.

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Optimally utilize the existing infrastructure and other resources of

participating Stock Exchanges, which are understated now.

Provide a level playing field to small Traders and Dealers by offering

an opportunity to participate in a national markets having

investment-oriented business.

Reduce transaction cost. Provide clearing and settlement facilities to the Traders and Dealers

across the Country at their doorstep in a decentralized mode. Spread demat trading across the country.

3.2 SAILENT FEATURES

Network of intermediaries:

As at the beginning of the financial year 2003-04, 548 intermediaries (207

Traders and 341 Dealers) are registered on ISE. A broad of members forms

the bedrock for any Exchange, and in this respect, ISE has a large pool of

registered intermediaries who can be tapped for any new line of business.

Robust Operational Systems:

The trading, settlement and funds transfer operations of ISE and ISS

are completely automated and state-of-the-art systems have been

deployed. The communication network of ISE, which has connectivity with

over 400 trading members and is spread across46 cities, is also used for

supporting the operations of ISS. The trading software and settlement

software, as well as the electronic funds transfer arrangement established

with HDFC Bank and ICICI Bank, gives ISE and ISS the required operational

efficiency and flexibility to not only handle the secondary market functions

effectively, but also by leveraging them for new ventures.

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Skilled and experienced manpower:

ISE and ISS have experienced and professional staff, who have wide

experience in Stock Exchanges/ capital market institutions, with in some

cases, the experience going up to nearly twenty years in this industry. The

staff has the skill-set required to perform a wide range of functions,

depending upon the requirements from time to time.

Aggressive pricing policy:

The philosophy of ISE is to have an aggressive pricing policy for the

various products and services offered by it. The aim is to penetrate the

retail market and strengthen the position, so that a wide variety of

products and services having appeal for the retail market can be offered

using a common distribution channel. The aggressive pricing policy also

ensures that the intermediaries have sufficient financial incentives for

offering these products and services to the end-clients.

Trading, Risk Management and Settlement Software

Systems:

The ORBIT (Online Regional Bourses Inter-connected Trading) and AXIS

(Automated Exchange Integrated Settlement) software developed on the

Microsoft NT platform, with consultancy assistance from Microsoft, are the

most contemporary of the trading and settlement softwares introduced in

the country. The applications have been built on a technology platform,

which offers low cost of ownership, facilitates simple maintenance and

supports easy up gradation and enhancement. The softwares are so

designed that the transaction processing capacity depends on the

hardware used; capacity can be added by just adding inexpensive

hardware, without any additional software work.

Vibrant Subsidiary Operations:

ISS, the wholly owned subsidiary of ISE, is one of the biggest Exchange

subsidiaries in the country. On any given day, more than 250 registered

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intermediaries of ISS traded from 46 cities across the length and breadth

of the country.

MISSION

ISE shall endeavor to provide flexible and cost-effective access to multiple

markets to its intermediaries across the country using the latesttechnology.

BOARD OF DIRECTORS

Shri K. Rajendran Nair - Chairman, Public Interest

Director Shri P. J. Mathew - Managing Director

Shri S. Ravi - Public Interest Director Shri K. V. Thomas - Shareholder Director Shri K. D. Gupta - Shareholder Director ShriManinder Singh Grewal - Shareholder Director ShriSanjeevPuri - Shareholder Director Shri T. N. T. Nayar - Shareholder Director Shri P. Sivakumar - Shareholder Director ShriSurendraHolani - Trading Member Director Shri Rajiv Vohra Trading Member Director

3.3 MILESTONES

July 6, 1996 A report on Inter-connected Market System (ICMS) submitted

to the Federation of Indian Stock Exchange (FISE).

October 26, 1996 Steering Committee was constituted by FISE at Hyderabad. January 4, 1997 Price water House Coopers, the management consultancy

firm, submitted a feasibility report and recommended the

establishment of ICMS.

January 22, 1998 ISE incorporated as a company limited by guarantee.

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November 18, 1998 SEBI grants recognition to ISE.

February 26, 1999 Commencement of trading on ISE.

December 31, 1999 Induction of 450 Dealers commences.

January 18, 2000 Incorporation of ISS as a company limited by share capital.

February 24, 2000 SEBI registers ISS for the Capital Market segment of NSE.

May 3, 2000 Commencement of trading by ISS in the Capital Market

segment of NSE.

January 10 , 2001 Turnover in the Capital Market segment of NSE crosses Rs.

1000 million per day.

February 28, 2001 Turnover of Rs. 1508.80 million recorded by ISS in the Capital

Market segment of NSE.

May 4, 2001

May 19, 2001

Internet trading for clients started by ISS for the NSE

segment through Dot Ex Plaza.

ISEs website, www.iseindia.com, launched

February 13, 2002 SEBI registers ISS for the Futures & Options segment of NSE.

May 6, 2002 ISS commences trading in the Futures & Options segment of

NSE.

March 12, 2003 ISS admitted as a member of the Equities segment of BSE.

June 21, 2003 First Investor Education Program under the Securities Market

Awareness Campaign (SMAC) of SEBI conducted at Vashi.

January 9, 2004 Peak turnover of Rs.3034.90 million recorded by ISS in the

Capital Market segment of NSE.

May 17, 2004 First DP branch office opened at Coimbatore by ISE.

July 24, 2004 Second DP branch opened at New Delhi by ISE.

September 3, 2004 Third DP branch opened at Kolkata by ISE

December 27, 2004 Trading in the BSE equities segment started by ISS.

September 15, 2005 Approval of ISEs Corporatisation and Demutualization

Scheme by SEBI.

