the ranbaxy daiichi merger (4)

THE RANBAXY DAIICHI MERGER

Just a few days before announcing that he had sold his family's 34.8% stake in Ranbaxy Laboratories to Japanese pharmaceutical firm Daiichi Sankyo, Ranbaxy's CEO and managing director, Malvinder Mohan Singh, said his company was on the hunt for its own acquisitions.

He told the New Delhi-headquartered business daily, theBusiness Standard, that he had "de-risked" and charted a strategy for the company to make acquisitions of its own."When you are the leader, you have to set the pace for the industry," he declared. So, Indian investors and pharmaceutical industry leaders were astounded by the June 11 announcement. To be sure, the markets were aware that something was afoot between Ranbaxy, India's largest pharmaceutical company, and Daiichi Sankyo, Japan's second largest, but investors were expecting no more than a sale of a strategic stake of about 10% or so to shore up an alliance between the two companies. The sale of the Singh family's entire stake came as quite a shock. Asked one journalist after the announcement: "Haven't you sold the family silver?"

According to Singh "[This] puts us on a new and much stronger platform to harness our capabilities in drug development, manufacturing and global reach," he said. "Together with our pool of scientific, technical and managerial resources and talent, we will enter a new orbit to chart a higher trajectory of sustainable growth ... in the developed and emerging markets, organically and inorganically. This is a significant milestone in our mission of becoming a research-based international pharmaceutical company." Daiichi Sankyo president and CEO Takashi Shoda said the two companies are a good fit: "The proposed transaction is in line with our goal to be a global pharmaceutical innovator and provides the opportunity to complement our strong presence in innovation with a new, strong presence in the fast-growing business of non-proprietary pharmaceuticals." He added: "While both companies will closely cooperate to explore how to fully optimize our growth opportunities, we will respect Ranbaxy's autonomy as a standalone company as well." Not only will Singh stay with the company, Shoda said, he will also be chairman of its board of directors.

RANBAXY.

TypePublic

Traded asBSE:500359NSE:RANBAXY

IndustryPharmaceuticals

Founded1961

HeadquartersGurgaon,Haryana,India

Revenue99.769 billion (US$1.81 billion)(2011)

Net incomeEBITDA18.299 billion (US$331.21 million)(2011)

Employees10,435

ParentDaiichi Sankyo

Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a Japanese companyShionogi. The name Ranbaxy is a combination of the names of its first ownersRanbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from his cousins Ranbir and Gurbax. After Bhai Mohan Singh's son Parvinder Singh joined the company in 1967, the company saw an increase in scale. In 1998, Ranbaxy entered theUnited States, the world's largest pharmaceuticals market and now the biggest market for Ranbaxy, accounting for 28% of Ranbaxy's sales in 2005. For the twelve months ending on 31 December 2005, the company's global sales were at US $1,178 million with overseas markets accounting for 75% of global sales (USA: 28%,Europe: 17%,Brazil,Russia, andChina: 29%). For the twelve months ending on December 31, 2006, the company's global sales were at US $1,300 million.

Most of Ranbaxy's products are manufactured by license from foreign pharmaceutical developers, though a significant percentage of their products are off-patentdrugs that are manufactured and distributed without licensing from the original manufacturer because the patents on such drugs have expired.

In December 2005, Ranbaxy's shares were hit hard by a patent ruling disallowing production of its own version ofPfizer'scholesterol-cutting drugLipitor, which has annual sales of more than $10 billion.In June 2008, Ranbaxy settled the patent dispute with Pfizer allowing them to sell Atorvastatin Calcium, the generic version of Lipitor(R)and Atorvastatin Calcium-Amylodipine Besylate, the generic version of Pfizer's Caduet(R)in the US starting November 30, 2011. The settlement also resolved several other disputes in other countries. On 23 June 2006, Ranbaxy received from the United StatesFood & Drug Administrationa 180-day exclusivity period to sellsimvastatin(Zocor) in the U.S. as ageneric drugat 80mg strength. Ranbaxy competes with the maker of brand-name Zocor,Merck & Co.; IVAX Corporation (which was acquired by and merged into Teva Pharmaceutical Industries Ltd.), which has 180-day exclusivity at strengths other than 80mg; andDr. Reddy's Laboratories, also from India, whose authorized generic version (licensed by Merck) is exempt from exclusivity.

