Financial Statement Analysis of Sun

Pharmaceutical Ltd & Lupin

Submitted by-

1) Ashna Nanda

FC17129

Sec-C

2) Sanya

FC17168

Sec - C

Company Info-
 QUALITATIVE ANALYSIS - SUN PHARAMCEUTICAL LIMITED

ABOUT

Sun Pharmaceutical Industries Limited (NSE: SUNPHARMA, BSE: 524715) is an Indian

multinational pharmaceutical company headquartered in Mumbai, Maharashtra that
manufactures and sells pharmaceutical formulations and active pharmaceutical
ingredients (APIs) primarily in India and the United States. The company offers
formulations in various therapeutic areas, such
as cardiology, psychiatry, neurology, gastroenterology and diabetology. It also
provides APIs such as warfarin, carbamazepine, etodolac, and clorazepate, as they all
as anticancer, steroids, peptides.

Vision

Reaching People and Touching Lives Globally as a Leading Provider of Valued

Medicines.

Values

 Quality- Get it right the first time

 Reliability- Maintain efficiency & discipline in all processes & systems and fulfil
the promises made to stakeholders
 Consistency- Endeavour to bring new products to the market & consistently
deliver value to stakeholders
 Trust- Be transparent in dealings
 Innovation- Implement new ideas & technologies to meet unmet needs and
think ahead of times

Mission

As they target moving up the pharmaceutical value chain, Sun Pharma is undergoing
a gradual transformation. They need to cross many milestones in this
transformation. Our capable and committed employees will be key drivers of this
transformation. The short-term outlook continues to be challenging. The US generics
industry is facing rapidly changing market dynamics. Increased competitive intensity
and customer consolidation is leading to pressure on pricing; while continued delay
in approvals from the Halol facility is also impacting us. Also, they had the benefit of
Imatinib exclusivity in the US in FY17, which has ended in July 2016. In the Indian
market, there is uncertainty amongst the trade channels due to the GST
implementation, although it may be temporary. Given these factors, growth could be
a challenge in FY18 and they expect a single-digit decline in consolidated revenues
for FY18 over FY17. Our consolidated R&D investments for FY18 will be about 9-10%
of revenues. Despite these challenges, they continue to invest in enhancing our
global specialty and complex generics pipeline. Investments will also continue for
setting up the requisite front-end capabilities for our specialty business in the US.
These investments may not have commensurate revenues in FY18, but in the long
term, the revenue from specialty products will justify these investments. As a
shareholder, you have continuously supported our endeavors over the past many
years. As always, they are grateful to you for this confidence.

Corporate Information

Chairman

Mr. Israel Makov is the former President & CEO of Teva Pharmaceutical Industries
Ltd. He joined Teva in 1995 and led the company's global expansion, managing 12
acquisitions, two of which were the largest M&A deals in Israeli history at the time.

Currently Mr. Makov is Chairman of BioLight – a company that invests, manages and
commercializes biomedical innovations grouped into “clusters” around defined
medical conditions and Chairman of Micromedic Technologies Ltd. - a cluster of
companies engaged in cancer diagnostics.

Mr. Makov is the former Chairman of Given Imaging—the developer and world’s
leading provider of capsule endoscopy and Netafim—the pioneer and global leader
in smart irrigation solutions.
Managing Director

Mr. Dilip Shanghvi is the founder of Sun Pharmaceutical Industries Ltd. and has
extensive industrial experience in the pharmaceutical industry. A first generation
entrepreneur, Mr. Shanghvi has won numerous awards and recognitions, including
Forbes’s Entrepreneur of the Year Award (2014), Economic Times’ Business Leader of
the Year (2014), CNN IBN’s Indian of the Year (Business) (2011), Business India's
Businessman of the Year (2011) and Ernst and Young's World Entrepreneur of the
Year (2011). He has also been awarded the Economic Times' Entrepreneur of the
Year (2008), Business Standard’s CEO of the Year (2008) and CNBC TV 18's First
Generation Entrepreneur of the Year (2007).

FINANCIAL HIGHLIGHTS

* During FY11, each equity share of ` 5/- was split into five equity shares of ` 1/- each.

* During FY14, the Company issued bonus shares in the ratio of one equity share of `
1/- for every share held.
* During FY15, the Company’s equity shares have increased to 2,406 Million due to
the merger of erstwhile Ranbaxy Laboratories Ltd. (RLL) with the Company, wherein
0.80 equity share of ` 1 each of the Company have been allotted to the shareholders
of RLL for every 1.00 share of ` 5 each held by them. The Company has adopted Ind-
AS accounting standards with effect from 1st April, 2015. Hence, FY16 onwards, the
financials are reported as per Ind-AS and are not strictly comparable with previous
years. For FY15, balance sheet items are as per Ind-AS.

GROWTH STREAMS

US Formulations 4th largest generics company in the US with a strong ANDA pipeline
(157 ANDAs awaiting approval). Largest Indian pharma company in the US. Presence
in generics and specialty segments with more than 420 approved products.

Emerging Markets Among the largest Indian pharma company in emerging markets.
Presence in over 100 countries across Africa, Americas, Asia and Eastern & Central
Europe. Key focus markets – Brazil, Mexico, Russia, Romania, South Africa, and
complementary and affiliated markets.
India Branded Generics No. 1 pharma company in India with 8.6% market share and
30 brands in the country’s top 300 brands. No.1 ranked with 11 classes of doctor
categories. Leading position in high growth chronic therapies.

Western Europe, Canada, Japan, A&NZ & Others Expanding presence in Europe.
Presence across majority of markets in Western Europe, Canada, Japan and A&NZ.
Product portfolio includes differentiated offerings for hospitals, injectables and
generics for retail market.

GROWTH STRATEGIES

Create Sustainable Revenue Streams Enhance share of specialty business globally.

Achieve differentiation by focusing on technically complex products. Focus on key
markets to achieve critical mass Speed to market. Ensure sustained compliance with
global regulatory standards.

Balance Profitability & Investments for Future Increasing contribution of specialty

and complex products. Future investments directed towards differentiated products.

Business Development Use acquisitions to bridge critical capability gaps. Focus on

access to products, technology, market presence. Ensure acquisitions yield high
return on investment. Focus on payback timelines

Cost Leadership Vertically integrated operations. Optimize operational costs.

CORPORATE GOVERNANCE
In compliance with Regulation 34(3) read with Schedule V of the Securities and
Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (“Listing Regulations, 2015”), the Company submits the Corporate
Governance Report for the year ended March 31, 2017.
1. COMPANY’S PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE

Sun Pharmaceutical Industries Limited’s philosophy on Corporate Governance

envisages working towards high levels of transparency, accountability, consistent
value systems, delegation across all facets of its operations leading to sharply
focused and operationally efficient growth. The Company tries to work by these
principles in all its interactions with stakeholders, including shareholders, employees,
customers, suppliers and statutory authorities. Sun Pharmaceutical Industries
Limited is committed to learn and adopt the best practices of Corporate Governance.

2. BOARD OF DIRECTORS

The present strength of the Board of Directors of Company is ten Director. Number
of Board Meetings held during the year ended March 31, 2017 and the dates on
which held: Six Board meetings were held during the year. The dates on which the
meetings were held during the year ended March 31, 2017 are as follows: May 30,
2016, June 23, 2016, August 12, 2016, September 17, 2016, November 10, 2016 and
February 14, 2017.

