Finance project

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Part 1.1 BRIEF HISTORY OF THE HEALTHCARE INDUSTRY
The healthcare industry, or medical industry, is an aggregation of sectors within
the economic system that provides goods and services to treat patients with
curative, preventive, rehabilitative, and palliative care. The modern health care
industry is divided into many sectors and depends on interdisciplinary teams of
trained professionals and paraprofessionals to meet health needs of individuals and
populations. The healthcare industry is one of the world's largest and fastest-
growing industries. Consuming over 10 percent of gross domestic product (GDP)
of most developed nations, health care can form an enormous part of a country's
economy. For purpose of finance and management, the health care industry is
typically divided into several areas. As a basic framework for defining the sector,
the United Nations International Standard Industrial Classification (ISIC)
categorizes the health care industry as generally consisting of:
1. Hospital activities;
2. Medical and dental practice activities;
3. Other human health activities.

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This third class involves activities of, or under the supervision of, nurses,
midwives, physiotherapists, scientific or diagnostic laboratories, pathology clinics,
residential health facilities, or other allied professions e.g. in the field of
optometry, hydrotherapy, medical massage, yoga therapy, music therapy,
occupational therapy, speech therapy, chiropody, homeopathy, chiropractics,
acupuncture, etc. The Global Industry Classification Standard and the Industry
Classification Benchmark further distinguish the industry as two main groups:
1. Health care equipment and services; and
2. Pharmaceuticals, biotechnology and related life sciences.
Healthcare equipment and services comprise companies and entities that provide
medical equipment, medical supplies, and health care services, such as hospitals,
home health care providers, and nursing homes. The second industry group
comprises sectors companies that produce biotechnology, pharmaceuticals, and
miscellaneous scientific services. Other approaches to defining the scope of the
health care industry tend to adopt a broader definition, also including other key
actions related to health, such as education and training of health professionals,
regulation and management of health services delivery, provision of traditional and
complementary medicines, and administration of health insurance.

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HEALTH CARE PROVIDER
A health care provider is an institution (such as a hospital or clinic) or person (such
as a physician, nurse, allied health professional or community health worker) that
provides preventive, curative, promotional, rehabilitative or palliative care services
in a systematic way to individuals, families or communities.
The World Health Organization estimates there are 9.2 million physicians, 19.4
million nurses and midwives, 1.9 million dentists and other dentistry personnel, 2.6
million pharmacists and other pharmaceutical personnel, and over 1.3 million
community health workers worldwide, making the health care industry one of the
largest segments of the workforce.
Many professions that do not directly provide health care itself, but are part of the
management and support of the health care system also support the medical
industry. The incomes of managers and administrators, underwriters and medical
malpractice attorneys, marketers, investors and shareholders of for-profit services,
all are attributable to health care costs. In 2011, health care costs paid to hospitals,
physicians, nursing homes, diagnostic laboratories, pharmacies, medical device
manufacturers and other components of the health care system, consumed 17.9
percent of the Gross Domestic Product (GDP) of the United States, the largest of
any country in the world.

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Indian Healthcare Industry
This industry comprises hospitals, medical infrastructure, medical devices, clinical
trials, outsourcing, telemedicine, health insurance and medical equipment, is
expected to reach US$ 160 billion by 2017.
The Indian hospital services sector generated revenue of over US$ 45 billion in
2012. This revenue is expected to increase at a compound annual growth rate
(CAGR) of 20 per cent during 2012-2017, according to a RNCOS report titled,
‘Indian Medical Device Market Outlook to 2017.
The healthcare industry in India is experiencing gradual transition from paper files
to electronic mediums. The Indian healthcare assisted by IT market has been
growing tremendously over the past few years. It is expected to grow at a CAGR
of around 22.7 per cent during the period 2013-2015.
The hospital and diagnostics centre in India received foreign direct investment
(FDI) worth US$ 1,914.28 million, while drugs & pharmaceutical and medical &
surgical appliances industry registered FDI worth US$ 11,318.32 million and US$
653.45 million, respectively during April 2000 to June 2013, according to data
provided by Department of Industrial Policy and Promotion (DIPP).

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KEY ACHIEVEMENTS IN HEALTH
Our overall achievement about longevity and other key health indicators are
impressive but in many respects uneven across States. In the past five decades life
expectancy has increased from 50 years to over 64 in 2000. IMR has come down
from 1476 to 7. Crude birth rates have dropped to 26.1 and death rates to 8.7.
At this stage, a process understanding of longevity and child health may be useful
for understanding progress in future. Longevity, is always a key national goal, is
not merely the reduction of deaths because of better medical and rehabilitative care
at old age. In fact, without reasonable quality of life in the extended years marked
by self-confidence and absence of undue dependency longevity may mean only a
display of technical skills. Quality of life requires as much external bio-medical
interventions as culture based acceptance of inevitable decline in faculties without
officious start at sixty. But it may run across life lived at all ages in reduction of
mortality among infants through immunization and nutrition interventions and
reduction of mortality among young and middle aged adults, including adolescents
getting inform about sexuality reproduction and safe motherhood. At the same
time, some segments will remain always more vulnerable. These segments include
the women particularly from the lower stratas of the society.

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Reduction in child mortality involves as much attention to protecting children from
infection as in ensuring nutrition and calls for a holistic view of mother and child
health services. The cluster of services consisting of antenatal services, delivery
care and post mortem attention and low birth weight, childhood diarrhoea and ARI
management are linked priorities. Programme of immunization and childhood
nutrition seen in better performing stats indicate sustained attention to routine and
complex investments into growing children as a group to make them grow into
persons capable of living long and well Often interest fades in pursuing the
unglamorous routine of supervised immunization and is substituted by pulse
campaigns etc. This in the end turns counter-productive. Indeed persistence with
improved routines and care for quality in immunization would also be a pathway to
reduce the world's highest rate of maternal mortality.
In this context, we may refer to the large ratio-based rural health infrastructure
consisting of over 5 lakh trained doctors working under plural systems of medicine
and a vast frontline force of over 7 lakh ANMs, MPWS and Anganwadi workers
besides community volunteers. The creation of such public work force should be
seen as a major achievement in a country short of resources and struggling with
great disparities in health status. As part of rural Primary health care network
alone, 1.6 lakh sub centres and 22975 PHCs and 2935 CHCs (with over 24000
doctors and over 3500 specialists to serve in them) has been set up.

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To promote Indian systems of medicine and homeopathy there are over 22000
dispensaries 2800 hospitals Besides 6 lakh angawadis serve nutrition needs of
nearly 20 million children and 4 million mothers. The total effort has cost the bulk
of the health development outlay, which stood at over Rs 62.500/- crores or 3-64 %
of total plan spending during the last fifty years.
On any account these are extraordinary infrastructural capacities created with
resources committed against odds to strengthen grass roots. There have been
facility gaps, supply gaps and staffing gaps, which can be filled up only by
allocating about 20% more funds and determined ill to ensure good administration
and synergy from greater congruence of services, but given the sheer size of the
endeavour thee wilt always be some failure of commitment and in routine
functioning. These get exacerbated by periodic campaign mode and vertical
programme, which have only increased compartmentalized vision and over-
mediatisation of health problems. The initial key mistake arose from the needless
bifurcation of health and family welfare and nutrition functions at all levels instead
of promoting more holism. Because of all this, the structure has been precluded
from reaching its optimal potential. It has been more firmly established at the
periphery/ sub-centre level and dedicated to RCH services only. At PHC and CHC
levels this has further been compounded by a weak referral system.

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There has not been enough convergence in "escorting" children through
immunization coverage and nutrition education of mothers and ensuring better
food to children, including cooked midday meals and health checks al schools.
There has also been no constructive engagement between allopathic and
indigenous systems to build synergies, which could have improved people's
perceptions of benefits from the infrastructure in ways that made sense to them.
A key task in the coming decades is therefore to utilize fully that created potential
by attending to well known organizational motivational and financial gaps. The
gaps have arisen partly from the source and scale of funds and partly due to lack of
persistence, both of which can be set right. States, several of whom are unable to
match Central assistance offered funds PHCs and CHCs and hence these centres
remain inadequate and operate on minimum efficiency. On the other hand, over
two-thirds cost of three fourths of sub-centres are fully met by the centre due to
their key role m family welfare services. However, in equal part these gaps are due
to many other non-monetary factors such as undue centralization and uniformity,
fluctuating commitment to key routines at ground level, insufficient
experimentation with alternatives such as getting public duties discharged through
private professionals and ensuring greater local accountability to users.