October 20, 2005 Switchover to Direct Client Dealing commences in ISS.

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3.4 INDUSTRY PROFILE

The Indian pharmaceutical industry is the world's second-largest by

volume and is likely to lead the manufacturing sector of India. India's bio-

tech industry clocked a 17 percent growth with revenues of Rs.137 billion

($3 billion) in the 2009-10 financial year over the previous fiscal. Bio-

pharma was the biggest contributor generating 60 percent of theindustry's growth at Rs.8,829 corer, followed by bio-services at Rs.2,639

corer and bio-agri at Rs.1,936 corer. The first pharmaceutical company

are Bengal Chemicals and Pharmaceutical Works , which still exists today

as one of 5 government-owned drug manufacturers, appeared

in Calcutta in 1930. For the next 60 years, most of the drugs in India were

imported by multinationals either in fully-formulated or bulk form.

The government started to encourage the growth of drug manufacturing

by Indian companies in the early 1960s, and with the Patents Act in 1970 ,

enabled the industry to become what it is today. This patent act removed

composition patents from food and drugs, and though it kept process

patents, these were shortened to a period of five to seven years. The lack

of patent protection made the Indian market undesirable to the

31
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multinational companies that had dominated the market, and while they

streamed out, Indian companies started to take their places. They carved a

niche in both the Indian and world markets with their expertise in reverse-

engineering new processes for manufacturing drugs at low costs. Although

some of the larger companies have taken baby steps towards drug

innovation, the industry as a whole has been following this business model

until the present.

In 2002, over 20,000 registered drug manufacturers in India sold $9 billion

worth of formulations and bulk drugs. 85% of these formulations were sold

in India while over 60% of the bulk drugs were exported, mostly to the

United States and Russia. Most of the players in the market are small-to-

medium enterprises; 250 of the largest companies control 70% of the

Indian market . Thanks to the 1970 Patent Act, multinationals representonly 35% of the market, down from 70% thirty years ago.

Most Pharma companies operating in India, even the multinationals,

employ Indians almost exclusively from the lowest ranks to high level

management. Mirroring the social structure, firms are very hierarchical.

Homegrown pharmaceuticals, like many other businesses in India, are

often a mix of public and private enterprise. Although many of thesecompanies are publicly owned, leadership passes from father to son and

the founding family holds a majority share.

In terms of the global market, India currently holds a modest 1-2% share,

but it has been growing at approximately 10% per year. India gained its

foothold on the global scene with its innovatively-engineered generic

drugs and active pharmaceutical ingredients (API), and it is now seeking to

become a major player in outsourced clinical research as well as contractmanufacturing and research. There are 74 U.S. FDA-approved

manufacturing facilities in India, more than in any other country outside

the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications

(ANDA) to the FDA are expected to be filed by Indian companies]. Growth

in other fields notwithstanding, generics are still a large part of the picture.32


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London research company Global Insight estimates that Indias share of

the global generics market will have risen from 4% to 33% by 2007.

THE GROWTH SCENARIO

India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14

percent per year. It is one of the largest and most advanced among the

developing countries.

Over 20,000 registered pharmaceutical manufacturers exist in the country.

The domestic pharmaceuticals industry output is expected to exceed

Rs260 billion in the financial year 2002, which accounts for merely 1.3% of

the global pharmaceutical sector. Of this, bulk drugs will account for Rs 54

bn (21%) and formulations, the remaining Rs 210 bn (79%). In financial

year 2001, imports were Rs 20 bn while exports were Rs87 bn.

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CHAPTER-IV(DATA ANALYSIS

&

INTERPRETATION)

4.1 Equity Analysis of Select Pharma Company

DR. Reddys laboratories

Established in 1984, Dr. Reddys Laboratories (NYSE: RDY) is an emerging

global pharmaceutical company.

As a fully integrated pharmaceutical company, our purpose is to provide

affordable and innovative medicines through our three core businesses: Pharmaceutical Services and Active Ingredients, comprising our

Active Pharmaceuticals and Custom Pharmaceuticals businesses;

Global Generics, which includes branded and unbranded generics;and

Proprietary Products, which includes New Chemical Entities (NCEs),

Differentiated Formulations, and Generic Biopharmaceuticals.

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Our products are marketed globally, with a focus on India, US, Europe and

Russia. Dr. Reddys conducts NCE research in the areas of metabolic

disorders, cardiovascular indications, anti-infectives and inflammation.

Our strong portfolio of businesses, geographies and products gives us an

edge in an increasingly competitive global market and allows us to provide

affordable medication to people across the world, regardless of geographic

and socio-economic barriers.

Board of directors

Mr. Amit Patel - Vice President, Corporate Development & Strategic

Planning

Dr. K Anji Reddy, chairman

Mr. GV Prasad - vice chairman & chief executive

Mr. Satish Reddy - managing director & COO

Dr. Reddy Laboratories Ltd - Capital Structure

Period Instrument

AuthorizedCapital

IssuedCapital - P A I D U P -

From To (Rs. cr)(Rs.cr)

Shares(nos)

FaceValue

Capital (Rs.Cr)

2009 2010EquityShare 120 84.4

168845585 5 84.4

2008 2009EquityShare 100 84.2

168468777 5 84.2

2007 2008EquityShare 100 84.1

168172746 5 84.1

2006 2007EquityShare 100 84

167912180 5 84

35
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2005 2006EquityShare 50 38.3

