IMT GHAZIABAD

Cipla vs Dr Reddys
Financial Statement Analysis

BY
Nikhil Gupta 10FN-121
Srikant Konduri 10FN-109
Saurabh Thadani 10FN-102
Sharun Alipuria 10DM-147
Tushar Gupta 10DM-168
Tushar Gupta 10DM-115
Vaibhav Choudhary 10FN-116
Vinayak Saksena 10HR-046
9/6/2010

Indian Pharmaceutical Industry

The Indian pharmaceutical industry currently tops the chart amongst India's science-based
industries with wide ranging capabilities in the complex field of drug manufacture and technology. A
highly organized sector, the Indian pharmaceutical industry is estimated to be worth $ 4.5 billion,
growing at about 8 to 9 percent annually.
It ranks very high amongst all the third world countries, in terms of technology, quality and the vast
range of medicines that are manufactured. It ranges from simple headache pills to sophisticated
antibiotics and complex cardiac compounds; almost every type of medicine is now made in
the Indian pharmaceutical industry.
Playing a key role in promoting and sustaining development in the vital field of medicines, Indian
Pharma Industry boasts of quality producers and many units approved by regulatory authorities in
USA and UK. International companies associated with this sector have stimulated, assisted and
spearheaded this dynamic development in the past 53 years and helped to put India on the
pharmaceutical map of the world.
The Indian pharmaceutical sector is highly fragmented with more than 20,000 registered units. It
has expanded drastically in the last two decades. The Pharmaceutical and Chemical industry in
India is an extremely fragmented market with severe price competition and government price
control. The Pharmaceutical industry in India meets around 70% of the country's demand for bulk
drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and
injectable. There are approximately 250 large units and about 8000 Small Scale Units, which form
the core of the pharmaceutical industry in India (including 5 Central Public Sector Units).
The Indian pharmaceutical industry which is worth US $ 3.1 billion is growing at the rate of 14
percent per annum.
Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs
and pharmaceutical products has been done away with. Manufacturers are free to produce any drug
duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the
pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific
manpower, strength of national laboratories and an increasing balance of trade. The
Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by
Intellectual Property Protection regime is well set to take on the international market.

CIPLA
The Chemical, Industrial & Pharmaceutical Laboratories (CIPLA) established in 1935. CIPLA was
registered as a public limited company with an authorized capital of Rs 6 lakhs. Officially it became
functional in 1937 with its first product. Cipla offers services like consulting, commissioning,
engineering, project appraisal, quality control, know-how transfer, support, and plant supply. Apart
from its presence in the Indian market, Cipla also has an export market and regularly exports to
more than 150 countries in regions such as North America, South American, Asia, Europe, Middle
East, Australia, and Africa. For the year ended 31 March 2007 Ciplas exports were worth
approximately Rs. 17,500 million. Cipla is also considerably well-known for its technological
innovation and processes for which the company received know-how royalties to the tune of Rs.
750 million during 2006-07. Cipla has been approved by regulatory bodies such as:

World Health Organization

Food and Drug Administration (FDA), USA

Therapeutic Goods Administration (TGA), Australia

Pharmaceutical Inspection Convention (PIC), Germany

National Institute of Pharmacy (NIP), Hungary

The Medicines and Healthcare products Regulatory Agency (MHRA) is the UK government
agency

Dr Reddy
Dr. Reddy's Laboratories Ltd., trading as Dr. Reddy's, founded in 1984 by Dr. K. Anji Reddy, has
become India's second biggest pharmaceutical company. Dr. Anji Reddy had worked in the publiclyowned Indian Drugs and Pharmaceuticals Ltd. Reddy's manufactures and markets a wide range of
pharmaceuticals in India and overseas. The company has over 190 medications, 60 active
pharmaceutical ingredients for drug manufacture, diagnostic kits, critical care, and biotechnology
products.
Dr. Reddy's began as a supplier to Indian drug manufacturers, but it soon started exporting to other
less-regulated markets that had the advantage of not having to spend time and money on
a manufacturing plant that that would gain approval from a drug licensing body such as the U.S.
Food and Drug Administration (FDA). By the early 1990s, the expanded scale and profitability from
these unregulated markets enabled the company to begin focusing on getting approval from drug
regulators for their formulations and bulk drug manufacturing plants in more-developed economies.
This allowed their movement into regulated markets such as the US and Europe.