In June 2008, Japan'sDaiichi Sankyo Companyagreed to take a majority (50.1%) stake in Ranbaxy, with a deal valued at about $4.6 billion. Ranbaxy's Malvinder Singh remained as CEO after the transaction. On 16 September 2008, the Food and Drug Administration issued two Warning Letters to Ranbaxy Laboratories Ltd. and an Import Alert for generic drugs produced by two manufacturing plants in India.By February 25, 2009 the U.S. Food and Drug Administration said it halted reviews of all drug applications including data developed at Ranbaxy's Paonta Sahib plant in India because of a practice of falsified data and test results in approved and pending drug applications. "Investigations revealed a pattern of questionable data," the FDA said. On December 1, 2011, Ranbaxy got the much-awaited approval from the US Food and Drug Administration to launch the generic version of drug lipitor in theUnited States of Americaafter its patent expired. On February 8, 2012, three batches of the gastric acid secretion inhibitor Pantoprazole were recalled in The Netherlands due to the presence of impurities. In June 2008,Daiichi-Sankyoacquired a 34.8% stake inRanbaxyfor a value $2.4 billion. In November 2008,Daiichi-Sankyocompleted the takeover of the company from the founding Singh family in a deal worth $4.6 billionby acquiring a 63.92% stake in Ranbaxy. The addition of Ranbaxy Laboratories extends Daiichi-Sankyo's operations - already comprising businesses in 22 countries.[citation needed]The combined company is worth about $30 billion.

DAIICHI

Daiichi Sankyo was established in 2005 through the merger ofSankyo Co., Ltd. andDaiichi Pharmaceutical Co., Ltd which were century-oldpharmaceutical companiesbased inJapan. Daiichi Sankyo Co., Ltd.is a globalpharmaceutical companyand the second largestpharmaceutical companyinJapan. It achieved JPY 970 billion in revenue in 2010 and is currently ranked number 17 in world sales. Its headquarter is based inTokyo. The company also owns the American biotechnology companyPlexxikon, the German biotechnology company U3 andRanbaxy Laboratoriesin India. Daiichi Sankyo is the producer of Benicar (Olmesartan), an angiotensin II receptor antagonist and top selling drug in the U.S. with total sales of USD 2.7 billion.

Daiichi Sankyo, Inc. (DSI) began operating in the U.S. in 2006. It is the U.S. subsidiary of Daiichi Sankyo, Co., Ltd. and a member of the Daiichi Sankyo Group. The organization, which includes U.S. commercial operations and global clinical development (Daiichi Sankyo Pharma Development), is headquartered inNew Jersey. Daiichi Sankyo Europe, GmbH (DSE), the European subsidiary, is headquartered inMunich,Germany. The organization is responsible for development and manufacturing for 12 European countries. Daiichi Sankyo Co., Ltd. is a full member of theEuropean Federation of Pharmaceutical Industries and Associations(EFPIA) and of theInternational Federation of Pharmaceutical Manufacturers and Associations(IFPMA). In 2009, the highly respected magazineR&D Directionhonoured Daiichi Sankyo with its "Best Cardiovascular Pipeline Award".

In 2006, Daiichi Sankyo acquired Zepharma, theOTC drugsunit ofAstellas Pharma. On June 10, 2008, Daiichi Sankyo agreed to take a majority (35%) stake inIndiangeneric drug makerRanbaxy, with a deal valued at about $4.6 billion. In June 2008, Daiichi Sankyo acquiredU3 Pharma, which would contribute a therapeutic anti-HER3antibody to the company's anticancer portfolio. On April 4, 2011 Daiichi Sankyo completed the acquisition of Plexxikon, a Berkeley CA-based pharmaceutical start-up company for $805 Million and an additional $130 Million in milestone payments, pending on the success of Vemurafenib (Plexxikons lead program) an oral, novel drug that targets the oncogenic BRAF mutation present in about half of melanoma cancers and about eight percent of all solid tumors. Daiichi Sankyo is retaining US co-promotion right of the (GSK licensed) drug.