3. CODE OF CONDUCT

The Board of Directors has laid down a Global Code of Conduct for all Board
members, and all employees, including the senior management of the Company. All
the Directors and senior management have affirmed compliance with the Global
Code of Conduct as approved and adopted by the Board of Directors and a
declaration to this effect signed by the Managing Director has been annexed as
Annexure ‘A’ to the Corporate Governance Report. The code of conduct has been
posted on the website of the Company www.sunpharma.com.

4. AUDIT COMMITTEE

The Audit Committee of the Company presently comprises of four independent non-
executive Directors viz. Mr. Keki M. Mistry, Mr. S. Mohanchand Dadha, Mr. Ashwin S.
Dani and Mr. Hasmukh S. Shah. Mr. Keki M. Mistry is the Chairman of the
Committee. The constitution of Audit Committee meets with the requirements as
laid down under Section 177 of the Companies Act, 2013 and also of Regulation 18 of
the Listing Regulations, 2015. Mr. Sunil R. Ajmera, the Company Secretary of the
Company is the Secretary of the Audit Committee.

MANAGEMENT DISCUSSION AND ANALYSIS

GLOBAL PHARMACEUTICAL INDUSTRY

The global spending on medicines is expected to reach nearly US$ 1.5 Trillion by
2021. This is an increase of nearly US$ 370 Billion from the 2016 estimated spending
level, representing a CAGR of 4-7%. The two main drivers of this growth will be
introduction of new innovative products in the developed markets and increased
volumes of branded generics in the emerging markets. The growth of a country’s
pharmaceutical industry closely mirrors its general economic progress. As economies
of the world demonstrate widely divergent growth patterns, industry growth is also
different. However, taking a macro perspective, global pharmaceutical growth
depends on worldwide economic momentum, government healthcare programmes
and spending patterns. While R&D efforts will drive the introduction of new products
in the market, challenges remain. For countries grappling with sluggish economies
and limited resources, funding access to these medicines remains an uphill task. Each
country in the world is facing these challenges and addressing them in its own way.
Overall, generic products will continue to be an integral part of these efforts,
targeted at striking a balance between access to healthcare and ability to fund it.

AUDITORS REPORT
Report on the Standalone Ind AS Financial Statements

They have audited the accompanying standalone Ind AS financial statements of Sun
Pharmaceutical Industries Limited (“the Company”), which comprise the Balance
Sheet as at 31st March, 2017, and the Statement of Profit and Loss (including Other
Comprehensive Income), the Cash Flow Statement and the Statement of Changes in
Equity for the year then ended, and a summary of the significant accounting policies
and other explanatory information.
Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section
134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of
these standalone Ind AS financial statements that give a true and fair view of the
financial position, financial performance including other comprehensive income,
cash flows and changes in equity of the Company in accordance with the accounting
principles generally accepted in India, including the Indian Accounting Standards (Ind
AS) prescribed under section 133 of the Act. This responsibility also includes
maintenance of adequate accounting records in accordance with the provisions of
the Act for safeguarding the assets of the Company and for preventing and detecting
frauds and other irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and prudent; and
design, implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and presentation of the standalone
Ind AS financial statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.

Auditor’s Responsibility

Their responsibility is to express an opinion on these standalone Ind AS financial

statements based on our audit. In conducting our audit, we have taken into account
the provisions of the Act, the accounting and auditing standards and matters which
are required to be included in the audit report under the provisions of the Act and
the Rules made thereunder. We conducted our audit of the standalone Ind AS
financial statements in accordance with the Standards on Auditing specified under
Section 143(10) of the Act. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about
whether the standalone Ind AS financial statements are free from material
misstatement. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the standalone Ind AS financial statements.
The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the standalone Ind AS financial
statements, whether due to fraud or error. In making those risk assessments, the
auditor considers internal financial control relevant to the Company’s preparation of
the standalone Ind AS financial statements that give a true and fair view in order to
design audit procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of the accounting policies used and the
reasonableness of the accounting estimates made by the Company’s Directors, as
well as evaluating the overall presentation of the standalone Ind AS financial
statements. We believe that the audit evidence obtained by us is sufficient and
appropriate to provide a basis for our audit opinion on the standalone Ind AS
financial statements.

Opinion

In their opinion and to the best of their information and according to the
explanations given to them, the aforesaid standalone Ind AS financial statements
give the information required by the Act in the manner so required and give a true
and fair view in conformity with the accounting principles generally accepted in
India, of the state of affairs of the Company as at 31st March, 2017, and its loss, total
comprehensive loss, its cash flows and the changes in equity for the year ended on
that date.

Qualitative Analysis of Lupin Limited

Lupin Limited is a transnational pharmaceutical company based in Mumbai. It is the seventh-
largest company by market capitalization and the 10th-largest generic pharmaceutical company
by revenue globally.

Lupin was founded in 1968 by Desh Bandhu Gupta, then an Associate Professor at BITS-Pilani,
Rajasthan. Named after the Lupin flower because of its inherent qualities and what it personifies
and stands for, the company was created with a vision to fight life-threatening infectious diseases
and to manufacture drugs of the highest social priority. Gupta died on 26 June 2017 and was
replaced as chairman by his wife, Manju Deshbandhu Gupta.

Lupin first gained recognition when it became one of the world’s largest manufacturers of
tuberculosis drugs. The company today has a significant market share in key markets in the
cardiovascular (prils and statins), Diabetology, asthma, pediatrics, CNS, GI, anti-infectives and
NSAIDs therapy segments. It also has a global leadership position in the anti-TB and
Cephalosporin segments.
Mission
Lupin's mission is to become a transnational pharmaceutical company through the development
and introduction of a wide portfolio of branded and generic products in key markets.

VISION
"To be An Innovation Led, Transnational Pharmaceutical Company"

VALUES:
INTEGRITY

We conduct ourselves with uncompromising integrity and honesty and insist on the highest
ethical standards and transparency from our employees in all interactions. Everything we do
must stand public scrutiny
PASSION FOR EXCELLENCE

We relentlessly pursue excellence through innovation and continuous improvement in all our
projects, processes and products. To set our standards, we benchmark with the best in the World.

TEAMWORK

We align efforts and energies of our people across all levels and geographies to deliver
outstanding results to our stakeholders. We encourage diverse opinions and yet work together in
a coordinated and mutually supportive way.

ENTREPRENEURIAL SPIRIT

We empower our employees to generate new ideas, explore avenues and offer solutions that add
exceptional value. We encourage them to build ownership in all endeavors by assuming
responsibility with passion and conviction.
RESPECT AND CARE

We are compassionate and sensitive towards all our stakeholders and treat them the way we
would expect to be treated. We provide equal and fair opportunity for employment, learning and
career development.

CUSTOMER FOCUS

We strive to understand and meet customer needs in a professional and responsive manner. We
focus on building long term partnerships for mutual benefit and take responsibility for delivering
on our commitment.