76694570 5 38.3

2004 2005EquityShare 50 38.3

76518949 5 38.3

2003 2004EquityShare 50 38.3

76518949 5 38.3

2002 2003EquityShare 50 38.3

76515948 5 38.3

2001 2002EquityShare 50 38.3

76515948 5 38.3

2000 2001EquityShare 50 31.6

31588780 10 31.6

1999 2000EquityShare 30 26.5

26487238 10 26.5

1995 1999EquityShare 30 26.5

26487238 10 26.5

1994 1995EquityShare 30 46.5 2250000 3 0.7

1994 1995EquityShare 30 46.5

23974176 10 24

1993 1994EquityShare 30 6.6 6557700 10 6.6

1992 1993EquityShare 10 6.6 6557700 10 6.6

1991 1992EquityShare 5 3.3 3278850 10 3.3

1989 1991EquityShare 3 2.2 2185900 10 2.2

1988 1989EquityShare 3 1.4 1366050 10 1.4

1986 1988EquityShare 1.5 1.4 1366250 10 1.4

1985 1986 EquityShare 1.5 0.2 243500 10 0.2

Dr. Reddy Laboratories Ltd. Profit & Loss A/c

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Mar'10 Mar'09 Mar'08 Mar'07 Mar'06

INCOME:

Sales Turnover 4,469.60 4,080.40 3,428.40 3,872.92 2,101.97

Excise Duty 74 80.9 84.51 89.66 98.71

NET SALES 4,395.60 3,999.50 3,343.89 3,783.26 2,003.25

Other Income 0 0 0 0 0

TOTAL INCOME 4,576.90 4,249.20 3,500.53 4,056.00 2,094.46EXPENDITURE:

Manufacturing Expenses 221.4 195.9 207.46 213.46 123.18

Material Consumed 1,482.10 1,469.90 1,253.46 1,121.59 756.15

Personal Expenses 516.4 412.5 366.28 299.04 205.85

Selling Expenses 443.8 448.7 375.37 323.4 243.15

Administrative Expenses 643.4 714.5 558.6 498.42 357.86

Expenses Capitalised 0 0 0 0 0

Provisions Made 0 0 0 0 0

TOTAL EXPENDITURE 3,307.10 3,241.50 2,761.19 2,455.91 1,686.19

Operating Profit 1,088.50 758 582.7 1,327.35 317.06

EBITDA 1,269.80 1,007.70 739.35 1,600.08 408.27

Depreciation 222.4 193.6 161.99 133.5 111.33

Other Write-offs 19.3 19.7 20.71 18.16 13.31

EBIT 1,028.10 794.4 556.65 1,448.42 283.63

Interest 16 27.4 14.69 51.96 24.63

EBT 1,012.10 767 541.96 1,396.47 259

Taxes 238.7 168.6 108.88 188.99 52.64

Profit and Loss for the Year 773.4 598.4 433.08 1,207.48 206.36

Non Recurring Items 72.7 -37.5 40.65 -38.79 4.76

Other Non Cash Adjustments -0.1 -0.1 0 0 0

Other Adjustments 0.1 0.1 1.55 8.19 0.01

REPORTED PAT 846.1 560.9 475.22 1,176.86 211.12

KEY ITEMS

Preference Dividend 0 0 0 0 0

Equity Dividend 190 105.3 63.06 62.97 38.35

Equity Dividend (%) 225.11 125.05 74.99 75 100

Shares in Issue (Lakhs) 1,688.45 1,684.69 1,681.73 1,679.12 766.95

EPS - Annualised (Rs) 50.11 33.29 28.26 70.09 27.53

Dr. Reddy Laboratories Ltd. Balance Sheet37


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Liabilities 2010 2009 2008 2007 2006Share Capital 84.4 84.2 84.09 83.96 38.35Reserves &Surplus

5,830.20 5,174.90

4,727.72

4,289.40

2,223.79

Net Worth5,914.

605,259.1

04,811.

804,373.

362,262.

14Secured Loans 0.8 2.6 3.4 1.92 145.13Unsecured Loans 562.4 637.7 458.91 327.98 778.74TOTALLIABILITIES

6,477.80

5,899.40

5,274.11

4,703.26

3,186.01

Assets

Gross Block2,425.7

0 2,157.301,750.2

11,291.1

91,052.9

0(-) Acc.Depreciation

1,110.10 946.5 762.8 609.15 491.08

Net Block 1,315.

601,210.8

0 987.42 682.04 561.82

Capital Work inProgress. 745.4 411.2 245.71 280.61 112.92

Investments.2,652.7

0 1,865.102,080.7

1 966.99 911.36Inventories 897.4 735.1 640.93 487.58 443.1

Sundry Debtors1,060.5

0 1,419.70 897.711,055.7

0 581.22

Cash And Bank 368 384.4 537.341,456.7

1 650.94Loans AndAdvances

1,321.40 1,331.20

1,272.02

1,028.56 723.61

Total CurrentAssets

3,647.30

3,870.40

3,348.01

4,028.55

2,398.87

Current Liabilities1,543.8

0 1,163.30 786.36 731.96 624.25Provisions 339.4 294.8 601.38 522.97 174.7Total CurrentLiabilities

1,883.20

1,458.10

1,387.74

1,254.93 798.95

NET CURRENTASSETS

1,764.10

2,412.30

1,960.27

2,773.62

1,599.92

Misc. Expenses 0 0 0 0 0TOTAL ASSETS(A+B+C+D+E)

6,477.80

5,899.40

5,274.11

4,703.26

3,186.01

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Dr. Reddy Laboratories Ltd. Earning Per Share

1) Earning Per Share (EPS ) : It is the earnings accuring to theEquity Share holder on every one share held by him. In other words,