CIPLA

Dr. Reddys

Balance Sheet (in Rs. Cr.)

Mar '08

Mar '09

Mar '10

Mar '08

Mar '09

Mar '10

12 mths

12 mths

12 mths

12 mths

12
mths

12
mths

Total Share Capital

155.46

155.46

160.58

84.09

84.2

84.4

Equity Share Capital

Sources Of Funds
155.46

155.46

160.58

84.09

84.2

84.4

Share Application Money

Preference Share Capital

3591.39

4186.32

5744.54

4727.72

5174.9

5830.2

Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans

8.97

8.97

8.97

3755.82

4350.75

5914.09

4811.81

5259.1

5914.6

16.98

2.79

0.41

3.4

2.6

0.8

563.55

937.45

4.66

458.91

637.7

562.4

Total Debt

580.53

940.24

5.07

462.31

640.3

563.2

4336.35

5290.99

5919.16

5274.12

5899.4

6477.8

Mar '08

Mar '09

Mar '10

Mar '08

Mar '09

Mar '10

12 mths

12 mths

12 mths

12 mths

12
mths

12
mths

2201.79

2693.29

2895.44

1750.21

2157.3

2425.7

540.43

700.8

884.27

762.8

946.5

1110.1

1661.36

1992.49

2011.17

987.41

1210.8

1315.6

233.12

366.32

684.24

245.71

411.2

745.4

94.75

81.32

265.1

2080.71

1865.1

2652.7

Inventories

1120.49

1398.32

1512.58

640.93

735.1

897.4

Sundry Debtors

1393.91

1837.15

1552.71

897.71

1419.7

1060.5

Total Liabilities

Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments

Cash and Bank Balance

79.12

52.84

60.32

67.19

84.3

47.9

Total Current Assets

2593.52

3288.31

3125.61

1605.83

2239.1

2005.8

Loans and Advances

1150.3

1131.1

2357.29

1272.02

1331.2

1321.4

0.16

0.16

0.52

470.15

300.1

320.1

3743.98

4419.57

5483.42

3348

3870.4

3647.3

Current Liabilities

980.05

1177

1177.11

786.36

1163.3

1543.8

Provisions

416.81

391.71

1347.66

601.38

294.8

339.4

Total CL & Provisions

1396.86

1568.71

2524.77

1387.74

1458.1

1883.2

Net Current Assets

2347.12

2850.86

2958.65

1960.26

2412.3

1764.1

Total Assets

4336.35

5290.99

5919.16

5274.09

5899.4

6477.8

Contingent Liabilities

1664.58

730.75

423.87

1892.55

1934.8

2016.1

48.2

55.86

73.55

286.12

312.17

350.3

Fixed Deposits
Total CA, Loans & Advances
Deferred Credit

Miscellaneous Expenses

Book Value (Rs)

Cipla

Dr Reddys

Profit & Loss account (in Rs.

