Financial statements analysis of

1. Financial Accounting
CIPLA
Caring for life
Balance Sheet Analysis

2. AGENDA
Overview – CIPLA
Significant accounting policies
Share price analysis
Cash flow statement analysis
Dupont analysis and comparison
- Aurobindo Laboratories Ltd
- Dr. Reddy’s Laboratories Ltd
Comparison with industry average
- PE Ratio
- EPS
Analysis
- BOD’s report
8/13/2012 PRAXIS BUSINESS SCHOOL 2

3. OVERVIEW - CIPLA
Founded in 1935
– Dr K A Hamied sets up "The Chemical, Industrial
and Pharmaceutical Laboratories Ltd.”
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4. SIGNIFICANT ACCOUNTING POLICIES
• Basis of Accounting • Research and Development
• Use of Estimates • Expenditure on Regulatory
• Principles of Approvals
Consolidation • Investments
• Fixed Assets • Revenue Recognition
• Borrowing Costs • Income Tax
• Depreciation • Impairment of Assets
• Inventories • Government Grants
• Foreign Exchange • Provisions and Contingent
Transactions Liabilities
• Employee Benefits
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5. SHARE PRICE ANALYSIS
Cipla Sensex
Rs. 330.00 19500.00
19000.00
Rs. 320.00
18500.00
Rs. 310.00
18000.00
Rs. 300.00 17500.00
17000.00
Rs. 290.00
Cipla 16500.00 Sensex
Rs. 280.00 16000.00
15500.00
Rs. 270.00
15000.00
Rs. 260.00
14500.00
Rs. 250.00 14000.00
1 4 7 1013161922252831343740434649525558 1 5 9 13 17 21 25 29 33 37 41 45 49 53 57
9.8% Decline CIPLA.XLSX
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6. SHARE PRICE ANALYSIS
Ranbaxy Sensex
600 19500.00
19000.00
500 18500.00
18000.00
400
17500.00
17000.00
300
Ranbaxy 16500.00 Sensex
16000.00
200
15500.00
100 15000.00
14500.00
0 14000.00
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 1 5 9 13 17 21 25 29 33 37 41 45 49 53 57
7.7% Decline RANBAXY.XLSX
8/13/2012 PRAXIS BUSINESS SCHOOL 6

7. CASH FLOW ANALYSIS
• In the current period the company’s Cash & Cash
equivalents have increased almost 38.28% to 84.13
crorefrom 60.84 crore, this hints that the spending have
decreased to that extent in the current year.
• Since there was a reduction of 41.68% in the sale of other
investments it shows that company is holding on to
investments.
• The statement shows that the company has purchased
investments worth 5228.18 crorea decrease of 41.6%
compared to last year.
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8. CASH FLOW ANALYSIS
• The outflow for fixed asset investment has also increased
by 29.93% as compared to last year. This gives an
indication about more Investments in infrastructure by
the company recently.
• 4.06% decrease is seen in dividends received on
Investments.
• The company has sold major fixed assets (a 229.9%
increase compared to last year) recently as is evident
from sales proceeds from Fixed Assets.
• Last year subsidiaries paid back 17.6 crorebut this year
company has given 204.47 croreto subsidiaries.
• 224.33 % increase in inventory from last year.
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9. DUPONT ANALYSIS
CIPLA
ROTA (PBIT/TA)
14.64%
TURNOVER OPERATING PROFIT CA LEVERAGE
(REVENUE/TA) 78.64% (PBIT/REVENUE) 18.6% (SALES/CA) 130.6%
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10. DUPONT ANALYSIS
CIPLA AUROBINDO DR. REDDY’S
ROTA 14.64% 15.59% 15.4%
TURNOVER 78.64% 79.09% 77.24%
OPERATING 18.6% 19.72% 20.02%
PROFIT
CURRENT ASSET 130.6% 123.85% 115.72%
LEVERAGE
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11. EARNINGS PER SHARE
PAT (in crore)
EPS =
No. Of Shares
Glenmark Aurobindo Dr. Reddy’s
PAT 2121.78 5938 8934
No. of Shares 270272053 291121290 168845585
EPS 78.51 203.97 529.12
INDUSTRY AVERAGE = 270.53
PAT No. of Shares EPS
CIPLA 960.39 11.96
802921357
8/13/2012 PRAXIS BUSINESS SCHOOL 11

12. P/E RATIO
STOCK PRICE
P/E =
EPS
Glenmark Aurobindo Dr. Reddy’s
Mkt. 283.6 195.9 1638.55
Price/Share
EPS 78.51 203.97 529.12
P/E Ratio 3.61 0.96 3.10
INDUSTRY AVERAGE = 2.56
Mkt. EPS P/E Ratio
Price/Share
CIPLA 321.05 11.96 26.84
8/13/2012 PRAXIS BUSINESS SCHOOL 12

13. ANALYSIS - BOD’s REPORT
• Domestic turnover rose by 12 per cent while export income
went up by 16 per cent. Profit after tax for the year was 960
crore compared to 1081 crore last year, excluding the one-
time sale of the I-pill brand last year. Sales & Other Income
7000 crore
• There was a dip in operating margins of about 3 per cent, as a
percentage of total revenue. This was mainly due to lower
technical fees (60 crore compared to 150 crore last year)
• In April 2010, the Company commenced commercial
production of pharmaceutical formulations at the Special
Economic Zone (SEZ) project, at Indore, Madhya Pradesh. The
total investment for this project is about 900 crore.
• Cipla’s fixed asset grew to 4200 crore from 3600 crore.
• Cipla’s share holder fund reduced from 6800 crore to 5900
crore.
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14. ANALYSIS - BOD’s REPORT
• During the year under review, almost 55 per cent of the total
income originated from international markets.
• On the occasion of Cipla’s Platinum Jubilee, the Company
announced setting up of the Cipla Foundation by contributing
a sum of 5 crore.
• The Directors recommend a final dividend of Rs. Per share on
80,29,21,357 equity shares of Rs.2 each for the year 2010-11
amounting to Rs. 160.58crore.
• The total dividend payout for the year 2010-11 inclusive of
dividend tax would aggregate to Rs.261.53 crore.
• CIPLA contributed significant net foreign exchange earnings
to the tune of USD 420 million.
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