I gracefully acknowledge my gratitude to MR. MANOJ BHAMBU.

My CORPORATE ACCOUNTING teacher for helping & guiding me in the preparation of this PROJECT ON FINANCIAL STATEMENTS OF CADILA HEALTHCARE Ltd without whose help, the project wouldnt have been completed.

Financial Statements are the summarized statements of accounting data produced at the end of the accounting process by an enterprise through which it communicates the accounting information to the internal and external users. A set of financial statements include: 1) Balance Sheet: - It is a statement of assets and liabilities, i.e., financial position of an enterprise at a given date. It is also known as Positional Statement. 2) Profit and Loss Account: - It shows the net result of business operations during an accounting period. It is also known as Income Statement. 3) Schedules and Notes to Accounts: - The Balance Sheet and Profit and Loss Account are supported by the schedules having details of items in the Balance Sheet and Profit and Loss Account, while the notes to accounts are the statement of accounting policies and explanation to material items. In this project I am going to study the financial statements of CADILA HEALTHCARE COMPANY. By studying them I will analyze how the company was performing in last five years.

'Cadila Healthcare' is an Indian pharmaceutical company head quartered at Ahmadabad in Gujarat state of western India. The company is the fifth largest pharmaceutical company in India with US$290m in turnover in 2004. It is a significant manufacturer of generic drugs. Cadila Pharma has developed a drug named Roserin which has reduced the cost of curing TB by 33%. Zydus Cadila is an innovative global pharmaceutical company that discovers, develops, manufactures and markets a broad range of healthcare products. The groups operations range from API to formulations, animal health products and cosmeceuticals. Headquartered in the city of Ahmedabad in India, the group has global operations in four continents spread across USA, Europe, Japan, Brazil, South Africa and 25 other emerging markets. In its mission to create healthier communities globally, Zydus Cadila delivers wide ranging healthcare solutions and value to its customers. With over 10,000 employees worldwide, a worldclass research and development centre dedicated to discovery research and eight state-of-the-art manufacturing plants, the group is dedicated to improving peoples lives.

Pankaj Ramanbhai Patel (born 1951) is the current Chairman and Managing Director of Cadila Healthcare, the fifth largest pharmaceutical company in India. Patel was tied for 26th place on Forbes Magazine's first annual list of the 40 richest Indians (2004) with an estimated net worth of $510 million. Patel was named the "Best Pharma Man of the year 2003" by the Foundation of Indian Industry and Economists in recognition of the growth of Cadila under his leadership. At that time, Patel predicted that Zydus Cadila would become the third-largest pharmaceutical company in India by 2005 however, the company's fortunes were reversed and Patel fell out of the list of richest Indians by 2005.
Cadila Healthcare Limited Type Industry Founded Headquarters Key people Revenue Net income Employees Website Public Pharmaceuticals 1954 Ahmedabad, India Pankaj Patel, Chairman INR 39 billion (2010) INR 3 billion (2010) 11000 (2010) http://www.zyduscadila.com/

The Company is also engaged into research and development in the areas of new molecular entity (NME), novel drug delivery systems (NDDS) and generic product development. During the fiscal year ended March 31, 2010 (fiscal 2010), the Company launched over 30 products and range of line extensions in the formulations market.

Income statement of Cadila Healthcare Ltd. for the last 5 years.

Mar ' 10 Income : Operating Income Expenses Material Consumed Manufacturing Expenses Personnel Expenses Selling Expenses Administrative Expenses Expenses Capitalized Cost Of Sales Operating Profit Other Recurring Income Adjusted PBDIT Financial Expenses Depreciation Other Write offs Adjusted PBT Tax Charges Adjusted PAT Non Recurring Items Other Non Cash adjustments Reported Net Profit Earnings Before Appropriation Equity Dividend Preference Dividend Dividend Tax Retained Earnings Mar ' 09 Mar ' 08 Mar ' 07 (Rs in Cr) Mar ' 06

1,885.60

1,743.40

1,681.80

1,450.30

1,276.60

795.00 96.80 266.90 273.10 339.00 0.00 1,770.80 114.80 582.40 697.20 43.10 90.00 0.00 564.10 17.00 547.10 -43.80 0.00 503.30 706.30 102.40 0.00 11.60 592.30

