ambalal sarabhai enterprises limited 21121

8/8/2019 Ambalal Sarabhai Enterprises Limited 21121

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A MINI PROJECT REPORT

ON

AMBALAL SARABHAI ENTERPRISES LIMITED

(Submitted in partial fulfillment of the requirements for the

Award of Master of Business Administration)

By

V.Annapurna DeviReg.no: 09501E0002

Under the guidance of

Mrs.N. Ramanuja(Asst Professor)

Department of Master of Business Administration

Prasad V. Potluri Siddhartha Institute of Technology

(Approved by AICTE to JNTU, Kakinada)

Vijayawada, Kanuru, Krishna District.


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HISTORY

In 1977, 85 companies of the Sarabhai Group were merged and a new company called

Ambalal Sarabhai Enterprises Pvt Ltd was formed. These group companies were

originally formed by the group founder, Ambalal Sarbhai and after his death Vikram

Sarabhai took over the reins of the company. In the year 1971 Vikram Sarabhai passed

away and his brother, Gautam Sarabhai, took charge of the company.

In 1980 the company became a public limited company. Subsequent family disputes

betweenGautam Sarabhai and his nephews, Kartikeya and Suhrid adversely affected the

fortunes of the company which went off the dividend list in 1983-84.. Since 1995-96

series of steps have been taken to bring the company back on track. Kartikeya Sarabhai isnow the Chairman of the company

BACKGROUND

Ambalal Sarabhai Enterprises is the largest producer of Vitamin C in the country. The

company caters mainly to the domestic market. The company was also a market leader in

the veterinary healthcare sector but recently the unit was transferred to a separate joint

venture with Zydus Cadila. Amphotercin and Tetracycline are the other important

products of the company.

Nature of Business:

Manufacturer, Exporter

Major Markets:

Indian Subcontinent, East/Middle Africa, North Africa, South/West Africa, East

Europe, North Europe, Middle East, South/West Europe, South East Asia and North

America


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Products:

Vitamin C -Bulk Drugs and intermediates

Video Equipment

Powders

Liquid

Tablets and Capsules

Injectables-Formulations

Tablets and Capsules -Formulations

Ointments

Test Instruments-Electronics

PATTERN OF SHAREHOLDING

Share Holding as on : 30 Sep 2009 30 Jun 2009 31 Mar 2009

Face Value 10.00 10.00 10.00

No. Of Shares

%Holding

No. Of Shares

%Holding

No. Of Shares

%Holding

Promoter's HoldingIndian Promoters 23,318,95

130.43 23,318,95

130.43 23,318,95

130.43

Sub Total 23,318,951

30.43 23,318,951

30.43 23,318,951

30.43

Non Promoter's HoldingInstitutional Investors

Banks Fin. Inst. and

Insurance

361,412 0.47 361,412 0.47 361,412 0.47

FII's 100,000 0.13 100,000 0.13 100,000 0.13

Sub Total 461,412 0.60 461,412 0.60 461,412 0.60

Other Investors

Private Corporate

Bodies

22,988,86

3

30.00 22,984,78

6

29.99 22,914,11

2

29.90

NRI's/OCB's/Foreign

Others

278,495 0.36 276,148 0.36 277,535 0.36

Sub Total 23,267,358

30.36 23,260,934

30.35 23,191,647

30.26

General Public 29,585,575

38.61 29,591,999

38.62 29,661,286

38.71


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Grand Total 76,633,296

100.00 76,633,296

100.00 76,633,296

100.00

The promoter holding has increased from 26.12% in September 2008 to 30.43% in

September 2009 Quarter. Promoters holding is increased it is a good sign. Now if we see

its peer group we find names Cipla, Dr. Reddys

COMPETITORS

Company Sales Current Change

(%)

P/E

Ratio

Market

(`Million) Price Cap.(`Million)

Cipla 53595.2 304.3 -0.28 22.44 246215.83

Dr Reddy's 44698 1338.95 0.3 26.43 228099.5

Ranbaxy Labs. 47802.86 473.3 4.03 12.57 194304.27

Biocon 11630.83 340.45 -0.31 24.68 67400Aurobindo Pharma 27948.3 1007 4.57 12.37 56995.99

Pfizer 8310.44 1152.65 0.79 24.08 34584.74

Matrix Laboratories 15021.32 209.35 0 18.9 32729.53

PHARMACEUTICAL INDUSTRY PERFORMANCE:

Indias pharmaceutical industry is one of the fastest growing sectors in the Indian

economy, having grown by 10% p.a. over past 5 years. The industry accounted for almost

2% of GDP in 2008, and employed almost 3 million people. The sector has emerged as

one of the strongest and most successful examples of knowledge-based industries in the

World and it has made significant progress in terms of development of technology,

products and infrastructure. The Indian pharmaceutical industry currently ranks fourth in

the world in terms of volume, with 8% global share. Its large pool of skilled technical

workforce, low production costs and government support has enabled its transformation

from an import-dependent country to a major exporting country.

