Group 1 Kevin jacob Gayatri murlidharan Namrata rani Nidhi garg Debashish paul

Objectives
Examine the performance of mobile mfg. firms on the

basis Du pont analysis

Use of financial ratios in evaluating the business

model followed
Evaluating which type of model is more suitable for

mobile mfg. industry

Scope
There are mainly two types of strategy followed in

mobile mfg. industry differentiation strategy.

cost

leadership

and

A firm could do well following either of the strategy as

per theory .
Our study focuses on finding out which model is more

suitable for the mobile mfg. industry as a whole.

Financial Year 2010-11 for Pharma

FY11/CY10 was a strong year for domestic pharma

companies on back of strong growth in both domestic and exports sales. Further, the efforts of global innovators to entrench in the domestic market intensified with many strategic tie-ups and small acquisitions of Indian companies. Now with Abbott taking over Piramals domestic division and Daiichi Sankyo having acquired Ranbaxy, 2 of the top 3 players in the Indian market are MNCs.

 Another problem which continued to hamper the

pharma sector was the stringency of the US FDA while inspecting manufacturing plants. Ranbaxy and Sun Pharma are yet to come to a resolution with respect to their plants with the US FDA. Aurobindo Pharma was new in the list to receive the warning letter for one of its biggest manufacturing unit.

 It was the chronic therapy segment, which once again stole

the thunder of the acute therapy segment. While the former recorded a robust 18% YoY growth, the latter grew by 14% YoY. On an average, they were able to clock topline growth in the range of 10% to 15%. On the margin front, performance was not good. Most of the companies saw increase in costs on the raw material costs and employee costs. The intensifying competition led to higher attrition and the industry is facing huge increase in the employee costs.

Methodology
The sample size for the study would consist of 10 firms
Five following cost leadership and five following

differentiation strategy.
Calculation of financial ratio and analysis of the same . Application of modified Du pont model to find out the

comparative analysis.

Litreature review
The du pont model

of retail industry: strategic management journal 2008. An analytical study of indian companies ( research paper) Modified du pont analysis : five ways to improve your return on equity( by thomas leisz) Business analysis and valuation : using financial analysis( by palepu and healy). Really modified du pont analysis: five ways to improve return on equity :Thomas J. Liesz ,Mesa State College

 Devine, Kevin and Seaton, Lloyd. An examination of

quarterly financial ratio stability: implications for financial decision making, Journal of Applied Business Research, Winter, 1995, pp. 81-98. Financial Analysis Full Text Available By: Prendergast, Paul. Financial Management (14719185), May2006, p48-49, 2p

Key learnings from literature review:

To avoid mistaken assumptions, a more in-depth

knowledge of ROE is needed. In the 1920s the DuPont corporation created a method of analysis that fills this need by breaking down ROE into a more complex equation.

 Until 1970s, maximizing ROA was a common corporate

goal. Thereafter, focus shifted from ROA to ROE. In addition to profitability and efficiency, the way in which a firm financed its activities, i.e. its use of leverage became a third area of attention for financial managers. The new ratio of interest was called the equity multiplier, which is (total assets / equity).

 ROA=Net income /Total Assets

ROE=ROA x (total assets / equity) ROE= (net income / sales) x (sales / total assets) x

(total assets / equity)

 The three-step equation breaks up ROE into three very

important components: ROE = (Net profit margin)* (Asset Turnover) * (Equity multiplier)

 These components include:

Operating efficiency - as measured by profit margin. Asset use efficiency - as measured by total asset turnover. Financial leverage - as measured by the equity multiplier.

The Three-Step DuPont Calculation

Taking the ROE equation: ROE = net income /

shareholder's equity and multiplying the equation by (sales / sales), we get: ROE = (net income / sales) * (sales / shareholder's equity)

 This equation for ROE, breaks it into three widely used

and studied components: ROE = (Net profit margin)* (Asset Turnover) * (Equity multiplier)

 We now have ROE broken into two components, the

first is net profit margin, and the second is the equity turnover ratio.
Now by multiplying in (assets / assets), we end up with

the three-step DuPont identity: ROE = (net income / sales) * (sales / assets) * (assets / shareholder's equity)

BIOCON BIOPHARMACEUTICALS LTD.

Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011

Operating efficiency Assets turnover ratio Financial leverage

-4.55652
0.013193 6.603788

-0.02071
0.094662 4.927841

0.641525
0.131801 5.315341

1.20227
0.159159 5.347727

0.979585
0.22666 6.998864

ROE

-0.39697

-0.00966

0.449432

1.023295

1.553977

Sales growth 2008 6.13913 2009 0.501827 2010 0.214923 2011 0.863818

Assets growth 2008 -0.00505 2009 0.078635 2010 0.006093 2011 0.308755

 2006 - Inaugurates Biocon Biopharmaceuticals, India's largest multi-

product Biologics facility at Biocon Park. 2007- ; Divests enzymes division for USD 115 million to Novozymes; Biocon and Abraxis BioScience. 2008 - Biocon acquires a 70% stake in German pharmaceutical company, AxiCorp GmbH for a consideration of 30 Million.

Analysis:
In 2006, Biocon grew revenues by a healthy 22% last quarter, but

operating profit grew by just 8% owing to a sharp drop in margins. A reasons for the drop was an adverse impact of Rs 3 crore due to foreign exchange movement. Margins fell partly because of a 50% increase in R&D spend to Rs 6 crore Also, Margins fell on account of lower statin prices. The company gets a majority of its revenues from statin bulks, which accounted for 42% of the sales in 2005-06. Higher depreciation charges on its new research and manufacturing facility.

FY 2006-07 vs FY 2007-08
Operating margins (excluding AxiCorp) maintained

at 31% level. MTM Losses provided at Rs. 147 crores. PAT impacted by MTM, declines to Rs. 93 crores. R&D revenue expenditure increases by 27% to Rs. 60 crores. Board recommends dividend of 60% at Rs. 3/- per share, on the enlarged share capital (post Sep 08 bonus issue).

FY 2008
R&D Revenue Expenditure increased 24% to Rs. 471

million from Rs. 379 million. As at March 31, 2008, BBPL had accumulated losses of Rs 325,611. Biocons share in the accumulated losses of BBPL aggregates Rs 166.062. Approval of BIOMAb-EGFR for new indications and commencement of sales to global markets is expected to help improve profitability in fiscal 2010.

FY 2009
Unpredictable Rupee depreciation adversely impacted

consolidated FY 09 earnings, wherein losses of Rs. 147 crores on account of MTM were provided. Sales revenue from Research Services grew 28% to Rs. 225 crores from Rs. 176 crores, in FY 09. Syngene and Clinigenes EBITDA grew 21% to Rs. 70 crores, but MTM severely impacted profit earnings resulting in a loss of Rs. 18 crores for the year. Also burdened with the impact of added depreciation of Rs. 16 crores.

FY 2010-11
During the year Biocon Biopharmaceuticals Private

Limited (BBPL) became a wholly owned subsidiary of the Company. For the year under review, BBPL earned revenues of ` 491 million as against ` 381 million in the previous year. The net profits for the year Stood at ` 192 million as against ` 26 million in the previous year.

Contd
For the year ended March 31, 2011 consolidated

revenues grew by 17% driven by a strong growth in biopharmaceutical segment, EBITDA It grew by 24% and Profit after tax (PAT) grew by 25% to ` 3,675 million as compared to ` 2,932 million in the previous financial year. The highlight of this past year was the strategic partnership with Pfizer for taking our biosimilar insulin global.