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GROWTH OF THE HEALTHCARE INDUSTRY
The Healthcare Industry is witnessing a sudden paradigm shift in last five year.
Though this change was inevitable and the Industry has been working towards it
for a decade now, this has been visible only in last two years, all sectors in India
are undergoing a change from unorganized to an organized structure and so it has
seen in healthcare. Until few years ago, healthcare delivery was sole responsibility
of Private practitioners and Doctor owned and run hospitals. The Indian healthcare
providers plan to spend ₹ 5,700 crores (US$ 897.64 million) on IT products and
services in 2013, a seven per cent rise over 2012 revenues of ₹ 5,300 crore (US$
834.65 million), as per a report by Gartner. A US$ 36 billion industry today and
growing at 15% CAGR, the Indian healthcare industry will be a US$ 280 billion by
2022.
Factors for the "Healthcare Boom" in India
1. Strong Indian Economy
2. Increasing options for Healthcare Financing
3. Increasing Opportunities in Healthcare delivery
4. Saturation of other sectors like IT, retail

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Strong Indian Economy
Indian Economy experienced a GDP growth of 9.0 percent during 2005-06 to 9.4
percent during 2006-07. By 2025, the India's economy is projected to be about 60
per cent the size of the US economy. The transformation into a tri-polar economy
will be complete by 2035, with the Indian economy only a little smaller than the
US economy but larger than that of Western Europe. By 2035, India is likely to be
a larger growth driver than the six largest countries in the EU, though its impact
will be a little over half that of the US. India, which is now the fourth largest
economy in terms of purchasing power parity, will overtake Japan and become
third major economic power within 10 years.
Better Profitability
Healthcare is a highest capital-intensive service industry and profitability has never
been as good to match others. It is all changing very fast. The best of the systems
of world are still struggling to achieve a good profitability level for healthcare.
Healthcare in United States had a profitability of just above 5% in last financial
year. India on the other hand, if we leave the charitable and government hospitals
aside, is witnessing a 15percentage to 25% profitability. This following factors are
responsible for the increase in profitability:

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Earlier Break Even
The break even for hospitals has been 5-7 years until last decade. The things
started changing as the structure of hospitals moved from unorganized to the
organized one.
1. Hospitals are now able to manage their funds in a better way
2. Though costs have increased, still they are able to maintain good profit margins
on all their services.
Medical Tourism
Medical Value travel is one of the emerging global sectors grossing US$ 22
billion. In 2006, more than 2 million medical tourists availed services in South-east
Asia from all corners of the world. With revenues close to US$ 450 million, India
has a 2% share of the global health tourism. The potential for India to become the
hub for medical value travel is huge. All the existing Healthcare Delivery providers
as well as the new entrants are in some or the other way eyeing that market. The
potential for India to become the hub for medical value travel is huge. All the
existing Healthcare Delivery providers as well as the new entrants are in some or
the other way eyeing that market.

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PART 1.2 DEFINITION OF THE TERMS OF THE SUBJECT
Asset
Anything tangible or intangible that is capable of being under the control to
produce value and that is bound to have positive economic value is an asset.
Simply stated, assets represent value of ownership that is capable of being
converted to cash.
BadDebt
Bad debt is usually a product of the debtor going into bankruptcy or when the
additional cost of debt is more than the amount, the creditor can collect. This debt,
if considered as bad, will be considered by the company as an expense.
Capital
Capital is the wealth in the form of money or other assets that is owned by a person
or organization which is available for a purpose such as starting up a company or
for investing.
CapitalAsset
Capital asset is usually used in the context of fixed assets. Assets that are not used
in the day-to-day course of business are called capital assets.

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CapitalEmployed
Capital Employed is the actual value of the assets that is contributing to the ability
of the business to generate revenue.
Capital Expenditure
It is the money spent for the improvement and servicing of existing fixed assets or
for purchasing new fixed assets. This is the investment made in fixed assets.
CapitalReserve
A capital reserve is one of the reserves that a business creates, out of the yearly
profits, for any specific purpose.
CurrentAsset
Current Assets are those assets in the hands of the company that are usually sold or
converted into cash within a year.
CurrentLiabilities
Current liabilities are the liability obligations of the business which it is expected
to pay off within a year. They are borrowed to finance the short-term business
needs.
Debentures
Debenture is an instrument that either creates a debt or acknowledges it, and it is a
debt without collateral. In corporate finance, the term is used for a medium- to
long-term debt instrument used by large companies to borrow money.

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Debt
A debt is money or goods or services which one business owes another business. A
business that owes money to another is said to have a debt over the other.
DeferredExpenditure
A Deferred expenditure is an expenditure that is carried forward and is written off
over subsequent periods.
Dividend
Dividend is a portion of the earnings of the business that is paid to the shareholders
of the company.
Equity
Equity means the ownership or the percentage of ownership that a person has in a
company.
Insolvency
Insolvency is a situation where an entity's liabilities exceed its assets and cannot be
paid off.
IntangibleAsset
An Intangible asset is an asset that cannot be physically seen or felt, but its
presence benefits the company, e.g. goodwill.

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MarketableSecurity
Marketable security is an equity or debt security that can be traded easily.
PaybackPeriod
Payback period is the period required to recover the amount spent for capital
investment.
ProfitabilityRatios
Profitability ratios is the set of ratios, which help, measure the profitability of the
business.
Ratio
Ratio is a mathematical instrument, which helps compare the performance of two
accounting results.
RetainedEarnings
Retained earnings are that part of the distributable profit, which has been retained
in the business for future use but has not been given to the owners.
WorkingCapital
Working capital is a financial metric, which represents operating liquidity available
to a business, organization or other entity, including governmental entity.

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IMPORTANT AND RELEVANT ASPECT OF THE SUBJECT
Finance is the allocation of assets and liabilities over time under conditions of
certainty and uncertainty. A key point in finance is the time value of money, which
states that a unit of currency today is worth more than the same unit of currency
tomorrow. Finance aims to price assets based on their risk level, and expected rate
of return. Different groups of people define finance in numerous ways. Though it is
difficult to give a perfect definition of Finance following selected statements will
help, you deduce its broad meaning.
In General sense"-Finance is the management of money and other valuables, which
can be easily converted into cash."
According to Experts-"Finance is a simple task of providing the necessary funds
(money) required by the business of entities like companies, firms, individuals and
others on the terms that are most favourable to achieve their economic objectives."
According to Entrepreneurs-"Finance is concerned with cash. It is so, since, every
business transaction involves cash directly or indirectly."

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Importance of Finance
Finance is important to business as without it businesses would not be able to start
up or survive. In order to start a business, source of finance is required such as
grants or loans used to buy essential items such as vehicles, premises and other
equipment. For a business to continue running money is required to face running
costs such as electricity and rent.
Financial Analysis
Financial analysis (also referred to as financial statement analysis or accounting
analysis or Analysis of finance) refers to an assessment of the viability, stability
and profitability of a business, sub-business or project. Professionals who prepare
reports using ratios that make use of information taken from financial statements
and other reports perform it.
1. Continue or discontinue its main operation or part of its business;
2. Make or purchase certain materials in the manufacture of its product;
3. Acquire or rentcertain machineries and equipment in the production of its
goods;
4. Issue stocks or negotiate for a bank loan to increase its working capital;
5. Make decisions regarding investing or lending capital;

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Tools of Financial Analysis
Financial analysis tools are one of the most efficient ways that can be used for
ensuring good profit from investments. These financial analysis tools are highly
helpful in evaluating the market and investing in a way to maximize the profit from
the investments made.
1. Ratio analysis-
Ratio Analysis is the calculation and comparison of main indicators - ratios that are
derived from the information given in a company's financial statements. It involves
methods of calculating and interpreting financial ratios in order to assess a firm's
performance and status. This Analysis is primarily designed to meet informational
needs of investors, creditors and management.
2. Trend analysis-
Trend Analysis is the practice of collecting information and attempting to spot a
pattern, or trend, in the information. Although trend analysis is often used to
predict future events, it could be used to estimate uncertain events in the past, such

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as how many ancient kings probably ruled between two dates, based on data such
as the average years which other known kings reigned.
3. Comparative Financial Statement Analysis or Horizontal
Analysis-
Comparative financial statement analysis is a tool by which the complete financial
statement is provided by an entity, revealing information for more than one
accounting period.
4. Common Size Statement Analysis or Vertical Analysis-
Common size financial statement analysis, also called vertical analysis, is just one
technique that financial managers use to analyze their financial statements. The
analysis of the Common size income statement is stating every line item on the
income statement as a percentage of sales.
For a study on FINANCIAL ANALYSIS of HLL, Ratio analysis is used as a tool.
RATIO ANALYSIS
Ratio analysis is a widely used tool of financial analysis. It has been defined as the
systematic use of ratio to interpret the financial statements so that the strength and
weaknesses of a firm as well as its historical performance and current financial

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condition can be determined. The term ratio refers to the numerical or quantitative
relationship between two variables.
Importance of Ratio Analysis
 It helps in evaluating the firm’s performance: With the help of ratio analysis
conclusion can be drawn regarding several aspects such as financial health,
profitability and operational efficiency of the undertaking. Ratio points out
the operating efficiency of the firm i.e. whether the management has utilized
the firm's assets correctly, to increase the investor's wealth.
 It helps in inter-firm comparison: Ratio analysis helps in inter-firm
comparison by providing necessary data. An inter-firm comparison indicates
relative position. If comparison shows a variance, the possible reasons of
variations may be identified and if results are negative, the action may be
initiated immediately to bring them in line.

