S N Juhi Final Project Report1

Internship Report on
STUDY ON WORKING CAPITAL MANAGEMENT

AT SHILPA MEDICARE LIMITED RAICHUR
BY
SOGRA NAVEED JUHI

3SL13MBA28
Submitted to
VISVESVARAYA TECHNOLOGICAL UNIVERSITY,

BELGAUM
In partial fulfilment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION

Under the guidance of
INTERNAL GUIDE
EXTERNAL GUIDE
Prof. BHGAYALAXMI RASTAPUR

Asst. Prof SLN college of Engineering.
Mr. N C BHANDARI
Sr. Manager-FINANCE
Shilpa Medicare Limited
H.K.E Societys S.L.N.COLLEGE OF

ENGINEERING DEPARTMENT OF
MBA
Yeramarus Camp,
RAICHUR-584 135
(2013-2015 Batch)
1

MBA
Yeramarus Camp,
RAICHUR-584 135
CERTIFICATE
This is to certify
that
Mrs.
SOGRA
NAVEED
JUHI
bearing
(USN: 3SL13MBA28) is a bonifide student of Master of Business Administration course of the

Institute (2013-2015) affiliated to Visvesvaraya Technological University, Belgaum. Internship
report on STUDY ON WORKING CAPITAL MANAGEMENT is prepared by her under
the guidance of Prof. BHGAYALAXMI RASTAPUR, in partial fulfilment of the requirements
for the award of the degree of Master of Business Administration of Visvesvaraya
Technological University, Belgaum Karnataka
Dr. C.H. Biradar
PRINCIPAL S.L.N.COLLEGE OF
ENGINEERING

MBA
Yeramarus Camp,
RAICHUR-584 135
CERTIFICATE
This is to certify
that
Mrs.
SOGRA
NAVEED
JUHI
bearing

Prof. AMARESH PATIL
HOD DEPARTMENT OF MBA

S.L.N.COLLEGE OF ENGINEERING

MBA
Yeramarus Camp,
RAICHUR-584 135
CERTIFICATE
This is to certify
that
Mrs.
SOGRA
NAVEED
JUHI
bearing

Internal Guide
Prof. BHGAYALAXMI RASTAPUR
Asst. Professor, DEPARTMENT OF MBA

S.L.N.COLLEGE OF ENGINEERING
Date: 13/02/2015
TO WHOM SO EVER IT MAY CONCERN

This is to certify that Mrs. Sogra Naveed Juhi bearing register number
3SL13MBA28 student of Master of Business Administration from HKES S.L.N.
College of Engineering. DEPARTMENT OF MBA, Yarmrus Camp,
RAICHUR. has successfully completed her ORGANIZATION STUDY from
09.12.2014 to 13.02.2015
She took keen interest, in the work assigned to her. Her conduct and behavior was
found good.
We wish her all success in her future endeavor
DECLARATION
I, SOGRA NAVEED JUHI (USN: 3SL13MBA28), hereby declare that the

Internship report entitled Working Capital Management with reference to Shilpa Medicare
Limited, Raichur prepared by me under the guidance of Prof. BHGAYALAXMI RASTAPUR,
faculty of M.B.A Department, SLN College of Engineering, Raichur and external assistance by
Mr. N C BHANDARI, Sr. Manager-FINANCE, Shilpa Medicare Ltd, Raichur.
I also declare that this Internship work is towards the partial fulfilment of the
university regulations for the award of degree of Master of Business Administration by
Visvesvaraya Technological University, Belgaum.
I have undergone a summer project for a period of Twelve weeks. I further declare
that this project is based on the original study undertaken by me and has not been submitted
for the award of any degree/diploma from any other University/Institution.
Place:
Signature
Date:
SOGRA NAVEED JUHI
(USN: 3SL13MBA28)
ACKNOWLEDGEMENT
It is my privilege to express a few words of gratitude and respect through this project
report to all those who guided and inspired me in completing this project.
I express my deep gratitude to Visvesvaraya University, Belgaum, which gave me an
opportunity to undertake this project by including the summer project in its program of Master
of Business Administration.
I owe my utmost gratitude to Shri. C.H Biradar (Principal), Amaresh Patil (Head of
the Dept.), my Internal Guide Prof. Bhgayalaxmi Rastapur and the faculty SLN college of
Engineering, Raichur, for their valuable guidance and useful suggestions.
I owe my sincere gratitude to Mr. Amrut Lahoti (Senior Manager), my External Guide
Mr. N C Bandhari, who always stood up to guide me and to resolve all my queries amidst their
busy schedule, and all the staff of Shilpa Medicare Limited, Raichur, who nurtured my
dedication towards the work and continuous practice in the course of project.
My deep sense of gratitude and respect to my parents for their support and
encouragement. Finally, I wish to sincerely acknowledge my gratitude to all the persons who
have helped me directly or indirectly in completing this project successfully.
Place:
Signature
Date:
SOGRA NAVEED JUHI
(USN: 3SL13MBA28)
TABLE OF CONTENTS
CHAPTER
CONTENTS
Page number
EXECUTIVE SUMMARY
11
INTRODUCTION
Introduction about the Internship
Topic chosen for study
Need for the study
Objectives of the study
Scope of the study
Methodology adopted
Literature review and
Limitations of the study
12 -21
13
14
14
15
15
15
16-21
21
INDUSTRY AND COMPANY PROFILE

Promoters
Vision, Mission &Quality Policy
Products / Services profile
Areas of Operation
Infrastructure facilities
Competitors information
SWOT analysis
Future growth and prospects and
Financial Statement
22-38
24
25
25-26
27-28
29
29
30
31-33
34-38
THEORETICAL BACKGROUND OF STUDY

Elaborative information on the subject chosen for
better understanding and usage in the analysis.
39-48
DATA ANALYSIS AND INTERPRETATION

Analysis and interpretation of the data Collected
with relevant tables and graphs.
49-57
SUMMARY, FINDING ,SUGGESTIONS AND

CONCLUSIONS
58-59
BIBLIOGRAPHY
60
ANNEXURE
61-63
LIST OF TABLES
Table
Number.
Table -1
ONCOLOGY APIS
26
Table -2
UNDER DEVELOPMENT-ONCOLOGY APIS
26
Table -3
NON-ONCOLOGY APIS
Particulars
Page
Numbers.
26
NON-ONCOLOGY APIS UNDER DEVELOPMENT
Table -4
Ownership Pattern
28
Table -5
SWOT ANALYSIS
30
Table -6
Profit and Loss Account for the Year Ended 31st March
2014
35
Table -7
Balance Sheet for the Year Ended 31st March 2014
35-36
Table -8
RATIO ANALYSIS
37-38
Table -9
Table showing the inventory turnover ratio
49
Table -9.1
Table showing the inventory conversion period
50
Table -10
Table showing the Debtors turnover ratio
51
Table -11
Table showing the current asset turnover ratio
52
Table -12
Table showing the Working capital turnover ratio
53
Table -13
Table showing the days of collectio12

n period
54
Table -14
Table showing the operating cycle
55
Table -15
Table showing the current ratio
56
Table -16
Table showing quick ratio
57
LIST OF FIGURES AND CHARTS
Graph
Number.
Particulars
Page
Numbers
Chart-1
Pie Diagram Ownership Pattern
28
Graph-1
Graphical Representation of inventory turnover ratio
49
Graph-1.1
Graphical Representation of inventory conversion period
50
Graph-2
Graphical Representation of debtors turnover ratio
51
Graph-3
Graphical Representation of current asset turnover ratio
52
Graph-4
Graphical Representation of Working Capital Turnover

Ratio
53
Graph-5
Graphical Representation of average collection period
54
Graph-6
Graphical Representation of operating cycle
55
Graph-7
Graphical Representation of Current Ratio
56
Graph-8
Graphical Representation of Quick Ratio
57
10
INTERNSHIP REPORT ON STUDY ON WORKING CAPITAL MANAGEMENT
EXECUTIVE SUMMARY
Established in 1987, Shilpa Medicare Limited has carved a niche for itself in the
exceedingly competitive and quality-conscious sphere of pharmaceutical manufacturing. It
produce and export consistently high-quality active pharmaceutical ingredients fine
chemicals, intermediates, herbal products and specialty chemical products using
sophisticated technology,
meticulously following international specifications.
The
company has earned its spurs as a successful and reliable partner within the pharmaceutical
industry. Buyers within the country and from across the borders count on its fast track
integrated process development and finely honed expertise of its skilled and experienced
personnel.
The purpose of this study is to understand the management of working capital in
Shilpa Medicare Ltd., and to learn the concept of business decision-making. The goal of
working capital management is to ensure that the firm is able to continue its operation and
that it has sufficient cash flow to satisfy both maturing short term debt and upcoming
operational expenses. Working capital is used in Shilpa Medicare Ltd., for the following
purpose:-Raw material, work in progress, finished goods, inventories, sundry debtors, and
day today cash requirements. The Shilpa Medicare Ltd., keep certain funds which is
automatically available to finance the current assets requirements. The various information
regarding Working Capital Management such as classification, determinants, sources
have been discussed , Ratio Analysis has been Carried out using Financial Information for
last five accounting years i.e. from 2010 to 2014 Ratios like Working capital Turnover
Ratio, Quick Ratio, Current Ratio, Inventory Turnover Ratio, Debtor Turnover Ratio,
Creditors turnover ratio have also been analyzed. A Statement of Changes in Working
Capital has also been analyzed. Main SWOT of the organization is postive, the Company
produces and exports consistently high-quality Pharmaceutical Products. Plant running
from past 21 yrs., there is no major break down because of close supervision and
maintenance. Various measures are taken to prevent the environmental hazard by the
organization to maintain ecological balance. Shilpa Medicare Ltd., is having a better
opportunity to setup a new plant in abroad since the export market for Shilpa Medicare
Ltd., products is very well established.
At Shilpa Medicare, the working capital management has shown increase in the
period of study. This shows working capital is managed effectively and all the other
departments are working in perfect co-ordination to ensure the progress of Shilpa Medicare,
but I have given some Suggestions & Conclusions on the basis of my Project study.
H.K.E. SOCIETYS
S.L.N. COLLEGE OF ENGINEERING DEPT OF MBA, RAICHUR
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CHAPTER 1
INTRODUCTION
An organization in order to attain the objective has to satisfy itself before satisfying
the customers. The organization generally comes into existence with the idea of attaining
their objectives through manufacturing products or rending service, to produce a very high
quality products or service it require factors of production viz, land, labour, capital and
enterprise or organization. Of the four factors enterprise is the most important because it is
due to the enterprise or on organization the most appropriate blending of factors of
production take place, without it the other three have no significance as they complete
depend upon organization.
The successful organization has to take care of everything in the organization to

survive, exist, grew and develops by leaps and bounds.
Moreover the organization is foundation of management, the organization plane is

ill defined, management is rendered difficulty and ineffective. If on the other hand, it is
logically clear cut and streamlined to meet present day requirement, then the first requisite
of sound management has been achieved.
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INTRODUCTION ABOUT THE INTERNSHIP