CHRONOLOGY OF KEY EVENTS

June 11, 2008 Signing of Agreement by Daiichi with Ranbaxy and its Promoters.

June 14, 2008 Public announcement by Daiichi to the shareholders of Ranbaxy to acquire

additional 20% equity shares at Rs.737 per share under the Takeover Code.

June 18, 2008 Ranbaxy announces its settlement with Pfizer over Lipitor litigation worldwide.

June 27, 2008 Submission of draft letter of offer by Daiichi to SEBI for its observations .

July 15, 2008 Approval of preferential allotment of equity shares and warrants to Daiichi by the

shareholders of Ranbaxy.

August 4, 2008 Daiichi receives SEBIs observation on the draft letter of offer

August 6, 2008 FIPB approves the proposed investment, subject to approval of CCEA

August 11, 2008 Daiichi issues revised schedule of activities due to delayed receipt of SEBI

observation

August 16, 2008 Opening of open offer

September 4, 2008 Closing of open offer

October 3, 2008 Receipt of approval from CCEA for foreign investment

October 15, 2008 Acquisition of 20% equity stake by Daiichi pursuant to open offer

October 16, 2008 SEBI rejects Promoters application to sell their equity stake through a block deal on the stock market

October 20, 2008 Ranbaxy becomes subsidiary of Daiichi upon increase in Daiichis stake to 52.5% (including preferential allotment and transfer of 1ST tranche shares from Promoters)

November 7, 2008 Daiichi acquires balance 11.42% shares from the Promoters off the stock market and the deal is concluded. Daiichis equity stake in Ranbaxy up to 63.92%

THE DEAL

In the month of June, 2008, Daiichi entered into a share purchase and share subscription agreement (Agreement) with Ranbaxy and the Singh family, the controlling shareholders (Promoters ), to acquire controlling stake in Ranbaxy.

source: http://www.nishithdesai.com/M&A-Lab/Ranbaxy%20Daiichi%20Deal%20-%20November%202008.pdfSingh is selling his 34.8% stake for around Rs. 10,000 crore ($2.4 billion) at Rs. 737 ($17) per share. Daiichi Sankyo will pick up another 9.4% through a preferential allotment. According to Securities & Exchange Board of India (Sebi) norms, it will have a make an open offer to the shareholders of Ranbaxy for another 20%. There could also be a preferential issue of warrants to take the Daiichi Sankyo stake up by another 4.9%. That will come into play if the ordinary shareholders don't respond to the open offer and Daiichi Sankyo needs another way to raise its stake to 51%.

At the end of the exercise, Ranbaxy will become a subsidiary of Daiichi Sankyo. Despite all the denials from Ranbaxy leadership, an Indian icon will vanish. What will Singh be doing with his $2.4 billion? He says that major investments are needed in Religare and Fortis, the group's forays into financial services and hospitals. But both are really part of the herd in their sectors while Ranbaxy was number one.

Ranbaxy, with $1.6 billion in global sales in 2007, had a profit after tax of $190 million, a gain of 67% over the previous year. It has a footprint in 49 countries and manufacturing facilities in 11. It has 12,000 employees, including 1,200 scientists and has been pouring money into R&D, though obviously not on the same scale as the Western majors. Ranbaxy is among the top 10 global generic companies. Its stated vision has been to be among the top five global generic players and to achieve global sales of $5 billion by 2012. How much of that survives the Daiichi Sankyo regime remains to be seen.

