CHAPTER 1

INTRODUCTION
Objectives of the study
Primary objectives comprise the study of organisation as a whole, and,
To understand the functioning of each department of the firm.
To analyse the financial position and profitability of the firm.
To conduct SWOT analysis and make inferences.
Scope
The pharmaceutical industry is the sector that has been one of the
pillars of industrialised economies and is increasingly recognised as an
important sector in the developing world as well. It contributes to
employment (direct, indirect or induced), trade (through imports and
exports), expenditure on research and development and technological
capacity building. It is also a necessary foundation for the existence of
generic industry.
Research Methodology
Research in common parlance is the search for knowledge through
objective and systematic method of finding solution to a problem.
Research Methodology is a way to systematically solve the research
problem.
Methodology used in the study
Primary data

Primary data is collected from the employees directly by the researcher.

The data required for the study is collected through;

Personal interview
Employees were personally interviewed to get their opinion regarding
functioning of the organisation.
Secondary data
Secondary data are those data which are already collected and
recorded. The relevant data for this study is collected from published
sources like annual report of the company for past 3 years, past records of
the firm and company website.

Limitation
The study is limited to the extent of understanding by the researcher
The opinions are mostly collected from the middle level managers
Lack of interest from the part of workers due to heavy work schedule

CHAPTER 2
INDUSTRY PROFILE
Pharmacy is the art or practice of preparing and preserving drugs
and of compounding and dispensing medicines according to prescriptions
of physicians. Since the launch of the pharmaceutical industry in the 19 th
century, it has covered a long way and now it has become one of the most
influential and successful industry in the world.
History of pharmaceutical Industry
The first known drugstore was opened by Arabian pharmacists
in Baghdad, and many more soon began operating throughout the
medieval Islamic world and eventually medieval Europe. By the 19 th
century many of the drugstores in Europe and North America had
eventually developed into larger pharmaceutical companies. Most of
todays pharmaceutical companies were founded in the late 19 th century
and early 20th centuries.
The industry remained relatively small scale until the 1970s when
it began to expand at a greater rate. Legislation allowing for strong
patents, to cover both the process of manufacture and the specific
products came into force in most countries. By the mid 1980s, small
biotechnology firms were struggling for survival, which led to the
formation of mutually beneficial partnerships with large pharmaceutical
companies and a host of corporate buyouts of the smaller firms.
Pharmaceutical manufacturing became concentrated, with a few large
companies holding a dominant position throughout the world and with a
few companies producing medicines within each country.

The Indian Pharmaceutical sector has come a long way,

being almost non- existent before 1970 to a prominent provider of
healthcare products, meeting almost 95% of countrys pharmaceutical
needs. The Industry today is in the front rank of Indias science based
industries with wide ranging capabilities in the complex field of drug
manufacture and technology.
The Indian pharmaceutical industry, the most respected amongst the
emerging nations, is one of the most sought after sectors from a global
collaboration point of view. Having a strong macro and socio economic
foundation, the driving factors are intrinsically deep-rooted in the
Indian pharmaceutical sector and have not been deterred by recent speed
breakers like quality issues faced by a few Indian companies.
Recently in India, the Union Cabinet has proposed revision to the
FIPB policy. If approved, the revised proposal states that 25 per cent of
investment must be sanctioned towards R&D activities and if the projects
deal with rare facilities and critical verticals, only 49 per cent FDI should
be allowed post government approval. The key concern of the government
is that high presences of multinational companies in India will negatively
impact availability and affordability of off-patent medicines in India.
One of the key characteristics of the Indian pharma industry is the
fact that it is very fragmented. The largest domestic market shareholders
hold about seven per cent of the Indian markets, while the top 10
companies command about 40 per cent of the market share.
The share of pharma companies of Indian origin is close to 73 per
cent of the Indian market while multinational companies hold the

remaining 27 per cent. This clearly indicates that the majority share of the
Indian market is with domestic pharma companies and equally distributed
amongst both large and small scale pharmaceutical companies.
The Indian Pharmaceutical industry is highly fragmented with
about 24,000 players (330 in the organised sector). The top ten companies
make up for more than a third of the market.
Indias pharmaceutical sector will touch US$ 45 billion by 2020,
according to a major study by global management and consulting firm,
McKinsey & Company. The reasons for this optimism are well founded.
In the period 20022012, the countrys healthcare sector grew three times
in size, touching US$ 70 billion from US$ 23 billion. India's
pharmaceutical market experienced a similar boom, reaching US$ 18
billion in 2012 from US$6 billion in 2005. The report further states that
the Indian pharmaceutical market will be the sixth largest in the world by
2020.
Besides the domestic market, Indian pharma companies also have
a large chunk of their revenues coming from exports. While some are
focusing on the generics market in the US, Europe and semi-regulated
markets, others are focusing on custom manufacturing for innovator
companies. Biopharmaceuticals is also increasingly becoming an area of
interest given the complexity in manufacture and limited competition.
The companies witnessed sluggish growth on the back of severe
competition in the acute segment, increasing competition from unlisted
players and so on. Though the Indian Pharma Industry grew by 14% (Dec

2012) vs. 15% in Dec 2011, large part of the growth was contributed by
the chronic segment.
Rupee depreciation was one important aspect which helped the
industry especially those companies who had not hedged their
receivables.
The market is primarily driven by exports to regulated as well as
semi-regulated markets. Currently, India exports drugs to more than 200
countries and vaccines and biopharmaceutical products to about 151
countries.
Indian pharmaceutical industry is fairly fragmented with top 10
companies contributing to 41% of total sales. The next ten companies
contribute to 22% of sales while the remaining companies contribute to
37% of the total sales. Urban regions (metros and tier I cities) contribute
to about 60% of total sales while the remaining country contributes to the
balance 40%.
Market performance of global pharmaceutical sector
The global pharmaceuticals market is worth US$300 billion a year,
a figure expected to rise to US$400 billion within three years. The 10
largest drugs companies control over one-third of this market, several
with sales of more than US$10 billion a year and profit margins of about
30%. Six are based in the United States and four in Europe. It is predicted
that North and South America, Europe and Japan will continue to account
for a full 85% of the global pharmaceuticals market well into the 21st
century.