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Types of Ratios:
1) Liquidity Ratio
The term ‘Liquidity’ means the ability of a firm to meet its current liabilities.
The liquidity ratios, therefore, try to establish a relationship between current
liabilities, which are the obligations soon becoming due and current assets,
which presumably provide the source from which these obligations will be
met. These ratios are of three types:
(i) Current Ratio
It is also known as the working capital ratio. It is most commonly used to
perform the short-term financial analysis. This ratio matches the current
assets of the firm to its current liabilities. The ratio can be calculated as
under
Current Ratio= Current assets
Current liabilities
(ii) Quick Ratio
This ratio is also known as acid test ratio or liquid ratio. It is a more severe
test of liquidity of a company. It shows the ability of a business to meet its
immediate financial commitments. The ratio can be calculated as under
Quick Ratio= Quick (liquid) assets
Quick liabilities

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(iii) Absolute Liquid Ratio
This ratio is also known as super quick ratio or cash ratio. Higher the ratio,
the higher is the cash liquidity.
Absolute Liquid Ratio= Cash in hand and at bank+ Marketable Securities
Current Liabilities
2) Capital Structure Ratio
Capital Structure Ratios are also known as gearing ratios or solvency ratios
or leverage ratios. These are used to analyze the long-term solvency of any
particular business concern. The long-term creditors as debenture holders,
financial institution etc. are interested in the security of their loan amounts
well as the ability of the company to meets interest costs.
(i) Debt-Equity Ratio
This ratio attempts to measure the relationship between long-term debts and
shareholder’s funds. In other words, this ratio measures the relative claims
of long-term creditors and the assets of the company. This ratio has been
calculated by the formulae:
Debt-Equity Ratio= Long term debts
Shareholder’s funds

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(ii) Proprietary Ratio
This is a variant of Debt-Equity Ratio. It measures the relationship between
shareholder’s funds and total assets. Its formula is:
Proprietary Ratio= Shareholder’s funds
Total Assets
(iii) Interest Coverage Ratio
This ratio indicates whether the business earns sufficient profit to pay
periodically the interest charges. This ratio is important from lender’s point
of view because it indicates the ability of a company to pay interest out of its
profits.
Interest Coverage Ratio= Earnings before interest and tax (EBIT)
Fixed interest charges
(iv) Debt to Total Funds Ratio
This ratio shows the relationship between debts and total funds employed in
the business.
Debt to Total Funds Ratio= Debt
Total Funds

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3) Turnover Ratios
Turnover ratios are used to indicate the efficiency with which assets and
resources of the firm are being utilized. These ratios are known as turnover
ratios because they indicate the speed with which assets are being converted
or turned over into sales. These ratios express the relationship between sales
and various assets. The important turnover ratios are:
(i) Inventory Turnover Ratio
This ratio is calculated by dividing the cost of goods sold by average
inventory. It tries to establish the relationship between the cost of goods sold
during a given period and the average amount of stock carried during the
period. This ratio is calculated as under:
Inventory Turnover Ratio= Cost of Goods Sold
Average Stock
Cost of Goods Sold= Sales- Gross Profit
Cost of Goods Sold= Opening Stock+ Purchases+ Carriage inwards and
Other Direct Expenses- Closing Stock
Average Stock = 1X (Opening Stock+ Closing Stock)
2

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(ii) Fixed Assets Turnover Ratio
This ratio indicates the efficiency with which the firm is utilizing its
investments in fixed assets such as plant and machinery, land etc. The term
fixed assets means depreciated value of fixed assets. It is computed as
follows:
Fixed Assets Turnover Ratio= Cost of Sales
Net Fixed Assets
(iii) Working Capital Turnover Ratio
This ratio indicates the efficiency or inefficiency in the utilization of
working capital in making sales. The term working capital means current
assets- current liabilities. It is calculates as:
Working Capital Turnover Ratio= Cost of Sales
Net Working Capital
4) Profitability Ratios
Every business should earn sufficient profits to survive and grow over a long
period. Efficiency of a business is measured in terms of profits. Profitability
ratios are calculated to measure the efficiency of a business. It may be
measured in two ways:

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(i) Profitability Ratios based on Sales
a) Gross Profit Ratio
This ratio expresses the relationship between gross profit and sales. It is
calculated as follows:
Gross Profit Ratio= Gross Profit X 100
Net Sales
b) Net Profit Ratio
This ratio explains the relationship between Net Profit to Sales. It is
calculate as follows:
Net Profit Ratio= Net Profit X 100
Net Sales
c) Operating Ratio
This ratio expresses the relationship between Cost of Goods Sold and
Operating Expenses on the one hand and Net Sales on the other.
Operating Ratio= Cost of Goods Sold+ Operating Expenses X 100
Net Sales

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(ii) Profitability Ratios based on Investments
a) Return on Investments (ROI)
This is the most important test of profitability of a business. It measures the
overall profitability. It is ascertained by comparing profit earned and capital
employed to earn it. It is calculated as follows:
ROI= Profit before Interest and Taxes X 100
Capital Employed
b) Return on Equity (ROE)
This ratio has two variations:
i. Return on Proprietor’s Equity
This is also known as return on shareholder’s funds. It shows the ratio of Net
Profit to Owner’s Equity.
Return on Proprietor’s equity
= Net Profit after tax and interest X 100
Shareholder’s Funds
ii.Return on Equity Capital
This ratio expresses the relationship between the Net Profit available to
Equity Shareholder and the amount of capital invested by them.
Return on Equity Capital
= Net Profit after Interest, Taxes and Preference Dividend X 100
Equity Shareholder’s Funds

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2.1 TITLE OF THE STUDY
A Study on Financial Analysis using Ratio Analysis as Tool with reference to HLL
LIFECARE LTD, BANGALORE.
2.2 STATEMENT OF THE PROBLEM
Financial soundness in terms of liquidity, profitability and activity are the main
objectives in front of growing organizations. To analyze in this angle and draw
meaningful conclusions to arrive at a right decision, analytical techniques are
required. Among such techniques ratio analysis is one valuable technique in the
hands of Financial Analyst. This study covers financial performance of HLL
Lifecare Limited, Bangalore for a period of three financial years from April 2010
to March 2013.
2.3 OBJECTIVES OF THE STUDY
i. To analyze the financial statements in order to understand the financial
position of the company.
ii. To analyze the liquidity position of the company.
iii. To analyze the profitability position of the company.
iv. To perform the Strength, Weakness, Opportunity and Threat analysis of
HLL Lifecare Limited.

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2.4 SCOPE OF THE STUDY
The present study is undertaken to study the Financial Analysis of HLL Lifecare
Limited which is based in Bangalore. The outcome of the study will help the
company to make necessary changes based on the problems identified in the study
and the suggestions recommended.
2.5 LIMITATIONS OF THE STUDY
i. The study is confined to Bangalore city only.
ii. Time constraints could not allow for an intensive enquiry into the problem.
iii. The results are based on the assumptions that the information provided by
the company’s employees is true to their knowledge and belief.
2.6 METHODOLOGY OF THE STUDY
The research has been carried out in the Bangalore office of the company. The
finance manager and other employees working in the finance department were
considered for conducting the interview. Secondary data has been collected from
the literature provided by the company in the form of fact sheets, documents,
memorandum and annual reports. Further information has been collected from
newspapers, magazines and the internet.

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2.7 RESEARCH INSTRUMENTS
The financial analysis of HLL Lifecare Limited, Bangalore is done by using ratio
analysis as a tool, which has been used as an instrument of research.
2.8 DEFINITION OF THE TERMS
Asset
Anything tangible or intangible that is capable of being under the control to
produce value and that is bound to have positive economic value is an asset.
Simply stated, assets represent value of ownership that is capable of being
converted to cash.
Capital
Capital is the wealth in the form of money or other assets that is owned by a person
or organization which is available for a purpose such as starting up a company or
for investing.
CapitalEmployed
Capital Employed is the actual value of the assets that is contributing to the ability
of the business to generate revenue.
CapitalReserve
A capital reserve is one of the reserves that a business creates, out of the yearly
profits, for any specific purpose.

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CurrentAsset
Current Assets are those assets in the hands of the company that are usually sold or
converted into cash within a year.
CurrentLiabilities
Current liabilities are the liability obligations of the business which it is expected
to pay off within a year. They are borrowed to finance the short-term business
needs.
Equity
Equity means the ownership or the percentage of ownership that a person has in a
company.
MarketableSecurity
Marketable security is an equity or debt security that can be traded easily.
ProfitabilityRatios
Profitability ratios is the set of ratios, which help, measure the profitability of the
business.
WorkingCapital
Working capital is a financial metric, which represents operating liquidity available
to a business, organization or other entity, including governmental entity.