Daiichi Sankyo is the product of a 2005 merger between Sankyo and Daiichi. In the financial year ended March 2008, it had net sales of $8.2 billion and a profit after tax of $915 million. It has a presence in 21 countries and employs 18,000 people. It is the second largest pharmaceutical company in Japan. The company can trace its roots back to 1899, though the formal entity today is relatively new. Daiichi Sankyo makes prescription drugs, diagnostics, radiopharmaceuticals and over-the-counter drugs. The combined company will be worth about $30 billion. The acquisition will help Daiichi Sankyo to jump from number 22 in the global pharmaceutical sector to number 15. "The deal will complement our strong presence in innovation with a new, strong presence in the fast-growing business of non-proprietary pharmaceuticals," according to Shoda. The combination has other benefits for the Japanese company. It gets a stake in a major player in generics, an area that is becoming increasingly important in Japan. According to the 2008 Japanese Pharmaceuticals & Healthcare Report (2ndquarter), the country's pharmaceutical market is currently valued at $74.4 billion and is the most mature in the Asia-Pacific region. By 2012, the market will grow to $82 billion. The country's generics sector is one of the most promising. "In an effort to control ballooning healthcare costs, the ministry of health plans to raise the volume share of generics within the total prescription market to at least 30% by 2012," says the report. "The current value of the sector is $5.5 billion, which equates to 7.3% of total medicines sales. Changes to prescribing procedures and the influx of foreign firms with low-cost goods will provide a stimulus to the generic drug sector." The comparative figures of volume share of generics for the U.S. and the UK are 13% and 26%, so there is some way to go.

THE PHARMA INDUSTRY IN INDIA

ThePharmaceutical industryinIndiais the world's third-largest in terms of volume and stands 14th in terms of value. Thegovernmentstarted to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970.However, economic liberalization in 90s by the former Prime MinisterP.V. Narasimha Raoand the thenFinanceMinister,Dr. Manmohan Singhenabled the industry to become what it is today. This patent act removed compositionpatentsfrom food and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market, and while they streamed out. Indian companies carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs. Although some of the larger companies have taken baby steps towards drug innovation, the industry as a whole has been following this business model until the present.

Pharmaceutical industry todayThe number of purely Indian pharma companies is fairly low. Indian pharma industry is mainly operated as well as controlled by dominant foreign companies having subsidiaries in India due to availability of cheap labour in India at lowest cost. In 2002, over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia[25]. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market.Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago.

Most pharma companies operating in India, even the multinationals, employ Indians almost exclusively from the lowest ranks to high level management. Mirroring the social structure, firms are very hierarchical. Homegrown pharmaceuticals, like many other businesses in India, are often a mix of public and private enterprise. Although many of these companies are publicly owned, leadership passes from father to son and the founding family holds a majority share.

In terms of the global market, India currently holds a modest 1-2% share, but it has been growing at approximately 10% per year. India gained its foothold on the global scene with its innovatively engineered generic drugs and active pharmaceutical ingredients (API), and it is now seeking to become a major player in outsourced clinical research as well as contract manufacturing and research. There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications (ANDA) to the FDA are expected to be filed by Indian companies. Growth in other fields notwithstanding, generics are still a large part of the picture. London research company Global Insight estimates that Indias share of the global generics market will have risen from 4% to 33% by 2007. The Indian pharmaceutical industry has become the third largest producer in the world and is poised to grow into an industry of $ 20 billion in 2015 from the current turnover of $ 12 billion.

PatentsAs it expands its core business, the industry is being forced to adapt its business model to recent changes in the operating environment. The first and most significant change was the January 1, 2005 enactment of an amendment to Indias patent law that reinstated product patents for the first time since 1972. The legislation took effect on the deadline set by the WTOs Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which mandated patent protection on both products and processes for a period of 20 years. Under this new law, India will be forced to recognize not only new patents but also any patents filed after January 1, 1995.Indian companies achieved their status in the domestic market by breaking these product patents, and it is estimated that within the next few years, they will lose $650 million of the local generics market to patent-holders. In the domestic market, this new patent legislation has resulted in fairly clear segmentation. The multinationals narrowed their focus onto high-end patients who make up only 12% of the market, taking advantage of their newly bestowed patent protection. Meanwhile, Indian firms have chosen to take their existing product portfolios and target semi-urban and rural populations.

Product developmentIndian companies are also starting to adapt their product development processes to the new environment. For years, firms have made their ways into the global market by researching generic competitors to patented drugs and following up with litigation to challenge the patent. This approach remains untouched by the new patent regime and looks to increase in the future. However, those that can afford it have set their sights on an even higher goal: new molecule discovery. Although the initial investment is huge, companies are lured by the promise of hefty profit margins and thas a legitimate competitor in the global industry. Local firms have slowly been investing more money into their R&D programs or have formed alliances to tap into these opportunities.