Some of the major investments in the Indian pharmaceutical sector

include the following:

GlaxoSmithKline Plc plans to invest Rs 864 crore (US$ 140.86

million) to set up a new factory in India. The plant, which is expected
to be operational by 2017, will include a warehouse, site infrastructure
and utilities to support the manufacturing and packing of the medicines.
Cadila Pharmaceuticals Ltd (CPL) plans to invest Rs 100 crore (US$
16.30 million) on expansion, upgradation and modernisation of its
manufacturing unit at Samba in Jammu district.
HLL Biotech Limited (HBL), a subsidiary of HLL Lifecare Ltd, has
entered into a long-term supply and technology license agreement with
the Institute of Immunology, Zagreb (IMZ), Croatia, for the
manufacture of measles vaccine in India. Under the partnership
agreement, IMZ will transfer the technology to manufacture bulk
measles vaccine to HBL.
Ranbaxy Laboratories Ltd has received an approval from the Central
Drugs Standard Control Organisation (CDSCO) to manufacture and
market a new drug for the treatment of malaria in adults.
Cipla has acquired a majority stake in Uganda-based Quality Chemical
Industries Ltd (QCIL), with the acquisition of an additional 14.5 per

cent stake for US$ 15 million through its subsidiary, Meditab Holdings
Ltd (MHL).
Dr Reddy's Laboratories Ltd has received approval from the USFDA
for its Azacitidine injection. The drug is used for treatment of some
types of cancer and disorders that affect the bone marrow.

Top ten players in Pharmaceutical industry

Ranbaxy laboratories
It operates in more than 150 countries in the world. The company which
was established in 1961 and it is the largest pharmaceutical company in
India With total net sales of Rs 7686.59 crore.
Cipla
It is the second largest company in Indian pharmaceutical sector with total
net sales of Rs 6,977.50 crore
Dr Reddy Laboratories
It is the third company in Indian pharmaceutical sector with total net sales
of Rs 6,686.30 crore.
The company was established in 1984.
Lupin
The company was established in 1968. The company is in fourth position
of Indian pharmaceutical sector with the total net sales of Rs
5,364.37 crore

Aurbindo Pharma
The company is in 5th position of Indian pharmaceutical sector with total
net sales of 4284.63 crore
Sun Pharma
Net Sales revenues stood at Rs 4,015.56 crore makes it the sixth largest
pharmaceutical company in India
Cadila Health
Cadila Health is the seventh largest pharma company with the total sales
revenue of Rs 3,152.20 crore.
Jubilant Life
Eighth largest company has the total sale revenue at Rs 2,641.07 crore
Wockhardt
Wockhardt has the total net sales of

Rs 2,560.16 crore and the ninth

largest pharmaceutical company in India.

Ipca Laboratories
Revenue of Rs 2,352.59 crore makes Ipca India's 10th largest pharma
firm by sales.

CHAPTER 3
COMPANY PROFILE

Kerala State Drugs & Pharmaceuticals Ltd is a Kerala

Government Undertaking. Since its inception in 1974, it has been
manufacturing and supplying essential and life saving medicines to cater
to the needs of the common patients resorting to Government Hospitals in
the State of Kerala a leading State in Public Health Services.
It is a wholly owned government company under the administrative
control of the Industries Department. The board of directors and the chief
executive of the company are appointed by the government.
It is the only government company in Kerala manufacturing
allopathic medicines. The company manufactures about 50 items of
medicines. Manufacturing offices and registered offices are located at
Kalavoor in Alappey district, Kerala. There are 270 employees currently
in the organization, including executives, staff and officers.
The company has been under constant pressure to achieve the best
of Quality Standards due to this reason. The company logo is "Quality
that Cures" with a Highly Dedicated Workforce and Professional
Supervision and with the old tradition of providing appropriate coverage
without fail. KSDP produce medicines that "CURE rather than TREAT".
The authorized capital of the company is Rs 950 00 000 and aided
capital amount to Rs 979 04 000.The modernization programs are now
being implemented. The latest development in the company is the
introduction of BETALACTUM PLANT. A new NABL accredited
laboratory is also being setup. The work is progressing in the company.
This plant is separated from other plants because the medicines in process
in the company are highly powerful. Medicines like Penicillin are highly

complicated and it may cause problems in the operation of general

medicines like paracetamol and amoxilline.
The Company has reached glorious heights in its way to thrive in
this Hi-Tech era. The Product Development wing of the Company has
made all efforts to bring out scores of new products in addition to the
existing multiplicity of drug formulations to the tune of hundred odd
products.

The development work of

new generation drugs are in

progress.
Now the Company is a major supplier of Quality drugs to Kerala
State Medical Service Corporation Ltd (KMSCL), Thiruvananthapuram,
which is a government of Kerala undertaking setup for supply of medical
requirements to government hospitals and medical institutions. KSDP
LTD., an enterprise fully owned by the Government of Kerala
Manufacturing Quality Drugs of various formulations like Tablets,
Capsules, Liquid Orals, External Preparations, Powders, ORS, Injectables
etc. from 1974 onwards.
The company has been manufacturing and supplying medicines to
government hospitals for health care of the people of the state during the
last 40years and social welfare is the main motive of the company. The
company also supplies medicines to the government of Andra Pradesh.
The accounts of the company are computerized and audited
accounts are completed up to the year 2012 2013. The order
procurement process is mainly done through e-tendering process and the
payments are made to the suppliers through the electronic mode.