CIPLA
Sales growth Mar 2007 0.178535 Mar 2008 0.174221 Mar 2009 0.23605 Mar 2010 0.069595 Mar 2011 0.123453

Assets growth Mar 2007 0.316858 Mar 2008 0.223414 Mar 2009 0.941216 Mar 2010 0.075057 Mar 2011 0.356961

DU-PONT ANALYSIS-Cipla
Cipla Ltd. Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Currency: Rs. Million (NonAnnualised ) 12 mths 12 mths 12 mths 12 mths 12 mths 12 mths Operating efficiency 0.258212 0.251042 0.224891 0.204561 0.266471 0.217157 Assets turnover 2.271075 2.032522 1.950795 1.971243 1.961229 1.623736 Financial leverage 22.78923 11.57668 14.16306 17.32465 18.03114 24.46756

ROE

13.36402

5.906986

6.21356

6.985977

9.423278

8.627413

FY 2007-08
The Companys turnover at Rs. 4429 crore crossed the

USD 1 billion mark for the first time. Inspite of a sluggish start in the first quarter, the overall turnover (including other income) of the Company grew by 18 per cent. The prices of many APIs and input materials have risen significantly due to

restriction in production by Chinese chemical manufacturers, rise in price of petroleum-based products, frequent shortages and generalinflationary conditions.

FY 2008-09
The Companys turnover recorded a 22 per cent growth

and crossed the Rs.5000 crore milestone. While exports grew by 30 per cent, the domestic sales grew by 15 per cent. Notably, technical fees fetched Rs.218 crore, as compared to Rs.150 crore marking a significant 42 per cent growth over the previous year. Over the last three years, the Company has invested about Rs.1900 crore in fixed assets.

Contd
The construction work at the Companys Rs.750 crore

Special Economic Zone (SEZ) project for pharmaceutical formulations, at Indore, Madhya Pradesh, was in full swing. Ciplas Rs.310 crore project in Sikkim for the manufacture of formulations. This year saw a significant growth in assets.

FY 2009-10
Sales growth was comparitively less in this financial

year. It sold its much-publicised emergency contraceptive brand I-pill to Piramal Healthcare for a princely Rs 95 crore - over three times the actual sales of the product. The Company is investing about Rs.250 crore in a new R&D and administration facility at Vikhroli, Mumbai.

Contd
Cipla is setting up API facilities at Bengaluru for anti-

cancer products. The Company is upgrading its API facilities at Patalganga to scale-up production. The total investment for these two projects is estimated to be about Rs.200 crore.

FY 2010-11
Shares in drugmaker Cipla fell nearly 4% on Monday

morning, after it reported a larger-than-expected 19.4% decline in third-quarter net profit late on Friday. It acquired significant minority stake in two biotech companies one each in Goa and Shanghai for $65 million (approximately Rs 300 cr) to consolidate its presence in the growing biotech sector.

FY 2011-12
Cipla's net sales growth of 13% was modest, given the low base a

year ago. Operating profit margins rose by 167 bps on the back of changes in product mix, but higher tax outgo (due to expiry of tax holidays) has squeezed the bottom line. Growth in exports, accounting for half of its revenues, was a letdown. Despite the rupee's fall, export revenue grew only 10.7%, compared with 9.5% and 8.4% in the preceding quarters. The exports growth has been erratic over the past few quarters due to its strategy to focus less on the low-margin anti-AIDS formulations.

Ranbaxy
Ranbaxy Laboratories Ltd.
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Currency: Rs. Million (Non-Annualised) 12 mths 12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Margin

NI/SALES

0.06908

0.195916

0.1596

0.091669

0.1707

0.248002

Total asset Turnover SALES/ASSETS

1.825161

1.686914

1.616722

1.664771

1.78463

1.919067

Return onAsssets

NI/Assets

0.126082

0.330493

0.258029

0.152609

0.304636

0.475933

ROE

1.218236

3.784104

3.128176

1.732908

3.778745

6.388989

Analysis
Net Profit margin decreased in 2008-09.
NPM was highest in 2010-11. Total asset turnover was lowest in 2007-08 andhighest

in 2010-11. Return on Assets was lowest in year 2005-06 and then in 2008. maximum ROA was in 2010