As a part of curriculum, every student studying MBA has to undertake a project on
a particular subject assigned to him/her. Accordingly I have chosen the project topic as A
study of working capital management on Shilpa Medicare Ltd., Raichur.
I am thankful to have got the opportunity to do my project. Shilpa Medicare ltd,

Raichur. This was like a dream come true as it is a leading company in a place like Raichur,
which is an industrially challenged area.
The organization culture is very good and it does create a homely atmosphere and
it motivates to learn. I learned how to apply theory into practical application. In corporate
world it is necessary to be patient and polite, this company has made me to incorporate this
important qualities in my life.
During the first week, it was totally a new experience entering into the organization.
On the first day of the training, factory manager detailed us very clearly about the company
& guidelines to be followed with respect to maintaining the discipline of the organization
and also informed the safety measures.
During the twelve weeks of the project in Shilpa Medicare Ltd I learnt about the
various departments of the company and the way they function, way to deal and interact
with the clients and amongst the employees, gained practical knowledge about financial
transactions, learnt the importance of team spirit and unity at work to be successful.
Finally I would like to mention the name of Mr. N C Bhandari, who guided me
through everything I did during the project. Totally it was a highly useful training for me
in the company. This has added value in my academic learning.
H.K.E. SOCIETYS
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TOPIC CHOSEN FOR THE STUDY

The title of the project A study on working capital management of Shilpa
Medicare Ltd, Raichur. This study does not cause all the financial components of the firm
but includes analysis of working capital of the company
NEED FOR THE STUDY

The study has been conducted for gaining practical knowledge about Working
Capital Management & activities of Shilpa Medicare Ltd., The study is undertaken as a part
of the MBA curriculum in the form of in plant training for the fulfillment of the requirement
of MBA degree.
The study of working capital is needed as a supportive base for the business
operations. It is one of the areas of financial decision-making. The study is needed because,
the management must see that excessive investment in current assets should be minimized
and at the same time it should protect the company from the problem of stock outs. As the
working capital is necessary for meeting the day-to-day expenditure of the company like
wages, salaries, fuel charges and other expenditures, it is very necessary to manage the
working capital. The liquidity of firm depends on the current assets of the company.
As from the above discussion it is clear that the working capital is very important
part of a business. In other words we can say that the working capital is the heartbeat of the
company. As the fastness and slowness of the heartbeat, are not the indicators of the good
health. Same in case of working capital, the excess and shortage of working capital also
not good for a companys liquidity.
Hence, because of all of the above reasons one should know how to manage the
working capital of the company, so the present study is conducted in Shilpa Medicare Ltd,
for the purpose of knowing the management of working capital.
H.K.E. SOCIETYS
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OBJECTIVES OF THE STUDY

This study has been taken up with the following major objectives.
To understand the working process of working capital management.
To analyze better ways of managing Working Capital.
To interpret the ratio of working capital.
To understand the concept of operating cycle in the company.
To understand the cash inflow and out flow of the company.
To make suggestions based on the finding of the study
SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The mainscope
of the study was to combine the practical and the theoretical aspect of the study into real
lifework experience. The study of working capital is based on tools like Ratio Analysis
based on the study of last 5 years Annual Reports of Shilpa Medicare Ltd, to examine the
management of working capital and its efficiency.
METHODOLOGY ADOPTED
Data Collection
Sources of Data
I have collected my information from the following sources, which helped me to make this
report. The sources have divided into two parts such as:
Primary Data:
Primary data are the data collected directly by the officer of finance department because
they are not previously collected. Primary data is collected by interview certain managers
who were chosen on the basis of their in depth knowledge & work experience at Shilpa
Medicare Limited.
Secondary Data:
Secondary data are those data, which are previously collected and compiled for other
purpose or further investigation. In this report the secondary data was collected by referring
to:
Annual reports
Balance sheet
Websites
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LITERATURE REVIEW
AN OVER VIEW
A literature review is an essay or is part of the introduction to an essay, research report,

or thesis. It provides an overview and critical analysis of relevant published scholarly
articles, research reports, books, theses etc on the topic or issue to be investigated. A
detailed guide to the literature review is available on the Language and Learning services
website. Literature search: A systematic and exhaustive search for published material on a
specific topic.
It discusses published information in a particular subject area, and

sometimes information in a particular subject area within a certain time period.
It is a summary of research that has been published about a particular subject. It
provides the reader with an idea about the current situation in terms of what has
been done, and what we know. Sometimes it includes suggestions about what
needs to be done to increase the knowledge and understanding of a particular
problem.
It gives an overview of what has been said, who the key writers are, what
are the prevailing theories and hypotheses, what questions are being asked, and
what methods and methodologies are appropriate and useful. As such, it is not
in itself primary research, but rather it reports on other findings. Literature
reviews can give you an overview or act as a stepping stone. It also provide a
solid background for a research paper's investigation.
A LITERATURE REVIEW MUST DO THESE THINGS:

be organized around and related directly to the thesis or research question you
are developing
synthesize results into a summary of what is and is not known
identify areas of controversy in the literature
formulate questions that need further research
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Structuring a literature review

It is often difficult to decide how to organize the huge amount of information
you have collected.
The structure of each dissertation will be different but there are some general
principles and these are really the guidelines you should use for any piece of
academic writing.
Structuring a literature review
Introduction to the literature review
Main part
Conclusions
A literature review is a piece of discursive prose, not a list describing or
summarizing one piece of literature after another.
It's usually a bad sign to see every paragraph beginning with the name of a
researcher. Instead, organize the literature review into sections that present
themes or identify trends, including relevant theory.
ABSTRACT OF LITERATURE REVIEW
The current study contributes to the literature by examining impact of working

capital management on the operating performance and growth of new public companies.
The study also sheds light on the relationship of working capital with debt level, firm risk,
and industry. Using a sample of a manufacturing, the study finds a significant positive
association between higher levels of accounts receivable and operating performance. The
study further finds that maintaining control (i.e. lower amounts) over levels of cash and
securities, inventory, fixed assets, and accounts payables appears to be associated with
higher operating performance, as well. We find that the firms which are experiencing
unusually high growth tend not to perform as well as those with low to moderate growth.
Further firms which are experiencing high growth tend to hold higher levels of cash and
securities, inventory, fixed assets, and accounts payables. These findings tend to suggest
that firms are willing to sacrifice performance (accept low or negative operating returns) to
increase their growth levels. The higher level of growth is also associated with higher
operating and financial risk. The findings of this study suggest that perhaps the firms should
stay more focused on their operating performance than on maintaining high growth levels.
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INTRODUCTION AND LITERATURE REVIEW

Working capital policy refers to the firm's policies regarding 1) target levels for
each category of current operating assets and liabilities, and 2) how current assets will be
financed. Generally good working capital policy (i.e. under conditions of certainty) is
considered to be one in which holdings of cash, securities, inventories, fixed assets, and
accounts payables are minimized.
The level of accounts receivables should be used as a means of stimulating sales

and other income. Previous literature on working capital management has found a negative
association, overall, between level of working capital and operating performance as
measured by operating returns and operating margins (Peterson and Rajan, 1997). Under
conditions of certainty (i.e. sales, costs, lead times, payment periods, and so on, are known),
firms have little reason to hold more working capital than a minimum level.
AN ANALYSIS OF WORKING CAPITAL MANAGEMENT RESULTS ACROSS INDUSTRIES :INTRODUCTION
The importance of efficient working capital management (WCM) is indisputable. Working
capital is the difference between resources in cash or readily convertible into cash (Current
Assets) and organizational commitments for which cash will soon be required (Current
Liabilities). The objective of working capital management is to maintain the optimum
balance of each of the working capital components.
Business viability relies on the ability to effectively manage receivables, inventory, and
payables. Firms are able to reduce financing costs and/or increase the funds available for
expansion by minimizing the amount of funds tied up in current assets. Much managerial
effort is expended in bringing non-optimal levels of current assets and liabilities back
toward optimal levels. An optimal level would be one in which a balance is achieved
between risk and efficiency.
A recent example of business attempting to maximize working capital management
is the recurrent attention being given to the application of Six Sigma methodology. When
used to identify and rectify discrepancies, inefficiencies and erroneous transactions in the
financial supply chain, Six Sigma reduces Days Sales Outstanding (DSO), accelerates the
payment cycle, improves customer satisfaction and reduces the necessary amount and cost
of working capital needs. There appear to be many success stories, including Jennifer
Townes (2002) report of a 15 percent decrease in days that sales are outstanding, resulting
H.K.E. SOCIETYS
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in an increased cash flow of approximately 2 million dollars at Thibodaux Regional

Medical Center. Furthermore, bad debts declined from 3.4 million dollar to o 600,000
dollar.
Even in a business using Six Sigma methodology, an optimal level of working
capital management needs to be identified. Industry factors may impact firm credit policy,
inventory management, and bill-paying activities. Some firms may be better suited to
minimize receivables and inventory, while others maximize payables. Another aspect of
optimal is the extent to which poor financial results can be tied to sub-optimal
performance. Fortunately, these issues are testable with data published by CFO magazine
(Mintz and Lazere 1997; Corman 1998; Mintz 1999; Myers 2000; Fink 2001), which claims
to be the source of tools and information for the financial executive, and are the subject
of this research.
The following section presents a brief literature review. Next, the research method is
described, including some information about the annual Working Capital Management
Survey published by CFO magazine. Findings are then presented and conclusions are
drawn.
MANY RESEARCHERS
DIFFERENT
VIEWS
HAVE STUDIED
AND
IN
WORKING
DIFFERENT
CAPITAL
ENVIRONMENTS.
FROM
THE
FOLLOWING ARE SOME USEFUL RESEARCH:
RELATED LITERATURE
The importance of working capital management is not new to the finance literature.
Over twenty years ago, Largay and Stickney (1980) reported that the then-recent
bankruptcy of W.T. Grant, a nationwide chain of department stores, should have been
anticipated because the corporation had been running a deficit cash flow from operations
for eight of the last ten years of its corporate life. As part of a study of the Fortune 500s
financial management practices. Following are the important views of scholars about
working capital management.
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A. GILBERT AND REICHERT (1995) :