As per the Organization of Pharmaceutical Producers of India (OPPI) estimates, the

industry is very fragmented, with over 450 companies producing 400 bulk drugs and over

60,000 generic formulations. That said, the trend that size matters still prevails, with the

top 20 companies representing over 55% of domestic retail sales. The top recruiters in the


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Indian pharmaceutical industry are Pfizer, Ranbaxy, Cipla, Nicholas Piramal and Glaxo,

to name a few.

Key findings

Cipla leads the Indian pharma industry with a market share of 5.3%, representing

$411m in sales in 2008. The market is highly competitive and fragmented, with

the top 10 layers accounting for 36.1% of sales in 2008.

The Indian pharma market will grow at a CAGR of 13.2% to reach a value of

$15.5bn by 2014.

This growth will be driven by increasing disposable incomes, growing investment

in healthcare infrastructure and the introduction of product patent legislation.

Ranbaxy is the second largest player in the Indian pharma market, with a share of

5% in 2008.

Ranbaxy has a dominant position in acute therapeutic areas, particularly anti-

infectives, due to a robust product portfolio and regular product launches.

Pharma companies are increasingly deploying their sales infrastructure towards

Indias rural areas. Pharma consumption is increasing in these areas due to the

rising purchasing power of the rural population, a relatively high prevalence of

serious ailments and recent government initiatives that have helped to increase

accessibility to medicines.

ASE Financial ratios

mar' 09 mar' 08 mar' 07 mar' 06 mar' 05

PER SHARE RATIOS

Adjusted E P S (`) -17.27 -12.15 -4.07 -4.50 -1.87

Adjusted Cash EPS (`) -17.01 -11.89 -3.79 -4.22 -1.52Reported EPS (`) 1.42 -0.98 -3.86 -0.83 -1.77

Reported Cash EPS (`) 1.68 -0.72 -3.57 -0.54 -1.42

Dividend Per Share 0.00 0.00 0.00 0.00 0.00

Operating Profit Per Share (`) -15.00 -5.70 -2.91 -2.42 -1.21

Book Value (Excl Rev Res) PerShare (`)

7.43 6.06 7.15 11.10 11.15


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Book Value (Incl Rev Res) PerShare (`)

7.43 6.06 7.15 11.10 11.15

Net Operating Income Per Share (`) 8.14 8.04 11.62 13.92 20.09

Free Reserves Per Share (`) -3.68 -6.08 -5.55 -1.72 -2.33

PROFITABILITY RATIOS

Operating Margin (%) -184.34 -70.91 -25.04 -17.35 -6.04

Gross Profit Margin (%) -187.61 -74.13 -27.29 -19.24 -7.63

Net Profit Margin (%) 16.60 -11.61 -30.62 -5.87 -8.18

Adjusted Cash Margin (%) -199.44 -140.35 -30.07 -29.66 -7.05

Adjusted Return On Net Worth (%) -232.58 -200.38 -56.97 -40.64 -16.85

Reported Return On Net Worth (%) 19.06 -16.23 -53.97 -7.53 -15.91

Return On long Term Funds (%) -186.62 -84.07 -20.78 -19.75 -0.47

LEVERAGE RATIOS

Long Term Debt / Equity 0.07 0.08 0.49 0.09 0.43

Total Debt/Equity 0.08 0.81 1.29 0.38 0.66

Owners fund as % of total Source 91.85 55.10 43.69 72.33 60.17

Fixed Assets Turnover Ratio 0.71 0.51 0.71 0.85 1.04

LIQUIDITY RATIOS

Current Ratio 0.56 0.81 0.83 0.96 0.94

Current Ratio (Inc. ST Loans) 0.55 0.68 0.65 0.81 0.79

Quick Ratio 0.48 0.76 0.77 0.86 0.81

Inventory Turnover Ratio 7.93 6.22 8.29 6.68 7.05

PAYOUT RATIOS

Dividend payout Ratio (Net Profit) 0.00 0.00 0.00 0.00 0.00

Dividend payout Ratio (CashProfit)