Corporate Information
DIRECTORS
Dr. Desh Bandhu Gupta, Chairman
Mrs. Manju. D. Gupta, Executive Director
Dr. Kamal K. Sharma, Vice Chairman
Ms. Vinita Gupta, Chief Executive Officer
Mr. Nilesh Gupta, Managing Director
Mr. Ramesh Swaminathan, Chief Financial Officer & Executive Director
Dr. Vijay Kelkar, Independent Director
Mr. R. A. Shah, Independent Director
Mr. Richard Zahn, Independent Director
Dr. K. U. Mada, Independent Director
Mr. Dileep C. Choksi, Independent Director
Mr. Jean-Luc Belingard, Independent Director
SENIOR MANAGEMENT TEAM
Dr. Desh Bandhu Gupta, Chairman
Dr. Kamal K. Sharma, Vice Chairman
Ms. Vinita Gupta, Chief Executive Officer
Mr. Nilesh Gupta, Managing Director
Mr. Ramesh Swaminathan, Chief Financial Officer & Executive Director
Dr. Rajender Kamboj, President - Novel Drug Discovery & Development
Mr. Naresh Gupta, President - API & Global TB
Mr. Alok Ghosh, President - Technical Operations
Dr. Cyrus Karkaria, President - Biotechnology
Mr. Sunil Makharia, President - Finance
Mr. Yugesh Goutam, President - Global Human Resources
Mr. Debabrata Chakravorty, President - Global Sourcing & Contract Manufacturing
Mr. Rajeev Sibal, President - India Region Formulations
Mr. Paul McGarty, President - Lupin Pharmaceuticals Inc., USA
Dr. Sofia Mumtaz, Head - Pipeline Management and Legal
Mr. Martin Mercer, President - Latin America
Dr. Thierry Volle, President - Europe, Middle-East & Africa
Dr. Fabrice Egros, President - Asia Pacific & Japan
Dr. Kurt Nielsen, President - Somerset, USA
Mr. Noriaki Tsunoda, President - Kyowa Pharmaceutical Industry Co., Ltd., Japan
REGISTERED OFFICE
Kalpataru Inspire, 3rd Floor,
Off Western Express Highway,
Santacruz (East),
Mumbai - 400 055.
India.
Tel: + 91 22 6640 2323
Fax:+ 91 22 6640 8131
Website
www.lupin.com
E-Mail
info@lupin.com
CORPORATE IDENTITY NUMBER
L24100MH1983PLC029442
CORPORATE OFFICE
Laxmi Towers, ‘B’ Wing, 5th Floor,
Bandra Kurla Complex,
Bandra (East),
Mumbai - 400 051.
India.
Tel: + 91 22 6640 2222
Fax: + 91 22 6640 2130
COMPANY SECRETARY
Mr. R. V. Satam
AUDITORS
B S R & Co. LLP
Chartered Accountants
INTERNAL AUDITORS
Ernst & Young LLP
Price Waterhouse & Co., Bangalore LLP
AUDIT COMMITTEE
Dr. K. U. Mada, Chairman
Dr. Kamal K. Sharma
Mr. Dileep C. Choksi
NOMINATION AND
REMUNERATION COMMITTEE
Dr. K. U. Mada, Chairman
Mr. R. A. Shah
Mr. Richard Zahn
STAKEHOLDERS’ RELATIONSHIP COMMITTEE
Dr. Vijay Kelkar, Chairman
Dr. K. U. Mada
CORPORATE SOCIAL
RESPONSIBILITY COMMITTEE
Dr. Desh Bandhu Gupta, Chairman
Dr. Kamal K. Sharma
Mr. Nilesh Gupta
Dr. Vijay Kelkar
RISK MANAGEMENT COMMITTEE
Dr. Kamal K. Sharma, Chairman
Ms. Vinita Gupta
Mr. Nilesh Gupta
Mr. Ramesh Swaminathan
Mr. Sunil Makharia
STRATEGIC ADVISORY BOARD
Mr. Jean-Luc Belingard
Mr. Franceso Granata
Ms. Yvonne Greenstreet
Mr. Paul Edick
KEY CONTACTS
Mr. Arvind Bothra
Head - Investor Relations and M&A
Email: arvindbothra@lupin.com
Mr. Pradeep Bhagwat
General Manager - Investors’ Services

Email: pradeepbhagwat@lupin.com
Director’s Report

Management Discussion and Analysis

In compliance with Regulation 34(3) read with Schedule V(B) of the Listing
Regulations, a Management Discussion and
Analysis forms part of this Annual Report.

Corporate Governance
In compliance with Regulation 34(3) read with Schedule V(C) of the Listing
Regulations, a Report on Corporate Governance
forms part of this Annual Report. Annexed to the Corporate Governance Report is
the Auditors’ certificate certifying
compliance with the conditions of corporate governance as prescribed under
Schedule V(E) of the Listing Regulations.
Your Company was conferred the coveted ‘Golden Peacock Award for
Excellence in Corporate Governance’ by the Institute
of Directors. The Award validates the ‘Best-in-class’ Corporate Governance
practices followed by the Company and reflects

on the transparent dealings with all its stakeholders.

Product Overview

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Financial High lights
FINANCIAL STATEMENTS
Financial statements are summaries of the operating, financing, and investment activities of a
business. Financial statements should provide information useful to both investors and
creditors in making credit, investment, and other business decisions. And this usefulness means
that investors and creditors can use these statements to predict, compare, and evaluate the
amount, timing, and uncertainty of potential cash flows. In other words, financial statements
provide the information needed to assess a company’s future earnings and therefore the cash
flows expected to result from those earnings.

There are the two basic financial statements:

1). Balance sheets

2). Statement of Profit and Loss

BALANCE SHEET:

The balance sheet is a summary of the assets, liabilities, and equity of a business at a Particular
point in time- usually the end of the firm’s fiscal year. The balance sheet is also known as the
statement of financial condition or the statement of financial position. The Values shown for
the different accounts on the balance sheet are not purported to reflect Current market values;
rather, they reflect historical costs.
STATEMENT OF PROFIT AND LOSS:

A Profit and Loss statement is a summary of the revenues and expenses of a business over a
period of time, usually one month, three months, or one year. It shows the results of the firm’s
operating and financing decisions during that time. The operating decisions of the company –
those that apply to production and marketing- Generate sales or revenues and incur the cost of
goods sold. The difference between sales and cost of goods sold is gross profit. Operating
decisions also result in administrative and general expenses such as advertising fees and office
salaries. Deducting these expenses to as earnings before interest and taxes (EBIT), operating
income, or operating earnings.The results of financing decisions are reflected in the remainder
of the income statement.When interest expenses and taxes, which are both influenced by
financing decisions, are subtracted from EBIT, the result is net income. Net income is, in a
sense, the amount available to owners of the firm. If the firm has preferred stock, the preferred
stock dividends are deducted from net income to arrive at earnings available to common
shareholders. If the firm does not have preferred stock (as is the case with Fictitious and most
non-fictitious corporations), net income is equivalent to earnings available for common
shareholders. The board of directors may then distribute all or part of this as common stock
dividends, retaining the remainder to help finance the firm.

CASH FLOW STATEMENT:

It is a statement, which measures inflows and outflows of cash on account of any type of
business activity. The cash flow statement also explains reasons for such inflows and outflows
of cash so it is a report on a company & cash flow activities. Particularly, it’s operating, investing
and financing activities.
The following are the consolidated statements of Profit and Loss and Consolidated Balance
sheet for the two companies for a period of five financial years 2013-2017.

SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Consolidated Balance Sheet as at 31 March………… (Rupees in Million)

Particulars FY2015 FY2016 FY2017
Property, Plant and Equipment 70,000.70 75,831.40 84952.9
Capital Work-in-Progress 15,317.70 12,034.60 15647.6
Goodwill 54845.9 56347.4 55362.2
Intangible assetss 6461.3 26543.7 36436.6
Intangible assetss under development 5068.4 9719.9 12366.2
Investment in associates 2175.7 3008.8 4605.4
Investment in joint ventures 418 655 429.5
Financial Assets
(i) Investments 10772.1 7496.9 4575.1
(ii) Loans 1830.1 1073.2 698.1
(iii) Others 1583.4 9809.9 6452.2
Deferred Tax Assets (Net) 27172.1 31489.9 24928.2
income tax assets(net) 11238.8 15726.2 31250.1
Other Non-Current Assets 5934.2 6152.8 6861.8
Current Assets
Inventories 56668.9 64225.4 68328.1
Financial Assets
(i) Investments 21662.2 7138.1 2308.8
(ii) Trade Receivables 50927.5 67756.6 72026.1
(iii) Cash and Cash Equivalents 72645.9 80751.4 86628
(iv) Other Bank Balances 37124.8 51065.1 64780.4
(v) Loans 10481.6 10715.5 10190.8
(vi) Others 26751.9 890.8 2258.5
Other Current Assets 12519.4 16798.2 22949.9
Asset classified as held for sale 71.9 65.9
Total assets 501600.6 555302.7 614102.4

EQUITY AND LIABILITIES

Equity
Equity Share Capital 2071.2 2406.6 2399.3
Share suspense account 334.8
Other Equity 278008.5 327418.2 363997.4

Non controlling interest 28511.9 40852.5 37908.6

Total Equity 308926.4 370677.3 404305.3
Liabilities
Non-current liabilities
Financial Liabilities
Borrowings 14360.8 31103 13597.7
Trade payable 10.2
Other financial liab 1816.7 1842.2 1048
Provisions 23074.5 18958.6 12111.1
Deferred tax lib 751.4 1027.7 3147.9
Other non current lib 39380.3 53185.8 30926.9
Current Liabilities
Financial Liabilities
 SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Consolidated Statement of Profit and Loss for the year ended 31

March………. (Rupees in Million

Particulars FY2013 FY2014 FY2015 FY2016 FY2017

Revenue from Operations (Net) 112998.6 160803.6 273920.1 284870.3 315784.4
Other Income 3880.9 5522.3 5476.6 6582.5 6231.5
Total revenue 116879.5 166325.9 279396.7 291452.8 322015.9
Expenses:
Cost of Materials Consumed 19499.8 22433.9 41586.9 41816.3 51246.1
Purchase of Stock-in-Trade 3518.4 6124.7 24659.9 25425.2 32777.6
Changes in inventories of
Finished Goods, Work-in-Progress
and Stock-in-Trade -2284.8 -765.4 1144.9 -3937.7 -2716.3
Employee Benefits Expense 15345.3 20744.4 45026.4 47723.1 49023
Finance Costs 431.6 441.9 5789.9 5232.4 3998
Depreciation and Amortization Exp. 3361.7 4092.3 11947.2 10375.3 12647.5
Other Expenses 27957.5 42268.3 82835 92260.2 84561.3
Total expense 67829.5 95340.1 212990.2 218894.8 231537.2
Loss/profit before exceptional and extraordinary items and Tax 49050 70985.8 66406.5 72558 90478.7
Exceptional income
Exceptional expense 5835.8 25174.1 2377.5 6851.7
Profit Before Tax 43214.2 45811.7 64029 65706.3 90478.7
Current tax 8131.3 8079.6 16479.3 11954.1 4046.4
Deffered tax 324.2 -1057.9 -7332.4 -2816.4 8069.3
Profit after tax 34758.7 38790 54882.1 56568.6 78363
Profit gor the year before share of associates & minority int 34758.7 38790 54882.1 56568.6 78363
Share of p&l of associates 125.6 -18.7 299.6
Share of p&l of joint ventures 33.2 -200.3
Profit for the year before non controlling interest 56583.1 78462.3
Non controlling interest 11126 8818.6
Profit for the year attributable to owner of the company 29830.6 31414.7 45393.8 45457.1 69643.7
Other comprehensive income -389.7 -766.9
Items that will not be reclassified to p&l -42.2 -56.6
Remeasurement of defined benefit plans -347.5 -710.3
Income tax effect -2802.4 -3741.4
Equity instruments through other comprehensive income -3149.4 -4451.7
Basic 14.4 15.2 18.9 18.9 29
Diluted 14.4 15.2 18.9 18.9 29
The Analysis of Financial Statements is a study of relationships among various financial figures
as set out in the financial statements, i.e., Balance Sheet and Statement of Profit and Loss. The
complex data given in these financial statements is divided or broken into Simple and valuable
elements and relationships are established between the elements of the same statement or
different financial statements. This process of division, establishing relationships and
interpretation thereof to understand the working and financial position of a business is known
as Analysis of Financial Statements.

Comparative Statements of Sun pharmaceutical

Industries Limited and Lupin Limited
Comparative Statements or Comparative Financial Statements mean a comparative study of
individual items or components of financial statements, i.e., Balance Sheet and Statement of
Profit and Loss of two or more years of the enterprise itself. In Comparative Statements,
amounts of two or more years are placed side by side along with change in amounts in absolute
and percentage terms to facilitate comparison. Both Statement of Profit and Loss and Balance
Sheet are prepared in the form of Comparative Statements or Comparative Financial
Statements.

STEP-1: Re-arrangement of Financial Statements

The following points may be noted regarding re-arrangement of the statement of profit and
loss:

1). Net Sales are revenue from operations.

2). Cost of goods sold = Raw material consumed + Purchases + Change in stock + Employee
benefit expenses + Manufacturing expenses if any.

3). Operating expenses = other expenses which includes administration and selling Expenses.

4). Non-operating income = other income + Exceptional incomes + Extraordinary incomes.

5). Non-operating expenses = Finance cost + Exceptional expenses + Extraordinary Expenses.

The following points may be noted regarding re-arrangement of balance sheet:

1). Other non-current assets = Deferred tax assets + other non-currents assets + Goodwill +
other long terms loans and advances.

2). Other current assets = Current investments + Short term loans and advances + other Current
assets.

3). Other current liabilities = other current liablities + Short term provisions + Short term
borrowing.

