SYNOPSIS

ON
CASH MANAGEMENT IN SUN PHARMACEUTICAL
INDUSTRIES LIMITED

[ MS 100 ]

SUBMITTED BY :
.
MBA
Enrollment No. : .

GUIDED BY:

INDIRA GANDHI NATIONAL OPEN UNIVERSITY

YEAR : 2017
 INTRODUCTION

Cash management is the corporate process of collecting and managing cash, as

well as using it for (short-term) investing. It is a key component of ensuring a
company's financial stability and solvency. Corporate treasurers or business
managers are frequently responsible for overall cash management and the related
responsibilities to remain solvent.

Successful cash management involves not only avoiding insolvency, but also
reducing the length of account receivables (AR), increasing collection rates,
selecting appropriate short-term investment vehicles, and increasing cash on hand
to improve a company's cash position and profitability.

Successfully managing cash is an essential skill for small business developers,

because they typically have less access to affordable credit and have a significant
amount of upfront costs to manage while waiting for receivables. Wisely
managing cash enables a company to meet unexpected expenses, and to handle
regularly occurring events such as payroll distribution.

Functions of Cash Management

Cash management is the treasury function of a business, responsible for achieving
optimal efficiency in two key areas: receivables, which is cash coming in, and
payables, which is cash going out.

Receivables Management
When a business issues an invoice it is reported as a receivable, which is cash
earned but yet to be received. Depending on the terms of the invoice, the business
may have to wait 30, 60 or 90 days for the cash to be received. It is common for a
business to report increasing sales, yet still run into a cash crunch because of slow
or poorly managed receivables. There are a number of things a business can do to
accelerate its receivables and reduce payment float, including clarifying billing
terms with customers, using an automated billing service to bill customers
immediately, using electronic payment processing through a bank to collect
payments, and staying on top of collections with an aging receivables report.

Payables Management
When a business controls its payables, it can better control its cash flow. By
improving the overall efficiency of the payables process, a business can reduce
costs and keep more cash working in the business. Payables management
solutions, such as electronic payment processing, direct payroll deposit, and
controlled disbursement can streamline and automate the payable functions.

Most of the receivables and payables management functions can be automated

using business banking solutions. The digital age has opened up opportunities for
smaller businesses to access the same large-scale cash management technologies
used by bigger companies. The cost savings generated from more efficient cash
management techniques easily offsets the costs. More importantly, management
will be able to reallocate precious resources to growing the business.
 RATIONALE OF THE PROJECT

Cash management is the process of collecting and managing cash, as well as using
it for investing. It is a key component of ensuring a company's financial stability
and solvency. Corporate treasurers or business managers are frequently
responsible for overall cash management and the related responsibilities to remain
solvent.

In this Project I will analyze Cash Management system of Sun Pharmaceutical Industries
Limited . I will analyze the Cash Flow from Operating Activities, Cash and Cash
Equivalents, Cash Turnover Ratio and Daily Cash Payment Ratio of Sun Pharmaceutical
Industries Limited , Absolute Liquid Ratio in last five years.
 COMPANY PROFILE

Sun Pharmaceutical Industries Limited is an Indian multinational pharmaceutical

company headquartered in Mumbai, Maharashtra that manufactures and sells
pharmaceutical formulations and active pharmaceutical ingredients (APIs)
primarily in India and the United States. The company offers formulations in
various therapeutic areas, such as cardiology, psychiatry, neurology,
gastroenterology and diabetology. It also provides APIs such as warfarin,
carbamazepine, etodolac, and clorazepate, as well as anticancers, steroids,
peptides, sex hormones, and controlled substances.

Sun Pharmaceuticals was established by Mr. Dilip Shanghvi in 1983 in Vapi with
five products to treat psychiatry ailments. Cardiology products were introduced in
1987 followed by gastroenterology products in 1989. Today it is the largest
chronic prescription company in India and a market leader in psychiatry,
neurology, cardiology, orthopedics, ophthalmology, gastroenterology and
nephrology.

The 2014 acquisition of Ranbaxy has made the company the largest pharma
company in India, the largest Indian pharma company in the US, and the 5th
largest specialty generic company globally.