The salaries and other incentives are paid to the employees by

transferring it to the salary account opened for each employee with IDBI
bank. Government of Kerala provides funds for operation of the business
in the state budget allocations.
The company also accounts for the welfare of employees through
group gratuity scheme of LIC for providing eligible gratuity to
employees on cessation of services, Provident Fund and Employee State
Insurance Schemes. Company canteen provides meals to employees at a
subsidized rate of Rs 6 and evening snacks and tea at the rate of Rs 2 and
Rs 1 respectively.
The raw materials for producing medicines are acquired from
outside states like that of Maharashtra and Gujarat.

Product profile
KSDP produces the following products at its plant in Alappuzha.

CAPSU
LES

TABLET
S

Amoxycillin Capsules I.P.

250mg.

Amoxycillin Capsules I.P.

500mg.

Ampicillin Capsules I.P.

250mg.

Cloxacillin Capsules I.P.

250mg.

Doxycycline Capsules I.P.

100mg

Omeprazole Capsules I.P.

20mg.

Acetylsalysalic Acid Tablets I.P.

300mg.

Alprazolam Tablets I.P.

0.5mg.

Amlodipine Tablets I.P.

2.5mg.

Amlodipine Tablets I.P.

5mg.

Amoxycillin Dispersible Tablets I.P.

125mg.

Atenolol Tablets I.P.

50mg.

Azithromycin Tablets I.P.

250mg.

Azithromycin Tablets I.P.

500mg.

Cetrizine Tablets I.P.

10mg.

Ciprofloxacin Tablets I..P. .

500mg.

Co-Trimoxazole Tablets I.P.

Chlorpheneramine Maleate Tablets
I.P.
Diethyl Carbamazine Citrate Tablets
I.P.

160/800
mg.
2mg.

100mg.

Diazepam Tablets I.P.

5mg.

Diclofenac Sodium Tablet I.P.

50mg.

Dicyclomine HCL Tablets I.P.

10mg.

Erythromycin Stearate Tablets

I.P.

250mg.

Folic Acid Tablets I.P.

5mg.

Frusemide Tablets I.P.

40mg.

Glibenclamide Tablets I.P.

2.5mg.

Glibenclamide Tablets I.P.

5mg.

Ibuprofen Tablets I.P.

200mg.

Ibuprofen Tablets I.P.

400mg.

Metformin Tablets I.P.

500mg.

Metoclopramide Tablets I.P.

10mg.

Metronidazole Tablets I.P.

200mg.

Metronidazole Tablets I.P.

400mg.

Nifedepine Tablets I.P.

10mg.

Norfloxacin Tablets I.P.

400mg.

Ofloxacin Tablets I.P.

200mg.

Paracetamol Tablets I.P.

500mg.

Phenobarbitone Tablets I.P.

30mg.

Phenobarbitone Tablets I.P.

60mg.

Salbutamol Tablets I.P.

4mg.

Albendazole Tablets I.P.

400mg.

Mefenamic Acid Tablets I.P.

500mg.

LIQUIDS
&

DRY Amoxycillin Dry Syrup 60ml. Bottle

POWDE

125mg./5
ml.

POWDE
R

Benzyl Benzoate Application Bottle

100ml.

Cephalexin Oral Suspension (Dry) Bottle

30ml.

Chlorhexidine/Cetrimide Solution Bottle

1LTR

Glycerin Bottle

500mg.

Mixture Carminative Bottle

500ml.

Turpentine Liniment Bottle

100ml.

ORS Packets WHO Formula

20.5 gm.

Purified Talc Packet

500mg.

Production Facility
K.S.D.P Formulation Division has got infrastructure facilities to
manufacture Pharmaceutical Formulations in various dosage forms
Tablets, Capsules, Powders, Liquid preparations, Injections Ampoules,
Vials & Transfusions, Eye Drops etc.

Tablets
Section

Plain and Coated (Film and Sugar) Tablets could be

manufactured in the section by using modern machinery.
40 Lakhs Tablets could be produced in 3 Shift Operation.

Capsule

The company has the facility to manufacture Beta Lactam,

Section

non Beta Lactam and gelatin capsules.

Powder

They have facilities for both ORS and external powder like

Section

Prickly Heat powder Feeling fresh in three perfumes.

Liquids

There are separate area for the manufacture of oral

Section

Preparations (Syrup & Mixtures) and External preparations.

Parenteral
Section

They are having the facility to manufacture Ampoules and

Repacking

The facility to repack raw materials, chemicals and Liquids

Packing

There is facility to pack Tablets & Capsules Products in Bulk

Section

(Plastic Container) and in Blister or Strips.

Vials.

CHAPTER 4
ORGANISATION CHART

The chairman is the head of the organisation who is

appointed by the government and the chairman is assisted by the

Managing Director of the company. The chairman changes with the

change in the government on power.
The Managing Director is further assisted by senior managers
both commercial and technical managers, under whom the finance
manager, company secretary, personnel manager, marketing manager,
manager in engineering, production, project and quality control.
The managers are assisted by the deputy mangers of production,
purchase, stores, planning, maintenance etc. The deputy managers are
further assisted by the junior managers of different levels. The junior
mangers of different departments are further assisted by the staffs and
workers.

CHAPTER 5
DEPARTMENTAL ANALYSIS
There are nine departments in the organisation which perform
various activities to ensure the smooth functioning of its affairs.
1.
2.
3.
4.
5.
6.
7.
8.
9.