 Ranbaxy Labs an underperformer in 2008 due to the

USFDA import ban on the 30 products from its two units at Paonta Sahib and Dewas . In 2008,Ranbaxy Labs net profit seen down 76% at Rs 50 cr. In 2010,with the Daiichi Sankyo takeover, a lot of licensed drugs helped the co. domestically. In 2010,The US FDA gave the green signal for Ranbaxy to launch the generic version of Aricept, a drug to treat Alzheimer's disease. In 2011,Ranbaxy jumps after final nod from USFDA to launch Lipitor

Sun Pharma
Net Profit margin has shown fluctuating trend .
NPM was highest in 2010.It fell in alternate years. Total asset turnover was highest in 2008 and 2009.It

fell sharply in 2010 Return on Assets became zero in 2007 and then rose sharply in 2008. Since then , it has shown fluctuating effect, decreasing in 2009 and 2011.

 In 2007,Sun Pharmas net sales growth 25%, Net profit

up 17%. In 2007,Sun Pharma gets approval to market generic Trileptal tabets In 2008,Sun Pharma reports Net sales up 76%, Net profit up 135% In 2008,Novartis drops Exelon patent suit against Sun Pharma. In 2009, Sun Pharma get tentative USFDA nod for drug

 In 2010,Sun Pharma achieves 35% sales growth

Sun Pharma gets US FDA nod for generic

hypertension drug

Dr Reddys Lab
Net Profit margin increased sharply in 2007 and then

dropped and remained constant.dbt) Total asset turnover increased sharply in 2007 and then dropped and remained constant.dbt) Return on Assets increased sharply in 2007 and then dropped and remained constant.dbt

 In 2006, Dr Reddy's received exclusive USFDA

approval for Ondansetron HCL tablets which gave 50% market share to DRL Dr Reddys & Torrent Pharma sign agreement In 2007,SYGNIS, Dr. Reddys sign supply collaboration for Ax200 Dr Reddys develop respiratory drug Dr Reddy's launches Ebernet TM-Eberconazole

Pfizer
Net Profit margin increased in 2007and fell sharply in

2009. Total asset turnover has been constant,lowest being in 2009. Return on Assets increased in 2007and fell sharply in 2009.

 Pfizers Q3 net profit was at Rs 30.8 crore versus Rs 28

crore during the same quarter previous year. Its net sales were at Rs 175.7 crore versus Rs 178.5 crore during the corresponding quarters. Operating profit margin stood at 19% vs 19.5%, YoY. In 2009, Pfizer acquired Wyeth in $60bn. In 2011, Ranbaxy, Pfizer in pact with ITC to boost rural sales

Piramal Healthcare
Net Profit margin was constant throughout,rising

sharply in 2010. NPM was highest in 2010-11. Total asset turnover was lowest in 2007-08 andhighest in 2008 Return on Assets constant throughout, rising sharply in 2010. ROA was highest in 2010-11

 In 2010, Abbott acquired Piramal in a $3.7-billion deal.

GSK
Net Profit margin rose sharply in 2007-08 and fell in

2008. Total asset turnover was lowest in 2007-08 and highest in 2010-11. Return on Assets was lowest in year 2005-06 and then highest in 2006.

 GSK Pharma launched 5 patented products over CY08-10.

In 2008, GSK Pharma signed licensing agreement with

Astellas The new initiatives were: 1) Developing channels for hospitals to leverage GSK scale, optimise marketing spends and develop expertise. 2) Develop channels and reach for tapping rural opportunity, expanding matured products through contract field force. 3) Investing in chronic therapeutic segments like diabetes, CVS, biological. Strengthen dermatology and critical care franchises.

 In 2008,GSK Pharma gained from vaccines,

priority products and launched 2 new innovative vaccines In 2009,GSK entered into a revenue sharing agreement with Dr Reddy's products in emerging mkts

Comparative Analysis for 2010-11

Piramal has the best Net Profit Margin in the industry

for the year 2010. Pfizer has the best Total asset turnover. Piramal has the best ROI.