A PROJECT REPORT ON STUDY ON VALUATION OF RANBEXY LABORETORIES LTD.

SUBMITTED TO NARMADA COLLAGE OF MANAGEMENT, BHARUCH

AFFILIATED TO GUJARAT TECHNOLOGICAL UNIVERSITY, AHMEDABAD

SUBMITTED BY HARSHIT SUTHAR ROLL NO: 1048 MBA (3RD SEMESTER)

UNDER THE GUIDANCE OF MS. CHETNA MAKWANA

Company Profile.
Ranbaxy Laboratories Limited (Ranbaxy), India's largest pharmaceutical company, is an integrated, research based, international pharmaceutical company, producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. Ranbaxy today has a presence in 23 of the top 25 pharmaceutical markets of the world. The Company has a global footprint in 46 countries, world-class manufacturing facilities in 7 countries and serves customers in over 125 countries.

In June 2008, Ranbaxy entered into an alliance with one of the largest Japanese innovator companies, Daiichi Sankyo Company Ltd., to create an innovator and generic pharmaceutical powerhouse. The combined entity now ranks among the top 20 pharmaceutical companies, globally. The transformational deal will place Ranbaxy in a higher growth trajectory and it will emerge stronger in terms of its global reach and in its capabilities in drug development and manufacturing.

Mission
Ranbaxy's mission is Enriching lives globally, with quality and affordable pharmaceuticals.

Financials
Ranbaxy was incorporated in 1961 and went public in 1973. For the year 2010, the Company recorded Global Sales of US $ 1868 Mn. The Company has a balanced mix of revenues from emerging and developed markets that contribute 50% and 44% respectively. In 2009, North America, the Company's largest market contributed sales of

US $ 660 Mn, followed by Europe garnering US $ 272 Mn and Asia clocking sales of US $ 468 Mn.

Strategy
Ranbaxy is focused on increasing the momentum in the generics business in its key markets through organic and inorganic growth routes. Growth is well spread across geographies with focus on developed and emerging markets. It is the Companys constant endeavour to provide a wide basket of generic and innovator products, leveraging the unique Hybrid Business Model with Daiichi Sankyo. The Company will also increasingly focus in high growth potential segments like Vaccines and Biogenerics. These new areas will add significant depth to the existing product pipeline.

R&D
Ranbaxy views its R&D capabilities as a vital component of its business strategy that will provide a sustainable, long-term competitive advantage. The Company has a pool of over 1,200 R&D personnel engaged in path-breaking research.

Ranbaxy is among the few Indian pharmaceutical companies in India to have started its research program in the late 70's, in support of its global ambitions. A first-of-its-kind world class R&D centre was commissioned in 1994. Today, the Company has multidisciplinary R&D centers at Gurgaon, in India, with dedicated facilities for generics research and innovative research. The R&D environment reflects its commitment to be a leader in the generics space offering value added formulations and development of NDA/ANDAs, based on its Novel Drug Delivery System (NDDS) research capability. Ranbaxys first significant international success using the NDDS technology platform came in September 1999, when the Company out-licensed its first once-a-day formulation to a multinational company.

In July 2010, Ranbaxys New Drug Discovery Research (NDDR) was transferred to Daiichi Sankyo India Pharma Private Limited as part of the strategy to strengthen the global Research and Development structure of the Daiichi Sankyo Group. While NDDR will now become an integral part of Daiichi Sankyo Life Science Research Center in India, based in Gurgaon, Ranbaxy will continue to independently develop and later commercialise the anti-malarial new drug, Arterolane + PQP, which is currently in Phase III trials. Ranbaxy will also explore the further development of late stage programs developed by NDDR in the last few years, including the development programs in the GSK collaboration. Within Ranbaxy, R&D of Generics will now get a sharper focus, as the Company is increasingly working on more complex and specialist areas.

People
The Companys business philosophy based on delivering value to its stakeholders constantly inspires its people to innovate, achieve excellence and set new global benchmarks. Driven by the passion of its around 14,000 strong multicultural workforce comprising of over 50 nationalities, Ranbaxy continues to aggressively pursue its mission of 'Enriching lives globally, with quality and affordable pharmaceuticals'.