Marketing department
Project department
Purchase department
Human resource department
Production department
Finance department
Quality control
Stores department
Maintenance department

Marketing department
Marketing activities of the company is limited to sales aspect since
it a public sector undertaking the marketing is not given much priority.
The firm undertakes two kinds of sales;
Government sales
Open market sales
Government sales

The primary consumer is the KMSCL, Kerala Medical Service

Corporation Ltd which performs the procurement and distribution
function of the medicines manufactured by KSDP.
The process starts while KMCL sends purchase order to KSDP as
per the requirement of medicines in the government institutions under
health department.
With the purchase order KSDP prepares production plan and with
reference to that the company purchase raw materials and packing
materials for medicines and start the production. After the production
process is completed the quality control department issue the quality
analysis report.
After the quality report is obtained the medicines are moved on to
the stores and they are further dispatched from the stores to the 14 drugs
warehouses of KMSCL as per the schedule of purchase order. Prior to the
process of sending the medicines to warehouse the invoices are send to
the warehouse and also fair copies of invoices are send to the KMSCL
along with the test report. While receiving the invoices KMSCL will
release the product from KSDP after completing the test formalities.
Pricing
Government supply price will be fixed at the L1 rate, which will
be published by KMSCL after completing the tender formalities. Along
with L1 rate a 15% price is added as per the store purchase manual of the
government of Kerala.

Purchase and production of medicines in KSDP happens when a

letter of intent send by KMSCL every year. The production process at
KSDP starts with the letter of intent, well in advance every year.
Open Market Sales
KSDP will get purchase orders from government institutions and
local self government bodies like corporations, municipalities and
punchayaths. Board and the cooperatives under the government of Kerala
fix the price as government price + 5% margin.
The sales are made to the private hospitals and relative cooperative
hospitals.
Pricing
The government rate, as fixed and along with that a 30% margin rate
is charged for the sales made to private hospitals and when the medicines
are being sold to other states. The Drugs and customer act is followed
while making sales.
Department structure
Marketing Manager
Deputy Manager

Assistant manager (Admn)

Junior manager (Admn)

Assistant manager (Sales)

Junior Manager (Sales)

Senior Assistant

Junior Assistant

Stenographer

Medical Representatives

Typist

Attender

Project Department
The project department performs the civil works including the
construction of buildings facilities transportation etc. The department
follows PERT and CPM techniques. The project department designs the
production plant according to the anticipated production and as per the
demand of production department. The size of the machinery is also
considered before designing the plant which is done on the basis of
anticipated orders. The plant needed to be designed in such a manner that
it creates an environment acceptable for production, the plant need to be a
sterile unit, which includes air lock rooms that facilitates the air and
temperature. The air lock avoids the entrance of polluted air into the
rooms and maintains a balanced temperature often at 20 degree Celsius.
The design of plants also needs careful safety measures to avoid
cross contamination. The betalactum plant of KSDP is separated from
other production units due to this reason.
The project department of KSDP is currently working on the
renovation project, the company is planning to utilise the existing space
efficiently for the production of non betalactum medicines. As its part the

department expects to renovate the plant at a reduced cost of rupees

75laks on buildings which will otherwise costs for about Rs 22crore,
resulting in a huge financial burden on the company. The facility cost is
expected to reduce to 15 crore rupees which was otherwise expected to
be, rupees 65 crore.
The factors that are considered by the department before designing a
plant are as follows;

Location
Availability of space
Access to market
Transportation facility
Availability of raw materials
Availability of skilled labour
Requirement availability
The company has already renovated one of its unutilised building

spaces for the functioning of its quality control department. The

Quality control department is one of the crucial departments in a
pharmaceutical company, so the design of a QC unit needs equal
considerations like that of production. The HVAC (Heat Ventilation
and Air Conditioning and AHU (Air Handling Unit) are also essential
facilities of a QC department.
The project department accounts for the civil, electrical and
mechanical works of the company. The site work of the department is
carried out as a step by step process in the following way;

Sub soil investigation

Earth work
Foundation
Basement

 Superstructure
Furnishing
Department structure
Project Manager
Deputy Manager
Civil consultant

Pharma consultant
Supporting staff

Purchase Department
Since its incorporation company produced generic drugs and the
purchase department concentrates on availability of raw materials for
production. The generic drugs that were produced in the company had
low acceptance in the market due to the absence of a particular brand
name as well as the lower cost of the product generated a question of
quality in the minds of consumers.
The purchase of raw materials by the company is through etendering where in the raw materials costing below one lakh is purchased
through quotation. E tendering is done for purchasing raw materials
costing above one lakh rupees.
The e- tendering method had its own drawback, the small scale
venders were hesitant to participate in the process due lack of expertise in
e sector. So the government revised the process and at present, the e

tendering is carried out only for the purchase of materials above 5lakh
rupees and below 5 lakh the company go for quotation process.
E tendering process
The e tendering process starts with the formation of an e portal
where the company publish an abstract of its tender. The public is free to
participate in the tendering process and can accept the tender. The
supplier will be selected through an automated process. This process is
transparent since the selection process is automated.
Every purchase in the company is carried out as per the store
purchase manual. The company is bound to pay 80 % of its cost
immediately at the receipt of goods while no advance payments will be
made. The remaining 20% of the cost will be paid after the quality
checking. All the payments for purchase will be made online.
The purchase committee is involved in every purchase and after the
bidding process the committee will conduct a meeting, the minutes of the
meeting will be prepared and the purchase manager will issue the order.
The Process
The step by step process of purchase in the department;

E tendering or tender invitation

Tender opening
Technical evaluation
Selection of supplier
Issue of purchase order
While performing the technical evaluation, if the material is not of

L1 price the second alternative L2 will be selected. L represents the

lowest possible price of the product. The purchase committee makes the
decision with regard to the L1 and L2 price and after the decision is being
made that will be disposed to the purchase department for making the
purchase.
The materials can be purchased from the local market itself
provided the cost is below 15000 rupees. The production was enhanced in
the year 2009-2010 with sufficient orders from KMSCL and subsequently
it came down in 2013-2014.
The company has its drawback of loosing orders due to lack of
efficiency in fulfilling the orders and especially on time.