708.20 46.30 180.60 0.00 591.10 0.00 1,526.20 217.20 262.60 479.80 88.00 82.60 0.00 309.20 30.50 278.70 -12.80 0.00 265.90 432.50 61.40 0.00 10.50 360.60

654.60 71.90 181.50 209.70 291.70 0.00 1,409.40 272.40 111.40 383.80 43.50 73.40 0.00 266.90 40.70 226.20 6.80 3.20 236.20 320.30 56.50 0.00 9.60 254.20

545.50 59.40 165.10 180.70 239.80 0.00 1,190.50 259.80 74.80 334.60 29.90 66.70 0.00 238.00 27.20 210.80 -6.10 0.00 204.70 442.80 50.20 0.00 8.50 384.10

525.70 44.10 145.80 152.40 170.90 0.00 1,038.90 237.70 49.10 286.80 21.50 61.60 0.00 203.70 23.00 180.70 -14.90 -0.90 164.90 313.90 37.70 0.00 5.30 270.90

Balance Sheet of Cadila Healthcare Ltd. for the last 5 years.

(Rs in Cr) Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 SOURCES OF FUNDS Owner's Fund Equity Share Capital Share Application Money Preference Share Capital Reserves & Surplus Loan Funds Secured Loans Unsecured Loans Total USES OF FUNDS Fixed Assets Gross Block Less : Revaluation Reserve Less : Accumulated Depreciation Net Block Capital Work-in-progress Investments Net Current Assets Current Assets, Loans & Advances Less : Current Liabilities & Provisions Total Net Current Assets Miscellaneous expenses not written Total Note : Book Value of Unquoted Investments Market Value of Quoted Investments Contingent liabilities Number of Equity shares outstanding (in Lacs)

68.20 68.20 0.00 0.00 0.00 0.00 1,553.90 1,164.60

62.80 0.00 0.00 991.00

62.80 0.00 0.00 819.50

31.40 0.00 0.00 704.90

554.20 636.70 559.30 362.70 312.50 39.90 183.20 179.60 85.00 120.70 2,216.20 2,052.70 1,792.70 1,330.00 1,169.50

1,556.70 1,358.50 1,241.00 1,129.20 1,015.10 0.00 0.00 0.00 0.00 0.00 606.30 521.60 457.10 387.70 329.10 950.40 836.90 783.90 741.50 686.00 142.90 117.30 96.40 52.10 58.90 598.90 595.40 442.70 292.80 185.10

1,205.70 997.40 989.50 829.40 628.40 682.90 524.70 519.80 585.80 388.90 522.80 472.70 469.70 243.60 239.50 1.20 30.40 0.00 0.00 0.00 2,216.20 2,052.70 1,792.70 1,330.00 1,169.50 547.00 1,059.10 530.60 539.60 166.90 523.70 388.60 44.40 73.40 238.70 37.60 63.30 156.20 29.40 64.30 628.07

1,364.99 1,364.99 1,256.14 1,256.14

CADILA HEALTHCARE LIMITED

Cash Flow Statement for the year ended March 31, 2010
INR - Millions Particulars A. Cash Flows from Operating Activities:Net profit before taxation and extraordinary items Adjustments for:Depreciation [Profit] / Loss on sale of assets [net] [Profit] / Loss on sale of investments [net] [Interest income] [Dividend income] Interest expenses Balance of Profit & Loss A/c acquired under amalgamation Bad debts written off Provision for doubtful debts Provisions for retirement benefits Provisions for probable product warranty claims and return of goods Total Operating profit before working capital changes Adjustments for:[Increase] / Decrease in trade receivables [Increase] / Decrease in other receivables [Increase] / Decrease in inventories Increase / [Decrease] in trade payables & other liabilities Total Cash generated from operations Capital Subsidy received during the year Interest received [Interest paid] [Direct taxes paid] [Net of refunds] Total Cash flow before extraordinary items Extraordinary income / [expenditure] Net cash from operating activities B. Cash flows from investing activities:Purchase of fixed assets Purchase of investments Proceeds from sale of Investments Proceeds from sale of fixed assets Dividend received Net cash from investing activities Year ended March 31, 2010 2009 5203 900 5 154 (73) (359) 374 0 0 47 19 (9) 1058 6261 (511) (924) (318) 898 (855) 5406 0 75 (382) (256) (563) 4843 292 5135 (2325) (530) 341 23 359 (2132) (1750) (1516) 10 240 405 (2611) 3 100 (650) (228) (775) 3062 (380) 2682 (768) 623 (231) 305 (71) 3837 826 (88) 0 (100) (405) 644 38 20 36 (45) 18 944 3908 2964