Earning Per Share is the net profit after tax and preference dividend

that is earned on one unit of equity, which is one equity share. It is

calculated as

Formula: EPS = Profit after tax Preference dividend x 100No. of Equity Shares

Particulars 2010 2009 2008 2007 2006REPORTED PAT 846.1 560.9 475.22 1,176.86 211.12Shares in Issue(Lakhs) 1,688.45 1,684.69 1,681.73 1,679.12 766.95EPS - Annualised (Rs) 50.11 33.29 28.26 70.09 27.53

Interpretation: In the Year 2006 when shares are issued of 766.95 then the

PAT is 211.12 then EPS showing at 27.53 where as in 2007 The Shares

issued by the company is higly then the PAT is increased and EPS is also

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PAT and EPS is increased. In the year 2009 shares issued more than 2007

but the PAT & EPS is decreased in compare to 2007. In 2010 shares issued

highly as compare to back 4 years but PAT & EPS is decreased compare to

2007. Overall EPS is best in 2007 when compare to other years.

Dr. Reddy Laboratories Ltd. Price Earning Ratio

2) Price Earning Ratio (P/E Ratio): It express the relationshipbetween Market price of one share of a company and the earnings per

share of that company. It is calculated as

Formula: MPS = Market Price of Equity ShareEarning Per Share

Particulars 2010 2009 2008 2007 2006Market Price 1274.95 490.20 591.25 728.25 1421.40EPS - Annualised (Rs) 50.11 33.29 28.26 70.09 27.53Price Earning Ratio 25.44 14.72 20.92 10.39 51.6

Interpretation: In the year 2006 the Market Price is 1421.40 EPS is 27.53

and P/E Ratio is 51.6 Whereas in 2007 M.P. has decreased of 728.25 but

EPS value is increased, and P/E decreased. In 2008 M.P, EPS, P/E totally

decreased. In 2009 M.P. share is less when compare to 2006 but EPS is

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4) Dividend Pay Out Ratio :- It is the ratio of Dividend Per share toEarning per share. It is calculated as

Formula:

DPS

EPS

YEAR DPS EPS DPS/EPS

2006 0.002 27.53 7.1013

2007 0.00170.0

9 2.1229

2008 0.00228.2

6 6.8365

2009 0.00333.2

9 8.0234

2010 0.00350.1

1 5.909

Interpretation: The Dividend Pay out ratio is higher in the year 2009 of

8.0234, then in the year 2008 it is 6.8365 in 2006 it is decreases of 7.1013

then 2010 & 2007 is decreases of 5.909, & 2.1229

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5) Dividend Yield Ratio: It Expenses the relationship betweenDividend Earned Per share and the Market Price per share. In other words,

it expenses the return on investment by purchasing a share in the stock

market without accounting for any capital appreciation. It is calculated as

Formula:

Dividend Per Share

Market Price of Share

YEAR DPS MPS DPS/MPS2006 0.002 1421 1.412007 0.001 728.3 1.372008 0.002 591.3 3.382009 0.003 490.2 6.122010 0.003 1275 2.35

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Interpretation: The Dividend Yield Ratio is increases in the year 2009 of

6.12 When compare to other year but in the year 2010 it is decreases of

2.35. Overall the financial position of the company is satisfactory in the

year 2009.

Trend Analysis - Dr. Reddy's Laboratories Ltd .

Trend Analysis: It involves computation of index numbers of movements of various financial items in the financial statements for a

number of periods. It helps in understanding the nature and rate of

movements in various financial factors. However, conclusions should not

be drawn on the basis of single trend. Trends of related items should be

carefully studied. Due to weightage should be given to extraneous factors

such as Govt Policy, Economic conditions, etc; as they can effect the trend

significantly.

YEAR 2010 2009 2008 2007 2006Sales Turnover 4,469.60 4,080.40 3,428.40 3,872.92 2,101.97REPORTED PAT 846.1 560.9 475.22 1,176.86 211.12

Interpretation: On 2006 Sales 2101.97 and PAT showing 211.12 on 2007

Sales 3872.92 and PAT showing 1176.86 has increased highly. On 2008

Sales little bit decrease but PAT is huge decreased compare to 2007. In

2008 Sales 3428.40 continuously going down proportionately profits also

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come down. In 2009 Sales increased and profit also little bit increased,

but in 2010 sales is increased if we compare last 5 years and profit also

increased but in 2007 sales increase little much but profit they got highly.

Overall the profit has been increased in the year 2007 of 1176.86 than

2010.

Shareholding pattern - Dr. Reddy's Laboratories Ltd.

Holder's NameNo of Shares

% ShareHolding

Promoters 43417812 25.66%ForeignInstitutions 46039165 27.21%

GeneralPublic 14110545 8.34%FinancialInstitutions 13730635 8.11%NBanksMutualFunds 8422444 4.98%

OtherCompanies 7553850 4.46%

ForeignNRI 2782551 1.64%

Others 305905 0.18%

ForeignIndustries 2500 0.00%

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AUROBINDO PHARMA LTD

Company History

Aurobindo Pharma was born of a vision. Founded in 1986 by

Mr. P.V.Ramaprasad Reddy, Mr. K.Nityananda Reddy and a small, highly

committed group of professionals, the company became a public venture

in 1992. It commenced operations in 1988-89 with a single unit

manufacturing semi synthetic penicillins (SSPs) at Pondicherry.

Aurobindo Pharma had gone public in 1995 by listing its shares in various

stock exchanges in the country. The company is the market leader in

semi-synthetic penicillin drugs. It has a presence in key therapeutic

segments like SSPs, cephalosporins, antivirals, CNS, cardio-vascular,

gastroenterology, etc.