Cr.)
Mar '08

Mar '09

Mar '10

Mar '08

Mar '09

Mar '10

12
mths

12
mths

12
mths

12
mths

12
mths

12
mths

4293.95

5295.33

5657.85

3428.4

4080.4

4469.6

90.66

61.04

52.16

84.51

80.9

74

4203.29

5234.29

5605.69

3343.89

3999.5

4395.6

134.92

-139.51

125.71

197.29

212.2

254

41.37

113.55

184.09

93.87

64.1

117.3

4379.58

5208.33

5915.49

3635.05

4275.8

4766.9

Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income
Expenditure

Raw Materials
Power & Fuel Cost
Employee Cost

2162.48

2513.11

2687.54

1347.33

1534

1599.4

96.9

91.71

92.15

77.12

90

104.1

255.45

271.33

318.87

366.28

412.5

516.4

Other Manufacturing Expenses

233.9

262.65

259.67

130.35

105.9

117.3

Selling and Admin Expenses

547.1

887.28

867.98

896.54

1117.9

1036.6

Miscellaneous Expenses

96.66

76.92

182.64

37.44

45.3

50.6

Preoperative Exp Capitalised

Total Expenses

Operating Profit
PBDIT
Interest

3392.49

4103

4408.85

2855.06

3305.6

3424.4

Mar '08

Mar '09

Mar '10

Mar '08

Mar '09

Mar '10

12
mths
852.17

12
mths
1244.84

12
mths
1380.93

12
mths
582.7

12
mths
758

12
mths
1088.5

987.09

1105.33

1506.64

779.99

970.2

1342.5

18.05

52.23

28.3

14.69

27.4

16

PBDT

969.04

1053.1

1478.34

765.3

942.8

1326.5

Depreciation

130.68

151.79

165.25

161.99

193.6

222.4

Other Written Off

20.71

19.7

19.3

Profit Before Tax

838.36

901.31

1313.09

582.6

729.5

1084.8

11.9

-0.06

-0.1

-0.1

PBT (Post Extra-ord Items)

838.36

901.31

1324.99

582.54

729.4

1084.7

Tax

136.93

124.5

243.5

108.88

168.6

238.7

Extra-ordinary items

Reported Net Profit

701.43

776.81

1081.49

475.22

560.9

846.1

Total Value Addition

1230.01

1589.89

1721.31

1507.73

1771.6

1825

Preference Dividend

155.46

155.46

160.58

63.06

105.3

190

26.42

26.42

26.67

10.72

17.8

31.6

Shares in issue (lakhs)

7772.91

7772.91

8029.21

1681.73

1684.69

1688.45

Earning Per Share (Rs)

9.02

9.99

13.47

28.26

33.29

50.11

Equity Dividend
Corporate Dividend Tax
Per share data (annualised)

Equity Dividend (%)

100

100

100

75

125

225

Book Value (Rs)

48.2

55.86

73.55

286.12

312.17

350.3

Balance Sheet (in Rs. Cr.)

Cipla

Dr Reddys

Increase(Decrease)

Increase(Decrease)

Mar '09

Mar '10

Amount

Mar '09

12 mths

12 mths

Total Share Capital

155.46

160.58

5.12

3.29%

84.2

84.4

0.20

0.24%

Equity Share Capital

155.46

160.58

5.12

3.29%

84.2

84.4

0.20

0.24%

0.00

0.00

12
mths

Mar
Amount
'10
12 mths

Sources Of Funds

Share Application Money

NA

NA

Preference Share Capital

Reserves

0.00

4186.32

5744.54

1558.22

Revaluation Reserves
Networth

Total Debt

37.22%

0.00

5174.9

5830.2

655.30

NA
12.66%

8.97

8.97

0.00

0.00%

0.00

4350.75

5914.09

1563.34

35.93%

5259.1

5914.6

655.50

12.46%

2.79

0.41

(2.38)

-85.30%

2.6

0.8

(1.80)

-69.23%

937.45

4.66

(932.79)

-99.50%

637.7

562.4

(75.30)

-11.81%

Secured Loans
Unsecured Loans

NA

NA

940.24

5.07

(935.17)

-99.46%

640.3

563.2

(77.10)

-12.04%

5290.99

5919.16

628.17

11.87%

5899.4

6477.8

578.40

9.80%

Mar '09

Mar '10

Increase(Decrease)

Mar '09

12 mths

12 mths

Amount

12
mths

2693.29

2895.44

202.15

7.51%

2157.3

2425.7

268.40

12.44%

700.8

884.27

183.47

26.18%

946.5

1110.1

163.60

17.28%

1992.49

2011.17

18.68

0.94%

1210.8

1315.6

104.80

8.66%

366.32

684.24

317.92

86.79%

411.2

745.4

334.20

81.27%

81.32

265.1

183.78

226.00%

1865.1

2652.7

787.60

42.23%

Inventories

1398.32

1512.58

114.26

8.17%

735.1

897.4

162.30

22.08%

Sundry Debtors

1837.15

1552.71

(284.44)

-15.48%

1419.7

1060.5

(359.20)

-25.30%

52.84

60.32

7.48

14.16%

84.3

47.9

(36.40)

-43.18%

Total Current Assets

3288.31

3125.61

(162.70)

-4.95%

2239.1

2005.8

(233.30)

-10.42%

Loans and Advances

1131.1

2357.29

1226.19

108.41%

1331.2

1321.4

(9.80)

-0.74%

0.16

0.52

0.36

225.00%

300.1

320.1

20.00

6.66%

4419.57

5483.42

1063.85

24.07%

3870.4

3647.3

(223.10)