4). Other long term liabilities and provisions = Deferred tax liabilities + other long term liabilities
+ Long term provison.
 SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Re-arranged Balance Sheet as at 31 March………… (Rupees in Million)

Particulars FY2013 FY2014 FY2015 FY2016 FY2017
Non Current Assets
Tangible Assets 31604.3 34981.8 70,000.70 75,831.40 84952.9
Intangible Assets 24870.4 33191 66375.6 92611 104165
Capital Work-in-Progress 5626.1 8415.4 15,317.70 12,034.60 15647.6
Non-current Investments 11063.5 7857.6 13365.8 11160.7 9610
Other Non Current Asset 17632.1 22379.8 47758.6 64252 70190.4
TOTAL NON CURRENT ASSETS 90796.4 106825.6 212,818.40 255,889.70 284,565.90
Current Assets
Inventories 25777.6 31230.1 56668.9 64225.4 68328.1
Trade Receivables 24122.3 22004.2 50927.5 67756.6 72026.1
Cash and Bank Balances 40587.1 75901.5 72645.9 80751.4 86628
Other Current Assets 24122.3 22004.2 108539.9 86679.6 102554.3
Total current Assets 114609.3 151140 288782.2 299413 329536.5
Total Assets 205405.7 257965.6 501,600.60 555,302.70 614,102.40
Current Liablities
Trade Payables 10579.9 13282.6 32430.3 35829.2 43953.9
Other Current Liabilities 17832.6 46253.6 120863.6 95610.4 134916.3
Total Current liablities 28412.5 59536.2 153293.9 131439.6 178870.2
Capital Employed 176993.2 198429.4 348,306.70 423,863.10 435,232.20
Non Current liablities
Long-term Borrowings 1152.6 486.7 14360.8 31103 13597.7
Other Long-term Liabilities 10013.5 28864.3 24891.2 20800.8 13159.1

Total non current Liablities 11166.1 29351 39252 51903.8 26756.8

Total liabilities 39578.6 88887.2 192545.9 183343.4 205627
Shareholder's Net Worth 165827.1 169078.4 309054.7 371959.3 408475.4
Prefernece Capital 0 0 0 0 0
Equity Shareholder Fund 165827.1 169078.4 309054.7 371959.3 408475.4
Share Capital 1035.6 2071.2 2071.2 2406.6 2399.3
Reserve and surplus 1488617 183178.3
Non controlling interest 28511.9 40852.5 37908.6
Other Equity 278008.5 327418.2 363997.4
Share suspense account 334.8
Total lib and equity 205405.7 257965.6 501600.6 555302.7 614102.4
 SUN PHARAMCEUTICAL INDUSTRIES LIMITED
Re-arranged Statement of Profit and Loss for the year ended 31 March……….
(Rupees in Million)

Particulars FY2013 FY2014 FY2015 FY2016 FY2017

Net revenue from operation 112998.6 160803.6 273920.1 284870.3 315784.4
COGS
Cost of Materials Consumed 19499.8 22433.9 41586.9 41816.3 51246.1
Purchase of Stock-in-Trade 3518.4 6124.7 24659.9 25425.2 32777.6
change of inven -2284.8 -765.4 1144.9 -3937.7 -2716.3
Employee Benefits Expense 15345.3 20744.4 45026.4 47723.1 49023
COGS 36078.7 48537.6 112418.1 111026.9 130330.4
Gross profit 76919.9 112266 161502 173843.4 185454
Other Expenses 27957.5 42268.3 82835 92260.2 84561.3
Cash operating profit(EBIDTA) 48962.4 69997.7 78667 81583.2 100892.7
Depreciation and Amortization Exp. 3361.7 4092.3 11947.2 10375.3 12647.5
EBIT/ operating profit 45600.7 65905.4 66719.8 71207.9 88245.2
Non operating income 9716.7 30696.4 5476.6 6582.5 6231.5
Non operating expenses 431.6 441.9 29564.9 12084.1 3998
PBT 54885.8 96159.9 42631.5 65706.3 90478.7
Tax expense 8455.5 7021.7 9146.9 9137.7 12115.7
PAT 46430.3 89138.2 33484.6 56568.6 78363

STEP-2: COMMON-SIZE STATEMENTS of Sun pharmaceutical

Industries Limited and Lupin Limited

Common-size statements or Common-size Financial Statements mean statements in which

individual items of financial statements of two or more years are placed side by side and
thereafter converted into percentage taking a common base. Common base normally taken is
total of assets or equity and liabilities, in this case of common-size Balance Sheet and Revenue
from operations, in the case of Common-size Statement of Profit and Loss. In the Balance
Sheet, the total of assets or equity and liabilities is taken as 100 and all the figures are
expressed as percentage of total. Similarly, in the Statement of Profit and Loss, Revenue from
operations, i.e., Net Sales is taken as 100 and all amounts are expressed as a percentage of
Revenue from operations, i.e., Net Sales.

SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Common Size Balance Sheet as at 31 March…………

Particulars FY2013 FY2014 FY2015 FY2016 FY2017

Non Current Assets
Tangible Assets 9.29 6.13 8.80 11.02 12.53
Intangible Assets 0.01 0.05 0.20 0.18 0.16
Capital Work-in-Progress 2.85 2.34 3.06 2.40 3.44
Non-current Investments 12.15 29.98 72.50 69.73 62.90
Other Non Current Asset 43.88 33.69 0.01 0.01 0.15
TOTAL NON CURRENT ASSETS 68.17 72.19 84.57 83.34 79.18
Current Assets 0.00 0.00 0.00 0.00 0.00
Inventories 7.11 4.52 6.17 6.68 7.47
Trade Receivables 6.04 4.77 5.05 6.26 8.91
Cash and Bank Balances 3.53 0.69 0.54 0.48 0.49
Other Current Assets 15.15 17.82 3.66 3.23 3.94
Total current Assets 31.83 27.81 15.43 16.66 20.82
Total Assets 100.00 100.00 100.00 100.00 100.00
Current Liablities 0.00 0.00 0.00 0.00 0.00
Trade Payables 2.97 1.85 4.45 5.56 6.85
Other Current Liabilities 6.49 18.77 24.24 71.68 29.05
Total Current liablities 9.46 20.62 28.69 77.23 35.90
Capital Employed 90.54 79.38 71.31 22.77 64.10
Non Current liablities 0.00 0.00 0.00 0.00 0.00
Long-term Borrowings 0.04 0.02 3.29 6.03 2.49
Other Long-term Liabilities 2.44 13.24 6.49 5.72 3.71
Total non current Liablities 2.48 13.26 9.78 11.75 6.19
Total liability 32.40 43.30 54.31 57.46 67.21
Shareholder's Net Worth 135.77 82.36 87.17 116.58 133.52
Prefernece Capital 0.00 0.00 0.00 0.00 0.00
Equity Shareholder Fund 0.00 0.00 0.00 0.00 0.00
Share Capital 0.85 1.01 0.58 0.75 0.78
Reserve and surplus 1218.76 89.22 0.00 0.00 0.00
Non controlling interest 0.00 0.00 8.04 12.80 12.39
Other Equity 0.00 0.00 78.41 102.62 118.98
Share suspense account 0.00 0.00 0.09 0.00 0.00
Total lib and equity 168.17 125.65 141.47 174.05 200.73
 SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Common Size Statement of Profit and Loss for the year ended 31 March……….

Particulars FY2012
FY2013 FY2014 FY2015 FY2016 FY2017
Net revenue from operation 100 100 100 100 100
COGS 0 0 0 0 0
Cost of Materials Consumed 29.02 31.63 28.20 23.38 29.26
Purchase of Stock-in-Trade 8.26 6.54 11.65 -0.18 -2.09
and Stock-in-Trade -0.43 -0.51 3.97 0.00 0.00
Employee Benefits Expense 9.66 9.89 18.54 18.78 19.04
Total COGS 46.51 47.54 62.37 41.97 46.22
Gross profit 53.49 52.46 37.63 58.03 53.78
Other Expenses 32.41 51.86 44.60 48.47 36.73
Cash operating profit(EBIDTA) 21.08 0.60 -6.97 9.55 17.06
Depreciation and Amortization Exp. 3.53 3.60 8.24 5.90 5.36
EBIT/ operating profit 17.55 -3.00 -15.21 3.65 11.70
Non operating income 39.95 108.51 6.83 8.37 7.98
Non operating expenses 1.77 1.56 36.88 15.37 5.12
PBT 225.67 339.93 53.18 83.56 115.90
Tax expense 34.77 24.82 11.41 11.62 15.52
PAT 190.90 315.11 41.77 71.94 100.38

INTRA-FIRM COMPARISON:

A comparison of financial variables of an enterprise over a period of time is known as Intra-firm

Comparison. It analyses the performance of a business over a number of years and shows trend
of financial factors.