Find that accounts receivable management models are used in 59 percent of these
firms to improve working capital projects, while inventory management models were used
in 60 percent of the companies. More recently, Farragher, Kleiman and Sahu (1999) find
that 55 percent of firms in the S&P Industrial index complete some form of a cash flow
assessment, but did not present insights regarding accounts receivable and inventory
management, or the variations of any current asset accounts or liability accounts across
industries. Thus, mixed evidence exists concerning the use of working capital management
techniques. Theoretical determination of optimal trade credit limits are the subject of many
articles over the years (e.g., Schwartz 1974; Scherr 1996), with scant attention paid to actual
accounts receivable management. Across a limited sample,
B. WEINRAUB AND VISSCHER (1998) :
Observe a tendency of firms with low levels of current ratios to also have low levels
of current liabilities. Simultaneously investigating accounts receivable and payable issues,
Hill, Sartoris, and Ferguson (1984) find differences in the way payment dates are defined.
Payees define the date of payment as the date payment is received, while payers view
payment as the postmark date. Additional WCM insight across firms, industries, and time
can add to this body of research. Maness and Zietlow (2002, 51, 496) presents two models
of value creation that incorporate effective short-term financial management activities.
However, these models are generic models and do not consider unique firm or industry
influences. Maness and Zietlow discuss industry influences in a short paragraph that
includes the observation that, An industry a company is located in may have more
influence on that companys fortunes than overall GNP (2002, 507).
C. ELJELLY, 2004 :
Elucidated that efficient liquidity management involves planning and controlling
current assets and current liabilities in such a manner that eliminates the risk of inability to
meet due short-term obligations and avoids excessive investment in these assets. The
relation between profitability and liquidity was examined, as measured by current ratio and
cash gap (cash conversion cycle) on a sample of joint stock companies in Saudi Arabia
using correlation and regression analysis.
The study found that the cash conversion cycle was of more importance as a measure of
liquidity than the current ratio that affects profitability. The size variable was found to have
significant effect on profitability at the industry level. The results were stable and had
important implications for liquidity management in various Saudi companies. First, it was
H.K.E. SOCIETYS
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clear that there was a negative relationship between profitability and liquidity indicators
such as current ratio and cash gap in the Saudi sample examined. Second, the study also
revealed that there was great variation among industries with respect to the significant
measure of liquidity.
D. BERGAMI ROBERT (2007) :
Analysis that that international trade transactions carry inherently more risk than
domestic trade transactions, because of differences in culture, business processes, laws and
regulations. It is therefore important for traders to ensure that payment is received for goods
dispatched and that the goods received and paid for comply with the contract of sale. One
effective way of managing these risks has been for traders to rely on the letter of credit as
a payment method. However for exporters in particular, the letter of credit has presented
difficulties in meeting the compliance requirements necessary for the payment to be
triggered.
The current rules that govern letter of credit transactions(UCP 500) have been under
review for the past three years and an updated set of rules (UCP 600) is expected to be
introduced on 1July 2007. This paper focuses on the changes mooted for 2007and compares
these main issues with the existing rules and other associated guidelines and regulations
governing this method of payment. This paper considers the implication to changes of letter
of credit transactions and the sharing of risk. Firstly the paper provides some background
to letters of credit, then comments on existing literature and models, and subsequently an
analysis of the most important changes to the existing rules, before reaching a conclusion.
The conclusion is that the UCP 600 have not paid enough consideration to traders and
service providers and are likely to engender an environment of uncertainty for exporters in
particular.
LIMITATIONS TO THE STUDY

The study was conducted only for 12 weeks, which was not sufficient to collect the
complete information regarding the departments of the company
Limited interaction with the concerned heads due to their busy schedule.
The analysis is limited to just five years of data study (from year 2010 to year 2014)
for financial analysis.
Analysis of this project report was again a big problem because some of the current
year information was not fully available.
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CHAPTER 2
INDUSTRY PROFILE
Global Indusry Overview:
The global pharmaceutical industry is expected to be worth more than
$ 1 trillion in 2014, growing at the compound annual growth rate of 4-5% over the five year
period.
The global pharmaceutical industry is a multinational industry that is a
highly regulated, capital intensive, and which is driven by large research and development
expenditures. The industry is primarily privately owned and is technologically sophisticated.
The strong growth in the developed and emerging countries will help to boost sales over the
next five years.
Emerging markets such as China, South Korea, Brazil, Russia and
Turkey have been experienced double-digit growth signaling an important shift occurring
in the pharmaceutical industry. As growth in the mature markets is coming to flat, industry
attention is shifting to smaller, developing markets that are doing exceptionally well.
Pharmaceutical Industry in India-An Overview:

India is among the top five emerging pharma markets and has grown at an estimated
compound annual growth rate (CAGR) of 13 per cent during the period FY 20092013. The
Indian pharmaceuticals market grew at a CAGR of more than 15 percent in 2013. According
to the survey reports the Indian pharmaceutical market is poised to grow to US$ 55
billion by 2020 from the current levels.
Indias pharma industry accounts for about 1.4 per cent of the global pharma
industry in value terms and 10 per cent in volume terms. Among the fastest growing pharma
industries in the world, Indias pharmaceutical sector is expected to expand at a compound
annual growth rate (CAGR) of 12.1 per cent during 20122020 and reach US$ 45 billion.
By 2020, the country is expected to be within the top three pharmaceutical markets by
incremental growth and sixth largest market globally in absolute size.
A new cluster of countries is contributing to the growth of the pharma industry,
resulting in a robust jump in exports of drugs. Both domestic and export-led demand
contributed towards the robust performance of the sector. On improved utilisation of
manufacturing facilities, the domestic pharmaceutical market is likely to see high revenue
growth and profit margins.
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Currently, Indian drugs are exported to more than 200 countries in the world, with
the US as the key market. It is responsible for about 40 per cent of the generic and over-thecounter drugs consumed in the US. During the year 2013, Foreign Direct Investment (FDI)
into the Indian pharmaceutical sector has more than doubled.
Substantial increase of expenditure by the Government of India and its states would
definitely create further demand to the pharmaceuticals. With 70 per cent of Indias
population residing in rural areas, pharma companies have immense opportunities to tap this
market. Demand for generic medicines in these regions has seen a sharp growth, and various
companies are investing in the distribution network in rural areas. The share of generic drugs
is expected to continue increasing. Oncology will be a key area of growth in Indias
healthcare sector. With increase in emphasis on health coverage both by central and state
governments, spending on coverage of medicines for oncology will see substantial rise
in next 3-5 years.
COMPANY PROFILE
Background and Inception of the Company
Established in 1987, Shilpa Medicare Limited has carved a niche for itself in the
exceedingly competitive and quality-conscious sphere of pharmaceutical manufacturing. It
produce and export consistently high-quality active pharmaceutical ingredients fine
chemicals, intermediates, herbal products and specialty chemical products using
sophisticated technology,
meticulously following international specifications.
The
company has earned its spurs as a successful and reliable partner within the pharmaceutical
industry. Buyers within the country and from across the borders count on its fast track
integrated process development and finely honed expertise of its skilled and experienced
personnel. The Company is already exporting to USA, Canada, Australia, Japan and
European Countries viz., Germany, Switzerland, Netherlands, Belgium, Spain, Greece,
Cyprus, Italy, United Kingdom etc., South American Countries like Mexico, Brazil,
Columbia etc., African Countries like Kenya, Nigeria and West Indies etc., Asian Countries
like Singapore, Taiwan, China, Malaysia, Thailand and closer to home to Iran, Egypt,
Pakistan and Bangladesh. Shilpa Medicare is synergizing strength through tie-ups for
manufacturing products and co-marketing rights, for it believes in working together and
sharing success. Being proactive in approach, the company continually seeks out enquiry's
for development of new products drawing from the extensive knowledge-base of its
qualified and experienced people as well as sophisticated facilities.
H.K.E. SOCIETYS
23
23
Nature of the business carried

Reliable Partner for API's & Customs Synthesis; recognized by Govt. of India &
Export House. It is the largest Manufacturer and Exporters of Oncology API's from India
& Bulk Drugs. Products registered in Europe, Russia, Korea, Iran, Canada, Japan,
Australia, etc. With World class State of the art facility. WHO GMP Approved Plant.
Patents filed for non-infringing manufacturing process. Highly efficient & cost effective
technology & manufacturing process.
Name of the Company
Address
SHILPA MEDICARE PVT LTD

Plot No: 33-33A,Industrial Growth center,
Wadloor Road,
Chicksugur Cross,
Hyderabad Road, Chicksugur-584134
20/11/1987
20 Acres
10/80 1st Floor,
Rajendragunj,
Raichur, Karnataka-584102
91-08532-235876
91-08532-235006/23570
info@vbshilpa.com
http://www.vbshilpa.com
Incorporation Date
Area
Company Head Office
Fax
Phone
E-mail
Web
PROMOTERS
Board of Directors
Shri Omprakash Inani
Chairman
ShriVishnukant C Bhutada
Managing Director
Shri Ajeet Singh Karan
Independent Director
Carlton Felix Pereira
Shri Pramod Kasat
Shri Rajendra Sunki Reddy
Shri N.PS Shinh
Shri Venugopal Loya
Board Committees :
Audit Committee
Venugopal Loya - Chairman
Omprakash Inani - Member
Pramod Kasat - Member
Rajender Sunki Reddy Member
H.K.E. SOCIETYS
Auditors
Bohara Bhandari Bung And Associates
Chartered Accountants
Amar Complex, M.G. Road
Raichur 584 101
24
24
VISION, MISSION AND QUALITY POLICY

VISION &MISSION
Shilpa Medicare shall be part of a healthier and happier future for all kind of people
irrespective of their economic status. Every human being shall be cared for and we shall
provide them hope during the turbulent times of their lives. Our hard work, diligence,
sincerity, more than two decades of experience and honesty, backed by intelligent planning,
shall forge a synergy of thoughts and action. Shilpa Medicare shall maintain the best quality
by continuous improvement in the system to ensure regulatory compliance to meet the
international standards, simultaneously keeping in mind the environmental health. In
accomplishing our mission we shall stand by our values, which run in the very existence of
our organization
QUALITY POLICY
Shilpa Medicare provides consistent quality to the customers. Strict quality assurance is
inherent in every step of our process, from incoming raw materials, maintenance, and
manufacture to finally shipment of the finished product. Our manufacturing facilities and
procedures are standardized to provide the international quality attributes to the products
consistently for each batch through a well-documented, validated and audited system. The
quality assurance of our products is our responsibility and all the departments of the
company share this responsibility by following all the requisite measures and resources to
achieve these goals.
We follow strict quality standards to ensure that all the products being manufactured are
consistently safe, effective and bear good quality. We ensure that all our products comply
with required quality parameters, and consistently meet their specifications. We adhere to
the responsible care programme to ensure optimum customer satisfaction. Adherence to
cGMP norms is an integral part of our total quality management system. We shall always
strive to maintain our reputation for consistent quality, service and timely delivery.
PRODUCT/ SERVICE PROFILE

Shilpa Medicare Limited has carved a niche for itself in the exceedingly competitive and
quality-conscious sphere of pharmaceuticals manufacturing. It produce and export
consistently
high-quality
Active
Pharmaceutical
Ingredients
Fine
Chemicals,
intermediates, herbal products and specialty chemical products using sophisticated

technology, meticulously following international specifications.
H.K.E. SOCIETYS
25
25
TABLE 1
ONCOLOGY APIS Anastrozole