Board of Directors

Dr. M.SivakumaranWhole-time Director

Mr. M.Sitarama MurthyNon-Executive Director

Dr.P.L.Sanjeev Reddy

Non-Executive Director

Vision "To become Asia's leading and one among the top 15 generic Pharma

companies in the world, by 2015"

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Mission Aurobindo's mission is to become the most valued Pharma partner for the

World Pharma fraternity by continuously researching, developing and

manufacturing a wide range of pharmaceutical products complying to the

highest regulatory standards.

Aurobindo Pharmacy Ltd - Capital Structure

Period InstrumentAuthorized Capital

IssuedCapital - P A I D U P -

From To (Rs. cr)

(Rs.

cr)

Shares

(nos)

Face

Value

Capital (Rs.

Cr)2009 2010

EquityShare 66 27.9

55728837 5 27.9

2008 2009EquityShare 50 26.9

53765268 5 26.9

2007 2008EquityShare 50 26.9

53765268 5 26.9

2006 2007EquityShare 50 26.7

53348637 5 26.7

2005 2006EquityShare 50 26.6

53270000 5 26.6

2004 2005

Equity

Share 50 25.4

507700

00 5 25.4

2003 2004EquityShare 50 25.4

50770000 5 25.4

2002 2003EquityShare 50 23.2

23250000 10 23.2

2001 2002EquityShare 50 20.7

20670000 10 20.7

2000 2001EquityShare 50 20

20002000 10 20

1998 1999EquityShare 20 9.4

9450000 10 9.4


4725000 10 4.7


4725000 10 4.7


4725000 10 4.7


4725000 10 4.7


1850000 10 1.8

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Profit and Loss A/c - Aurobindo Pharma Ltd

Particulars 2010 2009 2008 2007 2006

INCOME:

Sales Turnover 3,319.60 2,885.25 2,351.12 1,979.76 1,472.36

Excise Duty 67.54 90.35 116.49 103.67 78.72

NET SALES 3,252.06 2,794.90 2,234.63 1,876.09 1,393.64

Other Income 0 0 0 0 0

TOTAL INCOME 3,267.23 2,825.57 2,341.87 1,949.64 1,417.01

EXPENDITURE:


Material Consumed 1,862.54 1,721.81 1,460.18 1,241.97 951.85


Selling Expenses 122.27 127.29 65.98 47.49 35.14

Administrative Expenses 82.73 87.35 102.88 73.07 50.62

Expenses Capitalized 0 0 0 0 0

Provisions Made 0 0 0 0 0TOTALEXPENDITURE 2,494.78 2,278.03 1,917.10 1,597.35 1,213.58

Operating Profit 757.28 516.87 317.53 278.74 180.06

EBITDA 772.45 547.54 424.77 352.29 203.43

Depreciation 95.46 82.41 74.6 71.84 51.12

Other Write-offs 0 0 0 0 0EBIT 676.99 465.13 350.17 280.45 152.31

Interest 62.58 81.2 59.01 76.07 60.64

EBT 614.41 383.93 291.16 204.38 91.67Taxes 184.09 35.45 54.06 -0.1 17.08Profit and Loss for theYear 430.32 348.48 237.1 204.54 74.59

Non Recurring Items 97.05 -224.23 48.08 21.5 -2.72

Other Non CashAdjustments -1.61 4.29 5.6 3.04 -2.49

Other Adjustments 0 0 0 0 0

REPORTED PAT 525.76 128.54 290.78 229.08 69.38

KEY ITEMS


Equity Dividend 27.74 24.2 17.57 13.34 8.12

Equity Dividend (%) 99.56 90.02 65.36 50.01 30.49

Shares in Issue (Lakhs) 557.29 537.65 537.65 533.49 532.7


Balance Sheet - Aurobindo Pharma Ltd

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Liabilities 2010 2009 2008 2007 2006

Share Capital 27.86 26.88 26.88 26.69 26.67

Reserves & Surplus 1,886.50 1,293.95 1,193.72 902.63 878.78

Net Worth 1,914.361,320.8

3 1,220.60 929.32 905.45

Secured Loans 702.25 813.02 581.87 685.95 644.12

Unsecured Loans 1,242.53 1,301.66 1,173.78 1,290.39 561.1

TOTAL LIABILITIES 3,859.143,435.5

1 2,976.25 2,905.662,110.6

7Assets

Gross Block 1,526.88 1,258.70 1,132.01 944.29 913.64

(-) Acc. Depreciation 481.54 385.83 304.93 231.81 195.22

Net Block 1,045.34 872.87 827.08 712.48 718.42Capital Work inProgress. 499.47 285.96 124.69 183.14 145.45

Investments. 379.24 277.74 290.04 202.73 174.16

Inventories 944.82 735.52 651.23 547.28 383.44

Sundry Debtors 1,151.35 1,105.67 798.97 624.41 569

Cash And Bank 4.56 86.94 239.32 500.07 142.07

Loans And Advances 593.67 696.6 584.78 568.82 370.77Total CurrentAssets 2,694.40

2,624.73 2,274.30 2,240.58

1,465.28

Current Liabilities 719.94 595.02 506.06 409.64 378.96

Provisions 39.37 30.77 33.8 23.63 13.68Total CurrentLiabilities 759.31 625.79 539.86 433.27 392.64NET CURRENTASSETS 1,935.09

1,998.94 1,734.44 1,807.31

1,072.64

Misc. Expenses 0 0 0 0 0

TOTAL ASSETS(A+B+C+D+E) 3,859.14

3,435.51 2,976.25 2,905.66

2,110.67

Aurobindo Pharma Ltd. Earning Per Share

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1) Earning Per Share (EPS ) : It is the earnings accuring to theEquity Share holder on every one share held by him. In other words,