Some of the observations from the common-size statement of profit and loss of Sun
pharmaceuticals Industries Limited for the last five years may be summarized as given below:

 Company is focusing on increasing intangible asset as it was 12.11% of total assets(2013)

and has increased up to 16.96%(2017) whereas share of tangible asset has been
decreasing from 15.3 (2013) to 13.8(2017).
  Company’s long term loan and advances has been increasing with time that has lead to
increase in the proportion of other non current asset significantly.
 Current assets have been decreasing from 2013 to 2017 , as the proportion was around
62% earlier reduced to 52 % as of now.
 Other current liability saw an increase from 17832 to 134916 in absolute terms but
mainly due to increase in short term provision in 5 yrs and trade payable in between 14
-15.
 Equity has been decreasing within these 5 yrs and share has been going to other equity

INTER-FIRM COMPARISON : Balance Sheet

INTER-FIRM COMPARISON : Statements of Profit and Loss

STEP-3: INDEXED STATEMENTS of Sun pharmaceutical Industries

Limited and Lupin Limited
In this technique, the base year figures are taken at 100 and all subsequent years
figures are expressed as a percentage thereof. In case of financial statements,
various components of balance sheet and profit and loss account are expressed as
a percentage of the base year. It helps to compare the figures of a company over
the two or more years. A longer time frame of data gives better results.However
one should remember that

 There should be a consistency in the accounting policies.

 Proper care should be taken in selecting the base year. It must be a normal
and representative year.
 If possible, the figures should be adjusted for price level changes.

One should remember that indexed based or common-size financial numbers do

not convey much on their own. They tend to convey only when they are –

a). Logically linked with other recognizable connections among the various items
of the two financial statements of the same period.

b). Using data of the longer period to capture trends.

c). Compared with related data of peers from the same industry.
 SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Indexed Balance Sheet as at 31 March…………

Balance Sheet as FY2013 FY2014 FY2015 FY2016 FY2017
Non Current Assets
Tangible Assets 100 110.7 221.5 239.9 268.8
Intangible Assets 100 133.5 266.9 372.4 418.8
Capital Work-in-Progress 100 149.6 272.3 213.9 278.1
Non-current Investments 100 71.0 120.8 100.9 86.9
Other Non Current Asset 100 126.9 270.9 364.4 398.1
TOTAL NON CURRENT ASSETS 100 117.7 234.4 281.8 313.4
Current Assets
Inventories 100 121.2 219.8 249.2 265.1
Trade Receivables 100 91.2 211.1 280.9 298.6
Cash and Bank Balances 100 187.0 179.0 199.0 213.4
Other Current Assets 100 91.2 450.0 359.3 425.1
Total current Assets 100 131.9 252.0 261.2 287.5
Total Assets 100 125.6 244.2 270.3 299.0
Current Liablities
Trade Payables 100 104.8 435.0 488.9 577.7
Other Current Liabilities 100 486.2 1084.4 2885.4 1121.5
Total Current liablities 100 366.5 880.6 2133.3 950.8
Capital Employed 100 147.4 228.6 65.7 177.3
Non Current liablities
Long-term Borrowings 100 100.0 25115.5 41440.5 16393.1
Other Long-term Liabilities 100 912.5 772.3 612.8 380.5
Total non current Liablities 100 900.0 1145.6 1239.0 626.1
Total lib 100 224.6 486.5 463.2 519.5
Shareholder's Net Worth 100 102.0 186.4 224.3 246.3
Prefernece Capital
Equity Shareholder Fund
Share Capital 100 200.0 200.0 232.4 231.7
Reserve and surplus 100 123.1 0.0 0.0 0.0
Non controlling interest
Other Equity
share suspense account
Total lib and equity 100 125.6 244.2 270.3 299.0

SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Indexed Statement of Profit and Loss for the year ended 31 March………. (Rupees in Million)

Particulars FY2013 FY2014 FY2015 FY2016 FY2017

Net revenue from operation
COGS
Cost of Materials Consumed
Purchase of Stock-in-Trade
and Stock-in-Trade
Employee Benefits Expense
COGS
Gross profit
Other Expenses
Cash operating profit(EBIDTA)
Depreciation and Amortization Exp.100.00 121.73 355.39 308.63 376.22
EBIT/ operating profit
Non operating income
Non operating expenses
PBT
Tax expense
PAT
100.00 142.31 242.41 252.10 279.46
100.00 115.05 213.27 214.44 262.80
100.00 174.08 700.88 722.64 931.61
100.00 33.50 -50.11 172.34 118.89
100.00 135.18 293.42 310.99 319.47
100.00 134.53 311.59 307.74 361.24
100.00 145.95 209.96 226.01 241.10
100.00 151.19 296.29 330.00 302.46
100.00 142.96 160.67 166.62 206.06
100.00 144.53 146.31 156.16 193.52
100.00 315.91 56.36 67.74 64.13
100.00 408.72 130.32 192.81 63.79
100.00 144.72 130.54 133.96 184.46
100.00 83.04 108.18 108.07 143.29
100.00 157.57 135.20 139.35 193.04

INTRA-FIRM COMPARISON :

Some of the observations from the Indexed statement of Sun pharmaceuticals Industries

Limited for the last five years may be summarized as given below:

 Tangible assets have increased upto 168.8% in 2017 taking 2013 as base year.Whereas
intangible aseets have been increased uoto 318.8%.
 Inventories have increased upto 165.1% & trade receivable has increased upto 198.6%
 Trade payables have increased upto 477.7 %.
 Long term borrowings have increased upto 16293.1% whereas other long term liabilities
have decreased upto 280.5%
 Shareholder net worth has increased upto 146.3%.
 COGS has increased upto 261.24%.
 Gross profit has increased upto 141.1%.
 EBIDTA has increased upto 106.06%.
 Depreciation and amortization has increased upto 276.22%.
  EBIT has increased upto 93.52%.
 Non operating income & non operating expenses has decreased to 64.13% & 63.79%
respectively.

INTER-FIRM COMPARISON : Statements of Profit and Loss

INTER-FIRM COMPARISON : Balance Sheet

STEP-4: RATIO ANALYSIS

A Ratio is a relationship expressed in mathematical terms between two individuals or groups of figures
connected with each other in some logical manner. A financial ratio is a relationship between two or
more accounting figures, which may be expressed in different ways –

(a). As a pure ratio

(b). As number of times

(c). As a percenttage.

Ratios reduce large figures to an easily understandable relationship. But one should understand that
ratios is only a tool for analysis and can-not draw conclusions itself. It is for the analyst to draw
conclusions by evaluating and relating the ratios. An analyst has to handle it very carefully as a wrong
interpretation can entirely change the inferences drawn and may misguide the user. Let us understand
some of the basic caveats of ratio analysis.