Small and medium enterprisesAs promising as the future is for a whole, the outlook for small and medium enterprises (SME) is not as bright. The excise structure changed so that companies now have to pay a 16% tax on the maximum retail price (MRP) of their products, as opposed to on the ex-factory price. Consequently, larger companies are cutting back on outsourcing and what business is left is shifting to companies with facilities in the four tax-free states - Himachal Pradesh, Jammu & Kashmir, Uttaranchal and Jharkhand.Consequently a large number of pharmaceutical manufacturers shifted their plant to these states, as it became almost impossible to continue operating in non tax free zones. But in a matter of a couple of years the excise duty was revised on two occasions, first it was reduced to 8% and then to 4%. As a result the benefits of shifting to a tax free zone was negated. This resulted in, factories in the tax free zones, to start up third party manufacturing. Under this these factories produced goods under the brand names of other parties on job work basis.

As SMEs wrestled with the tax structure, they were also scrambling to meet the July 1 deadline for compliance with the revised Schedule M Good Manufacturing Practices (GMP). While this should be beneficial to consumers and the industry at large, SMEs have been finding it difficult to find the funds to upgrade their manufacturing plants, resulting in the closure of many facilities. Others invested the money to bring their facilities to compliance, but these operations were located in non-tax-free states, making it difficult to compete in the wake of the new excise tax.

ChallengesAll of these changes are ultimately good for the Indian pharmaceutical industry, which suffered in the past from inadequate regulation and large quantities of spurious drugs. They force the industry to reach a level necessary for global competitiveness. However, they have also exposed some of the inadequacies in the industry today. Its main weakness is an underdeveloped new molecule discovery program. Even after the increased investment, market leaders such as Ranbaxy and Dr. Reddys Laboratories spent only 5-10% of their revenues on R&D, lagging behind Western pharmaceuticals like Pfizer, whose research budget last year was greater than the combined revenues of the entire Indian pharmaceutical industry. This disparity is too great to be explained by cost differentials, and it comes when advances in genomics have made research equipment more expensive than ever. The drug discovery process is further hindered by a dearth of qualified molecular biologists. Due to the disconnect between curriculum and industry, pharmas in India also lack the academic collaboration that is crucial to drug development in the West.

Foreign investmentThe government has also taken steps to encourage foreign investment in its biotech sector. An initiative passed earlier this year allowed 100% foreign direct investment without compulsorylicensingfrom the government. In April, a delegation headed by the Kapil Sibal, the minister of science and technology and ocean development, visited five cities in the U.S. to encourage investment in India, with special emphasis on biotech. Just two months later, Sibal returned to the U.S. to unveil Indias biotech growth strategy at the BIO2005 conference in Philadelphia. 100%of fdi is allowed in India.

ANNEXURES: TABLES AND EXHIBITS

EXHIBIT1:

Table 1:Consolidated Balance Sheet of Ranbaxy Laboratories------------------- in Rs. Cr. -------------------