CADILA HEALTHCARE LIMITED

Cash Flow Statement for the year ended March 31, 2010
INR - Millions Particulars C. Cash flows from financing activities:[Borrowings] [Net] [Dividends paid] [Tax on dividends paid] Net cash used in financing activities Net increase / (-) decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents acquired due to amalgamation Cash and cash equivalents transfer on Demerger Cash and cash equivalents at the close of the year Year ended March 31, 2010 2009

(2257) (615) (105) (2977) 26 256 0 0 282

718 (564) (96) 58 129 190 4 (67) 256

CADILA HEALTHCARE LIMITED

Cash Flow Statement for the year ended March 31, 2009.
Particulars

INR - Millions Year ended March 31, 2009 2008 2785 734 (12) 8 (80) (396) 390 0 22 (3) 19 16 698 3483 (462) (1085) (23) (1012) (2582) 901 0 75 (374) (139) (438) 463 (48) 415 (1677) (1509) 2 114 396 (2674)

A. Cash Flows from Operating Activities: Net profit before taxation and extraordinary items 2964 Adjustments for:Depreciation 826 [Profit] / Loss on sale of assets [net] (88) [Profit] / Loss on sale of investments [net] 0 [Interest income] (100) [Dividend income] (405) Interest expenses 644 Balance of Profit & Loss A/c acquired under amalgamation 38 Bad debts written off 20 Provision for doubtful debts 36 Provisions for retirement benefits (45) Provisions for probable product warranty claims and return of goods 18 Total 944 Operating profit before working capital changes 3908 Adjustments for:[Increase] / Decrease in trade receivables (1064) [Increase] / Decrease in other receivables 919 [Increase] / Decrease in inventories (231) Increase / [Decrease] in trade payables & other liabilities 304 Total (72) Cash generated from operations 3836 Capital Subsidy received during the year 3 Interest received 100 (650) [Interest paid] [Direct taxes paid] [Net of refunds] (228) Total (775) Cash flow before extraordinary items 3061 Extraordinary income / [expenditure] (380) Net cash from operating activities 2681 B. Cash flows from investing activities: Purchase of fixed assets (1750) Purchase of investments (1516) Proceeds from sale of Investments 10 Proceeds from sale of fixed assets 240 Dividend received 405 Net cash from investing activities (2611)

CADILA HEALTHCARE LIMITED Cash Flow Statement for the year ended March 31, 2009. INR - Millions Particulars C. Cash flows from financing activities : [Borrowings] [Net] [Dividends paid] [Tax on dividends paid] Net cash used in financing activities Net increase / (-) decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents acquired due to amalgamation Cash and cash equivalents transfer on Demerger Cash and cash equivalents at the close of the ` year Year ended March 31, 2009 2008 719 (564) (96) 59 129 190 4 (67) 256 2912 (502) (85) 2325 66 124 0 0 190

Above I have shown the Financials of CADILA HEALTHCARE Ltd. Now after studying the financials I will analyze them by calculating RATIOS and find out that how the company was performing during these five years. RATIOS: - A Ratio is an arithmetical expression of relationship between two related or interdependent items. The term "accounting ratios" is used to describe significant relationship between figures shown on a balance sheet, in a profit and loss account, in a budgetary control system or in any other part of accounting organization. Accounting ratios thus shows the relationship between accounting data.