0.00 0.00 0.00 0.00 0.00

Earning Retention Ratio 100.00 0.00 0.00 0.00 0.00

Cash Earnings Retention Ratio 0.00 0.00 0.00 0.00 0.00

The current ratio is mainly used to give an idea of the company's ability to pay back its

short-term liabilities with its short-term assets. The higher the current ratio, the more

capable the company is of paying its obligations. Here the current ratio is 0.56 from the

past 5 years decreasing year by year a ratio under 1 suggests that the

company would be unable to pay off its obligations if they came due at that point. While


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this shows the company is not in good financial health, it does not necessarily mean that

it will go bankrupt - as there are many ways to access financing - but it is definitely not a

good sign.

Debt equity ratio less than 0.5 it is an indication where their equity is more than the debt

Fixed assets turn over ratio is 1.04 in 2005 and in 2009 it is 0.71 which is worse

indication for the fixed assets

Balance sheet of Ambalal Sarabhai Enterprises Ltd. for the last 5 years.

( ` in Million)

Particulars Mar 2009 Mar 2008 Mar 2007 Mar 2006 Mar 2005SOURCES OF FUNDS

Share Capital 766.33 766.33 766.33 766.33 649.19Share warrants &

Outstandings

0.00 0.00 0.00 0.00 0.00

Total Reserve -197.16 -301.78 -218.78 84.47 74.41

Shareholder's Funds 569.17 464.55 547.55 850.80 723.60

Secured Loans 41.64 122.79 387.31 204.34 475.81

Unsecured Loans 8.86 255.66 318.19 121.01 3.16

Total Debts 50.50 378.45 705.50 325.35 478.98

Total Liabilities 619.67 843.00 1253.05 1176.15 1202.57

APPLICATION OF FUNDS :

Gross Block 1100.45 1413.85 1465.07 1471.44 1487.52

Less: Accumulated

Depreciation

419.77 563.38 553.33 541.55 522.32

Less: Impairment of

Assets

0 0 0 0 0

Net Block 680.68 850.47 911.73 929.90 965.20

Lease Adjustment A/c 0 0 0 0 0

Capital Work in Progress 6.81 2.47 1.27 2.73 0

Pre-operative Expenses

pending

0 0 0 0 0

Assets in transit 0 0 0 0 0Investments 410.98 411.22 681.62 302.11 329.08

Current Assets, Loans

Inventories 82.62 111.90 129.64 199.59 221.78

Sundry Debtors 226.33 362.63 311.83 324.41 551.65

Cash and Bank 113.19 106.78 68.34 197.98 79.97

Other Current Assets 0 0 0 0 0

Loans and Advances 544.74 1225.13 1220.09 1454.67 1080.07


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Total Current Assets 966.88 1806.44 1729.91 2176.65 1933.46

Less : Current Liabilities

and Provisions

Current Liabilities 962.23 1723.63 1560.00 1738.49 1531.04

Provisions 483.44 503.98 511.48 498.50 497.66

Total Current Liabilities 1445.67 2227.60 2071.48 2236.99 2028.70

Net Current Assets -478.79 -421.16 -341.56 -60.34 -95.23

Miscellaneous Expenses

not written off

0 0 0 1.76 3.52

Total Assets 619.67 843.00 1253.05 1176.15 1202.57

Contingent Liabilities 276.01 241.20 192.85 174.69 120.78

Compared to previous years the debt is reduced to 50crores.

Inventories are decreasing year by year even though it is good in terms of expenses but it

is an indication for shortage. Current assets are reduced which is not good for its health

and current liabilities are also decreased which shows a good indication.

Totally their total assets were reduced it is 50% in the total assets before 5 years as shown

above

Sales

(`. in Million)

Particulars Mar 09 Mar 08 Mar 07 Mar 06 Mar 05

No of Months 12 12 12 12 12

Gross Sales 646.04 668.34 1035.08 1286.69 1509.94

Less: Inter divisional transfers 0 0 0 0 0

Less: Sales Returns 0 0 0 0 0

Less: Excise 20.95 57.09 144.80 219.94 205.93

Net Sales 625.10 611.25 890.28 1066.76 1304.01

Compared to previous years their sales also decreased because their less consumption of

materials. They want to reduce their debt so the investment also decreased.