Earning Per Share is the net profit after tax and preference dividend


calculated as


Particulars 2010 2009 2008 2007 2006REPORTED PAT 525.76 128.54 290.78 229.08 69.38Shares in Issue(Lakhs) 557.29 537.65 537.65 533.49 532.7EPS - Annualised (Rs) 94.34 23.9 54.08 42.93 13.02

Interpretation: In the year 2006 PAT is 69.38 & shares issued is 532.7

EPS is 13.02. In the year 2007 PAT is increased of 229.08 shares is little

bit increased wheareas EPS is high of 42.93. In 2008 PAT, Shares issued &

EPS is totally increased then compare to other pervious years. As

compared to 2009 PAT, Shares Issued, & EPS is increased in 2010.

Aurobindo Pharma Ltd. Price Earning Ratio51


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2) Price Earning Ratio (P/E Ratio): It express the relationshipbetween Market price of one share of a company and the earnings per

share of that company. It is calculated as


Particulars 2010 2009 2008 2007 2006

Market Price 959.4 188.15 291.3 678.55 683.2


Price Earning Ratio 10.16 7.87 5.38 15.8 52.47

Interpretation:

In the Year 2006 Market Price is 683.2 and EPS is 13.02, P/E is 52.47,

whereas in 2007 increase in M.P. & EPS but decrease in P/E of 15.8. In the

year 2008 M.P. & P/E is less when compare to both years but EPS is more.

In 2009 M.P. is 188.15 and EPS is 23.9 and P/E. is 7.87. In the Year 2010

M.P. is Huge when compare to 2009 hence EPS & P/E is increased.

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3) Dividend Per Share (DPS): It is the amount of dividend payableto the holder of one Equity Share. It is calculated as

Formula: Dividend on Equity Share Capital

No. of Equity Shares

Year Dividend

No. of

Equity Shares DPS

2006 1.5532.7 0.00281

5

2007 2.5533.49 0.00468

6

2008 3.25537.65 0.00604

4

2009 4.5537.65 0.00836

9

2010 5

557.29 0.00897

1

Interpretation: In table & Graph it shows that in the year 2010Dividend is 5 & No. of Equity shares is 557.29 hence increases but DPS is

increases but in the year 2009 DPS is increases of 0.008369 compare to

other years. Overall the Financial Position of the Company is Satisfactory.

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4) Dividend Pay Out Ratio :- It is the ratio of Dividend Per share toEarning per share. It is calculated as

Formula:

DPS

EPS

DPS EPS DPS/EPS

20060.00281

513.02 0.0002162

1

20070.00468

642.93 0.0001091

5

20080.00604

454.08 0.0001117

6

20090.00836

923.9 0.0003501

7

20100.00897

194.34

0.9509

Interpretation: The Dividend Pay out ratio is higher in the year 2010of 09509, then in the year 2008 it is 0.00035017 in 2006 it is decreases of

0.00021621 then 2007 & 2008 is decreases of 0.00010915 & 0.00011176.

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market without accounting for any capital appreciation. It is calculated asFormula:

Dividend Per Share


Year DPS MPS DPS/MPS2006 0.00282 683.2 4.12032007 0.00469 678.55 6.9059

2008 0.00604 291.3 2.07482009 0.00837 188.15 4.4482010 0.00897 959.4 9.3506

Interpretation: The Dividend Yield Ratio is increases in the year 2010 of

9.3506 When compare to other year but in the year 2010 it is decreases of

2.0748. Overall the financial position of the company is satisfactory in the

year 2009.

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Trend Analysis Aurobindo Pharma Ltd .

Trend Analysis: It involves computation of index numbers of movements of various financial items in the financial statements for a

number of periods. It helps in understanding the nature and rate of

movements in various financial factors. However, conclusions should not

be drawn on the basis of single trend. Trends of related items should be

carefully studied. Due to weightage should be given to extraneous factors

such as Govt Policy, Economic conditions, etc; as they can effect the trend

significantly.

Particulars 2010 2009 2008 2007 2006Sales

Turnover 3,319.602,885.2

52,351.1

21,979.7

61,472.3

6Reported PAT 525.76 128.54 290.78 229.08 69.38

Interpretation: - In the Year 2006 Salesturnover is 1472.36 and PAT is

69.38, in the year 2007 Sales & PAT increased to 1979.76 & 229.08. In

2008 excess sales & PAT of 2351.12 & 290.78 as compare to back 2 years.

In 2009 Sales is increased but profit is decreased than 2008, whereas in

2010 huge increase in sales and PAT as compare to previous years i.e.,

3319.60 & 525.76. Overall the Performace of the Sales turnover is

satisfactory in the year 2010.

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Shareholding pattern - Aurobindo Pharma Ltd.

Holder's Name No of Shares% Share

Holding

Promoters 31671899 54.40%

ForeignInstitutions 15355615 26.37%

GeneralPublic 3584432 6.16%

FinancialInstitutio

ns 2799262 4.81%NBanksMutualFun

ds 2688292 4.62%



Others 78685 0.14%

ForeignOcb 68635 0.12%

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CIPLA HISTORY

Khwaja Abdul Hamied, the founder of Cipla, was born on October 31,

1898. The fire of nationalism was kindled in him when he was 15 as he

witnessed a wanton act of colonial highhandedness. The fire was to

blaze within him right through his life.