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2.9 OVERVIEW OF CHAPTER SCHEME
Chapter 1- Introduction
This chapter includes the theoretical background of the study. There is detailed
information about the healthcare industry in India, which has details about the
history of this industry, its growth and prospects. The definition of the terms used
in the subject is also mentioned along with the important and other relevant aspects
of the subject to the title of the study.
Chapter 2- Research Design
This chapter includes the Title of the Study, Statement of the Problem, Objectives
of the Study, Scope of the Study, Limitations of the Study, Methodology of the
Study, Research Instruments and Definition of the terms used and Overview of
Chapter Scheme.
Chapter 3- Company Profile
This chapter includes the topics like Inception, Type, Nature, Board of Directors,
Organization Chart, Business Operations, SWOT Analysis, Product/ Service
Profile, Market share, Competitors, Functional Chart and Future prospects/ Growth
of the company.

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Chapter4- Data Analysis and Interpretation
This chapter includes the following the title of the table, Data table (in tabular
form), Analysis of the table, Inference of the table and Graphical Representation
with respect to the findings of the project.
Chapter 5- Summary of Findings and Conclusion
The chapter begins with the objectives and scope of the study to ease the
understanding of the reader. The findings are summarized and presented in a
paragraph form besides each of the finding is numbered. The conclusion of the
project should be given to justify the objectives of the study.
Chapter 6- Recommendations and Suggestion
This chapter includes the recommendations and suggestions that is drawn with
reference to the objectives of the study. Specific recommendations/ suggestions for
each of the objective of the study is mentioned after conducting findings. The
recommendations mentioned are specific, acceptable, practical and clear.

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3.1 INCEPTION
In 1966, a quiet revolution took place in Trivandrum, also known as
Thiruvananthapuram, a small picturesque town located in the southwestern part of
India. The revolution, called HLL, swept through the length and breadth of the v
country. The revolution resulted in creating a healthier India, with a record of 189
million couple year protections (CYPs) during the past four decades.
HLL was incorporated as a company under the ministry of Family Welfare
of the Government of India in 1966. HLL’s first plant began operations on April 5,
1969 at Peroorkada in Thiruvananthapuram district of Kerala. The plant was
established in technical collaboration with M/s Okamoto Industries Inc. Japan.
3.2 TYPE
HLL Lifecare Limited is a Mini Ratna, upgraded as a Schedule B, Central Public
Sector Enterprise under The Ministry of Health, Government of India. The
company received the Prime Minister Award for the best Public Sector Enterprise
in India. It is the only company in the world, which manufactures and markets such
a wide range of contraceptives.

35
3.3 NATURE
HLL Lifecare Limited is an Indian Healthcare products manufacturing company.
The company produces medicines, contraceptives and various surgical and non-
surgical equipments. Besides this, it also provides services in the field of
Infrastructure development, Healthcare, Procurement and Consultancy division.
3.4 BOARD OF DIRECTORS
Official Directors
Name Designation
Shri S. K. Srivastava Additional Secretary (Government of India)
Shri S. K. Rao Joint Secretary (Government of India)
Functional Directors
Name Designation at HLL Lifecare Limited
Dr.M.Ayyappan Chairman & Managing Director
Shri K.K.Suresh Kumar Director (Marketing)
Shri R.P.Khandelwal Director (Finance)
Dr.KR S Krishnan Director(T&O)

36
Independent Directors
Name Designation
Dr. Aarti Vij Faculty-in-charge
Organ Retrieval Banking Organization,
AIIMS, New Delhi
Shri Sanjiv Kapoor Chartered Accountant
M/s. SK Kapoor & Co.
Chartered Accountants
16/98, LIC Building, Kanpur
Shri K.Mohandas Ex-Secretary, Govt. of India
HLL Lifecare Limited
Thiruvananthapuram - 695 012

37
3.5 Organization Chart
DIRECTOR
AVP(F)VP(F)
AVP
DVP
CS&SVP
DVP(Cash)
VP
AP
SVP(HR)
DVP(HR)
DIRECTORT&OMD
SVP
AVP(PR)
SVP(CA)
VP
DIRECTOR
VP
DVPDVP(M)
SVP(T&O)
(HJHH(T&O(
CHAIRMANANDMANAGINGDIRECTOR

38
3.6 Business Operations
HLL Lifecare Limited performs business operations, which include manufacturing
healthcare products such as condoms, Surgical Sutures, blood bags, and so on. One
of HLL's contraceptive products is ormeloxifene, branded as Saheli, a non-
hormonal non-steroid weekly oral contraceptive. Besides production, it is also into
providing services that include Infrastructure Development, Healthcare Services
and Procurement & Consultancy Services.
3.7 SWOT ANALYSIS
STRENGTH
1. HLL has the highest quality certifications awarded by reputed
international agencies like ISO 9000, CE and SABS etc.
2. Strong and sound infrastructure for direct marketing.
3. Strong alliance with multinational companies.
4. Company is financially sound.
5. Not even a single person-day was lost due to lockout during the last
15years, which shows excellent industrial relations.
6. New product and variants is launched every year.
7. Products are exported to over 70 countries.

39
WEAKNESS
1. All the brands except Moods has low market share in the open market.
2. Most of the brands are not easily available for retailers.
3. Most of the consumers are not aware about the existence of such a
company.
4. Investments made during the year takes greater time to be recover.
OPPORTUNITY
1. There are facilities for expansion.
2. There is a potential market for HLL products within and outside India.
3. There is a certain degree of consciousness about health in the society.
4. It intends to bring the entire group of contraceptive under one
roof, which will enable the company to bring a balanced product mix.
THREAT
1. There exists a threat from new entrants.
2. There are substitutes for the products launched by HLL.
3. Duplicate products of HLL also exist in the market.
4. Global competitors of HLL are known in the domestic market and are
flourishing in their business day by day.

40
3.7 PRODUCT/ SERVICES PROFILE
PRODUCTS
MOODS
MOODS are the flagship condom brand of HLL. It had been launched in the year
1987. Ever conscious of quality, Moods has worked its way to certificates from the
world's most respected international agencies. Moods condoms manufactured by
the Peroorkada factory have received several registrations: the CE, NF, SABS,
KITE and the US FDA 510k.
HINGCLAT - POLYGLACTIN
Synthetic braided and coated absorbable suture manufactured by co-
polymerization of 90% glycoside and 10% Latticed
HICARE BLOOD BANK REFRIGATOR
Positive forced air circulation system aided by continuous rating motor ensures
uniformity of temperature throughout the cabinet. Uses most advanced solid-state
electronics and non-CFC, non-HCFC refrigeration system in Line with
international norms & protocols.

41
NISHCHAY
NISHCHAY Rapid In-vitro Diagnostic Kits, for the detection of pregnancy, is
manufactured for the Government of India’s Maternal and Child Health Program,
at its Manesar facility that meets GMP requirements.
MAKESURE
A pregnancy test card that can be of use at the comfort of one’s own house
instantly.
MEDIGARD
Sterile and Non-Sterile MEDIGARD surgical gloves offer safety and hygiene,
which are of paramount importance to both healthcare professionals and patients.
HICARE BLOOD COLLECTION MONITOR
HICARE Blood collection monitor is compact, portable and highly accurate
equipment. It provides smooth and gentle rocking for homogeneous mixing of
whole blood with anticoagulant without damaging blood cells and platelets during
collection of blood from a donor.

42
HICARE PHOTOTHERAPY UNIT
HICARE Neonatal Phototherapy Unit (HNP-101) provides intense blue light for
the effective treatment of neonatal hyperbilirubinaemia. Light from the CFL
module is focused on the baby bed, avoiding scatter into the care-provider space.
Unwanted UV radiation is filtered and eliminated.
HICARE INTENSIVE CARE INCUBATOR
The HICARE neonatal intensive care incubator (HNI-102) has been specially
designed to provide the safest and most stable environment for the critical neonate.
With a wide range of accessories, it can be tailored to meet any situation arising in
the care of the infant.
HL SUBCUTEX
It is an innovative product developed by HLL. It is used to reconstruct tissue
defects and deficiencies by aiding natural development of tissue flaps. It is
manufactured in a class 10000 clean room facility.
HILGESTRONE
Natural Micronized Progesterone is developed to maintain pregnancy during
threatened abortion and in pre-term labour.

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SERVISES
Infrastructure Development Division
Infrastructure Development Division of HLL is premier consultancy division for
development of medical and allied infrastructure facilities. Infrastructure
Development Division provides services in design, engineering and execution of
construction projects. Clients include Government of India, state governments,
government departments, public sector undertakings and corporations such as
Employees’ State Insurance Corporation of India (ESIC), National Rural Health
Mission (NRHM), Kerala Social Welfare department and autonomous bodies such
as Malabar Cancer Centre, Jawaharlal Institute of Postgraduate Medical Education
& Research (JIPMER) etc.
A dedicated team of highly qualified and experienced professionals forms the core
of Infrastructure Development Division. With expertise in varied fields such as
project and construction management, procurement, engineering (civil, electrical,
electronics, instrumentation, mechanical and bio-medical), financial management,
contract management and arbitration, the team steers customers’ need of creating
state-of-the- art healthcare facilities.