Moving of share prices for past 50 days as shown in the following table


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DATE OPEN HIGH LOW CLOSE VOLUME

20/9/2010 10.92 10.92 10.64 10.77 26453

17/9/2010 10.57 10.78 10.53 10.64 26368

16/9/2010 10.71 10.8 10.51 10.61 2431515/9/2010 10.64 11 10.6 10.81 42164

14/9/2010 11.14 11.2 10.6 10.64 40889

13/9/2010 11.05 11.18 10.85 10.93 57540

9/9/2010 11.2 11.34 11 11.07 33860

8/9/2010 11.37 11.37 11 11.12 22035

7/9/2010 11.35 11.37 11.13 11.32 28029

6/9/2010 11.37 11.5 11.05 11.14 51493

3/9/2010 10.87 11.45 10.73 10.95 42342

2/9/2010 10.98 10.98 10.6 10.73 427351/9/2010 10.79 10.79 10.5 10.73 19382

31/8/2010 11.58 11.58 10.5 10.57 36554

30/8/2010 11.38 11.38 10.9 10.94 32742

27/8/2010 11.1 11.37 10.82 11.03 33753

26/8/2010 11.41 11.41 11.01 11.04 56463

25/8/2010 11.75 11.75 11.21 11.38 32407

24/8/2010 11.7 12 11.5 11.56 21695

23/8/2010 11.79 12.19 11.51 11.83 72730

20/8/2010 11.2 11.7 11.2 11.61 28305

19/8/2010 11.8 11.8 11.21 11.45 48049

18/8/2010 11.5 11.85 11.05 11.6 21920

17/8/2010 11.68 11.9 11.6 11.68 53659

16/8/2010 12.2 12.2 11.55 11.63 34229

13/8/2010 11.56 12.35 11.51 11.95 79596

12/8/2010 11.85 12.09 11.65 11.67 30413

11/8/2010 12.43 12.75 11.75 11.96 47601

10/8/2010 12.6 13 12.32 12.42 164846

9/8/2010 11.58 13.25 11.35 12.47 338633

6/8/2010 11.32 11.28 11.45 11.63 266515/8/2010 11.1 11.58 11.1 11.39 29120

4/8/2010 11.23 11.7 10.55 11.42 52923

3/8/2010 11.64 11.64 11.25 11.37 34944

2/8/2010 11.68 11.68 11.16 11.32 30161

30/7/2010 11.32 11.67 11.3 11.32 19503

29/7/2010 11.53 11.67 11.3 11.53 12864


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28/7/2010 11.58 11.84 11.5 11.54 25503

27/7/2010 11.64 11.99 11.81 11.62 45649

26/7/2010 11.52 11.85 11.52 11.74 33976

Graphical representation:

The shares are ordinary shares with the face value `10 .Total number of outstanding

shares is 76.63 million.

Total market capitalization value is `837.60 million.

By observing the graph we can say that there are sudden fluctuations in share moving

prices.

In the above data as I collected information from 26-07-2010 to 20-09-2010

On the first day the share value is r`11.52and on 20-09-2010 the share value is `10.92

There is 5% change in these 50 days. Till now they didnt pay the dividends to

shareholders

Beta: 1.37

Market Cap (Mil.): `837.60


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Shares Outstanding (Mil.): 76.63

Annual Dividend: NA

Yield (%): NA

PE ratio 7.85

Growth for Ambalal Sarabhai Enterprises Ltd

1 Year 3 Years 5 Years

Sales % 8.79 -19.37 -11.33

EPS % -43.28 25.68 3.65

Dividend % -- -- --

At present the net profit margin is -16.60% so compare to other firms it is not profitable

in their industry.Its EPS`1.42 compare to previous years it is in positive because from the past 5years it

is below `-3

Beta value is 1.37 when the beta value is more than 1 it is very sensitivity to market

prices.

CONCLUSION:Finally by observing the reports Ambalal Sarabhai Enterprises is a little weaker than

other companies in the Industry. They are reducing their debts and they are not

concentrating to increase their sales because their over all costs are decreasing during the

inflation time. They are not giving any dividend it may a reason for the high systematic

risk But compare to previous years there is good result in EPS and share holding patterns.

Sooner it may get a good position in the industry

ambalal sarabhai enterprises limited 21121

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