Over 72% of Sun Pharma sales are from markets outside India, primarily in the
US. The US is the single largest market, accounting for about 50% turnover; in all,
formulations or finished dosage forms, account for 93% of the turnover.
Manufacturing is across 26 locations, including plants in the US, Canada, Brazil,
Mexico and Israel. In the US, the company markets a large basket of generics,
with a strong pipeline awaiting approval from the U.S. Food and Drug
Administration (FDA).
Sun Pharma was listed on the stock exchange in 1994 in an issue oversubscribed
55 times. The founding family continues to hold a majority stake in the company.
Today Sun Pharma is the second largest and the most profitable pharmaceutical
company in India, as well as the largest pharmaceutical company by market
capitalisation on the Indian exchanges.

The Indian pharmaceutical industry has become the third largest producer in the
world in terms of volumes and is poised to grow into an industry of $20 billion in
2015 from the current turnover of $12 billion. In terms of value India still stands at
number 14 in the world.

In 2009 Sun Pharma's Caraco Pharmaceutical's plant in Detroit was closed due to
unsanitary conditions resulting in the seizure of $20 million of drugs by the FDA
for contamination issues.

In December 2016 the FDA sent Sun a warning letter about nine violations at its
manufacturing plant in Halol.

Sun Pharma requested the USFDA to withdraw approval for 28 Abbreviated New
Drug Applications (ANDAs) belonging to its wholly owned subsidiary Ranbaxy
Laboratories.
 OBJECTIVES OF THE STUDY

To analyze the Cash Flow from Operating Activities in last five years.
To analyze Cash and Cash Equivalents.
To analyze the Cash Turnover Ratio of Sun Pharmaceutical Industries Limited .
To analyze Daily Cash Payment Ratio of Sun Pharmaceutical Industries Limited .
To analyze Absolute Liquid Ratio of Sun Pharmaceutical Industries Limited .

REASON FOR CHOOSING THE PROJECT

I have chosen this topic because I am interested to work in Pharmaceutical

Company. I would like to analyze the Cash Management in Sun Pharmaceutical
Industries Limited . I would also like to compare the cash management strategies
and their performance.
 RESEARCH METHODOLOGY
Analysis of past data a helps to understand the effectiveness of Cash Management
Strategies followed by the company For the proper analysis of data simple
statistical techniques such as percentage will be used. It helped in making more
accurate generalization from the data available. I will analyze 5 year data from
Balance sheet and Profit & Loss Account.
TOOLS OF ANALYSIS
In the present analysis of Cash Management secondary data will be used. I will
use the following types of published data :
Company Annual Report
Balance Sheet
Profit & Loss A/c
Cash Flow Statement

METHODS OF DATA COLLECTION

Basically there are methods of data collection they are:
Primary data
Secondary data
To achieve the objective, information will be collected through secondary data.
Secondary data one those which have been already been collected. It may be
published or unpublished data.
Some of the data will be collected through visit and personal observation. But
mainly data will be collected form financial statement (annual report) of Cipla. All
the information which are collected, through data are analyzed interpreted and
tabulated to full fill be objective.
In this study I will use Secondary Data.
SAMPLING
For this study 5 Years Data will be used.
 LIMITATIONS OF THE STUDY

Time will be limited.

Different accounting procedures may make results misleading.
 EXPECTED CONTRUBUTION FROM THE STUDY

This research will reveal the Cash Management Practices of the company. This
research will also help the company to formulate strategies for improving Cash
Management Practices.
 DIRECTION FOR FUTURE RESEARCH

This research will be based on Cash Management practices of Sun Pharmaceutical

Industries Limited . This research can be further expanded to more companies of
Pharmaceutical Industry. This research can also be further converted to
comparative study of Cash Management Strategies of Sun Pharmaceutical
Industries Limited with its competitors.
 REFERENCES

Books:
Chandra Prasana, Financial Management,TMH, 4th Edition, 1997, New Delhi
Gupta Sunita, Management of Working Capital, First Edition,New Century
Publications,New Delhi(2003).
Gupta S.P., Management Accounting, Sahitya Bhawan Pub.,2002.
Kothari C.R, Research methodology-methods & techniques, second edition, vishwa
prakashan Delhi(1990).
Khan & Jain, Financial Mnaagement, MH 3rd Edition, 1999.
Maheshwari S.N, Management accounting and financial control, thirteen edition,
sultan chand & sons, New Delhi(2002).

Websites:
www.sunpharma.com