-5.76%

0.00

0.00

Total Liabilities

Application Of Funds
Gross Block
Less: Accum.
Depreciation
Net Block
Capital Work in Progress
Investments

Cash and Bank Balance

Fixed Deposits
Total CA, Loans &
Advances
Deffered Credit
Current Liabilities

NA

Mar
'10
12
mths

Increase(Decrease)
Amount

NA

1177

1177.11

0.11

0.01%

1163.3

1543.8

380.50

32.71%

391.71

1347.66

955.95

244.05%

294.8

339.4

44.60

15.13%

Total CL & Provisions

1568.71

2524.77

956.06

60.95%

1458.1

1883.2

425.10

29.15%

Net Current Assets

2850.86

2958.65

107.79

3.78%

2412.3

1764.1

(648.20)

-26.87%

Provisions

Miscellaneous Expenses
Total Assets

Contingent Liabilities
Book Value (Rs)

0.00

0.00

5290.99

5919.16

628.17

NA
11.87%

5899.4

6477.8

578.40

NA

730.75

423.87

(306.88)

-42.00%

1934.8

2016.1

81.30

4.20%

55.86

73.55

17.69

31.67%

312.17

350.3

38.13

12.21%

9.80%

Profit & Loss account (in Rs. Cr.)

Income

Mar '09

Mar '10

Increase(Decrease)

Mar '09

12 mths

12 mths

Amount

12
mths

Mar
'10
12
mths

Increase(Decrease)
Amount

Sales Turnover

5295.33

5657.85

362.52

6.85%

4080.4

4469.6

389.20

9.54%

61.04

52.16

(8.88)

-14.55%

80.9

74

(6.90)

-8.53%

Net Sales

5234.29

5605.69

371.40

7.10%

3999.5

4395.6

396.10

9.90%

Other Income

-139.51

125.71

265.22

#######

212.2

254

41.80

19.70%

113.55

184.09

70.54

62.12%

64.1

117.3

53.20

83.00%

5208.33

5915.49

707.16

13.58%

4275.8

4766.9

491.10

11.49%

2513.11

2687.54

174.43

6.94%

1534

1599.4

65.40

4.26%

91.71

92.15

0.44

0.48%

90

104.1

14.10

15.67%

Employee Cost

271.33

318.87

47.54

17.52%

412.5

516.4

103.90

25.19%

Other Manufacturing
Expenses
Selling and Admin
Expenses
Miscellaneous Expenses

262.65

259.67

(2.98)

-1.13%

105.9

117.3

11.40

10.76%

887.28

867.98

(19.30)

-2.18%

1117.9

1036.6

(81.30)

-7.27%

76.92

182.64

105.72

137.44%

45.3

50.6

5.30

11.70%

0.00

0.00

4103

4408.85

305.85

7.45%

3305.6

3424.4

118.80

Excise Duty

Stock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost

Preoperative Exp
Capitalised
Total Expenses

NA

NA
3.59%

Mar '09

Mar '10

Increase(Decrease)

Mar '09

Mar
'10

Increase(Decrease)

12 mths

12 mths

Amount

1380.93

136.09

10.93%

12
mths
1088.5

Amount

1244.84

12
mths
758

1105.33

1506.64

401.31

36.31%

970.2

52.23

28.3

(23.93)

-45.82%

PBDT

1053.1

1478.34

425.24

Depreciation

151.79

165.25

13.46

Other Written Off

0.00

Profit Before Tax

901.31

1313.09

411.78

Operating Profit
PBDIT
Interest

Extra-ordinary items

330.50

43.60%

1342.5

372.30

38.37%

27.4

16

(11.40)

-41.61%

40.38%

942.8

1326.5

383.70

40.70%

8.87%

193.6

222.4

28.80

14.88%

19.7

19.3

(0.40)

-2.03%

729.5

1084.8

355.30

48.70%

NA
45.69%

11.9

11.90

-0.1

-0.1

0.00

0.00%

901.31

1324.99

423.68

47.01%

729.4

1084.7

355.30

48.71%

124.5

243.5

119.00

95.58%

168.6

238.7

70.10

41.58%

Reported Net Profit

776.81

1081.49

304.68

39.22%

560.9

846.1

285.20

50.85%

Total Value Addition

1589.89

1721.31

131.42

8.27%

1771.6

1825

53.40

Preference Dividend

0.00

0.00

155.46

160.58

5.12

3.29%

105.3

190

84.70

80.44%

26.42

26.67

0.25

0.95%

17.8

31.6

13.80

77.53%

Shares in issue (lakhs)