In college, he found Chemistry fascinating. He set sail for Europe in

1924 and got admission in Berlin University as a research student of

"The Technology of Barium Compounds". He earned his doctorate

three years later.

In October 1927, during the long voyage from Europe to India, he

drew up great plans for the future. He wrote: "No modern industry

could have been possible without the help of such centres of researchwork where men are engaged in compelling nature to yield her

secrets to the ruthless search of an investigating chemist." His plan

found many supporters but no financiers. However, Dr Hamied was

determined to being "a small wheel, no matter how small, than be a

cog in a big wheel."

Board of Directors

FounderDr. K.A. Hamied(1898-1972)Chairman & Managing DirectorDr. Y.K. Hamied

Joint Managing DirectorMr. M.K. Hamied

Capital Structure - Cipla Ltd .

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Period Instrument

Authorized

CapitalIssuedCapital - P A I D U P -

From To (Rs. cr)(Rs.

cr)Shares(nos)

FaceValue

Capital (Rs.Cr)

2009201

0Equity

Share 175 160.88029213

57 2 160.6

2008200

9Equity

Share 175 155.77772913

57 2 155.5

2007200

8Equity

Share 175 155.77772913

57 2 155.5

2006200

7Equity

Share 175 155.77772913

57 2 155.5

2005200

6Equity

Share 175 60.22998702

33 2 60

2004200

5Equity

Share 65 60.22998702

33 2 60

2003200

4Equity

Share 65 60.25997234

9 10 60

2002200

3Equity

Share 65 60.25997234

9 10 60

2001200

2Equity

Share 65 60.25997234

9 10 60

2000200

1Equity

Share 65 60.25997234

9 10 60

1995199

9Equity

Share 25 20.21999078

3 10 20

1994199

5Equity

Share 25 18.71864740

0 1018.

6

1993199

4Equity

Share 25 3.2 3107900 10 3.1

1992199

3Equity

Share 10 3.2 31079010

0 3.1

1991199

2Equity

Share 1.9 1.6 15539510

0 1.6

1987199

1Equity

Share 1.9 1.6 15018410

0 1.5

1985198

7Equity

Share 1.9 0.8 7509210

0 0.8

1979 1985 EquityShare 0.5 0.4 37546 100 0.4

1962197

9Equity

Share 0.2 0.2 1877310

0 0.2

1947196

2Equity

Share 0.2 0.2 1746410

0 0.2

1945194

7Equity

Share 0.2 0.2 1500010

0 0.2

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1944194

5Equity

Share 0.1 0.1 600010

0 0.1

1943194

4Equity

Share 0.1 0 300010

0 0

1935194

3Equity

Share 0.1 0 1108 50 0

Cipla Pharma Ltd - Profit & Loss

Particulars 2010 2009 2008 2007 2006INCOME:

Sales Turnover 5,657.85 5,295.33 4,293.95 3,656.92 3,103.62

Excise Duty 52.16 61.04 90.66 94.93 122.27

NET SALES 5,605.69 5,234.29 4,203.29 3,561.99 2,981.35

Other Income 0 0 0 0 0TOTAL INCOME 5,699.90 5,324.34 4,268.20 3,627.77 3,019.33

EXPENDITURE:


Material Consumed 2,503.45 2,399.56 2,121.11 1,785.62 1,469.76


Selling Expenses 326.48 375.59 284.63 226.08 187.58Administrative Expenses 724.14 588.61 359.13 270.69 245.65Expenses Capitalised 0 0 0 0 0

Provisions Made 0 0 0 0 0

TOTAL EXPENDITURE 4,224.76 3,989.45 3,351.12 2,740.16 2,287.46Operating Profit 1,380.93 1,244.84 852.17 821.83 693.89

EBITDA 1,475.14 1,334.89 917.08 887.61 731.87

Depreciation 165.25 151.79 130.68 103.37 80.18

Other Write-offs 0 0 0 0 0

EBIT 1,309.89 1,183.10 786.4 784.24 651.69

Interest 28.3 52.23 18.05 11.16 16.07

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EBT 1,281.59 1,130.87 768.35 773.08 635.62

Taxes 243.5 124.5 136.93 139.95 102.2

Profit and Loss for the Year 1,038.09 1,006.37 631.42 633.13 533.42

Non Recurring Items 31.5 -229.56 70.01 34.9 74.22

Other Non Cash Adjustments 11.9 0 0 0 0

Other Adjustments 0 0 0 0 0

REPORTED PAT 1,081.49 776.81 701.43 668.03 607.64

KEY ITEMS


Equity Dividend 160.58 155.46 155.46 155.46 155.46Equity Dividend (%) 100 100 100 100 259.22Shares in Issue (Lakhs) 8,029.21 7,772.91 7,772.91 7,772.91 2,998.70EPS - Annualised (Rs) 13.47 9.99 9.02 8.59 20.26

Cipla Ltd - Balance Sheet

Liabilities 2010 2009200

8200

7200

6Share Capital 160.58 155.46 155.46 155.46 59.97

Reserves & Surplus 5,744.54 4,186.323,591.3

9 3,071.84 1,913.98

Net Worth 5,914.09 4,350.753,755.8

23,236.2

71,983.2

7

Secured Loans 0.41 2.79 16.98 7.25 51.27

Unsecured Loans 4.66 937.45 563.55 116.31 417.64

TOTAL LIABILITIES 5,919.16 5,290.994,336.3

5 3,359.832,452.1

8Assets

Gross Block 2,895.44 2,693.292,201.7

9 1,799.711,366.6

7(-) Acc.Depreciation 884.27 700.8 540.43 411.64 310.06

Net Block 2,002.20 1,983.521,652.3

9 1,379.101,047.2

9Capital Work inProgress. 684.24 366.32 233.12 73.19 87.01Investments. 265.1 81.32 94.75 117.8 22.43