44
Apart from infrastructure development services, Infrastructure Development
Division also offers facility management services. This niche area of specialisation
provides both hard and soft services including operation and maintenance,
integrated building management, housekeeping, security services, horticulture
services, warehouse management, hospitality services, support services and the
like.
At present the division is providing facility management services at Jawaharlal
Institute of Postgraduate Medical Education & Research (JIPMER) in Puducherry,
Thiruvananthapuram Medical College Hospital in Kerala, National Institute of
Mental Health and Neuro Sciences (NIMHANS) in Bangalore, Karnataka, Victoria
Hospital in Bangalore in the state of Karnataka and research institutions like
Central Tuber Crops Research Institute in Thiruvananthapuram, Kerala. The
government has also entrusted HLL with the responsibility of providing facility
management services at Lady Harding Medical College in New Delhi and All
India Institute of Medical Sciences (AIIMS) in Jodhpur in Rajasthan.

45
Recently completed Infrastructure Development projects
1. Jawaharlal Institute of Postgraduate Medical Education & Research
(JIPMER), Puducherry.
The JIPMER project comprised setting up a 360-bed hospital with a super
specialty block, trauma care centre, oncology block, nursing college and hostel on
their premises in Puducherry. Medical equipment had to be supplied, installed and
commissioned. The JIPMER Phase-I project was completed one month ahead of
schedule in February 2009. JIPMER was only happy to award the Phase-II project
to HLL at a total cost of INR 359 crores. Again completed before deadline, the
project is being inaugurated by Dr Manmohan Singh, The Honourable Prime
Minister of India on 30 June 2012. This project included setting up of a 400-bed
women and children’s hospital, teaching block, hostel and residential doctors’
block on a total construction area of 7500 square meters.
2. Up gradation of Bangalore Medical College, Karnataka
HLL set up a 203-bed super specialty block, nursing college and hospital with a
total area of 22,586 square meters at Bangalore Medical College with a project cost
of INR 120 crores. The work was completed in July 2010.

46
3. Up gradation of Thiruvananthapuram Medical College Hospital, Kerala
The project includes setting up of a 253-bed super specialty block, nursing college
extension block and MLT block with a total area of 16,605 square meters.
Infrastructure Development Division’s responsibility also included supply,
installation and commissioning of medical equipment. This project of INR 120
crores was completed in February 2010 and the super specialty block has been
fully functional since July 2010. HLL is presently providing facility management
services at the super specialty block.
Healthcare Services Division
The changing attitudes towards healthcare and growing lifestyle diseases are
increasing the need for reliable, affordable and quality healthcare services. The
whole purpose HLL’s Healthcare Services Division came into existence is ‘to
provide affordable and reliable solutions for quality Healthcare’.
Hindlabs and Lifecare Centres are the two brands comes under Healthcare Services
Division offers a wide range of quality services at affordable rates. Through these
two brands, Healthcare Services Division offers outsourcing partnerships to
partnering institutions in the areas of diagnostic services, pharmacy and other
specialist services.

47
The services offered includes radio diagnosis and imaging centres, complete range
of path lab services, specialist pharmacy and retailing of surgical implants, surgical
consumables, essential lifesaving drugs, ophthalmic medicines and accessories and
management services for diagnostic centres.
Healthcare Services Division can offer the services in a variety of partnership
models suited to the individual institution’s need. The primary models are-
 In house model- where the space is provided by the institution and
Healthcare Services Division sets up and operates Hindlabs and/or Lifecare
Centres offering services to the public. This model is ideal for large
institutions.
 Facility Model - Where the partner hospital provides space and existing
diagnostic /medical facility to Healthcare Services Division and the division
will upgrade the facility to provide services to the patients. This is ideal for
hospitals and medical colleges looking forward to upgrading existing
facilities.
 Centre Management Model - Healthcare Services Division can
professionally manage and operate the hospital’s diagnostic centre like path-
lab or radio diagnosis centres by deploying trained manpower.

48
Existing Partnerships
1. Hindlabs – Partners with CGHS
Hindlabs network in partnership with Central Government Health Scheme (CGHS)
is an example of diagnostic outsourcing. This network provides advanced
laboratory and imaging services to over 400000 CGHS beneficiaries in New Delhi,
India. The capability includes routine and specialty diagnostic tests. The centre has
received the prestigious NABL (National Accreditation Board for Testing and
Calibration Laboratories) certification in October 2010. The services provided are
path-lab testing, ultrasound and Doppler studies, Echocardiography, X -ray and
ECG. The services are being brought to the door step of the beneficiaries through
collection centres.
2. Hindlabs MRI Scan Centre partners with Government Medical College
Hospitals- Kerala.
In a unique partnership with Government of Kerala, Healthcare Services Division
has set up three Hindlabs MRI scan centres at Medical College Hospitals in
Kottayam, Alappuzha and Thrissur districts of Kerala. The state-of-the-art 1.5
Tesla MRI Scan machines provide advanced scan capabilities. The centres have
been providing excellent scan services to patients in cost-effective rates which also
became an impactful market intervention in its home market that is Kerala.

49
All the three Hindlabs MRI Scan centres are connected through tele-radiology
facility which helps to transfer the MRI images to other MRI Scan centres for
correct, fast and expert diagnosis.
3. Hindlabs partners with ESIC
Hindlabs in partnership with Employees’ State Insurance Corporation of India
(ESIC) is providing centre management services for management and operations of
CT / MRI centres at ESIC Model Hospitals at Andheri East in Mumbai and
Rajajinagar in Bengaluru in Karnataka. The doctors and staff employed by
Hindlabs through a service provider have been providing uninterrupted radio
diagnosis services to the beneficiaries. The maintenance and up keep of the 64
Slice CT scan machine and 1.5 Tesla MRI scan machine are coordinated by the
Hindlabs team.
4. Lifecare Centre partners with Regional Institute of Ophthalmology
Thiruvanathapuram, Kerala
In collaboration with Government of Kerala, Healthcare Services Division has set
up a fair price outlet for ophthalmic products, including spectacles, lenses and
frames at the Regional Institute of Ophthalmology in Thiruvananthapuram, Kerala.

50
Procurement and Consultancy Division
The Procurement and Consultancy Division of HLL is designated as a National
Procurement Support Agency (NPSA). It is an ISO 9001 certified division of HLL.
Procurement and Consultancy Division with its highly qualified and experienced
team of professionals is fully competent to undertake various consultancy
assignments such as bid process management, procurement of goods and stores
including medical equipment, drugs and pharmaceuticals, computer hardware,
application and systems software, design and construction of hospitals/ factories,
project planning and monitoring.
Procurement and Consultancy Division is fully conversant with all the rules and
procedures prescribed in GFR (General Financial Rules) of the Government of
India including contract laws, Central Vigilance Commission (CVC), arbitration
rules and the guidelines of the World Bank, Asian Development Bank etc.
The Division has the expertise in preparation of project schedule and procurement
plans, assessment of client’s requirements, preparation of technical specifications/
standards/designs/drawings and monitoring of the project activities based on
project networking software.

51
Procurement and Consultancy Division has a dedicated team of highly qualified
and experienced professionals to handle relevant tasks in all fields such as - project
management, construction works, procurement, engineering (civil, electrical,
electronics, instrumentation, mechanical, bio-medical & chemical), financial
management, contract laws and arbitration.
HLL’s Procurement and Consultancy Division has been selected as in-house
consultants to the Ministry of Health and Family Welfare, Government of India,
for upgrading the medi-care facilities at Jawaharlal Institute of Postgraduate
Medical Education & Research (JIPMER), Pondicherry with an estimated outlay of
INR 169.06 crores.
Ministry of Health and Family Welfare have also appointed the same division as
in-house consultants for the up gradation of medicare facilities in the Medical
College hospitals in Thiruvananthapuram in Kerala, Bengalaru in Karnataka and
Salem in Tamilnadu. This is done under Pradhan Mantri Swasthya Suraksha
Yojana (PMSSY), a Government of India scheme that aims at correcting the
imbalances in availability of affordable/reliable tertiary level healthcare in the
country.

52
3.8 Market share
With the changing socio-political climate, global health programs are constantly
seeking diverse solutions in the areas of medicine and healthcare. HLL provides
the perfect answer to many questions that the world faces in healthcare, thanks to
its extensive experience, innovative technologies and ample resources, which today
reach over 115 countries spanning the seven continents.
3.9 Competitors
Global Competitors
1. ANTZ Latex private Ltd. Singapore
2. ANSELL Ltd. Australia
3. Sinchem nimbo medical company Ltd. China
4. Green mate corporation, South Korea
5. Maper company, China
Domestic Competitors
1. TTK Produces 425 million pieces of condoms every year under the brand
name KOHINOOR, FIESTA and CHAMP AND DUROPACK.
2. JK Groups KAMASUTRA
3. Polar Latex with ADAM brand of condoms

53
3.10 Future prospects/ Growth
HLL Lifecare Limited believes that the management of the day is the custodian of
the company's legacy, and a trustee for tomorrow. The measure of its achievement
is not just sustaining present performance, but also equally assuring future
prospects. To secure the future, the main task of management is to realize
sustainable growth. To achieve this, we believe that we must spare no effort. We
therefore stretch our growth ambitions to set aspirations that many others might
consider unrealistic.
Our quest for growth is underpin by a strong belief that the next millennium will be
the millennium of knowledge. This inevitably means that people, as carriers of
knowledge, will be an organization’s most important asset. In fact, physical assets
will lose much of their importance to business success. For India, this is indeed
good news because this is the countries big chance to leverage its key strength: its
vast pool of highly talented people. The pharmaceuticals and software industries
are already doing this and reaping the gains of their foresight. The millennium of
knowledge calls for a new paradigm - business growth through people growth. It is
at the root of sustained shareholder value creation.