ImatinibMesylate Azacitidine
Irinotecan HCl Trihydrate Bendamustine
Lenalidomide Bicalutamide
Letrozole
Bortezomib
Melphalan
Busulphan
Oxaliplatin
Cabazitaxel Amorphous
Paclitaxel
Capecitabine
Pazopanib
Pemetrexed Disodium
Carboplatin
Hemipentahydrate
Cladribine
Pemetrexed DiPotassium
Clofarabine
Sorafenib Tosylate
Cyclophosphamide
Sunitinib
Cytarabine
Temozolomide
Dasatinib Monohydrate
Thalidomide
Decitabine
TopotecanHCl
Docetaxel
Vismodegib
Erlotinib
Zoledronic acid
Gemcitabine HCl
5- Fluoro Uracil
HydroxyUrea
TABLE 2
UNDER DEVELOPMENT-ONCOLOGY APIS
PRODUCTS UNDER DEVELOPMENT (Oncology)
Abiraterone Acetate
Bosutinib
Enzalutamide
Exemestane
LapatinibDitosylate
Procarbazine
Regorafenib
Axitinib
Crizotinib
Estramustine
Gefitinib
Nilotinib
Pralatrexate
Temsirolimus
TABLE 3
NON-ONCOLOGY APIS
Acebrophylline
AmbroxolHCl
Echothiophate
Fingolimod HCl
Nifedipine
Perfenidone
H.K.E. SOCIETYS
PrucaloprideSuccinate
Rivastigmine
Sildenafil Citrate
Ursodeoxycholic acid
Valsartan
NON-ONCOLOGY APIS UNDER

DEVELOPMENT
Dimethyl Fumarate
Methotrexate
Pirfenidone
Vemurafenib
Odanacatib
Tofacitinib
26
26
AREA OF OPERATION
Shilpa Medicare Ltd has global presence in its operations, the plants and offices of the
company have been established in the following countries.
Italy
Germany
China
Japan
Australia
USA
Turkey
Regulatory Approvals
Regulatory Authorities
Raichur
Unit I
Raichur
Unit II
WHO-GMP
KFDA - Korea
DSIR, Govt. of India
PMDA-Japan
TGA-Australia
BSG-Hamburg
Afssaps-France
Infarmed-Portugal
TPD-Canada
EDQM (CEP)
USFDA (Inspected)
UNITS
I.
II.
III.
IV.
Raichur Unit
Jadcherla Unit
Hyderabad unit-Nu Therapeutics
Shadnagar Unit
H.K.E. SOCIETYS
27
27
Ownership Pattern
TABLE 4
HOLDER'S NAME
Promoter and Promoter Group
Banks Mutual Funds
Financial Institutions
Foreign Institutions Investors
Bodies Corporate
Individual shareholders holding
nominal sharecapital up to Rs.l lakh.
Individual shareholders holding
nominal share capital in excess of
Rs.l lakh
Directors
Trusts
F. C. B
Non-resident Indians
HUF
Clearing Members
NO OF SHARES % SHARE HOLDING

20453658
53.06 %
27120
0.07%
3218
0.01%
5695843
14.77%
2413453
6.27%
3234988
9.65%
1977029
5.13%
59250
1250
3000000
926661
209819
42706
0.15%
0.00%
7.78%
2.45%
0.54%
0.11%
Pie Diagram 1
Chart Title
Promoter and Promoter

Group
Banks Mutual Funds
Financial Institutions
8%
0%
%
5%
Foreign Institutions
Investors
10%
%
2%
Bodies Corporate
10%
53%
6%
15%
%
0%
0
Individual shareholders
holding nominal sharecapital
up to Rs.l lakh.
Individual shareholders
holding nominal share
capital in excess of Rs.l lakh
Directors
Trusts
F. C. B
H.K.E. SOCIETYS
28
28
INFRASTRUCTURAL FACILITIES
The Company has state of the art facilities for the employees. It gives importance to the
environment and takes the utmost care of health of the workers. The company is situated
in the outskirts of the city and is away from the pollution causing due to vehicles. The
company has 20 acres. The space is also used for greenery concentrating on the
environment that creates a good working condition for the employees. The company
provides all the facilities to the employees, like:
Canteen Facility
Quality assurance
Planning
Better Sales and services
Wash rooms
Drinking water
Transport facility
First Aid
COMPETITORS INFORMATION
Anjaneya Life Care Ltd
Aarey Drugs & Pharmaceutical Ltd
Aarti Drugs Ltd
Abbott India Ltd
ABL Bio-Technologies Ltd
Addlife Pharma Ltd
Cipla
Piramal Healthcare
Ranbaxy Labs
Dr Reddys Lab
Sun Pharma
H.K.E. SOCIETYS
29
29
SWOT ANALYSIS
SWOT-Acronym for Strengths, Weaknesses, Opportunities, and Threats. It is a
Technique that is credited to Albert Humphrey who led a research project at Stanford
University in the 1960s and 1970s. It is a structured planning method used to evaluate the
strengths, weaknesses, opportunities and threats involved in a project or in a business
venture.
This section of the Report will focus on the SWOT Analysis of Shilpa Medicare
Ltd., and the below highlighted is the SWOT framework summary.
TABLE 5
STRENGTHS
WEAKNESS
Cost competitiveness due to lower
Company not getting quality man
labour cost and production cost
Strong marketing and distribution
network in domestic as well as
international market
Superior management Talent.
Committed employees.
Benefits provided by government
to 100% EOU Unit
power available in this region.

Lack of strong linkages between
industries and academia
Inadequate access to pool of
highly trained and skilled
scientists, both in India and
abroad.
Modern machines and
equipments are not installed in
the company.
OPPORTUNITIES
THREATS
Significant export potential to the
R & D efforts of Indian
developing as well as developed
pharmaceutical
companies
countries
hampered
by
lack
of
enabling
regulatory
requirement.
Licensing deals and collaborations
For instance, restrictions on
with MNCs for New Chemical
animal
Entities
testing, outdated patent office, etc
and New Drug Delivery Systems
Product patent regime poses
Contract manufacturing
serious challenges to domestic
arrangements with MNCs
industries unless it invests in R &
Potential for developing the
D.
company as a center for
Drug (Pricing Control) Order puts
International Clinical Trials
unrealistic ceilings on product
Drugs
that
address
rising
prices and profitability. and
prevents
pharmaceutical
multifactorial disorders such as
companies
from
generating
cancer as well as lifestyle disorders
investible surplus.
Exports effort hampered by
such as obesity are also likely to
procedural hurdles in India as well
experience strong revenue growth
as
non-tariff
barriers
imposed
abroad.
H.K.E. SOCIETYS
30
30
FUTURE GROWTH AND PROSPECTS

It is often said that the pharma sector has no cyclical factor attached to it.
Irrespective of whether the economy is in a downturn or in an upturn, the general belief is
that demand for drugs is likely to grow steadily over the long-term. Todays pharma
business indicates dynamic shift from the past decade owing to stringent IP driven needs
for the market.
As per 'Pharma Vision 2020', the Government of India aims to make India a global
leader in end-to-end drug manufacturing
Manufacturing costs in India are approximately 35-40 per cent of those in the US
due to low installation and manufacturing costs
The biologics market will grow to 3 billion USD by 2020. The projected human
resource requirement in the Indian pharma sector is estimated to be about 21,
50,000 by 2020
Industry Least affected by recession
Due to increasing population and income levels, demand for high-end drugs is
expected to reach US$ 8 billion by 2015
Expenditure on pharmaceuticals is likely to increase to over 40 per cent of the
total spending on healthcare by households by 2015 from 28 per cent in 2007
With 70 per cent of India's population residing in rural markets, various pharma
companies are investing in the distribution network in rural areas
Increased penetration of chemists, especially in the rural parts of the country
would make OTC drugs easily available.
Number of drugs going off-patent in the developed countries offers a big
opportunity for the Indian companies to capture this market. Since generic drugs
are commodities by nature, Indian producers have the competitive advantage, as
they are the lowest cost producers of drugs in the world.
Opening up of health insurance sector and the expected growth in per capita
income are key growth drivers from a long-term perspective. This leads to the
expansion of healthcare industry of which pharma industry is an integral part.
Being the lowest cost producer combined with FDA approved plants, Indian
companies can become a global outsourcing hub for pharmaceutical products.
Government of India is poised to increase its spending on health care which
would result more demand to pharmaceutical products.
H.K.E. SOCIETYS
31
31
In the above context, Shilpa Medicare is successfully striving for innovative

solutions that may help patients in one way or the other regarding their affordable
healthcare requirements.
As a growing organization, they are collaborating and working with a large number
of reputed partners and clients. They are foreseeing market opportunities, and backing them
up with quick decision making, so as to help in timely introduction of affordable generics
which shall reach patients as quickly as possible. With the relevant expertise and knowhow for the development and production of simple to complex products, ranging across
APIs, formulations and new drug delivery systems.
Taking the lead and outperforming competition shall ensure success in the coming years
and enable them to continuously invest in the future. With their sincere efforts they shall
be among the leaders in healthcare industry, providing affordable medicines to all the strata
of society
Future Expansion Plans at a Glance

Shilpa Medicare is expecting to construct Raichem Medicare Pvt Ltd
opposite to Shilpa Medicare ltd
Constructing Raichem Life sciences Pvt Ltd (Formulation Unit).
It has strong determination to expand its plant.
The important plan of the company is to be the leader in the market or to be
in the leading position
H.K.E. SOCIETYS
32
32
AWARDS /ACHIEVEMENTS
National Energy Conservation Award- 2012 Conferred by President of India
Karnataka State Govt.''Best Entrepreneur Award''.
Govt. of India''Best Entrepreneur Award''.
''Star Export House''Status from Ministry of Commerce and Industry, Govt. of

India.
''Best Export Award''from Visvesvaraya Industrial Trade Centre, Bangalore,

Govt. of Karnataka, India.
''Outstanding Industrial Award''from Indian Junior Chamber.
''Registration with ''Russian Health Authority'' for AmbroxolHCl.
''Certificate of Suitability'' received from EDQM for AmbroxolHCl (R0-CEP

2004-201-Rev 00).
''Certificate of Suitability'' received from EDQM for TiclopidineHCl (R0-CEP

2005-004-Rev 00).
''Certificate of Suitability'' received from EDQM for Carboplatin (R0-CEP