The movement of materials happens in firm in the following

manner;

Purchase

Stores

Finance department

Stock

Quality Control

Purchase department

The materials move to stores immediately on purchase and they

are kept as stock till it is moved on to the quality control department for
the quality checking. After the quality analysis the department issues
GRN (Goods Received Note) and the purchase document is made by the

purchase department and is send to the finance department for the

payment of money.
Department Structure
Deputy Manager
Assistant Manager
(Purchase & planning)

Sr. Assistant

Assistant Manager (Purchase)

Graduate trainee

Engineering Trainee

Attender

HR Department
The HR department is responsible for the welfare of the
employees. The department makes decision on the selection and
recruitment of employees, their payroll mechanisms and the attendance
rate. Other fringe benefits are provided to the employees with reference to
the acts as well as after the discussion made with the District Labour
Officer (DLO). The number of holidays and ESI benefits etc are decided
by the HR department.
The working hours is divided into four shifts of 8hours respectively,
it contains a general shift along with shifts from 6:30-2:30, 2:30-9:30,
9:30-6:30. The company follows all national holidays and in every month
the employees are awarded 3more days as holidays. Overtime work is
given double the wage rate.

The different kinds of employees include permanent staff, contract

workers, casual workers and trainees. The company follows punching
system and the attendance is the base for their pay.
The ESI benefits are given to the employees. The employees with
wage rate above Rs 15000 are excluded from the benefits. The
recruitment process of the employees is through the Public Service
Commission (PSC) basis. Whereas the last recruitment through PSC basis
happened before 28 years and now the recruitment is done on contract
basis as well as through employment exchanges and on daily wage basis.
There are two approved trade unions functioning in the company,
AITUC and CITU and are choosen through elections. The Voluntary
Retirement Scheme (VRS) was given to the employees in two years 1994
and 2004. Vitamin A plant also lead to the transfer of employees. The
Vitamin A plant and the KSDP had same Memorandum of Association
and Articles of Association, so the managers in both plants are bound to
work together and when the Vitamin A plant was closed most of the
employees were appointed in KSDP. Vitamin A and KSDP plant had
separate financial records.
The Chairman and Managing Director of the company will be
appointed by the government. The political parties have a major role in
the appointment of people in the organisation. The employees are given
14 casual leaves along with holidays on Sunday and an average of
15holidays annually. The employees also have 33 earned leaves per year
Department structure
MANAGER, PERSONNEL
AND ADMINISTRATION

Legal consultant

Security officer

House keeping

EOA establishment and

office administration

EDP

Security guards

Assistant Manager

General
assistant
Junior
assistant
Graduate
trainee
DCP
trainee

Personnel
Senior
assistant
Stenographer
Section staff
Section
staff
Graduate
trainee
Attender

Senior assistant

Production Department
Production is the functional area responsible for turning inputs into
finished outputs through a series of production processes. The Production
Manager is responsible for making sure that raw materials are provided
and made into finished goods effectively. He or she must make sure that
work is carried out smoothly, and must supervise procedures for making
work more efficient and more enjoyable.
There are four sub-divisions for production department which
stands for the production of various products in KSDP.
1. Tablet section

2. Capsule section
3. Packing section
4. Liquids/ORS section
Manager Production

Tablet section

Packing section

Production executive

Assistant Manager

Capsule Section
Production Executive

ORS/ liquid section

Production
Executive

Foreman

Foreman

Foreman

Charge hand

Charge hand

Foreman
Charge hand
Charge hand

Senior operator
Operator

Operator

Assistant
Operator

Operator

Assistant Operator

Tablet Section
A tablet is a pharmaceutical dosage form which comprises a
mixture of active substances and excipients, usually in powder form,
pressed or compacted from a powder into a solid dose. The excipients can
include diluents, binders or granulating agents, glidants (flow aids) and
lubricants to ensure efficient tableting; disintegrents to promote tablet
break-up in the digestive tract; sweeteners or flavours to enhance taste;
and pigments to make the tablets visually attractive. A polymer coating is
often applied to make the tablet smoother and easier to swallow, to
control the release rate of the active ingredient, to make it more resistant

to the environment (extending its shelf life), or to enhance the tablet's

appearance.
Process

Capsule Section
Capsule is the most versatile of all dosage forms. These are solid
dosage forms in which one or more medicinal and inert ingredients are
enclosed in a small shell or container usually made of gelatin.

Process
Raw Material Sampling

QC not approved
Raw material handling

QC

Test
QC approved

Raw Material Dispensing

Sifting
Granulation

Milling (if required)

Mixing
Blending
IPQC

Test
IPQC not approved

Powder Filling
Capsule filling

Polishing
Remove

Inspection

empty

IPQC Test

IPQC not approved

IPQC approved

Capsule
Rejected
Capsule

Primary Packing
Inspection (if required)
Secondary Packaging
Product Packing

QC Test
QC not approved

repacking
QC approved product

There are two types of capsules, hard and soft. The hard capsule
is also called two piece as it consists of two pieces in the form of small
cylinders closed at one end, the shorter piece is called the cap which fits

over the open end of the longer piece, called the body. The soft gelatin
capsule is also called as one piece. Capsules are available in many sizes
to provide dosing flexibility. Unpleasant drug tastes and odours can be
masked by the tasteless gelatin shell. The administration of liquid and
solid drugs enclosed in hard gelatin capsules is one of the most frequently
utilized dosage forms.