54
CURRENT RATIO
Current ratio also known as working capital ratio is used to perform the short- term
financial analysis. It matches the current assets of the firm to its current liabilities.
Current Ratio = Current Assets
Current Liabilities
TABLE4.1- SHOWING CURRENT RATIO
Particulars 2010-2011 2011-2012 2012-2013
Current Assets 39,406.14 41,776.69 63,853.23
Current Liabilities 35,250.33 36,347.37 60,872.89
Current Ratio 1.117 1.149 1.048
(Amt in lakhs)
ANALYSIS
The current asset of the company in 2010-2011 was Rs 39,406.14, which increased
to Rs 41,776.69 in 2011-2012, and it again increased to Rs 63,853.23 in 2012-
2013. The current liability for 2010-2011 was Rs 35,250.33 that increased to Rs
36,347.37 in 2011-2012 and further rose to Rs 60,872.89 in 2012-2013. The
current ratio in 2010-2011 is 1.117 that increased to 1.149 in 2011-2012 but it
reduced to1.048 in 2012-2013.

55
INFERENCE
The current ratio of the company for all the three years is more than 1:1 that is
suggestive of a satisfactory short-term financial strength. In this case, the company
is utilizing its current assets or its short-term financing facilities to meet its current
obligations.
GRAPH 4.1- SHOWING CURRENT RATIO
0.95
1
1.05
1.1
1.15
2010-2011
2011-2012
2012-2013
Currentratio
No of years

56
QUICK RATIO
This ratio is also known as acid test ratio or liquid ratio. It is a more severe test of
liquidity of a company. It shows the ability of a business to meet its immediate
financial commitments.
Quick Ratio= Current Assets-Stock-Prepaid Expenses
Current Liabilities –Bank Overdraft
TABLE4.2- SHOWING QUICK RATIO
Particulars 2010-2011 2011-2012 2012-2013
Quick Assets 5,092.95 1,423.70 1,172.88
Quick Liabilities 35,250.33 36,347.37 60,872.89
Quick Ratio 0.144 0.039 0.019
(Amt in lakhs)
ANALYSIS
The quick asset of the company in 2010-2011 was Rs 5,092.95 that reduced to Rs
1,423.70 in 2011-2012 and it further reduced to Rs 1,172.88 in 2012-2013. The
quick liability for the year 2010-2011 was Rs 35,250.33 that increased to Rs
36,347.37 in 2011-2012 and further rose to Rs 60,872.89 in 2012-2013. The quick
ratio in 2010-2011 is 0.144 that reduced to0.039in 2011-2012 and it further
reduced to0.019 in 2012-2013.

57
INFERENCE
The quick ratio of the company for the three given years is less than 1:1 that is not
at all satisfactory. Because of such a low ratio, the business may find itself in
serious financial difficulties.
GRAPH 4.2- SHOWING QUICK RATIO
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
2010-2011
2011-2012
2012 - 2013
QuickRatio
No Of Years

58
ABSOLUTE LIQUID RATIO
Absolute liquid ratio is also known as super quick ratio or cash ratio. This ratio
aims to arrive at absolute liquid assets in relation to the current liabilities.
Absolute Liquid Ratio= Cash in hand & bank + Marketable securities
Current Liabilities
TABLE4.3- SHOWING ABSOLUTE LIQUID RATIO
Particulars 2010-2011 2011-2012 2012-2013
Cash & cash equivalents 5,092.95 1,423.70 1,172.88
Current Liabilities 35,250.33 36,347.37 60,872.89
Absolute Liquid Ratio 0.144 0.039 0.019
(Amt in lakhs)
ANALYSIS
The Cash & cash equivalent in 2010-2011 was Rs 5,092.95which reduced to Rs
1,423.70 in 2011-2012 and it further reduced to Rs 1,172.88 in 2012-2013. The
current liability for 2010-2011 was Rs 35,250.33 that increased to Rs 36,347.37 in
2011-2012 and further rose to Rs 60,872.89 in 2012-2013. The Absolute Liquid
Ratio in 2010-2011 is 0.144 that reduced to 0.039 in 2011-2012 and it went down
to0.019 in 2012-2013.

59
INFERENCE
The absolute liquid ratio of the company for the given years has been continuously
decreasing. Lower ratio shows that there is lower cash liquidity. A low ratio is not
a serious matter because the company can always borrow from the bank for short-
term requirements.
GRAPH 4.3- SHOWING ABSOLUTE LIQUID RATIO
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
2010-2011
2011-2012
2012 - 2013
AbsouluteLiquidRatio
No Of Years

60
DEBT-EQUITY RATIO
This ratio attempts to measure the relative claims of long- term creditors on one
hand and owner’s of the company on the other, on the assets of the company.
Debt-equity Ratio= Long-term debt
Shareholder’s Funds
TABLE4.4- SHOWING DEBT-EQUITY RATIO
Particulars 2010-2011 2011-2012 2012-2013
Long-term debt 37,499.94 38,194.88 66,138.38
Shareholder’s Funds 15,596.00 17,466.09 37,821.60
Debt-equity Ratio 2.404:1 2.186:1 1.748:1
(Amt in lakhs)
ANALYSIS
The Long-term debt of the company in 2010-2011 was Rs 37,499.94 that increased
to Rs 38,194.88 in 2011-2012 and it further increased to Rs 66,138.38 in 2012-
2013. The Shareholder’s Funds for 2010-2011 was Rs 15,596.00 that increased to
Rs 17,466.09 in 2011-2012 and further rose to Rs 37,821.60 in 2012-2013. The
Debt-equity Ratio in 2010-2011 is 2.404 that reduced to 2.186 in 2011-2012, and it
went further down to 1.748in 2012-2013.

61
INFERENCE
In all the years, the debt-equity ratio of the company is slightly higher in all the
years. A high debt equity ratio indicates that the claims of the creditors are greater
than those of the owners and in such cases, the company needs to worry in meeting
its fixed obligations.
GRAPH 4.4- SHOWING DEBT-EQUITYRATIO
0
0.5
1
1.5
2
2.5
2010-2011
2011-2012
2012-2013
Debt-EquityRatio
No of Years

62
PROPRIETARY RATIO
This is a variant of debt equity ratio. It measures the relationship between
shareholder’s funds and total assets of the company.
Proprietary Ratio= Shareholder’s Funds
Total Assets
TABLE4.5- SHOWING PROPRIETARY RATIO
Particulars 2010-2011 2011-2012 2012-2013
Shareholder’s Funds 15,596.00 17,466.09 37,821.60
Total Assets 83,520.55 1.00,402.39 1,55,395.69
Proprietary Ratio 0.186 0.173 0.243
(Amt in lakhs)
ANALYSIS
The Shareholder’s Funds of the company in 2010-2011 was Rs 15,596.00 that
increased to Rs 17,466.09 in 2011-2012 and it further increased to Rs 37,821.60 in
2012-2013. The Total Asset in 2010-2011 was Rs 83,520.55 that increased to Rs
1,00, 402.39 in 2011-2012 and further rose to Rs 1, 55,395.69 in 2012-2013. The
Proprietary Ratio in 2010-2011 is 0.186 that reduced to 0.173 in 2011-2012 and it
increased to 0.243in 2012-2013.

63
INFERENCE
The company’s proprietary ratio is quite low for all the given years, there being a
reduction in every consecutive year. The lower proprietary ratio suggests a lower
long-term stability of the company that consequently provides lower protection to
creditors.
GRAPH 4.5- SHOWING PROPRIETARY RATIO
0
0.05
0.1
0.15
0.2
0.25
2010-2011
2011-2012
2012-2013
ProprietaryRatio
No of Years

64
INTEREST COVERAGE RATIO
Interest coverage ratio indicates whether the business earns sufficient profit to pay
periodically the interest charges.
Interest Coverage Ratio= Earnings before tax and interest
Fixed Interest Charges
TABLE4.6- SHOWING INTEREST COVERAGE RATIO
Particulars 2010-2011 2011-2012 2012-2013
Earnings before tax and interest 2,749.41 3,056.38 3,780.87
Fixed Interest Charges 2,249.61 1,847.51 5,265.49
Interest Coverage Ratio 1.222 times 1.654 times 0.718 times
(Amt in lakhs)
ANALYSIS
The Earnings before tax and interest of the company in 2010-2011 was Rs
2,749.41 that increased to Rs 3,056.38 in 2011-2012 and it further increased to Rs
3,780.87 in 2012-2013. The Fixed Interest Charges in 2010-2011 was Rs 2,249.61
that reduced to Rs 1,847.51 in 2011-2012 and increased to Rs 5,265.49 in 2012-
2013. The Interest Coverage Ratio in 2010-2011 is 1.222 times which increased to
1.654times in 2011-2012 and then it decreased to 0.718times in 2012-2013.