2006-212-Rev 00).
Patent application on IrinotecanHClTrihydrate "An improved process for the

preparation of IrinotecanHClTrihydrate" published as WO2006016203 on date
2006-02-16.
Patent file for Gemcitabine HCl and Anastrozole manufacturing process.
Filed ASMF/EDMF of Gemcitabine HCl over 21 EU countries.
Filed ASMF/EDMF of IrinotecanHClTrihydrateHCl over 27 EU countries.
Filed ASMF/EDMF of OxaliplatinHCl over 11 EU countries.
"Best District Export Award" received from FKCCI, Bangalore on 16.06.2007.
Korean FDA Approved for Gemcitabine HCl&AmbroxolHCl.
COS received from EDQM for BuflomedilHCl (R0-CEP 2006-080-Rev.00).
COS received from EDQM for Oxaliplatin EP (R0-CEP 2006-201-Rev.00).
"Best District Export Award" received from FKCCI, Bangalore on 20.06.2008.
COS received from EDQM for Gemcitabine HCl EP (R0-CEP 2006-222-Re
H.K.E. SOCIETYS
33
33
FINANCIAL STATEMENT
TABLE 6
Profit and Loss Account for the Year Ended 31st March 2014
(Rs. In Millions)
Particulars
YRC
Less: Sales Returns
Less: Excise
Net Sales
EXPENDITURE :
Increase/Decrease in
Stock
Raw Materials Consumed
Power & Fuel Cost
Employee Cost
Other Manufacturing
Expenses
General and
Administration Expenses
Selling and Distribution
Expenses
Miscellaneous Expenses
Expenses Capitalised
Total Expenditure
PBIDT (Excl OI)
Other Income
Operating Profit
Interest
PBDT
Depreciation
Profit Before Taxation &
Exceptional Items
Exceptional Income /
Expenses
Profit Before Tax
Provision for Tax
PAT
Extraordinary Items
Adj to Profit After Tax
Profit Balance B/F
Appropriations
Equity Dividend (%)
Earnings Per Share (Rs.)
Book Value (Rs.)
H.K.E. SOCIETYS
Mar 2014
Mar 2013
Mar 2012
Mar 2011
Mar 2010
0
69.94
5273.68
0
70.85
3281.96
0
52.68
2797.59
0
58.24
2575.44
0
54.35
2344.60
-118.28
3168.60
155.48
374.36
37.08
2012.93
88.32
227.61
-170.12
1915.66
76.35
169.41
88.40
1450.31
56.50
128.47
-146.67
1427.59
45.19
101.30
228.00
132.84
101.97
78.35
46.13
110.99
76.75
64.50
40.19
30.37
72.23
95.62
0
4086.99
1186.69
88.53
1275.22
43.48
1231.74
210.92
41.12
11.23
0
2627.89
654.07
50.06
704.14
19.45
684.69
127.54
30.25
46.69
0
2234.71
562.88
77.86
640.74
19.71
621.03
114.38
28.42
10.90
0
1881.53
693.91
90.97
784.88
22.73
762.14
104.21
55.61
13.44
0
1572.96
771.64
53.32
824.96
54.87
770.09
97.65
1020.82
557.15
506.65
657.93
672.44
0
1020.82
212.25
808.57
0
0
1821.52
2630.09
50.00
21.98
112.15
-1.04
556.11
96.52
459.60
0
0
1451.48
1911.07
65.00
18.74
134.88
6.27
512.92
115.45
397.48
0
0
1132.15
1529.63
45.00
16.21
117.15
0
657.93
149.11
508.82
0
0
714.79
1223.61
40.00
21.18
96.09
0
672.44
212.31
460.13
0
1.07
321.63
782.83
35.00
20.89
50.94
34
34
TABLE 7
Blanace Sheet for the Year Ended 31st March 2014
(Rs. In Millions)
Particulars
Share Capital
Share Warrants &
Outstandings
Total Reserves
Shareholder's Funds
Minority Interest
Long-Term Borrowings
Secured Loans
Unsecured Loans
Deferred Tax Assets /
Liabilities
Other Long Term
Liabilities
Long Term Trade
Payables
Long Term Provisions
Total Non-Current
Liabilities
Current Liabilities
Trade Payables
Other Current Liabilities
Short Term Borrowings
Short Term Provisions
Total Current Liabilities
Total Liabilities
Mar 2014
73.57
Mar 2013
49.05
Mar 2012
49.05
Mar 2011
48.05
Mar 2010
44.05
0.00
4052.08
4125.65
0
0
373.80
0
0.00
3258.81
3307.86
0
0
432.19
0
0.00
2823.95
2872.99
0
0
50.75
0
43.75
2260.31
2352.11
0
0
111.63
0
0.00
1077.90
1121.95
0
0
671.74
15.30
269.75
206.30
191.08
152.62
136.41
0
8.79
0
3.12
0
7.58
0
6.00
0
0
652.34
0
866.12
356.29
220.22
47.79
1490.42
6268.40
641.61
0
477.38
215.07
389.23
38.00
1119.69
5069.16
249.41
0
531.35
182.77
357.32
26.00
1097.43
4219.83
270.24
0
239.96
142.70
278.59
22.41
683.66
3306.01
823.46
0
375.66
8.15
0
92.77
476.58
2421.98
Continued..
H.K.E. SOCIETYS
35
35
Particulars
ASSETS
Non-Current Assets
Gross Block
Less: Accumulated
Depreciation
Less: Impairment of
Assets
Net Block
Lease Adjustment A/c
Capital Work in Progress
Intangible assets under
development
Pre-operative Expenses
pending
Assets in transit
Non-Current Investments
Long Term Loans &
Advances
Other Non-Current Assets
Total Non-Current
Assets
Current Assets Loans &
Advances
Currents Investments
Inventories
Sundry Debtors
Cash and Bank
Other Current Assets
Short Term Loans and
Advances
Total Current Assets
Net Current Assets
(Including Current
Investments)
Total Current Assets
Excluding Current
Investments
Miscellaneous Expenses
not written off
Total Assets
Contingent Liabilities
Total Debt
Book Value
Adjusted Book Value
H.K.E. SOCIETYS
Mar 2014
0
0
3387.32
Mar 2013
0
0
2126.99
Mar 2012
0
0
1881.79
Mar 2011
0
0
1629.96
Mar 2010
0
0
1559.63
810.71
601.44
473.38
359.01
280.24
0
2576.61
0
492.35
0
1525.56
0
1141.79
0
1408.41
0
552.66
0
1270.95
0
12.55
0
1279.39
0
30.58
0.93
0
0
650.65
0
0
370.07
0
0
331.13
0
0
280.84
0
0
36.95
300.60
4.64
199.92
3.99
171.76
3.44
24.56
3.00
0
0
4024.84
3242.25
2467.40
1591.90
1346.92
0
101.39
1089.50
603.09
8.05
173.84
0
502.82
661.30
318.77
105.26
112.13
0
680.22
598.70
331.87
19.49
65.06
0
0
374.44
336.34
837.48
60.75
0
0
436.46
314.86
17.98
48.51
267.69
2243.56
126.65
1826.91
57.10
1752.43
105.10
1714.10
257.25
1075.06
753.15
707.22
655.00
1030.45
598.49
2142.17
1324.09
1072.21
1714.10
1075.06
0
6268.40
0
5069.16
0
4219.83
0
3306.01
0
2421.98
400.69
981.66
134.88
89.92
559.08
548.64
117.15
78.10
266.72
501.84
96.09
64.06
217.35
687.05
50.94
33.96
430.02
800.78
112.15
112.15
36
36
TABLE 8
RATIO ANALYSIS
Particulars
Operational &
Financial Ratios
Mar 2014
Mar 2013 Mar 2012
Mar 2011 Mar 2010
Earnings Per Share ( )
21.98
18.74
16.21
21.18
20.89
CEPS( )
27.71
15.96
13.91
17.01
16.88
DPS( )
1.00
1.30
0.90
0.80
0.70
Book NAV/Share( )
Tax Rate (%)
112.15
20.79
134.88
17.36
117.15
22.51
96.09
22.66
50.94
31.57
Particulars
Margin Ratios
Core EBITDA Margin
(%)
EBIT Margin (%)
Pre Tax Margin (%)
PAT Margin (%)
Cash Profit Margin
(%)
Mar 2014 Mar 2013 Mar 2012
Mar 2011 Mar 2010
22.21
19.92
19.10
15.13
19.51
17.17
16.59
13.71
19.75
18.69
18.00
13.95
26.35
25.84
24.98
19.32
32.17
30.32
28.03
19.18
19.08
17.51
17.96
23.28
23.25
Particulars
Performance Ratios
ROA (%)
ROE (%)
ROCE (%)
Asset Turnover(x)
Sales/Fixed Asset(x)
Working
Capital/Sales(x)
Mar 2014 Mar 2013 Mar 2012
Mar 2011 Mar 2010
14.26
21.75
23.10
0.94
1.94
9.90
14.87
14.93
0.72
1.67
10.56
15.34
16.97
0.76
1.62
17.77
29.67
29.19
0.92
1.65
20.77
51.11
42.03
1.08
1.61
7.10
4.74
4.35
2.56
4.01
Particulars
Efficiency Ratios
Fixed Capital/Sales(x)
Receivable days
Inventory Days
Payable days
Mar 2014 Mar 2013 Mar 2012 Mar 2011 Mar 2010
H.K.E. SOCIETYS
0.52
31.48
59.79
59.11
0.60
35.42
68.58
68.15
0.62
42.78
62.31
62.12
0.61
45.13
56.19
57.27
0.62
38.28
50.66
61.52
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Particulars
Valuation Parameters
PER(x)
PCE(x)
Price/Book(x)
Yield (%)
EV/Net Sales(x)
EV/Core EBITDA(x)
EV/EBIT(x)
EV/CE(x)
M Cap / Sales
Mar 2014 Mar 2013
Mar 2012
Mar 2011 Mar 2010
18.78
14.89
3.68
0.24
3.03
12.53
15.01
2.55
2.88
14.78
11.48
2.05
0.38
2.29
10.00
12.03
1.52
2.10
12.41
10.30
2.73
0.30
2.32
7.61
8.78
1.81
2.45
Particulars
Growth Ratio
Net Sales Growth (%)
Core EBITDA
Growth (%)
EBIT Growth (%)
PAT Growth (%)
EPS Growth (%)
Mar 2014 Mar 2013 Mar 2012
Mar 2011 Mar 2010
60.69
17.31
8.63
9.85
72.45
81.10
84.91
75.93
17.29
9.89
8.06
15.63
15.63
-18.36
-21.75
-21.88
-23.48
-4.86
-6.41
10.58
1.38
200.89
240.28
520.37
520.36
Particulars
Financial Stability
Ratios
Total Debt/Equity(x)
Current Ratio(x)
Quick Ratio(x)
Interest Cover(x)
Total Debt/M cap(x)
Mar 2014 Mar 2013 Mar 2012
Mar 2011 Mar 2010
0.19
1.51
0.81
24.48
0.05
0.22
2.51
1.98
29.94
0.08
8.74
10.26
1.82
0.53
2.10
9.80
11.99
1.36
1.84
0.30
1.63
1.05
29.59
0.24
0.19
1.60
1.06
27.03
0.09
8.49
10.51
5.22
0.26
2.78
7.92
8.98
2.70
2.50
0.61
2.26
1.34
13.25
0.18
Few formulas used

1. Calculation of working capital: Current asset-Current liability
2. Calculation of current ratio: Current asset/Current liability
3. Calculation of quick Ratio:
4. Calculation of cost benefit ratio:
H.K.E. SOCIETYS
Current Asset Inventory

Current liability
Profit
Capital
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THEORETICAL BACKGROUND OF THE STUDY