Ranbaxy Laboratories Limited is a pharmaceutical company that was incorporated in India in 1961. The company went public in 1973 and Japanese pharmaceutical company Daiichi Sankyo gained majority control in 2008. Ranbaxy exports its products to 125 countries with ground operations in 46 and manufacturing facilities in seven countries

Formation
Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a Japanese company Shionogi. The name Ranbaxy is a combination of the names of its first owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from his cousins Ranbir and Gurbax. After Bhai Mohan Singh's son Parvinder Singh joined the company in 1967, the company saw an increase in scale.

Trading
In 1998, Ranbaxy entered the United States, the world's largest pharmaceuticals market and now the biggest market for Ranbaxy, accounting for 28% of Ranbaxy's sales in 2005. For the twelve months ending on 31 December 2005, the company's global sales were at US $1,178 million with overseas markets accounting for 75% of global sales (USA: 28%, Europe: 17%, Brazil, Russia, and China: 29%). For the twelve months ending on December 31, 2006, the company's global sales were at US $1,300 million. Most of Ranbaxy's products are manufactured by license from foreign pharmaceutical developers, though a significant percentage of their products are off-patent drugs that are manufactured and distributed without licensing from the original manufacturer because the patents on such drugs have expired.

In December 2005, Ranbaxy's shares were hit hard by a patent ruling disallowing production of its own version of Pfizer's cholesterol-cutting drug Lipitor, which has annual sales of more than $10 billion. In June 2008, Ranbaxy settled the patent dispute with Pfizer allowing them to sell Atorvastatin Calcium, the generic version of Lipitor and Atorvastatin Calcium-Amylodipine Besylate, the generic version of Pfizer's Caduet (R) in the US starting November 30, 2011. The settlement also resolved several other disputes in other countries. On 23 June 2006, Ranbaxy received from the United States Food & Drug Administration a 180-day exclusivity period to sell simvastatin (Zocor) in the U.S. as a generic drug at 80 mg strength. Ranbaxy competes with the maker of brand-name Zocor, Merck & Co.; IVAX Corporation (which was acquired by and merged into Teva Pharmaceutical Industries Ltd.), which has 180-day exclusivity at strengths other than 80 mg; and Dr. Reddy's Laboratories, also from India, whose authorized generic version (licensed by Merck) is exempt from exclusivity. In June 2008, Japan's Daiichi Sankyo Company agreed to take a majority (50.1%) stake in Ranbaxy, with a deal valued at about $4.6 billion. Ranbaxy's Malvinder Singh remained as CEO after the transaction. On 16 September 2008, the Food and Drug Administration issued two Warning Letters to Ranbaxy Laboratories Ltd. and an Import Alert for generic drugs produced by two manufacturing plants in India. By February 25, 2009 the U.S. Food and Drug Administration said it halted reviews of all drug applications including data developed at Ranbaxy's Paonta Sahib plant in India because of a practice of falsified data and test results in approved and pending drug applications. "Investigations revealed a pattern of questionable data," the FDA said. On December 1, 2011, Ranbaxy got the much-awaited approval from the US Food and Drug Administration to launch the generic version of drug lipitor in the United States of America after its patent got expired.

Acquisition
In June 2008, Daiichi-Sankyo acquired a 34.8% stake in Ranbaxy, for a value $2.4 billion. In November 2008, Daiichi-Sankyo completed the takeover of the company from the founding Singh family in a deal worth $4.6 billion by acquiring a 63.92% stake in Ranbaxy.