Firstly, ratio analysis is used according to the purpose of the user. Ratio analysis helps to evaluate
profitabilit, operating efficiency, short term liquidity and long term solvency position of the enterprise. A
prospective investor would be interested in judging future profitability and return on his investments
while a lending institution would like to know the ability of the enterprise to pay regular interest and
repayment of funds in the long term. In the same manner, a supplier of materials would be interested in
the short term liquidity position of the firm.

Secondly, the reliability and depth of the analysis depends upon the availability of data. If possible, only
audited statements should be considered. The information available in the published financial
statements should be supplemented by the qualitative information from the annual report and other
sources. The quality of analysis also depends upon the quality of the financial statements. All the
limitations of financial such as –
1). Only quantitative information is recorded in the financial statements.

2). Price level changes are ignored.

3). Historical analysis only.

4). Not free from personal bias.

5). Inaccuracy of the accounts etc. are incorporated in the analysis as well.

Thirdly, in order to reach to reliable conclusions, a group of ratios is preferred rather than a single ratio.
Further, one should understand that no ratio is good or bad and there is nothing like an ideal ratio
uniformly applicable in all industries and situations. For example, a gross profit ratio of 25% in a dairy
industry may be considered quite high but the same 25% gross profit ratio for a cosmetics company is
highly insufficient to meet the subsequent expenses.

Fourthly, an intra-firm (for the same firm comparison on year on year basis) as well as inter-firm
comparison for two or more firms for the same period) comparison may be used to get better results.
 SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Profitability Ratio
Particulars FY2013 FY2014 FY2015 FY2016 FY2017
Sales A 112998.6 160803.6 273920.1 284870.3 315784.4
Gross Profit B 76919.9 112266.0 161502.0 173843.4 185454.0
EBIT C 45600.7 65905.4 66719.8 71207.9 88245.2
Earning Available for equity shareholders/PAT D 40594.5 63964.1 54882.1 56568.6 78363.0
Expenses E 27957.5 42268.3 82835.0 92260.2 84561.3
Total Asset F 205405.7 257965.6 501600.6 555302.7 614102.4
Capital Employed G 176993.2 198429.4 348306.7 423863.1 435232.2
Shareholders' Fund H 165827.1 169078.4 309054.7 371959.3 408475.4
No. of Equity Shares I 10360.0 2071.0 2071.0 2406.0 2399.0
Earning Distributed as Dividend J 25900.0 3106.5 6213.0 2406.0 2399.0
EPS K 14.4 15.2 18.9 18.9 29.0
DPS L 2.5 1.5 3.0 1.0 1.0
Market Price Per Share M 408.0 566.0 1015.0 811.0 688.0

Profitability Ratio (Based on Sales)

G. P. Ratio (B/A) 0.7 0.7 0.6 0.6 0.6
Operating Margin Ratio (C/A) 0.4 0.4 0.2 0.2 0.3
Net Profit Ratio (D/A) 0.4 0.4 0.2 0.2 0.2

Profitability Ratio (Based on Asset/ Investment)

Return on Asset (D/F) 0.2 0.2 0.1 0.1 0.1
Return on Investment (B/G) 0.4 0.6 0.5 0.4 0.4
Return on Equity (D/H) 0.2 0.4 0.2 0.2 0.2
Return on capital employed C/G 0.3 0.3 0.2 0.2 0.2
Other Profitability Ratio (Owner's Point of View)
Earning Per Share (D/I) 3.9 30.9 26.5 23.5 32.7
Dividend Per Share (J/I) 2.5 1.5 3 1 1
Dividend Payout Ratio (J/D) 0.638 0.049 0.113 0.043 0.031
Retention Ratio 1-(J/D) 0.362 0.951 0.887 0.957 0.969
Yield
Earning Yield (K/M) 0.035 0.027 0.019 0.023 0.042
Dividend Yield (L/M) 0.006 0.003 0.003 0.001 0.001
Market Capitalisation I*M 4226880 1172186 2102065 1951266 1650512

Interpretation

 The profitability ratio depicts that that the gross profit ratio has been decreasing due to
% increase in sales is more than % increase in gross profit.
 Same is the case with operating profit and net profit ratio.
 The return on investment and equity has seen no change.
 The return on capital employed has been decreased due to decrease in net profit ratio.
 Co. has been showing the earning per share every year but the dividend per share has
been reduced every year because of which the dividend pay-out has decreased and
retention ratio has increased
 SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Leverage Ratio
I
Particulars FY2013 FY2014 FY2015 FY2016 FY2017
Total Long Term Debt A 11166.1 29351 39252 51903.8 26756.8
Total Shareholders' Fund B 165827.1 169078.4 309054.7 371959.3 408475.4
Total Debt C 11995.6 53394.7 102932.9 105117.6 93792.7
Total Asset D 205405.7 257965.6 501600.6 555302.7 614102.4
Fixed Asset E 31604.3 34981.8 70000.7 75831.4 84952.9
EBIT F 45600.7 65905.4 66719.8 71207.9 88245.2
Interest G 431.6 441.9 5789.9 5232.4 3998
EBIDTA H 48962.4 69997.7 78667 81583.2 100892.7

Leverage Ratios
Debt Equity Ratio (A/B) 0.07 0.17 0.13 0.14 0.07
Total Debt Ratio (C/D) 0.06 0.21 0.21 0.19 0.15
Fixed Asset to Long Term Debt Ratio (E/A) 2.83 1.19 1.78 1.46 3.18
Equity Multiplier (D/B) 1.24 1.53 1.62 1.49 1.50

Ability to Service Debt

Interest Coverage Ratio (F/G) 105.66 149.14 11.52 13.61 22.07

Interpretation

 Debt Equity ratio shows the liabilities of company is 7% of stakeholders equity in 2017
which is reduced in comparision to past years.
 Debt Ratio is 15 % which shows equity ratio is high and company uses more of equity
shares for financing.
 Company can cover 3.18 % of the long term liabilities and since it has increased from
previous year it indicates increased debt capacity.
 Interst coverage ratio shows detoriation of company’s ability to pay interest related
liabilities since 2013.
 SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Liquidity Ratio

Particulars FY2013 FY2014 FY2015 FY2016 FY2017

Current Asset A 114609 151140 288782 299413 329537
Current Liability B 28413 59536 153294 131440 178870
Inventories C 25778 31230 56669 64225 68328
Quick Asset D 88832 119910 232113 235188 261208
Cash & Bank Balance E 40587 75902 72646 80751 86628
Cost of Goods Sold F 36079 48538 112418 111027 130330
Operating Expenses G 27958 42268 82835 92260 84561
Tax H 8456 7022 9147 9138 12116
Projected Daily Cash Requirment I

Current Ratio (A/B) 4 3 2 2 2

Quick Ratio (D/B) 3 2 2 2 1
Absolute Liquidity Ratio (E/B) 1 1 0 1 0

Interpretation

 Current ratio shows company have 2 times more current assets to pay off its current liabilities
and its constant from the year 2015.
 Quick ratio shows ability of company to pay short term debt immediately ,which has been
decreased to 1 over 5 years.
 Absolute liquidity ratio shows cash funds with company is not enough to pay of current liabilities
in time as it is less than standard ratio which is 1:2.
 SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Market Ratio

Particulars FY2013 FY2014 FY2015 FY2016 FY2017

Market price A 408 566 1015 811 688
Book value per share B 16.00647683 81.64095 149.2297 154.5966 170.269
EPS C 14.4 15.2 18.9 18.9 29
Ratios
Price- Book value ratio A/B 25.48968172 6.932796 6.801595 5.245913 4.040664
P/E Ratio A/C 28.33333333 37.23684 53.7037 42.91005 23.72414

Interpretation

Decrease in P/E ratio shows incestors may be aniticipating not so high

performance & growth thus won’t be ready to pay high price for shares.

SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Activity Ratio
Particulars FY2013 FY2014 FY2015 FY2016 FY2017
Cost of Goods Sold A 36078.7 48537.6 112418.1 111026.9 130330.4
Average Stock B 7543.5 8935 15537 60446 66276
Annual Net Sales C 112998.6 160803.6 273920.1 284870.3 315784.4
Average Collection Period D 71.54 51.63 47.93 74.99 79.68
Average Receivables E 22454.8 23063.2 36465.8 59342 69891.3
Average Payment Period F 160.36 150.40 124.21 182.72 170.92
Average Payables G 10253.5 11931.2 22856.4 34129.7 39891.5
Average Tangible Asset H 28869.7 33293.15 52491.2 72916 80392.1
Average Fixed Asset I 47994.1 62323.75 102274.55 152409.2 178779.95
Average Working Capital J 157774.2 187711.3 273368.1 386084.9 429547.6
Annual credit purchases K 23018.2 28558.6 66246.8 67241.5 84023.7
Days of inventory holding 360/STR 75.27 66.27 49.75 195.99 183.07
Stock Turnover Ratio (A/B) 4.78 5.43 7.24 1.84 1.97
Debtors Turnover Ratio C/E 5.03 6.97 7.51 4.80 4.52
Creditors Turnover Ratio K/G 2.24 2.39 2.90 1.97 2.11
Total Asset Turnover Ratio (C/H) 3.91 4.83 5.22 3.91 3.93
Fixed Asset Turnover Ratio (C/I) 2.35 2.58 2.68 1.87 1.77
Working Capital Turnover Ratio (C/J) 0.72 0.86 1.00 0.74 0.74
Interpretation

 The holding period of inventory has been increased which has led to
increase in the carrying cost by 108 times.
 The average collection period has increased which has lead to delay in
payment and reduction in debtor turnover ratio.

SUN PHARAMCEUTICAL INDUSTRIES LIMITED

Cash Flow Statements

Particulars 2016 2017

A. Cash flow from operating activities
Profit Before Tax 65,706.30 90,478.70
Adjustments for:
Depreciation and amortisation expense 10,375.30 12,647.50
Impairment of property, plant and
equipment and other intangible assets
(including amount considered in
exceptional items in previous year) 4,981.10 203.6
Impairment of goodwill (including amount
considered in exceptional items in
previous year) 1,942.30
(Gain) /loss on sale / write off of property,
plant and equipment and other intangible
assets, net (including amount considered
in exceptional items) -400.4 108.8
Finance costs 5,232.40 3,998.00
Interest income -3,572.20 -3,711.70
Dividend income -502.9 -420.5
Net gain arising on financial assets
measured at fair value through profit or
loss -353.3 -72.2
Gain on sale of financial assets measured
at fair value through profit or loss -528 -479.3
Gain on disposal of an associate entity -201.3
Provision / write off for doubtful trade
receivables / advances 1,602.10 341.8
Sundry balances written back -175.2 -618.5
Expense recognised in respect of share
based payments to employees 98.8 32.3
Impairment of non-current investment in
an associate - -
Impairment of investments 166.8 6.8
Effect of exchange rate changes -297.6 -6,828.60
Operating profit before working capital
changes 84,275.50 95,485.40
Movements in working capital
(Increase) in inventories -1,667.40 -3,449.90
(Increase) in trade receivables -18,102.70 -2,934.50
(Increase) / decrease in other assets 20,922.40 -6,464.20
Increase in trade payables 3,624.80 7,354.50
Decrease in other liabilities -1,023.00 -1,530.70
Increase / (decrease) in provisions -1,286.40 2,932.70
Cash generated from operations 86,743.20 91,393.30
Income tax paid (net of refund) -19,884.60 -20,571.20
Net cash from operating activities (A) 66,858.60 70,822.10
B. Cash flow from investing activities
Payments for purchase of property, plant
and equipment (including capital-work-in-
progress, other intangible assets and
intangible assets under development) -34,035.20 -36,928.60
Proceeds from disposal of property, plant
and equipment and other intangible
assets 706 1,024.70
Loans / Inter corporate deposits
Given / placed -5,045.70 -6,504.60
Received back / matured 5,120.30 6,796.80
Purchase of investments [including
associate and joint venture ` 1,543.6 - -
Million (Previous year ` 1,071.6 Million)] 401,217.20 388,310.40
Proceeds from sale of investments 416,414.10 391,949.90
Bank balances not considered as cash and
cash equivalents
Fixed deposits / margin money placed -66,025.50 -67,586.60
Fixed deposits / margin money matured 46,731.20 55,224.30
Net cash outflow on acquisition of
subsidiaries / business units -10,255.50 -1,671.80
Interest received 3,378.70 3,365.20
Receipt of rental on assets given under
finance lease 10 10.6
Dividend received 502.9 420.5
Net cash used in investing activities (B) -43,715.90 -42,216.00
C. Cash flow from financing activities
Proceeds from borrowings 82,945.30 53,639.50
Repayment of borrowings -90,764.90 -45,268.20
Payment for buy-back of equity shares of
parent and buy-back of equity shares held
by non-controlling interests of subsidiary -469.5 -27,307.80
Dividend payment to non-controlling
interests -25.7 -30.4
Payment for share buy-back expenses - -34.2
Net increase in working capital demand
loans 1,038.60 2,349.90
Proceeds from issue of equity shares on
exercise of stock options / share
application money received 91.3 24.8
Finance costs (includes borrowing costs
capitalised) -3,013.90 -3,338.30
Dividend paid -7,216.80 -2,399.20
Tax on dividend -1,469.70 -490
Net cash used in financing activities (C) -18,885.30 -22,853.90
Net increase in cash and cash equivalents
(A+B+C) 4,257.40 5,752.20
Cash and cash equivalents at the
beginning of the year 71,834.90 80,316.90
Effect of exchange differences on
restatement of foreign currency cash and
cash equivalents 4,224.60 354.5
Cash and cash equivalents at the end of
the year 80,316.90 86,423.60
As at As at
March March
Notes: in Million 31,2016 31,2017

(a) Cash and cash equivalents comprises

of
Balances with banks
In current accounts 53,731.00 49,192.30
In deposit accounts with original maturity
less than 3 months 26,858.80 35,576.10
Cheques, drafts on hand 143.6 1,813.90
Cash on hand 18 45.7
Cash and cash equivalents (Refer note 14) 80,751.40 86,628.00
Less:- cash credit facilities included under
loans repayable on demand in note 434.5 204.4
Cash and cash equivalents in cash flow
statement 80,316.90 86,423.60