Packing section
The packing section is responsible for the perfect and safe packaging
of medicines. The capsules and tablets produced under the production
department is moved on to the packing section where it is undergone
stripping process which is considered to be the primary packing process
and further the stripped medicines are packed in paper boxes and finally
into the cartels.
The packing section along with appropriate packing performs the
function of sealing the manufacturing date, expiry period and net weight.
The sealing process is done manually in the company and the secondary
packing and tertiary packing is also done manually by the labourers.
The primary packing is fully automated where the medicines are
packed by the stripping machine itself.
In the case of liquid medicines the bottling process is done by
machines whereas the labelling and sealing is done manually. The
capsules and tablets are packed in the proportion of 10*10*60 where each
cartel contains a set of 60 boxes containing 10 strips of 10 capsules each.
Liquid and ORS section

The liquid and ORS section functions away from the tablet and
capsule sections and the packing process is also done separately from the
other two sections. The liquid medicines are prone to higher rate of risks
and thus they are produced and packed there itself. The primary packing
is bottling and there after the medicines will be undergoing the secondary
packing process and finally they will be the tertiary process where the
bottles will be stored in big cardboard boxes called cartels and further
they are transported to the storage unit.

Finance Department
The finance department is responsible for the monetary transactions
happening in the organisation with regard to production, purchase
maintenance, project and other subsequent departments. The department
follows double entry system of book keeping and the bank of the
company is IDBI Bank where the transactions happen through the bank
account opened in IDBI. The company had started with an Authorized
capital of Rs 950, 00,000 and aided capital 979, 04000.
The accounts of the company are computerized and audited
accounts are completed up to the year 2012- 13. Procurement operations
are mainly through e-tendering process. Payments are made to suppliers
through the electronic mode.
Companies salaries benefits are mainly paid to employees by
transfer and crediting to salary account opened by each employee with
IDBI bank. Government of Kerala provides funds for operation of the
business by state budget allocations.

The company also doing welfare activities to the employees, there

is group of activity scheme of LIC for providing eligible gratuity to
employees on cessation of services. All employees benefits from
employees provident fund and employees state insurance schemes.
Company canteen provides meals to employees as a subsidiary rate of RS
6.
While analysing the financial department of the company it can be
found out that there is no out flow of fund because the company has not
even started repayment of term loans given in various from 1998 to 201314. If company pays the entire due amount it will affect the working
capital of the company, so it is not willing to pay the amount.
In 1994 company faced huge crises its history, they received letter of
intent from KMSCL for supplying medicines. With that they purchased
required raw materials but further KMSCL denied the issue of purchase
order. They were unable to sell all those products manufactured and it
blocked companies working capital. For the further operation of
company has taken loans form government of Kerala.
Another problem happened in 2002, when the companys Vitamin A
Plant was closed. It happened because of improper planning. The plant
was not viable and the company did not get any profit from of that. Due
to this company had an offer for VRS to all those employees who were
working there and it resulted in huge financial burden on the company.
Company received its highest amount purchase order form KMSCL in
2010-11 with an amount of 39crores.
The latest development, BETALACTAM PLANT, started with an
initial investment of Rs 9crore in this project. In the financial year 2010-

11 the company made a profit of RS 2, 71, 42,010. In the year 2011-12

company had a profit RS 2, 52, 79, 041
During the year 2011-12 company has received financial assistance of
Rs 160 lakh from government of Kerala. In 2012 -13 company reported
loss of Rs 189 lakh during the period under review against the profit of
RS 253 lakh during the previous year, due to drastic decrease in revenue
from operations. Accumulated loss of the company is RS 9312.35 lakh.

COMPARATIVE BALANCESHEETS FOR THE YEARS

2011,

2012 , 2013
As on 31-3-2011 As on 31-32012

As on 31-32013

9,07,94,000

9,07,94,000

9,07,94,000

(93,76,12,220)

(91,23,33,179) (93,12,34,857)

(84,68,18,220)

(82,1539,179)

EQUITY AND LIABILITIES

Share holders fund

Share capital

Reserve and surplus

(84,0440,857)

TOTAL
Non Current Liabilities

34,76,16,138

34,61,08,567

40,63,96,996

Long term borrowing

6,48,937

7,09,689

8,09,494

4,83,98,015

4,77,65,411

4,71,99,879

39,66,63,090

39,45,83,667

45,44,06,369

4,78,84,246

4,17,02,859

3,73,19,593

71,32,91,980

79,67,31,811

82,13,51,679

37,46,634

25,45,645

22,58,422

76,49,22,860

84,09,80,315

86,09,29,694

31,47,67,730

41,40,24,802

47,48,95,206

1,24,60,888

11,97,38,380

10,88,45,059

8,27,33,979

9,33,309

2,03,06,963

1,17,44,015

89,34,776

3,26,97,451

10,69,38,882

12,96,06,465

16,18,49,473

Differed tax liability (net)

Other long term liabilities
TOTAL NON-CURRENT
LIABILITIES

Current Liabilities
Trade payable
Other current liabilities
Short term provisions

TOTAL LIABILITIES
ASSETS
Non Current Assets
Fixed assets
tangible assets
capital work in progress
long term loans and advances