7772.91

8029.21

256.30

3.30%

1684.69

1688.5

3.76

0.22%

Earning Per Share (Rs)

9.99

13.47

3.48

34.83%

33.29

50.11

16.82

50.53%

Equity Dividend (%)

100

100

0.00

0.00%

125

225

100.00

80.00%

73.55

17.69

31.67%

312.17

350.3

38.13

12.21%

PBT (Post Extra-ord Items)

Tax

Equity Dividend
Corporate Dividend Tax

NA

NA

3.01%
NA

Per share data (annualised)

Book Value (Rs)

55.86

Ratios
Profitability Ratios
Net Profit Ratio

Cipla
2008

2009

Dr Reddys
2010

2008

2009

2010

Net Profits

838.36

901.31

1313.09

582.54

729.4

1084.7

Net Sales

4203.29

5234.29

5605.69

3343.89

3999.5

4395.6

19.94533

17.21934

23.42424

17.42103

18.23728

24.67695

701.43

776.81

1081.49

475.22

560.9

846.1

Ratio
Return on Net worth
PAT
Net worth
Ratio

3755.82

4350.75

5914.09

4811.81

5259.1

5914.6

18.67582

17.85462

18.28667

9.876117

10.66532

14.30528

Return on Capital
employed
PAT

701.43

776.81

1081.49

475.22

560.9

846.1

Capital employed

4336.35

5290.99

5919.16

5274.09

5899.4

6477.8

16.17559

14.68175

18.271

9.010464

9.507747

13.06153

838.36

901.31

1324.99

582.54

729.4

1084.7

1894.48

2358.81

2695.41

1233.12

1622

2061

94.75

81.32

265.1

2080.71

1865.1

2652.7

Current Assets

2593.52

3288.31

3125.61

1605.83

2239.1

2005.8

Total

4582.75

5728.44

6086.12

4919.66

5726.2

6719.5

ROTA

18.29382

15.73395

21.77068

11.84106

12.73794

16.14257

2593.52

3288.31

3125.61

1605.83

2239.1

2005.8

980.05

1177

1177.11

786.36

1163.3

1543.8

2.646314

2.793806

2.655325

2.042105

1.924783

1.299262

2593.52

3288.31

3125.61

1605.83

2239.1

2005.8

Ratio
Return on Total Assets
Net profit before tax
Net Fixed assets
Investments

Liquidity Ratios
Current Ratios
Current Assets
Current Liabilities
Current Ratio
Liquid Ratio
Current Assets
Inventory

1120.49

1398.32

1512.58

640.93

735.1

897.4

Current Assets less

inventory
Current Liabilities

1,473.03

1,889.99

1,613.03

964.9

1504

1108.4

980.05

1177

1177.11

786.36

1163.3

1543.8

Liquid Ratio

1.503015

1.605769

1.370331

1.227046

1.292874

0.717969

4293.95

5295.33

5657.85

3428.4

4080.4

4469.6

Turnover Ratios
Inventory Turnover Ratio
Gross Sales
Inventory

1120.49

1398.32

1512.58

640.93

735.1

897.4

ITR

3.832207

3.786923

3.740529

5.349102

5.550809

4.980611

Inventory holding period

(days)

93.94064

95.06399

96.24306

67.30102

64.85541

72.28029

4203.29

5234.29

5605.69

3343.89

3999.5

4395.6

Debtors Turnover Ratio

Sales

Sundry debtors

1393.91

1837.15

1552.71

897.71

1419.7

1060.5

DTR (times)

3.015467

2.849136

3.610262

3.724911

2.817144

4.144837

Credit period (days)

119.3845

126.3541

99.71575

96.6466

127.789

86.85504

Solvency Ratios
Debt/ Capital employed Ratio
Debt
Capital Employed
Debt/ Capital employed
Ratio

580.53

940.24

5.07

462.31

640.3

563.2

4336.35

5290.99

5919.16

5274.12

5899.4

6477.8

0.133875

0.177706

0.000857

0.087656

0.108536

0.086943

856.41

953.54

1341.39

618

776.6

1120.1

18.05

52.23

28.3

14.69

27.4

16

47.44654

18.25656

47.39894

42.06943

28.34307

70.00625

Interest coverage ratio

PBIT
Interest
PBIT/Interst

Key notes about Financial Ratio Analysis:

Profitability Ratios:
Net profit ratio: It is the ratio of Net profits to Net sales. It is quite similar for both the companies.
There was a considerable decrease in 2009 as compared to 2008 for Cipla. It can be attributed to a
considerable increase in cost of raw materials and selling and admin expenses. Also the ratio
increased for Dr. Reddy in 2010 as compared to that of 2009 due to a drastic increase in profits.
Return on Net worth: It is the ratio of net profit to net worth of the company. It has been almost the
same for 3 years in case of Cipla due to considerable increase in the reserves and surplus which
counteracted the increase in profits. The case has been different for Dr. Reddy which has shown a
considerable increase in the Return on net worth. This is because the percentage increase in its net
profit has been way ahead of that in case of reserves and surplus and net worth as a whole.
Return on capital employed: It is the ratio of Net profits to the total capital employed. Since the
debts taken by the companies are negligible, thus the ROCE ratios are quite same as Return on net
worth. However there is an anomaly. The 2009 ROCE for Cipla is considerably different from the
Return on net worth that year. It is because of the large total debts of about 940 crores. However
they are repaid the next year.
Return on Total Assets: It is the ration of Net profit to the total assets which include the net block,
current assets and investments. The ROTA for Cipla is higher than that of Dr. Reddy. It implies that
Cipla is better using its assets as compared to Dr. Reddy.
Liquidity Ratios:
Current Ratio: It is calculated as the ratio of the current assets of a company to its current liabilities.
The industrial average of the current ratio for the Indian pharma industry is 1.45.
For Cipla it stands at 2.65 as compared to 1.29 for Dr. Reddys. Thus Cipla is in a better position to
pays its current liabilities as compared to Dr. Reddys. Thus the short term creditors if given a choice
would prefer Cipla over Dr. Reddys. But investors would prefer investing in Dr. Reddys rather than
Cipla for better profits since it is using more of credit available from the market at a low rate.

Liquid Ratio: It gives the liquidity position of the company. It is quite same as Current ratio, except
that inventories are not included in the current assets since that are not easily liquefiable. The
industrial average Liquid ratio is 0.73. Dr. Reddys liquid ratio is 0.718, which is quite near to the
industrial average. For Cipla however it is around 1.37 again reflecting its conservative nature.
Inventory turnover ratio (ITR): Inventory turnover ratio for Dr. Reddy is better than Cipla indicating
that it better manages its inventory thus minimising the cost. Thus Dr. Reddy is turning over its
inventory contents more frequently than Cipla and also its inventory holding period is lower.
Debts turnover ratio (DTR): Debts turnover ratio of Dr. Reddy is higher than that of Cipla indicating
that Dr. Reddy sells a smaller proportion of its products on credit than Cipla. It again implies that Dr.
Reddy is better than Cipla from investors perspective since it gives away less debts and the credit
period is less. Thus the debtors pay their debts quicker than in case of Cipla.
Solvency Ratios:
Debt/Capital Employed ratio: This ratio is low for both the companies, however it is lower still for
Cipla i.e. just about .0008.Thus both the companies employ negligible debts. Cipla however can be
seen as more conservative as compared to Dr. Reddy and the whole pharmaceutical industry.
Interest coverage ratio: It is the ratio between PBIT and Interest to be paid to the creditors. Both
the companies have a high Interest coverage ratio which is a comfort to the creditors. It is higher for
Dr. Reddy. A point to be observed is that the interest coverage ratio for Cipla has suddenly climbed
from 18.25 in 2009 to 47.4 in 2010. Same is the case with Dr. Reddy. This is because their profits
have risen and some debts have been repaid.
EPS ratio: Earning per share ratio is most important ratio from point of view of investor. EPS for
Cipla is 13.47 and for Dr Reddys is 50.12. However it may be attributed to the fact that Dr Reddys
has only 1688.5 lac share in market while Cipla has 8029.21 lacs.

Conclusion
From an investor's point of view Dr. Reddys would be a better investment. The high EPS support
for the same.
From a creditors point of view Cipla would be a better company since it is more conservative. The
high liquidity ratios also support the same.