WORKING CAPITAL MANAGEMENT
A study of working capital management is of major importance to internal and
external analysis because of its close relationship with the day to day operations of a
business. Working capital is that portion of the assets of a business which are used in or
related to current operations and represented at any one time by the operating cycle of such
items as against receivables, inventories of raw material, stores, work in process and
finished goods, merchandise, notes or bills receivables and cash.
In accounting working capital is the difference between inflow and outflow of
funds. In other words, it is the net cash inflow. It is defined as the excess of current assets
over current liabilities and provisions. Working capital is often referred to as circulating
capital. The use of the term circulating capital instead of working capital indicates that its
flow is circular in nature. At the beginning of a business venture, cash is provided by owners
and lenders. A part of this cash is invested in tools, machinery, furniture, equipment,
building and other forms of fixed assets, which are not to be sold during the normal course
of business. The remaining cash is used as working capital to meet the current requirements
of a business enterprise such as purchase of service, raw material or merchandise. When a
firms products or finished goods are sold, it has what is known as cash or receivables.
When receivables are collected, more cash is available for the purchase of raw material or
merchandise and service. This flow of cash into production and so on, illustrates the circular
flow of working capital. The term circulating capital is frequently used to denote those
assets which are changed with relative rapidly from one form to another.
Working capital funds are different from working funds in a business. Working
funds are the total resource of a business. Working funds are the total resource of a business
concern and include internal and external equities, which are sunk in current fixed assets.
Working capital funds however are sunk only in current assets of a concern.
Business firms are established by investment in the form of assets that can be
classified on the basis of liquidity. Firms finance the total investment in assets with debt
and owners equity, the supply of which is limited. The principles of financial management
form the basis of managing investments and related financing with current debt, long term
debt, capital contribution or related earnings. The investment in current assets is a working
capital and the related financial management approach is working capital management.
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Working capital management is defined here as a process of planning and

controlling he levels of investment and financing current assets as well as related operations
of purchasing and selling. It requires managers to decide on what levels of current assets
the firm will hold at any point in time and on how these current assets are to be financed.
Operations include activities related to purchase of material and the sales of finished
goods. Operating cycle determines a firms working capital investment and its financing
needs. The purchase and sales operations create cash inflow and outflows, which are both
unsynchronized and uncertain. They are unsynchronized because cash disbursements
usually take place before cash receipt.
Figure 1. The Working Capital Cycle

The cash conversion cycle:
The cash conversion cycle is used to measure working capital management and it measures
companies liquid situation and how effective the working capital is managed. The outcome
will show the number of days in average it will take for the capital that is tied up in working
capital to convert to cash in the cycle. A shorter conversion cycle with a low or even
negative number of days is preferable for profit as the need for external financing is
reduced.
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Average number of days inventory

+
Cash conversion cycle
= Average number of days accounts receivable
Average number of days accounts payable
Figure 2. The Operating and Cash conversion cycle

Types of Working Capital
Permanent working capital
It means the minimum amount of investment in all current assets which is regarded at
all times to carry on minimum level of business activities. The operating cycle is a continuous
process and therefore, the need for current assets increases and decreases over time. There is
always a minimum level of current assets required at all time by the firm to carry on its business
operations. This minimum level of current assets is known as permanent working capital or
fixed working capital.
Temporary working capital
This is also called the fluctuation or variable working capital. The amount of temporary
working capital keeps on changing depending upon the changes in production and sales.
Gross working capital
It is the amount of funds invested in the various components of current assets.
Net working capital
It is the difference between current assets and current liabilities. The concept net
working capital enables a firm to determine the exact amount available at its disposal for
operational requirements.
Negative working capital
When current liabilities exceed current assets negative working capital emerges. Such
a situation occurs when a firm is nearing a crisis of some magnitude.
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Managing the components of working capital

The components of working capital are:
Cash Management
Receivables Management
Inventory Management
A. CASH MANAGEMENT
Cash is the important current asset for the operation of the business. Cash is the
basic input needed to keep the business running on a continuous basis; it is also the ultimate
output expected to be realized by selling the service or product manufactured by the firm.
The firm should keep sufficient cash, neither more nor less.
Cash is the liquid form of an asset. It is the ready money available in the firm or
with the business, essential for its operations. A firm needs the cash for the following three
purposes:
a. The Transaction Motive:
The firm should keep cash to conduct its business in the ordinary course. The firm
needs cash primarily to make payment for purchases, sales, wages and salaries etc.
b. The Precautionary Motive:
The firm should keep cash to meet contingencies in future. It provides a cushion or
buffer to withstand some unexpected emergency.
c. The Speculative Motive:
To tap profits from opportunities arising from fluctuations in commodity prices,
security prices, interest rates etc. the company with surplus cash is in a better
position to exploit such situations.
B. RECEIVABLES MANAGEMENT
Receivable represents amounts owed to the firm as a result of sale of goods or
services on the ordinary course of business. These are claims of the firm against its
customers and form part of its current assets. These receivables are carried for the
customers. The period of credit and extent of receivables depends upon the credit policy
followed by the firm. The main purpose of maintaining or investing in receivables is to
meet competitors, to increase sales, and to maintain a cordial relationship with the clients.
Receivables management is the process of making decisions relating to investment
in trade debtors. However, at the same time, investment in this current asset involves cost
considerations also. Therefore there is always a risk of bad debts too.
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C. INVENTORY MANAGEMENT
Background of the study of Inventory Management
Every enterprise needs inventory for smooth running of its activities. It serves as a
link between the production and the distribution processes. There is generally a time lag,
between the recognition of a need and its fulfillment. The greater the time lag, the higher
the requirements of inventory. It also provides a cushion for future price fluctuation.
The investment in inventories constitutes the most significant part of current
assets/working capital in most of the undertakings. Thus it is very essential to have a proper
control and management of inventories. The purpose of inventory is to ensure availability
of materials in sufficient quantity as and when required and also to minimize investment in
inventories.
Inventories represent the second largest asset category for manufacturing
companies. The proportion of inventories to total assets generally varies between 15 and
30%.Decisions relating to inventories are taken primarily by executives in production,
purchasing and marketing departments. Hence the importance of inventory management
cannot be overemphasized.
What are inventories?
Every one, be it a firm, or an establishment or an individual, is familiar with the
word stock because each of these carry some items to meet their requirements. In trade and
industry, the word stock, is called inventories.
Objectives of scientific inventory control system:
Service to the customers
Continuity of productive operations
Economy in purchasing
Reduction of risk of loss
Reduction of administrative workload
Administrative simplicity
A manufacturing firm generally carries following six major kinds of inventories:
Raw materials
Work-in-progress
Finished goods
Tools
Supplies
Machinery spares
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1. Raw materials:
Raw materials form a major input into the organization. They are required to carry
out production activities uninterruptedly. The quantity of raw materials required will be
determined by the rate of consumption and the time required for replenishing the supplies.
The factors like availability of raw materials and Government regulations etc., too affect
the stock of raw materials.
2. Work-in-progress:
The work-in-progress is the stage of stocks, which are in raw materials and finished
goods. The raw materials enter the process of manufacturing but they are yet to attain a
final shape of finished goods. The quantum of work-in-progress depends upon the time
taken in the manufacturing: the more will be the amount of work-in-progress.
3. Finished goods:
These are the goods which are ready for the consumers. The stock of finished goods
provides a buffer between production and market. The purpose of maintaining inventory is
to ensure proper supply of goods to customers. In some concerns the production is
undertaken on order basis, in these concerns there will be need for finished goods. The need
for finished goods inventory will be more when production is undertaken in general without
waiting for specific orders.
4. Consumables:
These are materials which are needed to smoothen the process of production These
materials do not directly enter production but they act as catalysts etc,. Consumables may
be classified according to their consumption and criticality, Generally, consumable stores
do not create any supply problem and form a small part of production. There can be
instances where these materials may account for much value than the raw materials. The
fuel oil may form a substantial part of cost.
5. Spares:
The consumption pattern of raw materials, consumables, finished goods are
different from that of spares. The stocking policy of spares is different from industry to
industry. Some industries like transport will require more spares than order concerns. The
costly spare parts like engines: maintenance parts, etc,. are not discarded after use but rather
they are kept in ready position for future use. All decisions about spares are based on
financial cost of inventory on such spares and the cost that may arise due to their nonavailability.
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Why do we have inventories?
To gain economy in purchasing
To keep pace with changing market conditions
To satisfy demand during period of replenishment
To carry reserve stocks to avoid stock outs
To stabilize production
To prevent loss of sales
To satisfy other business constraints
Historical Perspective of Inventory Management:

The management and control of Inventory is a challenge to all organization in any
sector of the economy. The problem of Inventory does not confine them to profit making
big firms. The same type of problem is encounter by social and non-profit organization too.
Inventory problems have been encountered by every society, but it was not until the
th
20 century that the analytical techniques were developed to study them. The initial impetus
for analysis expectedly cones from manufacturing sector. It was until after World War II that a
concerted effort an risk and uncertainly aspects of inventory has made. In theory, inventory is
an area of organized operation that is well developed.
Material is a very important factor of production. It includes physical commodities used
to manufacture the final end product. It is the starting point from which the first operation starts.
It is inventories and does not get waste and exhaust (unless it is deteriorated) with the passage
of time as labor is wasted that it can be purchased on varying quantities according to the
requirements of firm where as often Clements of cost like labor and other services cannot be
easily varied once they are established. Materials account for nearly 60% of cost of production
as it is clear from an analysis of the financial statements of larger number of private and public
sector organization.
According to the Indian Association of material marketing 64 paisa in a rupee is spent
in materials by Indian Industries, 16 paisa on labor and the rest of one rupee on spent on
overheads, thus the importance of material control lies in the fact that any savings made in the
cost of materials will go a long way in reducing cost of the production and improving the
profitability of a concern.
Studies by experts in this field have highlighted the fact that if an organization can
affect 5% saving in material cost, it would be as good as the increasing the production or sales
by about 36%.
Proper control of materials is necessary from the time orders for purchase of materials
is placed with suppliers until they have been consumed. The object of material may be reduced
in other words, efforts are to be made to reduce the cost material when it is purchased, stored
and used.
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Meaning and Definition:

Several authors have defined the term inventory. The more popular of them are, the
term inventory includes Raw-materials, work-in progress, finished products, spares and others
in order to meet an unexpected demand or distribution in the future.
It can be used to refer to the stock of raw materials unhand at particulars, goods in
process of manufacturing, finished products, merchandise, purchased for relate and others like
tangible assets measured and counted in connection with financial records and accounting
records, the reference may be the stock of goods owned by an enterprise at a particular time.
Yet another definition is that the term includes the following categories of times.
Production inventories, MRO inventories, in process inventories and finished goods
inventories.
Turnover/activity ratios of the company
Introduction:
The assessment of asset usage is important as it helps us to understand the overall level
of efficiency at which a business is performing. Turnover ratios are employed to evaluate the
efficiency with which the firm manages and utilizes its assets. These ratios are called as activity
ratios. It is called as turnover ratio because they indicate the speed with which assets are being
converted or turnover into sales. Thus it involves the relationship between sales and assets. A
proper balance between sales and assets reflects the assets are managed well. Higher the rate
of rotation the greater will be the profitability.
Our basic ratios for this section are Stock turnover, debtors turnover and creditors
turnover help us to assess the liquidity position as well as giving us detailed information about
stock control and credit control of the company.
Different turnover ratios:
i.
Inventory or stock turnover ratio
ii.
Debtors turnover ratio
iii.
Creditors turnover ratio
iv.
Current assets turnover ratio
v.
Working capital turnover ratio