Dec '11Dec '10Dec '09Dec '08Dec '07

12 mths12 mths12 mths12 mths12 mths

Sources Of Funds

Total Share Capital211.00210.52210.21210.19186.54

Equity Share Capital211.00210.52210.21210.19186.54

Share Application Money0.676.60175.85175.661.18

Preference Share Capital0.000.000.000.000.00

Init. Contribution Settler0.000.000.000.000.00

Preference Share Application Money0.000.000.000.000.00

Employee Stock Opiton0.000.000.000.000.00

Reserves2,651.125,380.743,950.213,891.892,596.95

Revaluation Reserves6.606.877.1218.5118.73

Networth2,869.395,604.734,343.394,296.252,803.40

Secured Loans337.34236.94218.66210.94410.26

Unsecured Loans4,153.394,097.873,410.864,100.503,731.32

Total Debt4,490.734,334.813,629.524,311.444,141.58

Minority Interest80.9764.7153.3267.4657.05

Policy Holders Funds0.000.000.000.000.00

Group Share in Joint Venture0.000.000.000.000.00

Total Liabilities7,360.129,939.547,972.918,607.696,944.98



Application Of Funds

Gross Block7,326.656,705.016,278.556,194.165,569.03

Less: Accum. Depreciation2,467.992,157.101,788.051,704.201,364.51

Net Block4,858.664,547.914,490.504,489.964,204.52

Capital Work in Progress264.13381.78623.07470.74357.39

Investments98.22498.45540.74543.15240.32

Inventories2,610.712,192.611,840.701,964.311,640.86

Sundry Debtors3,006.531,605.251,839.951,331.011,493.06

Cash and Bank Balance793.44356.72346.16307.51230.75

Total Current Assets6,410.684,154.584,026.813,602.833,364.67

Loans and Advances1,818.031,670.701,576.942,550.251,033.52

Fixed Deposits2,274.682,907.72895.482,088.13207.14

Total CA, Loans & Advances10,503.398,733.006,499.238,241.214,605.33

Deffered Credit0.000.000.000.000.00

Current Liabilities5,326.553,203.543,267.144,297.941,635.23

Provisions2,956.77953.35860.15771.98770.31

Total CL & Provisions8,283.324,156.894,127.295,069.922,405.54

Net Current Assets2,220.074,576.112,371.943,171.292,199.79


Group Share in Joint Venture0.000.000.000.000.00

Miscellaneous Expenses0.000.000.000.000.00

Total Assets7,441.0810,004.258,026.258,675.147,002.02

Contingent Liabilities398.30322.49330.91364.73246.12

Book Value (Rs)67.82132.8098.9697.5874.61

Table 2: Consolidated Profit & Loss account of Ranbaxy Laboratories------------------- in Rs. Cr. -------------------



Income

Sales Turnover10,180.468,962.307,611.777,475.336,825.67

Excise Duty22.5840.9615.9055.8551.37

Net Sales10,157.888,921.347,595.877,419.486,774.30

Other Income-4,000.451,015.37535.75-1,648.92581.16

Stock Adjustments415.80313.74-111.04174.6010.61

Total Income6,573.2310,250.458,020.585,945.167,366.07

Expenditure

Raw Materials3,795.973,443.333,098.263,282.882,792.44

Power & Fuel Cost234.68200.50165.78120.4397.37

Employee Cost1,625.311,505.981,417.47966.58890.27

Other Manufacturing Expenses179.44138.64140.10282.95167.51

Selling and Admin Expenses1,852.811,580.401,546.901,877.471,789.80

Miscellaneous Expenses1,095.75496.64389.51445.48261.77

Preoperative Exp Capitalised0.000.000.000.000.00

Total Expenses8,783.967,365.496,758.026,975.795,999.16



Operating Profit1,789.721,869.59726.81618.29785.75

PBDIT-2,210.732,884.961,262.56-1,030.631,366.91

Interest76.8261.3971.04205.50141.19

PBDT-2,287.552,823.571,191.52-1,236.131,225.72

Depreciation394.02553.27267.61282.47175.20

Other Written Off7.830.000.000.3844.71

Profit Before Tax-2,689.402,270.30923.91-1,518.981,005.81

Extra-ordinary items30.7158.5685.6417.8723.01

PBT (Post Extra-ord Items)-2,658.692,328.861,009.55-1,501.111,028.82

Tax213.73582.99698.07-564.96211.89

Reported Net Profit-2,883.421,736.85310.68-934.95786.65


Share Of P/L Of Associates6.59227.543.247.82-0.21

Net P/L After Minority Interest & Share Of Associates-282.441,438.20210.86-969.07751.58

Total Value Addition4,987.993,922.163,659.763,692.913,206.71

Preference Dividend0.000.000.000.000.00

Equity Dividend0.0784.210.000.00317.16

Corporate Dividend Tax-0.3213.990.000.0053.90

Per share data (annualised)