Ratios as tools for establishing true profitability and financial position of a company can be classified as:1. LIQUIDITY RATIOS: - Liquidity ratios measure the short-term solvency, i.e., the firms ability to pay its current dues. They comprise of Current Ratio and Liquidity Ratio. a) CURRENT RATIO: - Current ratio is a relationship of current assets to current liabilities and is computed to assess the short-term financial position of the enterprise. Current Ratio = Current Assets Current Liabilities b) LIQUIDITY RATIO: - Liquidity ratio is a relationship of liquid assets with current liabilities and is computed to assess the short-term liquidity of the enterprise in its correct form. Liquidity Ratio = Liquid Assets Current Liabilities 2. SOLVENCY RATIOS: - The term solvency implies ability of an enterprise to meet its long-term indebtedness and thus, solvency ratios convey an enterprises ability to meet its long-term obligations. It is of following types:a) DEBT-EQUITY RATIO: - The Debt-Equity ratio is computed to ascertain soundness of the long-term financial position of the firm. This ratio expresses a relationship between debt and the equity. Debt-Equity Ratio = Debt (Long-Term Loans) Equity (Shareholders Funds)

3. ACTIVITY RATIOS: - It is also termed as Performance or Turnover Ratios, judge how well the facilities at the disposal of the enterprise are being utilized. a) INVENTORY TURNOVER RATIO: - It establishes the relationship between the cost of goods sold during a given period and the average amount of inventory carried during that period. Inventory (Stock) Turnover Ratio = Cost of Goods Sold Average Stock or Inventory 4. PROFITABILITY RATIOS: - In general terms, efficiency in business is measured by profitability. These are measured in percentage (%).It is of following types:a) GROSS PROFIT RATIO: - This ratio establishes relationship of gross profit on sales to net sales of a firm, which is calculated in percentage. Gross profit Ratio = Gross Profit Net Sales b) OPERATING RATIO: - This ratio is computed to establish relationship between operating costs and net sales. Operating Ratio = Cost of Goods Sold + Operating Expenses Net Sales c) NET PROFIT RATIO: - Net profit ratio establishes the relationship between net profit and sales i.e., it shows the percentage of net profit earned on sales. Net Profit Ratio = Net Profit Net Sales d) RETURN ON INVESTMENT (ROI): - This ratio establishes the relationship of profit (profit means profit before interest and tax) with capital employed. The overall performance of the enterprise can be judged by this ratio. Return on Investment = Profit before Interest, Tax and Dividend Capital Employed e) EARNING PER SHARE (EPS): - Earning per share measures the earnings available to an equity shareholder on per share basis. Earning Per Share = Net Profit after Tax Preference Dividend Number of Equity Shares f) DIVIDEND PER SHARE: - The profit distributed among shareholders is termed as dividend. Dividend per share ratio represents the dividend distributed per equity share. Dividend per Share = Dividend Paid to Equity Shareholders Number of Equity Shares x 100 x 100 x 100 x 100

The ratios can be viewed of CADILA HEALTHCARE Ltd. for the period of 5 years
Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

LIQUIDITY RATIOS Current Ratio Quick Ratio 1.77 1.16 1.85 1.16 1.90 1.23 1.42 0.81 1.62 1.02

SOLVENCY RATIOS Total Debt/Equity 0.36 0.66 0.70 0.50 0.58

ACTIVITY RATIOS Inventory Turnover Ratio PROFITABILITY RATIOS Operating Ratio (%) Gross Profit Ratio (%) Net Profit Ratio (%) Return On Investment (%) Earning Per Share (Rs.) Dividend Per Share (Rs.) 6.08 1.31 20.39 31.05 36.87 5.00 14.34 9.60 13.31 22.11 19.48 4.50 16.19 11.83 13.17 22.41 18.80 4.50 17.91 13.31 13.42 23.20 16.30 4.00 18.61 13.79 12.43 22.39 26.25 6.00 5.48 5.76 5.78 5.02 6.86

CHART SHOWING NET PROFIT OF CADILA HEALTHCARE Ltd.

YEAR NET PROFIT (in crores)

2010 547.1

2009 278.7

2008 226.2

2007 210.8

2006 180.7

Chart Title
600 500 400 300 200 100 0 NET PROFIT 2010 2009 2008 2007 2006

1) By comparing the net profits of 2006 07 it is analyzed that the company is earning profit with a difference of Rs. 30.10 crores. This shows that company is performing well during this period.

2) By comparing the net profits of 2007 08 it is analyzed that the company is earning profit with a difference of Rs. 15.4 crores .This shows that company is performing good but the profit earned during this period is less than the previous year.

3) By comparing the net profits of 2008 09 it is analyzed that the company is earning profit with a difference of Rs. 52.50 crores .This shows that company is performing efficiently during this period. The profit has increased a lot.