These Activity Ratios are also called the Turnover ratios or Performance ratios. A
turnover ratio or an Activity ratio is a measure of movement and indicates as to how frequently
an account has moved/turned over during a period it shows as to how efficiently and effectively
the assets of the firm are being utilized. The activities ratios measure the effectiveness with
which the firm uses its resources. These ratios are usually calculated with reference to sales/cost
of goods sold and are expressed in terms of rates or times.
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Liquidity ratios
Liquidity ratio may be defined as financial ratio which throws light on short term
solvency of the firm. It measures the ability of the firm to meet its current obligations i.e.
working capital requirements.
A firm should ensure that it doesnt suffer from lack of liquidity and also see that
it doesnt have excess liquidity. Failure of a company is to not meet its obligations due to
lack of sufficient liquidity will result in a poor credit worthiness and loss of creditors
confidence. Therefore it is necessary to maintain a proper balance between high liquidity
and lack of liquidity. So liquidity ratio measures the ability of a firm to meet its short terms
obligations and reflects short-term financial strength of the firm.
Credit analysts, those interpreting the financial ratios from the prospects of a lender,
focus on the downside risk since they gain none of the upside from an
improvement in operations. They pay great attention to liquidity and leverage ratios to
ascertain a companys financial risk.
Liquidity ratio needs establishing a relationship between cash and other current
assets to current obligations to provide quick measures of liquidity. These ratios are also
termed as working capital ratio or short-term solvency ratio. An enterprise must have
adequate working capital to run its day-to-day operations.
Inadequacy of working capital may bring the entire business operation to a grinding halt
because of inability of the enterprise to pay for wages, materials and other regular expenses.
The liquidity refers to the maintenance of cash, bank balance and those assets which
are easily convertible into cash in order to meet the liabilities as and when arising. the
liquidity ratios study the firms short term solvency and its ability to payoff the liabilities.
It should be intuitive to observe that a firm, no matter how profitable it is, cannot continue
to exist unless it is able to meet its obligations as they arise. The day-to-day problems of
financial management consist of highly important task of finding sufficient cash to meet
current obligations. The short term liquidity risk, arises primarily from the need to finance
current operations. To the extent that the firm has to make payments to its suppliers before
it is paid for the goods and services it provides, a cash short fall has to be met usually
through the short term borrowings. Although this financing of working capital needs is
routinely done in most firms, the liquidity ratios have been devised to keep a track on the
extent of the firms exposure to the risk that it will not be able to meet its short term
obligations. Liquidity ratios as a group are intended to provide information about a firms
liquidity and the primary concern is the firms ability to pay its current liabilities.
Consequently , these ratios focus on current assets and current liabilities.
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The liquidity ratios provide a quick measure of liquidity of the firm by establishing a
relationship between its current assets and its current liabilities. If a firm does not have
sufficient liquidity it may not be in a position to meet its credit worthiness. The liquidity ratios
may be called the Balance sheet ratios because the information required for the calculation of
liquidity ratios is available in the balance sheet only. Some of the common liquidity ratios are
which give a picture of a companys short term financial situation or solvency.
I.
Current Ratio
II.
Quick Ratio/liquid Ratio
III.
Absolute liquid/cash ratio
Operating Cycle
The duration of time required to complete the following cycle of events in case
of
a manufacturing firm is called the operating cycle.

a) Conversion of cash into raw material.
b) Conversion of raw material into work in process.
c) Conversion if work in process into finished goods.
d) Conversion of finished goods into debtors and bills receivables through sales.
e) Conversion of debtors and bills receivables into cash.
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CHAPTER 4.
DATA ANALYSIS AND INTERPRETAION
1. Inventory turnover ratio
It signifies the liquidity of the inventory. A high inventory turnover indicates brisk
sales. The ratio is therefore a measure to discover the possible trouble in the form of
over stocking or over valuation.
Inventory turnover
ratio =
Cost of goods sold

Average inventory
Sales
Closing Stock
Or
(If there is no
opening stock)
Opening stock + Closing stock

2
Avg. Inventory =
Table 9: Table showing the inventory turnover ratio (Rs in millions)

Year
Mar 2010
Mar 2011
Mar 2012
Mar 2013
Mar 2014
Graph 1:
Net Sales
2344.60
2575.44
2797.59
3281.96
5273.68
Inventories
325.42
396.48
477.58
616.65
863.87
Inventory Turnover Ratio

7.20
6.50
5.86
5.32
6.10
INVENTORY TURNOVER RATIO
Inventory Turnover Ratio

8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
7.20
6.50
Mar
2010
Mar
2011
5.86
Mar
2012
YEARS
6.10
5.32
Mar
2013
Mar
2014
Interpretation:
The lower the ratio indicates the more efficiency in converting inventory into
accounts receivables through sales. The ratios computed clearly demonstrated that there
is efficiency in inventory management. The ratio can be still increased by following
inventory control techniques like Just in time, buffer stocks etc. These techniques avoid
necessary idle cost of storage on inventory management system.
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Inventory conversion period

Inventory conversion period (ICP) refers to the length of time between purchase of
raw material, production of the goods or service, and the sale of the finished product.
Number of days in a year
Inventory conversion period =
Inventory turnover ratio
<
Table 9.1: Table showing the inventory conversion period (Rs in millions.)
Year
Mar 2010
Mar 2011
Mar 2012
Mar 2013
Mar 2014
Net Sales
2344.60
2575.44
2797.59
3281.96
5273.68
Days
50.66
56.19
62.31
68.58
59.79
Inventory Conversion Period
80
Graph 1.1
Inventories
325.42
396.48
477.58
616.65
863.87
70
60
DAYS
50
40
30
20
10
0
Mar
2010Mar
2011Mar 2012Mar
YEARS
2013Mar
2014
Interpretation:
If the average collection period extends beyond 60 days, debtors are holding cash that
should have flowed into the department. This means that the department is unable to satisfy
pressing liabilities or to invest that cash.
The inventory conversion period over the years have come down which indicates the
conversion of raw material into finished products is faster in the company. The analysis
shows us the days it was approx. 51 days in 2010 but later increased till 2013 to 68.58 and
again controlled significantly to 59.79 in 2014
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2. Debtors turnover ratio

Debtors constitute an important element of current assets and therefore the
quality of debtors to a great extend determines a firm liquidity.
Debtors turnover ratio =
Net sales
Debtors
Table 10: Table showing the Debtors turnover ratio (Rs in millons.)
Year
Net Sales
Sundry Debtors
Mar 2010
2344.60
314.86
7.45
Mar 2011
2575.44
336.34
7.66
Mar 2012
2797.59
331.87
8.43
Mar 2013
3281.96
318.77
10.30
Mar 2014
5273.68
603.09
8.74
Graph 2
DEBTOR TURNOVER RATIO
Debtor Turnover Ratio

10.30
12.00
10.00
7.45
7.66
8.74
8.43
8.00
6.00
4.00
2.00
0.00
Mar
2010
Mar
2011
Mar
2012
YEARS
Mar
2013
Mar
2014
Interpretation:
This ratio shows the extent of trade credit granted and efficiency in the collection
of debts. The debtor ratio does not solve the collection problem, but it acts as an indicator
that an adverse trend is developing.
We see that it was 7.45 in 2010 and it increased to 10.30 in 2013 and again
decreased to 8.74 in 2014
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3. Current asset turnover ratio

This ratio indicates the efficiency with which current assets turn into sales. A lower
current asset to sales ratio implies by and large a more efficient use of funds. Thus, a
high turnover rate indicates reduced lock-up f unds in current assets.
=
Table 11: Table showing the current asset turnover ratio (Rs in millons.)
Year
Net Sales
Current Assets
Current Asset Turnover

Ratio
Mar 2010
2344.60
2170.93
1.08
Mar 2011
2575.44
2799.39
0.92
Mar 2012
2797.59
3681.04
0.76
Mar 2013
3281.96
4558.28
0.72
Mar 2014
5273.68
5610.30
0.94
Current Asset Turnover Ratio

CURRENT ASSEST RATIO
Graph 3:
1.2
1.08
0.94
0.92
0.76
0.8
0.72
0.6
0.4
0.2
0
Mar
2010
Mar
2011
Mar
2012
YEARS
Mar
2013
Mar
2014
Interpretation:
The current asset turnover ratio computed clearly implies and indicates there
is more consistency and efficiency in converting current assets into sales throughout 5
years of analysis.
There is gradual decrease from 1.08 in 2010 to 0.92 in 2011
further
there was a slight decrease to 0.76 and 0.72 in 2012 and 2013 but in the coming year
2014 the company strived hard to bring it to0 .94 which clearly indicates efficiency in
its operations.
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4. Working capital turnover ratio

This ratio helps to measure the efficiency of the utilization of net working capital.
It signifies that for an amount of sales, a relative amount of working capital is needed.
If any increase in sales is contemplated, working capital should be adequate and thus,
this rati o helps management to maintain the adequate leve l of working capital.
=
( Working Capital = Current Assets - Current liabilities)

=
Table 12: Table showing the Working capital turnover ratio (Rs in millons.)
Year
Mar 2010
Mar 2011
Mar 2012
Mar 2013
Mar 2014
Net Sales
Working Capital
Working Capital turnover
2344.60
584.69
4.01
2575.44
1006.03
2.56
2797.59
643.12
4.35
3281.96
692.40
4.74
5273.68
742.77
7.1
Graph 4:
WORKING CAPITAL RATIO
Working Capital Turnover ratio

8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
7.10
4.35
4.01
4.74
2.56
Mar
2010
Mar
2011
Mar
2012
Mar
2013
Mar
2014
YEARS
Interpretation:
The ratio computed clearly indicates that, there is no consistency in the amount of
working capital held and the sales achieved. There is gradual decrease from 4.01 in
2010 to 2.56 in the year 2011 and then there is a sudden gain to 4.35 in the year 2012,
this is because of good financial forecast in respect of probable revenue from sales and
the amount needed for working capital. And it has increased to 7.10 in 2014
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5. Average collection period

Average collection period, which measures how long it takes to collect
amounts from debtors. This can be compar ed with stated credit terms of the compan y.
=
Table 13: Table showing the days of collection period (Rs in millons.)
Year
Net Sales
Debtors turnover ratio Average collection period
Mar 2010
2344.60
7.45
48.32
Mar 2011
2575.44
7.66
47.00
Mar 2012
2797.59
8.43
42.70
Mar 2013
3281.96
10.30
34.95
Mar 2014
5273.68
8.74
41.19
Graph 5:
PERIOD OF COLLECTION
Average collection period

48.32
47.00
50.00
40.00
30.00
20.00
10.00
0.00
42.70
34.95
Mar
2010
Mar
2011
Mar
2012
Mar
2013
41.19
Mar
2014
YEARS
Interpretation:
Average collection period measures the quality of debtors. As shorter
collection period implies prompt payment by debtors. It reduces the chances of bad
debts. A longer collection period implies too liberal and inefficient credit collection
performance. From the above statement we can make out that the company has
inefficient credit collection performance in the year 2013 was good but it become slight
liberal in 2014
It is difficult to provide a standard collection period of debtors because it depends

upon the nature of the industry, seasonable character of the business and credit policies
of the firm. In general, the amount of receivables should not exceed 3-4 months of credit
sale.
H.K.E. SOCIETYS
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6. Operating cycle
The duration of time required to compl ete the sequence of events.
Operating cycle =
Table 14: Table showing the operating cycle (Rs in millons.)
Year
Mar 2010
Mar 2011
Mar 2012
Mar 2013
Mar 2014
Graph 6:
Net Sales
2344.60
2575.44
2797.59
3281.96
5273.68
Inventories
325.42
396.48
477.58
616.65
863.87