Shares in issue (lakhs)4,220.004,210.414,204.184,203.703,730.71

Earning Per Share (Rs)-68.3341.257.39-22.2421.09

Equity Dividend (%)0.000.000.000.000.00

Book Value (Rs)67.82132.8098.9697.5874.61

Table :3 Consolidated Cash Flow of Ranbaxy Laboratories------------------- in Rs. Cr. -------------------



Net Profit Before Tax-2686.482321.721009.76-1500.03998.54

Net Cash From Operating Activities629.231538.60-162.13-154.881023.24

Net Cash (used in)/fromInvesting Activities916.07-2170.7565.16-696.78-840.83

Net Cash (used in)/from Financing Activities-1211.51790.82-522.272688.51-39.16

Net (decrease)/increase In Cash and Cash Equivalents445.69158.66-619.241836.85143.26

Opening Cash & Cash Equivalents681.21522.551166.85429.58286.32

Closing Cash & Cash Equivalents1126.90681.21547.612266.43429.58

Table 4: Consolidated Key Financial Ratios of Ranbaxy Laboratories------------------- in Rs. Cr. -------------------


Investment Valuation Ratios

Face Value5.005.005.005.005.00

Dividend Per Share----------

Operating Profit Per Share (Rs)44.1917.2714.7120.2523.52

Net Operating Profit Per Share (Rs)211.89180.67176.50181.58164.40

Free Reserves Per Share (Rs)122.9292.4790.9368.9563.14

Bonus in Equity Capital69.7569.8569.8678.7278.80

Profitability Ratios

Operating Profit Margin(%)20.859.558.3311.1514.30

Profit Before Interest And Tax Margin(%)14.305.924.438.5111.79

Gross Profit Margin(%)14.656.034.528.5611.86

Cash Profit Margin(%)15.701.2514.926.5610.96

Adjusted Cash Margin(%)15.701.2514.925.3910.42

Net Profit Margin(%)16.373.83-12.5611.358.27

Adjusted Net Profit Margin(%)16.373.83-12.5611.358.27

Return On Capital Employed(%)15.377.505.678.3811.16

Return On Net Worth(%)26.767.12-23.1827.8219.88

Adjusted Return on Net Worth(%)15.78-4.1020.645.3017.76

Return on Assets Excluding Revaluations132.8098.9697.5874.6168.85

Return on Assets Including Revaluations132.9699.1398.0275.1169.36

Return on Long Term Funds(%)17.498.286.5610.0013.31

Liquidity And Solvency Ratios

Current Ratio1.641.391.351.291.38

Quick Ratio1.571.010.931.181.29

Debt Equity Ratio0.780.871.051.491.54

Long Term Debt Equity Ratio0.560.740.811.091.13

Debt Coverage Ratios

Interest Cover24.888.422.374.117.03

Total Debt to Owners Fund0.780.871.051.491.54

Financial Charges Coverage Ratio33.8912.193.755.678.83

Financial Charges Coverage Ratio Post Tax34.398.94-2.258.047.73

Management Efficiency Ratios

Inventory Turnover Ratio4.274.344.004.394.06

Debtors Turnover Ratio5.184.795.254.424.52

Investments Turnover Ratio4.274.344.004.394.06

Fixed Assets Turnover Ratio2.252.192.182.232.11

Total Assets Turnover Ratio1.231.451.271.521.41

Asset Turnover Ratio2.252.192.182.232.11

Average Raw Material Holding124.98120.50131.38117.41120.08

Average Finished Goods Held46.8138.8348.7848.4158.33

Number of Days In Working Capital185.35113.18153.87116.90134.28

Profit & Loss Account Ratios

Material Cost Composition38.5940.7844.2441.2242.22

Imported Composition of Raw Materials Consumed----------

Selling Distribution Cost Composition8.8610.1711.3212.3111.02

Expenses as Composition of Total Sales----------

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit6.56----47.9170.80

Dividend Payout Ratio Cash Profit4.78----37.3151.82

Earning Retention Ratio88.88100.00---151.1220.74

Cash Earning Retention Ratio93.17100.00100.00-0.9243.79

AdjustedCash Flow Times3.0237.533.8211.266.15

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