Inventories 1,512.58 1,398.321,120.4

9 978.6 957Sundry Debtors 1,552.71 1,837.15 1,393.9 1,028.7 875.96

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1 8Cash And Bank 60.84 53 79.28 131.49 44.48Loans AndAdvances 2,357.29 1,131.10

1,150.30 695.81 414.84

Total Current Assets 5,483.42 4,419.573,743.9

82,834.6

82,292.2

8

Current Liabilities 1,177.11 1,177.00 980.05 643.78 733.84Provisions 1,347.66 391.71 416.81 410.13 272.31

Total CurrentLiabilities 2,524.77 1,568.71

1,396.86 1,053.91

1,006.15

NET CURRENTASSETS 2,958.65 2,850.86

2,347.12 1,780.77

1,286.13

Misc. Expenses 0 0 0 0 0

TOTAL ASSETS(A+B+C+D+E) 5,919.16 5,290.99

4,336.35 3,359.83

2,452.18

Cipla Ltd Earning Per Share

1) Earning Per Share (EPS ) : It is the earnings accuring to the

Equity Share holder on every one share held by him. In other words,Earning Per Share is the net profit after tax and preference dividend


calculated as


Particulars 2010 2009 2008 2007 2006

REPORTED PAT 1,081.49 776.81 701.43 668.03 607.64Shares in Issue(Lakhs) 8,029.21

7,772.91

7,772.91

7,772.91

2,998.70

EPS - Annualised(Rs) 13.46 10 9.02 8.59 20.26

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Interpretation : In the year 2006 the EPS value increases whencompare to after 4 years where as in 2010 PAT increases but EPS showingdown value.

Cipla Ltd. Price Earning Ratio

2) Price Earning Ratio (P/E Ratio): It express the relationship

between Market price of one share of a company and the earnings pershare of that company. It is calculated as


Particulars 2010 2009 2008 2007 2006

Market Price 338.35 220.05 220.00 236.80 662.25

EPS - Annualised (Rs)13.46 10 9.02 8.59 20.26

Price Earning Ratio 25.14 22 24.39 27.56 32.68

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Interpretation: The above table & graph shows that increase of Market

price, and EPS, and P/E in the year 2006 . whereas compare to other us

years it is decreases, and in 2010 Overall the position of the company is

satisfactory.

3) Dividend Per Share (DPS): It is the amount of dividend payableto the holder of one Equity Share. It is calculated as

Formula: Dividend on Equity Share CapitalNo. of Equity Shares

YearDividend

No. of EquityShares DPS

2006 22998.7 0.00066

7

2007 27772.91 0.00025

7

2008 2 7772.91 0.00025 7

2009 27772.91 0.00025

7

2010 28029.21 0.00024

9

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Interpretation: In table & Graph it shows that in the year 2006 2010

same Dividend is declaring of Rs.2 & No. of Equity shares is 8029.21 in

the year 2010 but DPS is increases in 2006 but not in 2010 by comparing

to other years. Overall the Financial Position of the Company is

Satisfactory.

4) Dividend Pay Out Ratio:- It is the ratio of Dividend Per share toEarning per share. It is calculated as

Formula:

DPS

EPS

Year DPSEPS DPS/EPS

20060.000667

20.263.2922

20070.000257

8.592.9918

20080.000257

9.022.84922

2009 0.00025 10 0.0000257

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7

20100.000249

13.461.8499

Interpretation: The Dividend Pay out ratio is higher in the year 2006 of

3.2922, then in the year 2007 it is 2.9918 in 2008 it is decreases of

2.84922 then 2010 & 2009s is decreases of 1.8499 & 0.0000257.



market without accounting for any capital appreciation. It is calculated as

Formula:

Dividend Per Share


YEAR DPS MPS DPS/MPS2006 0.000667 662.3 1.007172007 0.000257 236.8 1.0853

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Sales Turnover5,657.8

5 5,295.334,293.9

53,656.9

23,103.6

2

Reported PAT1,081.4

9 776.81 701.43 668.03 607.64

Interpretation: In the Year 2006 Sales is 3103.62 and PAT is 607.64,whereas in the year 2007 sales & PAT is increased of 3656.92 and 668.03.

In the year 2008 huge increased in sales than back of 2 years i.e., 4293.95

& 701.43, and in the year 2009 sales is increased little much than compare

to 2008 & in the year 2010 sales increased little much than compare to

2009 of 5657.65 and PAT is 1081.49. Overall the position of sales turnover

and PAT is satisfactory in the year 2010.

Shareholding pattern - Cipla Ltd.

Holder's Name No of Shares% Share

Holding

Promoters 128743291 16.03%

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GeneralPublic 168071913 20.93%

ForeignPromoter 166742687 20.77%ForeignInstitutio

ns 123725014 15.41%FinancialInstituti

ons 96236561 11.99%

NBanksMutualFunds 53558268 6.67%



Others 1108779 0.14%

ForeignOcb 79103 0.01%

ForeignIndustries 259 0.00%

NATCO PHARMA LTD

Company Profile

NATCO Pharma Limited is an Indian enterprise molded by global

aspirations. This has always demanded a preparedness and long- term

organizational vision that can encompass the turbulence's and paradoxes

of shifting terms and terrain's of business.

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Mission

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.

Our Products:

Tigecycline

Tamsulosin Hcl

Imipenem and Cilastatin

Amikacin

kasi original project on 06-03-2011 (1)

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