COMPANY ANALYSIS

BALANCE SHEET:

Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities

Dec '10 210.52 210.52 6.6 0 4,915.28 0 5,132.40 195.39 4,065.33 4,260.72 9,393.12

Dec '09 210.21 210.21 175.85 0 3,748.54 0 4,134.60 175.83 3,172.55 3,348.38 7,482.98

Dec '08 210.19 210.19 175.66 0 3,330.92 0 3,716.77 162.07 3,563.30 3,725.37 7,442.14

Dec '07 186.54 186.54 1.18 0 2,350.68 0 2,538.40 365.07 3,137.96 3,503.03 6,041.43

Dec '06 186.34 186.34 0.88 0 2,162.79 0 2,350.01 224.29 2,954.31 3,178.60 5,528.61

Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit

Dec'10 Dec'09 Dec'08 Dec'07 Dec'06 2,857.63 2,620.92 2,386.75 2,261.48 2,133.57 1,145.52 1,027.52 930.07 791.96 699.54 1,712.11 1,593.40 1,456.68 1,469.52 1,434.03 330.18 414.92 428.77 327.42 301.88 3,804.44 1,489.91 1,292.63 22.44 2,804.98 1,470.45 2,689.85 6,965.28 0 3,833.69 1,230.48 1,534.65 25.56 2,790.69 1,967.65 728.56 5,486.90 0 3,618.03 1,198.52 1,024.54 49.86 2,272.92 2,351.98 1,885.08 6,509.98 0 3,237.55 976.07 882.91 69.38 1,928.36 882.99 111.07 2,922.42 0 2,679.95 954.91 1,013.75 27.06 1,995.72 581.18 44.09 2,620.99 0

Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

2,491.08 927.82 3,418.90 3,546.38 0 9,393.11 276.13 121.74

3,082.89 763.03 3,845.92 1,640.98 0 7,482.99 261.05 94.16

3,840.11 731.2 4,571.31 1,938.67 0 7,442.15 252.85 84.24

1,177.35 738.14 1,915.49 1,006.93 0 6,041.42 201 68.01

985.57 522.67 1,508.24 1,112.75 0 5,528.61 159.4 63.03

PROFIT AND LOSS ACCOUNT:

Percitulars

Dec'10

Dec'09

Dec'08

Dec'07

Dec'06

Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses

5,687.33 40.96 5,646.37 562.45

4,676.21 24.17 4,652.04 1,587.64 161.43 33.96 115.59 6,370.25 5,301.21 3,179.99 2,181.22 132.75 608.28 96.68 1,916.58 109.57 582.5 89.94 2,049.30 108.83 472.65 94.65

4,797.49 15.9 4,781.59 485.66

4,344.39 51.37 4,293.02 551.13

4,218.98 53.86 4,165.12 -28.65

40.66 44.7 4,884.81 4,181.17 1,861.17 90.35 420.04 82.6 1,708.23 80.7 328.45 79.52

1,332.70 1,306.25 1,402.77 1,341.03 1,234.42 185.14 0 158.07 0 383.26 0 123.9 0 146.23 0

4,536.77 4,162.91 4,511.46 3,919.09 3,577.55

Perticulars Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

Dec'10 Dec'09 Dec'08 1,271.03 652.64 256.17 1,833.48 1,138.30 1,331.47 54.19 39.47 145.83 1,779.29 1,098.83 1,477.30 228.35 148.2 154.47 0 0 0 1,550.94 950.63 1,631.77 21.88 111.42 17.76 1,572.82 1,062.05 1,614.01 415.48 488.86 -574.24 1,148.73 571.98 1,044.80 2,355.55 2,246.33 2,462.16 0 0 0 84.21 0 0 13.99 0 0 4,210.41 27.28 40 121.74 4,204.17 13.61 0 94.16 4,203.70 -24.85 0 84.24

Dec'07 414.59 965.72 93.43 872.29 118.73 0 753.56 35.46 789.02 156.69 617.72 2,057.93 0 317.15 53.9 3,730.71 16.56 170 68.01

Dec'06 632.27 603.62 58.44 545.18 106.75 0 438.43 19.34 457.77 62.43 380.54 1,869.31 0 316.89 44.44 3,726.87 10.21 170 63.03

ASSETS BASE VALUATION OF THE COMPANY

2010:
VALUE OF THE COMPANY =

= =2.070 2009:
VALUE OF THE COMPANY =

= = 1.87

2008:
VALUE OF THE COMPANY =

= = 3.53