65
INFERENCE
The standard for interest coverage ratio for a company is that the interest charges
should be covered 6 to 7 times. In this case, it is very low than the standard. This
suggests that the company has very little capacity to pay interest out of its profits.
GRAPH 4.6- SHOWING INTEREST COVERAGE RATIO
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2010-2011
2011-2012
2012-2013
InterestCoverageRatio
No of Years

66
DEBT TO TOTAL FUNDS RATIO
Debt to total funds ratio shows the relationship between debts and total funds
employed in the business.
Debt to total Funds Ratio= Debt
Total Funds
TABLE4.7- SHOWING DEBT TO TOTAL FUNDS RATIO
Particulars 2010-2011 2011-2012 2012-2013
Debt 37,499.94 38,194.88 66,138.38
Total Funds 53.095.94 55,660.97 1,03,959.98
Debt to total funds ratio 0.706 0.686 0.636
(Amt in lakhs)
ANALYSIS
The Debt of the company in 2010-2011 was Rs 37,499.94 that increased to Rs
38,194.88 in 2011-2012 and it further increased to Rs 66,138.38 in 2012-2013. The
Total Funds in 2010-2011 was Rs 53.095.94 which increased to Rs 55,660.97 in
2011-2012 and it further increased to Rs 1, 03,959.98 in 2012-2013. The Debt to
total funds ratio in 2010-2011 is 0.706 that reduced to 0.686 in 2011-2012 and then
further decreased to 0.636 in 2012-2013.

67
INFERENCE
The company’s debt to total funds ratio is quite low throughout the three years.
The funds supplied by the outsider’s in the total funds of the company can be
easily repaid if the ratio is on the lower side. This gives a feeling of security to the
creditors.
GRAPH 4.7- SHOWING DEBT TO TOTAL FUNDS RATIO
0.6
0.62
0.64
0.66
0.68
0.7
0.72
2010-2011
2011-2012
2012-2013
DebttoTotalFundsRatio
No of Years

68
INVENTORYTURNOVER RATIO
Inventory turnover ratio expresses the relationship between sales and average
stock. It is used to indicate the efficiency with which the stocks of the firm are
being utilised.
Inventory Turnover Ratio= Cost of Goods Sold
Average Stock
TABLE4.8- SHOWING INVENTORYTURNOVER RATIO
Particulars 2010-2011 2011-2012 2012-2013
Cost of Goods Sold 43,791.25 44,280.23 64,279.15
Average Stock 2,093.34 2,521.17 2,891.63
Inventory Turnover Ratio 20.919 times 17.563 times 22.229 times
(Amt in lakhs)
ANALYSIS
The Cost of Goods Sold of the company in 2010-2011 was Rs 43,791.25 that
2012-2013. The Average Stock in 2010-2011 was Rs 2,093.34 that increased to Rs
Inventory Turnover Ratio in 2010-2011 is 20.919 that reduced to 17.563 in 2011-
2012 and then it increased to 22.229 in 2012-2013.

69
INFERENCE
The company’s inventory turnover ratio has remained quite high throughout. It is
an indicator of favourable results. It is due to high level of stock. Such a situation
allows the company to meet the customer’s demands and thereby is helpful in
earning maximum profits.
GRAPH 4.8- SHOWING INVENTORY TURNOVER RATIO
0
5
10
15
20
25
2010-2011
2011-2012
2012-2013
InventoryTurnoverRatio
No of Years

70
FIXED ASSETTURNOVER RATIO
This ratio indicates the efficiency with which the firm is utilizing its investments in
fixed assets such as plants and machinery, land etc.
Fixed Asset Turnover Ratio= Cost of Sales
Net Fixed Assets
TABLE4.9- SHOWING FIXED ASSETTURNOVER RATIO
Particulars 2010-2011 2011-2012 2012-2013
Cost of Sales 43,791.25 44,280.23 64,279.15
Net Fixed Asset 12,422.26 15,277.85 20,305.51
Fixed Asset Turnover Ratio 3.525:1 2.898:1 3.165:1
(Amt in lakhs)
ANALYSIS
The Cost of Sales of the company in 2010-2011 was Rs 43,791.25 that increased to
Rs 44,280.23 in 2011-2012 and it further increased to Rs 64,279.15 in 2012-2013.
The Net Fixed Asset in 2010-2011 was Rs 12,422.26 that increased to Rs
Fixed Asset Turnover Ratio in 2010-2011 is 3.525 that reduced to 2.898 in 2011-
2012 and then it increased to 3.165in 2012-2013.

71
INFERENCE
The fixed asset turnover ratio of the company has decreased in the second year and
then increased in the third year. An increase in this ratio indicates that there is an
efficient utilization of fixed assets for generating sales.
GRAPH 4.9- SHOWING FIXED ASSET TURNOVER RATIO
0
0.5
1
1.5
2
2.5
3
3.5
4
2010-2011
2011-2012
2012-2013
FixedAssetTurnoverRatio
No of Years

72
WORKING CAPITALTURNOVER RATIO
Working capital turnover ratio indicates the efficiency or inefficiency in the
utilisation of working capital in making sales.
Working Capital Turnover Ratio= Cost of Sales
Net Working Capital
TABLE4.10- SHOWING WORKING CAPITALTURNOVER RATIO
Particulars 2010-2011 2011-2012 2012-2013
Cost of Sales 43,791.25 44,280.23 64,279.15
Net Working Capital 4,155.81 5,429.32 2,980.34
Working Capital Turnover Ratio 10.537 times 8.155 times 21.567 times
(Amt in lakhs)
ANALYSIS
The Cost of Sales of the company in 2010-2011 was Rs 43,791.25 that increased to
The Net Working Capital in 2010-2011 was Rs 4,155.81 that increased to Rs
5,429.32 in 2011-2012 and it reduced to Rs 2,980.34 in 2012-2013. The Working
Capital Turnover Ratio in 2010-2011 is10.537 that reduced to 8.155 in 2011-2012
and then it increased to 21.567in 2012-2013.

73
INFERENCE
The working capital turnover ratio of the company has decreased in the second
year. It drastically increased in the third year. A higher ratio shows that the
company is efficiently utilizing the working capital to generate sales.
GRAPH 4.10- SHOWING WORKING CAPITALTURNOVER RATIO
0
5
10
15
20
25
2010-2011
2011-2012
2012-2013
WorkingCapitalTurnoverRatio
No of Years

74
GROSS PROFIT RATIO
Gross profit ratio expresses the relationship between gross profit and sales. This
ratio indicates the amount of gross profit that is generated in relation to per unit of
sales.
Gross Profit Ratio= Gross Profit X 100
Net Sales
TABLE4.11- SHOWING GROSS PROFIT RATIO
Particulars 2010-2011 2011-2012 2012-2013
Gross Profit 2,749.41 3,056.38 3,780.87
Net Sales 46,540.66 47,336.61 68,060.02
Gross Profit Ratio 5.90% 6.45% 5.55%
(Amt in lakhs)
ANALYSIS
The Gross Profit of the company in 2010-2011 was Rs 2,749.41 that increased to
Net Sales in 2010-2011 was Rs 46,540.66 that increased to Rs 47,336.61 in 2011-
2012 and it further increased to Rs 68,060.02 in 2012-2013. The Gross Profit Ratio
in 2010-2011 is 5.90%that increased to 6.45% in 2011-2012 and then it reduced to
5.55%in 2012-2013.

75
INFERENCE
The gross profit ratio has been very low over the years. This shows that there is a
high cost of goods sold due to a very high cost of production. It may also be due an
increase in manufacturing expenses. It is not favourable for the company.
GRAPH 4.11- SHOWING GROSS PROFIT RATIO
0.05
0.052
0.054
0.056
0.058
0.06
0.062
0.064
0.066
2010-2011
2011-2012
2012-2013
GrossProfitRatio
No of Years

76
NET PROFIT RATIO
Net profit ratio expresses the relationship between net profits to per rupee of sales.
This ratio helps to measure the efficiency of a business in terms of profits.
Net Profit Ratio= Net Profit X 100
Net Sales
TABLE4.12- SHOWING NET PROFIT RATIO
Particulars 2010-2011 2011-2012 2012-2013
Net Profit 1,843.49 2,054.05 3,007.47
Net Sales 46,540.66 47,336.61 68,060.02
Net Profit Ratio 3.961% 4.339% 4.418%
(Amt in lakhs)
ANALYSIS
The Net Profit of the company in 2010-2011 was Rs 1,843.49, which increased to
Rs 2,054.05 in 2011-2012, and it further increased to Rs 3,007.47 in 2012-2013.
Net Sales in 2010-2011 was Rs 46,540.66, which increased to Rs 47,336.61 in
2011-2012, and it further increased to Rs 68,060.02 in 2012-2013. The Net Profit
Ratio in 2010-2011 is 0.039which increased to 0.043 in 2011-2012 and then it
slightly increased to 0.044in 2012-2013.