TOTAL NON-CURRENT ASSETS

Current Assets
Inventories
Trade Receivables
Cash and Bank Balances

5,76,41,992

7,15,20,861

10,20,59,041

4,25,91,209

10,43,47,377

6,38,00,771

8,70,60,003

9,32,19,637

12,97,38,939

2,05,35,644

1,45,30,505

1,65,15,382

7,99,957

9,31,600

20,78,28,848

28,44,18,337

31,30,45,733

31,47,67,730

41,40,24,802

47,4895,206

short term loans and advances

other current assets

TOTAL CURRENT ASSETS

TOTAL ASSETS

Inference from the balance sheet

The Balance Sheet of the company shows a negative reserve and
surplus.
In 31-3-2013 Balance Sheet showed an increase of Rs 6,02,88,429 as
compared to previous year in long term borrowings of the company.
Tangible assets of the company decreased by 1,08,93,321 as compared
31-3-2012 in 31-3-2013.
There was an increase of total non- current assets of Rs.32243008 in
31-3-2013 as compared to 31-3-2012.
The Balance Sheet shows a decreasing cash & bank balance the last
three years

Capital Structure of KSDP limited

The company has an authorized capital of Rs. 9,50,00,000 of Rs 100
each.
The company have only one class of shares Equity Share
The shares are held wholly by governor of Kerala and his nominee

Ratio Analysis
Current Ratio:
This ratio establishes a relationship between current assets and
current liabilities. The objective of computing this ratio is to measure the
ability of the firm to meet its short term obligations and to reflect the
short-term financial strength or solvency of a firm.

Current ratio

Current Assets
Current Liabilities

Current Ratio Analysis;

Particulars/year

31-3-2011

31-3-2012

31-3-2013

ended
Current Assets

20,78,28,848

28,44,18,337

31,30,45,733

Current Liabilities

76,49,22,860

84,09,80,315

86,09,29,694

Current ratio

Interpretation:

.26

.33

.36

The ratio indicates that the companies liability is more than its
assets. As compared to 31-3-2011 the company improved its current
assets but the companys current liabilities are still more than the current
assets.

Profitability Ratio
The primary objective of a business undertaking is to earn profit.
Profitability ratios are calculated to measure the overall objective of the
business.

Net profit Ratio

This ratio is used to measure the relationship between net profit and net
sales.
Net Profit Ratio = Net Profit
Net Sales

Net Profit Ratio Analysis;

Particulars/year
ended
Net Profit

31-3-2011

31-3-2012

31-3-2013

2,71,42,010

2,52,79,041

-1,89,01,678

Net Sales

28,91,47,590

33,25,08,096

13,43,62,902

Net Profit ratio

0.09

0.076

-0.14

Interpretation:
By analyzing the table we can understand company made profit in
the years 2010-2011& 2011-2012. But the profit is showing a decreasing
tendency. In 2012-2013, the company incurred a loss of Rs 1, 89, 01,678.
During this year companys sales also decreased.

Department Structure

Finance manager

Accounts

Provident Fund

Senior Accountant

Senior Assistant

Senior Assistant
Cashier
Junior Assistant

Graduate Trainee

Quality control Department

The QC is important department in every manufacturing
organisation, especially in KSDP, being a medicine manufacturing firm
the quality constraints need to be followed to a higher extent since the
quality of medicines matters in the life of individuals. The QC has its role
in every stage of production where from the purchase of raw materials till
the output is generated, at every stage of production the quality checking
is done by the QC department.
The quality of the raw materials being transported from other states is
examined before making the payment itself, thereafter while the
production process starts the quality checking is done just before the
production and in each stage the samples are collected and sent for quality
checking.
The company functions with the certifications from different
organisations. The Drug manufacturing certificate issued by the drugs
control office is the prime among them. Good Manufacturing Practise
(GMP) certificate is also issued by the drug control office and the
company is bound to follow the GMP standards. The GLP certificate or
the Good Laboratory Practise certificate, Rectified certificate to store
spirits, Fire and Safety certificates, Pollution Control certificates are some
of the quality certifications that are issued to the company for its facilities.

Stores Department
The store is the place where the materials are stored before and after
the commencing of production activities. The store department collects

the raw materials and stores it till it is subjected to quality checking

facilitated by the quality control department. The activities in the stores
are regulated by the stores manual. The department also takes care of the
output generated out of the production department.
The store regulates the flow of materials in and out of the firm. The
firm follows FIFO method or first in first out method where the raw
materials that are entered into the firm first will be sending to the
production process and likewise the output as well. The record is kept in
this regard and is evaluated periodically.

Maintenance Department
The maintenance department does the maintenance activities of the
entire firm, be it the production or other aspects. The maintenance work is
classified under electrical and mechanical section. The equipment
maintenance is performed as specified in the purchase manual of
respective machines and the firm as such follows a pattern of preventive
maintenance.
The lubrications are done periodically so as to keep the machines
working without any failure. The department keeps spare equipments and
parts so as to ensure continuous flow of production without any
hindrance. The machines will be replaced as soon as they are found
damaged. Those equipments that are found completely damaged are sold
out in auction.

Department structure
Electrical section

Mechanical section

Assistant manager

Manager

Air conditioner

Boiler
Vehicle
Mechanical

AC Mechanic
Water treatment

Driver
Foremen
Charge hand

Mechanic

Operator

Operator

Electrical

Foremen

Chargehand

CHAPTER 6
SWOT ANALYSIS
Strengths
Public sector undertaking
Quality Medicines
Orders from neighbouring
states
Low cost

Weaknesses

Slow decision making

Outdated technology
Political interference
Absence of proper recognition
Change in government policies
Old Production plants following
GMP standards as on

establishment
Absence of proper waste
treatment mechanisms
Improper storage

Opportunities

Threats

Availability of space
Availability of plant and other

Competitors strategy
Bulk wastage on cancellation of

facilities
Retail outlets facilitating direct

orders by buyers
Delay in disposal of expired

sales near hospitals

Takeover by Hindustan Latex
New Betalactum plant

medicines

Interpretation
Strengths
The company has the strength of being a public sector
undertaking. The government acts a financing agent for the company,
providing sufficient funds for its operations through loans and by other
means. The loans provided are interest loans and it has the advantage of
flexibility in repayment.
Being a government firm, the medicines produced in the
company has the advantage of sales to the government hospitals and
KMSCL acquires the medicines in bulk and makes sales.
The production of quality medicines is strength of KSDP
where the medicines are made fulfilling the quality specifications are met
at a lower cost. The costs of the medicines are much lower than that of its

competitors. The company acquires purchase order form its neighbouring

states like Andhra Pradesh and they are stable in making the purchase.