4) By comparing the net profits of 2009 10 it is analyzed that the company is earning profit with a difference of Rs. 268.4 crores. This shows that company is performing so well and more efficiently and profit are increasing at a high rate.

So it is seen that upto 2010 company has progressed a lot as we can see that the company is earning profit more than previous years at a high rate.

CHART SHOWING RATIOS OF CADILA HEALTHCARE LTD.

YEAR 2010 2009 2008 2007 2006 LIQUIDITY RATIOS SOLVENCY RATIOS ACTIVITY RATIOS PROFITABILITY RATIOS 2.93 0.36 5.48 100.7 3.01 0.66 5.76 83.34 3.13 0.7 5.78 86.9 2.23 0.5 5.02 87.14 2.64 0.58 6.86 99.47

120

100

80

60

40

20

LIQUIDITY RATIOS SOLVENCY RATIOS ACTIVITY RATIOS PROFITABILITY RATIOS

0 2010 2009 2008 2007 2006

1. Liquidity Ratios (i.e. Current Ratio + Liquid Ratio) during all the years is fluctuating a little but the company can quietly meet the day to day expenses easily. 2. Solvency Ratios (i.e. Debt Equity Ratio) are indicating that the company will manage to meet its long-term indebtedness. 3. Activity Ratios (i.e. Inventory Turnover Ratio) remains optimum from 2006 2010 which ensures adequate working capital and enables the company to earn a reasonable margin of profits. 4. Profitability Ratios (i.e. Operating Ratio, Gross Profit Ratio, Net Profit Ratio, and Return on Investment etc.) are quite high as compared to other ratio which are showing that in each year the company is earning more and more profits which will shows that company is performing financially well from past 5 years and the operations or working of the company is going smoothly and efficiently.

CHART SHOWING CASH INFLOWS AND OUTFLOWS FROM DIFFERENT ACTIVITIES

(Rs in Cr)

Particulars Profit Before Tax Net Cash Flow-Operating Activity Net Cash Used In Investing Activity Net Cash Used in Fin. Activity Net Inc/Dec In Cash And Equivalent
600 500 400 300 200 100 0 2010 -100 -200 -300 -400 2009 2008

Mar ' 10 520.30 513.50 -213.20 -297.70 2.60

Mar ' 09 296.40 268.10 -261.10 5.90 12.90

Mar ' 08 278.50 41.50 -267.40 232.50 6.60

Mar ' 07 231.90 210.60 -171.10 -29.40 10.10

Mar ' 06 199.90 55.70 -98.50 18.70 -24.10

Profit Before Tax Net Cash Flow from Operating Activities Net Cash Used in Investing Activities
2007 2006

Net Cash Flow or Used in Financing Activities Net Increase/Decrease in Cash and Cash Equivalent

1) In 2006 cash flow from Operating Activities is Rs.55.70 crores which has been increased to Rs.210.60 crores in 2007 which is quite a very high total which shows that company is earning more through these activities. In 2008 the total has been fallen to Rs.41.50 and it has increase to Rs.268.10 crores in 2009 which indicates that the company can recover its losses in this year. In 2010 the company has increased its cash flows from operating activities to Rs.513.50. 2) In 2006 cash used Investing Activities is Rs. 98.50 crores which has been decreased to Rs. 171.10 crores in 2007 which shows that company is not earning through these activities. In 2008 the company is again in losses as the cash outflow is now Rs. 267.40 crores and in 2009 also the outflow is of Rs. 261.10 which indicates that the company has more outflows than inflows through Investing Activities. In 2010 also the cash is going out and is of Rs. 213.20. This indicates that the company is not having any proceeds from these activities from last 5 years. 3) In 2006 cash flow from Financing Activities is Rs.18.70 crores and in 2007 cash outflow is of Rs. 29.40 crores which shows that during this year company has not earned any proceeds. In 2008 the total has been increased to Rs.232.50 crores which indicates that company has work efficiently in this year. And in 2009 it has been reduced to Rs.5.90 crores, indicating that inflows are very few during this year. In 2010 the outflows are very high.

Through above analyses it is concluded that the business of CADILA HEALTHCARE Ltd. has been efficient during 2009 as the inflows are more than the outflows. "