77
INFERENCE
The company’s overall net profit ratio is on the lower side. Hence, there might be
certain level of difficulty to withstand the adverse conditions that includes rising
cost of production and lower sales volume. This is not advantageous for the firm.
GRAPH 4.12- SHOWING NET PROFIT RATIO
0.036
0.037
0.038
0.039
0.04
0.041
0.042
0.043
0.044
2010-2011
2011-2012
2012-2013
NetProfitRatio
No of Years

78
OPERATING RATIO
This ratio explains the relationship between cost of goods sold and operating
expenses on one hand and net sales on the other.
Operating Ratio= Cost of Goods Sold + Operating Expenses X 100
Net Sales
TABLE4.13- SHOWING OPERATING RATIO
Particulars 2010-2011 2011-2012 2012-2013
Cost of Goods Sold + Operating Expenses 27,842.39 29,628.48 40,237.62
Net Sales 46,540.66 47,336.61 68,060.02
Operating Ratio 59.823% 62.591% 59.120%
(Amt in lakhs)
ANALYSIS
The Cost of Goods Sold + Operating Expenses of the company in 2010-2011 was
Rs 27,842.39 which increased to Rs 29,628.48 in 2011-2012 and it further
increased to Rs 40,237.62 in 2012-2013.Net Sales in 2010-2011 was Rs 46,540.66
2012-2013. The Operating Ratio in 2010-2011 is 59.823% that increased to
62.591% in 2011-2012 and went down in 59.120% in 2012-2013.

79
INFERENCE
The operating ratio of the company increased in the second year and it again went
down in the third year. A low ratio is favourable for the company because it leaves
a larger margin of profit to meet non-operating expenses. It is a good sign for the
company.
GRAPH 4.13- SHOWING OPERATING RATIO
57.00%
58.00%
59.00%
60.00%
61.00%
62.00%
63.00%
2010-2011
2011-2012
2012-2013
OperatingRatio
No of Years

80
RETURN ON INVESTMENT
Return on investment measures the overall profitability of a business. It is
ascertained by comparing the profit earned and capital employed to earn it.
Return on Investment= Profit before Interest and Tax X 100
Capital Employed
TABLE4.14- SHOWING RETURN ON INVESTMENT
Particulars 2010-2011 2011-2012 2012-2013
Profit before Interest and Tax 2,749.41 3,056.38 3,780.87
Capital Employed 6,578.07 20,707.18 23,285.85
Return on Investment 41.796% 14.760% 16.236%
(Amt in lakhs)
ANALYSIS
The Profit before Interest and Tax in 2010-2011 was Rs 2,749.41 that increased to
Rs 3,056.38 in 2011-2012 and further increased to Rs 3,780.87 in 2012-2013.
Capital Employed was Rs 6,578.07in 2010-201 that increased to Rs 20,707.18 in
2011-2012 and further increased to Rs 23,285.85 in 2012-2013. The Return on
Investment in 2010-2011 is 41.796%, which drastically reduced to 14.760% in
2011-2012, and then it further decreased to 16.236%in 2012-2013.

81
INFERENCE
This ratio decreased drastically in the second year. It then increased slightly in the
third year. However, it has been quite low in the last two years. This indicates that
there is enough scope for the management to use the available resources.
GRAPH 4.14- SHOWING RETURN ON INVESTMENT
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
2010-2011
2011-2012
2012-2013
ReturnonInvestment
No of Years

82
RETURN ON EQUITY
Return on equity establishes the relationship between the net profit available to
equity shareholder and the amount of capital invested by them.
Return on Equity= Net Profit after Taxes and Interest X 100
Shareholder’s Fund
TABLE4.15- SHOWING RETURN ON EQUITY
Particulars 2010-2011 2011-2012 2012-2013
Net Profit after Taxes and Interest 1,843.49 2,054.05 3,007.47
Shareholder’s Fund 15,596.00 17,466.09 37,821.60
Return on Equity 11.820% 11.760% 7.95%
(Amt in lakhs)
ANALYSIS
The Net Profit after taxes and interest in 2010-2011 was Rs 1,843.49 that increased
to Rs 2,054.05 in 2011-2012 and it further increased to Rs 3,007.47 in 2012-2013.
The Shareholder’s Funds in 2010-2011 was Rs 15,596.00 that increased to Rs
Return on Equity in 2010-2011 is 11.820 that reduced to 11.760 in 2011-2012 and
then it further reduced to 7.95in 2012-2013.

83
INFERENCE
The company’s return on equity slightly decreased from the first year but it
drastically decreased in the final year. The investors do not favour a lower ratio.
There would not be higher Market valuation for the company’s shares.
GRAPH 4.15- SHOWING RETURN ON EQUITY
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2010-2011
2011-2012
2012-2013
ReturnonEquity
No of Years

84
The summary of findings obtained from the financial records of the HLL Lifecare
Limited is as follows:
1. The current ratio throughout the years is more than 1:1, which suggests that its
short- term solvency position is satisfactory. However, the quick ratio and the
absolute liquid ratio is low than the standard. This shows that the business may
find itself in serious financial difficulties.
2. The debt-equity ratio was slightly higher in all the years. The company needs to
make adequate arrangements while meeting the claims of the creditors.
3. The proprietary ratio is quite low for all the given years, there being a reduction
in every consecutive year. It is suggestive of a lower long-term stability of the
company.
4. The interest coverage ratio is very low than the standard. This shows that the
company does not have sufficient capacity to pay interest out of its profits.
5. The debt to total funds ratio is quite low throughout the three years thus the
funds supplied by the outsider’s can be easily repaid.
6. The inventory turnover ratio has remained quite high throughout. It is not an
indicator of favourable results, as it does not allow the company to meet the
customer’s demands thereby not earning sufficient profits.

85
7. The fixed asset turnover ratio increased in the final year from being low initially.
This shows that the company is efficiently utilizing fixed assets for generating
sales.
8. The working capital turnover ratio has drastically increased in the final year
from a very low ratio in the beginning. A higher ratio shows that the company is
efficiently utilizing the working capital to generate sales.
9. The gross profit as well as net profit of the company has been very low over the
years. This is not advantageous for the firm. However, the operating ratio is quite
low in the last year. This is favourable for the company because it leaves a larger
margin of profit to meet non-operating expenses.
10. The return on investment has been quite low in the last two years. This
indicates that there is enough scope for the management to use the available
resources.
11. The return on equity drastically decreased in the final year. The investors do
not favour a lower ratio. There would not be higher Market valuation for the
company’s shares. This is not favourable for the company.

86
CONCLUSION
HLL Lifecare Limited is a Mini Ratna, upgraded as a Schedule B, Central Public
Sector Enterprise under The Ministry of Health, Government of India. The
company produces medicines, contraceptives and various surgical and non-surgical
equipments. Besides this, it also provides services in the field of Infrastructure
development, Healthcare, Procurement and Consultancy division. The objective
behind doing this project was to understand the liquidity position, profitability
position and to perform the strengths, weakness, opportunity and threat analysis of
the company. The current ratio throughout the years is more than 1:1, which
suggests that its short- term solvency position is satisfactory. However, the quick
ratio and the absolute liquid ratio is low than the standard. This shows that the
business may find itself in serious financial difficulties. The gross profit as well as
net profit of the company has been very low over the years. This is not
advantageous for the firm. However, the operating ratio is quite low in the last
year. This is favourable for the company because it leaves a larger margin of profit
to meet non-operating expenses. The liquidity and profitability position of the
company does not show a favourable result as quite a number of ratios need
improvement. Moreover, the strength, weakness, opportunity and threats of the
company reveal that it is taking sufficient measures to improve its performance in
the market.

87
The recommendations and suggestions after analyzing the financial records using
ratios of HLL Lifecare Limited are as follows:
1. The quick ratio throughout the years is less than 1:1, which is not at all
satisfactory. The company should employ means to increase its quick assets for a
better liquidity position in the years to come.
2. The debt-equity ratio was slightly higher in all the years. The company should
rely less on the outsider’s funds for a better solvency position.
3. The proprietary ratio has been decreasing consecutively. The company must
increase the stake of its shareholders in its assets value in order to be more solvent.
4. The interest coverage ratio is low than the standard. It must make effort such
that the earnings before interest and taxes are higher than the fixed interest charges.
5. The gross profit ratio has been very low over the years. The company must
reduce all its direct expenses in order to improve the margin of gross profit.
6. The company’s overall net profit ratio is quite low. It can be improved by
reducing the operating and non-operating expenses.
7. The return on equity drastically decreased in the final year. The investors do not
favour a low ratio. The company must see to it that the comparative increase in net
profit should be higher than the comparative increase in shareholder’s funds.

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