Weaknesses
The decision making within the firm is slow as it has to
fulfil the norms of government. Making a purchase for the company takes
lot of time and effort to fulfil its formalities and requirements and to get
sanction from government. The technical developments are not visible in
the production plants since the firm still works with older technology.
Political interference is another drawback where the
political parties and trade unions play a major role in the firm. They are
both beneficial and at times it is a weakness since the political parties has
the power of recommending people for job and thus the appointment of
labourers is under its influence since incorporation.
Changing government and its policies affect the company, the
Chairman and Managing Director of the company are appointed at the
interest of the political parties in power, and the efficient people within
the company are not referred for the post.
Other than government hospitals generally people dont prefer
to use the medicines since they are not well recognised in the market.
Opportunities
The company has vast opportunities for its revival and
growth. It has sufficient space for advancement, proper facilities and well
equipped buildings are available. There is huge warehouse which is being
kept closed that has the capacity of over 3 times the capacity of the

existing storage unit. The old Vitamin A plant is being kept unutilised and
the machines are rusting, the company can make use of the plant and
make sales of the machineries before further damage and get the money
for its functioning.
The company is planning to open its outlets near to every
hospital facilitating its direct sales. This is a plan of higher chances of
success. The Hindustan Latex is planning for the takeover of firm,
enabling it to upgrade to a Central government firm. The new betalactum
plant is another growth opportunity for the firm.
Threats
The production plant following the GNP standards existed
from the time of its incorporation is a threat to the firm. The absence of a
proper waste treatment mechanism is one of the major threats to the firm.
The effluent treatment plant is not working and the waste is not treated.
The delayed disposal of wasted medicines is the result of lengthy
procedures for getting government approval for disposing the medicines.
The competitors charge high price on the medicines but their
strategy of sales make them unbeatable for other companies and as KSDP
is concerned, the firm cannot spend more to improve the sales while the
competitors spend large amounts as for doctors to prescribe their
medicines.
The unexpected cancellation of orders lead to bulk wastage of
medicines and it is a threat since the company invest on the production
and it end as mere waste if the sales did not happen within the expiry
period. The storage of the medicines are not proper since the capacity of

the store is less, the medicines are kept in the plant itself till it is being
transported.

CHAPTER 7
FINDINGS, SUGGESTIONS AND CONCLUSION
Findings

 The liquidity position of the company is unfavourable as the current

liabilities exceeds its current assets
The comparison of profitability ratios of past 3 years shows that the net
profit of the company is showing decreasing trend over the years
The company has reported a loss of Rs 189lakh during the financial
year 2012-2013 against a profit of Rs 253 lakh due to decrease in
revenue from operation
There is an increase in the long term borrowing of the company and it
has not started repayment of loans given in various years from 1998 to
2012-2013

The accumulated loss of the company is Rs 9312.35 lakh which is more

than 50 % of its net worth
The absence of a proper waste disposal system and a sewage treatment
plant is a drawback for the company
Old manufacturing unit where the production process is still carried out
is following the GMP standards as on its establishment
Suggestions
The company should maintain proper balance with under the reserves
and surplus as soon as it earns some amount of profit in future so as to
improve the liquidity position.

 The sales need to be maximised despite of its limitations. A proper

marketing strategy is to be followed.
As found out by the Principal Secretary ,the annual report mentions
that, the loss of the company is understand due to non provision of
contingent liabilities and non provision in capital account, thus proper
provisions need to be maintained.
The company can repay its debt to a certain extend by the sale of
equipments in Vitamin A plant and its facilities.
The company should maintain proper records on fixed assets and
physical verification should be done periodically.
The company need to concentrate more on its functioning ensuring
economy in all spheres of activities.
The waste disposal and waste management system need to be
implemented.

Conclusion
The Kerala State Drugs and Pharmaceuticals is a government
undertaking which was established with a mission cure for all with its
logo stating quality that cures. The company functions with its mission
of cure for all and they provide quality medicines to the government
hospitals, targeting the poor patients. The medicines are distributed at a

lower rate at the hospitals by the Kerala State Medical Service

Corporation.
The KSDP is in path of revival. Despite of its accumulated loss and
diminishing performance standard, the company goes for advancement. It
has found its own survival techniques, the investment on new
BETALACTUM plant is one among them. The unutilised buildings and
facilities are planned to be restructured so as to make it available for
production purpose.
The company is planning to expand its market niche by introducing its
retail outlets near the government hospitals all over the state thereby
facilitating improved sales and profit margin. The Hindustan Latex a
Central Government firm is planning a takeover of the firm and thus
converting it into a Central Government undertaking. Many workers who
have been working there on contract basis for long are expecting a
permanent job thereby and the company as such is expecting a future, a
prosperous life ahead, while accepting the proposal for takeover of the
firm. It has the potential and a history of glorious life with its Vitamin A
plant in 1980s, the only plant producing vitamin A in Kerala. The
company is in its path to regain its glory of past and as such its highly
dedicated workforce.