7.45
7.66
8.43
10.30
8.74
Days
51.11
56.49
62.54
68.77
59.57
DAYS
Operating cycle
70
60
50
40
30
20
10
0
51.11
Mar
2010
56.49
Mar
2011
62.54
68.77
Mar
Mar
2012
2013
YEARS
59.57
Mar
2014
Interpretation:
The duration of production was very high during the year 2014. The company has
taken effective steps in order to reduce the no of days of production but even though in the
year 2010 to 2013 the days of production has increased from 51.11 to 68.77respectively.
But in the latest F.Y 2014 the operating cycle has come down to an significant figure of
59.57 days, which indicates the efficiency achieved in various processes.
H.K.E. SOCIETYS
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7. Current Ratio
This ratio is an indicator of the firms commitment to meet its short-term
liabilities.
=
(Current Assets = Inventories + Sundry Debtors+ Cash and Bank Balances)
(Current Liabilities = Sundry Creditors + Bank overdraft + Deposit received from contractors)
Table 15: Table showing the current ratio (Rs in millons.)
Year
Current Assets Current Liabilities
Current Ratio
Mar 2010
2170.93
960.59
2.26
Mar 2011
2799.39
1115.30
2.51
Mar 2012
3681.04
2300.65
1.60
Mar 2013
4558.28
2796.49
1.63
Mar 2014
5610.30
3715.43
1.51
Graph 7
CURRENT RATIO
Current Ratio
3.00
2.50
2.26
2.51
1.60
2.00
1.63
1.51
1.50
1.00
0.50
0.00
Mar
2010
Mar
2011
Mar
2012
YEARS
Mar
2013
Mar
2014
Interpretation:
The current ratio of 2:1 will be considered as ideal under all normal
situations. But the ratios computed indicates lack of funds in current assets, because it
is lower in all the above 5 years compared to normal ratio of 2:1. In the year 2014 it has
fallen to a low of 1.51. There is a constant management of current ratio in the abovementioned 5 years, by which company has overcome the decline in the year 2014.
H.K.E. SOCIETYS
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8. Quick Ratio:
Quick ratio, also called acid-test ratio, establishes a relationship between quick or
liquid assets and current liabilities. An asset is liquid if it can be converted into cash
immediately or reasonably soon without a loss of value. Cash is the most liquid asset. Other
assets that are considered to be relatively liquid and included in quick assets are debtors
and bill receivable and marketable securities (temporary quoted investments). Inventories
are considered to be less liquid. Because they require some time in realising into cash; their
value also has a tendency to fluctuate. Quick ratio can be calculated by dividing uqick assets
by current liabilities.
Generally, a quick ratio of 1 to 1 i s considered to represent a satis factory current

financial condition.
Table 16: Table showing quick ratio (Rs in millions.)
Year
Current Assets
Mar 2010
2170.93
Mar 2011
2799.39
Mar 2012
3681.04
Mar 2013
4558.28
Mar 2014
5610.30
Inventories
325.42
396.48
477.58
616.65
863.87
Graph 8
Current Liabilities
960.59
1115.30
2300.65
2796.49
3715.43
Quick Ratio
1.92123
2.15451
1.392414
1.409492
1.277491
QUICK RATIO
2.50
1.92
2.15
RATIOS
2.00
1.39
1.41
1.50
1.28
1.00
0.50
0.00
Mar
2010
Mar
2011
Mar
2012
YEARS
Mar
2013
Mar
2014
Interpretation:
The quick ratio is also called as the acid test ratio and is the one of the best measures of
liquidity. The quick ratio is much more conservative measure than the current ratio
The ideal standard of quick ratio should be 1:1 since the organisation has the higher ratio it
is doing extremely well and their ability is very fast to meet the current liabilities.
H.K.E. SOCIETYS
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Chapter 5
Summary of Findings, Conclusion and Suggestions /recommendations
Findings
Total Current asset is maximum in the year 2014 and minimum in the year 2010,
where in current liabilities there is also an increase in the year in 2014 and decrease
in the year 2010. The current asset and current liabilities have reached its maximum
point in the year 2014 in the case of changes in current assets and current liabilities.
Current liabilities constitute a major portion of the total liabilities, which shows that
the firm is dependent more on the short-term borrowings to finance its activities.
The net profit of the organization has seen a rapid growth from 460.13 million
rupees in 2010 to 808.57 million rupees crores in 2014
It is inferred that the cash and bank balance is decreasing from 2010 17.98 million
rupees to 8.05 million rupees in 2014 as the funds are utilized for growth
requirements.
But we see that huge surplus of cash and bank was there in 2011 up to 837.48
million rupees
It is inferred that the inventory is max at 2014 and min at 2011 because of better
techniques in inventory management.
The debtors turnover is increasing because of liberal trade credits allowed.
The working capital turnover ratio is inconsistent because of poor forecasts.
It can be inferred that the companys ability to meet short term liabilities is
improving.
It can be inferred that the liquid asset of the company is maximum during the year
2011 because of increase in fixed deposits and decreased in 2014
H.K.E. SOCIETYS
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SUGGESTIONS & RECOMMENDATIONS

The company should introduce advanced technology in production so that the
cost of production goes down.
Even though the current asset level seems to be good by seeking current ratio
but the amount is lacked up in the current asset is more than the requirement. It
should be checked.
1. The liquidity position of the company is good. But very much liquidity lowers the
profitability. It should be checked.
2. Good incentive should be given for the workers who take minimum number of
holidays.
3. Loans and advances must be locked up if, it affect the profitability of the company.
4. Company should recruit skilled labors to maintain productivity.
5. It should provide training facilities to the workers in their work field.
6. Offers, discount, add should be given to the sales of the drugs.
7. Lot of fund is kept idle in the form of fixed deposits, which generates least revenues;
instead it should be invested in short-term interest bearing securities, which would
yield returns for the company.
8. As there are lots of opportunities available internationally, the company should
concentrate on expanding their business more in different countries.
If the following suggestions are adopted by Shilpa Medicare Limited, it would definitely
result in the better financial performance and help the company in the long run.
CONCLUSION
Shilpa Medicare Limited has carved a niche for itself in the exceedingly competitive and
quality-conscious sphere of pharmaceuticals manufacturing.
After analyzing the data and coming through the data and graphs of various years the
company has earned a good profit from the initial years itself. The working capital, cash,
liquidity position of the company is very good.
It is necessary to say that, the study, helped to gain a good exposure on organization and its
operational areas at Shilpa Medicare Limited.
H.K.E. SOCIETYS
59
59
BIBLIOGRAPHY
BOOKS:
I.
Khan M Y & Jain P K, Financial Management, Tata McGraw Hill Education,

6th edition, 2012.
II.
III.
Pandey I M, Financial Management, Vikas Publications, 10th edition, 2010.

Shashi K Gupta and Neethi k Gupta, Financial Management, Kalyani
Publication, 2nd revised edition, 2009.
IV.
K. Aswathappa & K. Shridhar bhat- Production and operations management.
Webliography:
http://www.vbshilpa.com/
http://www.moneycontrol.com
http://economictimes.indiatimes.com
http://www.pharmatutor.org
Other sources:
1. Annual reports of Shilpa Medicare Ltd. for the year 2013-14
H.K.E. SOCIETYS
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ANNEXURE
H.K.E. SOCIETYS
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H.K.E. SOCIETYS
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62
H.K.E. SOCIETYS
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Internship Report on

STUDY ON WORKING CAPITAL MANAGEMENT

SOGRA NAVEED JUHI

VISVESVARAYA TECHNOLOGICAL UNIVERSITY,

MASTER OF BUSINESS ADMINISTRATION

Prof. BHGAYALAXMI RASTAPUR

H.K.E Societys S.L.N.COLLEGE OF

H.K.E Societys S.L.N.COLLEGE OF

(USN: 3SL13MBA28) is a bonifide student of Master of Business Administration course of the

Dr. C.H. Biradar

H.K.E Societys S.L.N.COLLEGE OF

(USN: 3SL13MBA28) is a bonifide student of Master of Business Administration course of the

Prof. AMARESH PATIL

HOD DEPARTMENT OF MBA

H.K.E Societys S.L.N.COLLEGE OF

(USN: 3SL13MBA28) is a bonifide student of Master of Business Administration course of the

Prof. BHGAYALAXMI RASTAPUR

Asst. Professor, DEPARTMENT OF MBA

TO WHOM SO EVER IT MAY CONCERN

I, SOGRA NAVEED JUHI (USN: 3SL13MBA28), hereby declare that the

SOGRA NAVEED JUHI

SOGRA NAVEED JUHI

INDUSTRY AND COMPANY PROFILE

THEORETICAL BACKGROUND OF STUDY

DATA ANALYSIS AND INTERPRETATION

SUMMARY, FINDING ,SUGGESTIONS AND

UNDER DEVELOPMENT-ONCOLOGY APIS

Balance Sheet for the Year Ended 31st March 2014

Table showing the inventory turnover ratio

Table showing the inventory conversion period

Table showing the Debtors turnover ratio

Table showing the current asset turnover ratio

Table showing the Working capital turnover ratio

Table showing the days of collectio12

Table showing the operating cycle

Table showing the current ratio

Table showing quick ratio

LIST OF FIGURES AND CHARTS

Pie Diagram Ownership Pattern

Graphical Representation of inventory turnover ratio

Graphical Representation of inventory conversion period

Graphical Representation of debtors turnover ratio

Graphical Representation of current asset turnover ratio

Graphical Representation of Working Capital Turnover

Graphical Representation of average collection period

Graphical Representation of operating cycle

Graphical Representation of Current Ratio

Graphical Representation of Quick Ratio

INTERNSHIP REPORT ON STUDY ON WORKING CAPITAL MANAGEMENT

meticulously following international specifications.

S.L.N. COLLEGE OF ENGINEERING DEPT OF MBA, RAICHUR

INTERNSHIP REPORT ON STUDY ON WORKING CAPITAL MANAGEMENT

The successful organization has to take care of everything in the organization to

Moreover the organization is foundation of management, the organization plane is

S.L.N. COLLEGE OF ENGINEERING DEPT OF MBA, RAICHUR

INTERNSHIP REPORT ON STUDY ON WORKING CAPITAL MANAGEMENT

INTRODUCTION ABOUT THE INTERNSHIP

I am thankful to have got the opportunity to do my project. Shilpa Medicare ltd,

S.L.N. COLLEGE OF ENGINEERING DEPT OF MBA, RAICHUR

INTERNSHIP REPORT ON STUDY ON WORKING CAPITAL MANAGEMENT

TOPIC CHOSEN FOR THE STUDY

NEED FOR THE STUDY

S.L.N. COLLEGE OF ENGINEERING DEPT OF MBA, RAICHUR

INTERNSHIP REPORT ON STUDY ON WORKING CAPITAL MANAGEMENT