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CHAPTER 1: INTRODUCTION

The Indian Pharmaceutical Industry is capable to meet the country’s demand for every drug.
The manufacturing units within the country are meeting about 80% of the country’s drug
requirements. The drug production sector is equipped with technology and researched
knowledge base. The industry produces drugs worth Rs.18000 crores and is growing at 9%
every year. It offers quality products with internationally accepted quality standards. There
are about 20,000 production units in India with products sold at competitive lower prices than
international drug prices.

India has various competitive advantages in Pharma production over western world. It has a
large pool of educated manpower with technical and managerial skills.

It has a well-developed research and development base equipped with advanced technology.
Low cost of research over the western countries gives India a potential advantage for future
developments. The country has an open market policy where foreign capital investment is
permitted. Restriction on capital investments has been removed in the recent years with a
view to make new investments profitable. Also, the country has a strong legal framework, an
essential for pharmaceutical industry. The most promising fact about India is a 70 million
middle class population with good consumption power.

India has various competitive advantages in Pharma production over western world. It has a
large pool of educated manpower with technical and managerial skills.

It has a well-developed research and development base equipped with advanced technology.
Low cost of research over the western countries give India a potential advantage for future
developments. The country has an open market policy where foreign capital investment is
permitted. Restriction on capital investment has been removed in the recent years with a view
to make new investments profitable. Also, the country has a strong legal framework, an
essential for pharmaceutical industry. The most promising fact about India is a 70 million
middle class population with good consumption power.

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1.1 INDUSTRY PROFILE

Overview of pharmaceutical sector:

Accounting for 2% of the world’s pharmaceutical market, the Indian pharmaceutical sector
has an estimated market value of about US $8 billion. It is at 4 th rank in terms of total
pharmaceutical production and 13th in terms of value. It is growing at an average rate of 7.2%
and is expected to grow to US $12 billion by the end of 2010.

Over the last two years the pharmaceutical market value has increased to about US
$355million because of the launch of new products. According to an estimate, 3900 new
generic products have been launches by big brands in the Pharma sector. As in the present
scenario, only a few people can afford costly drugs, which have increased price sensitivity in
the pharmaceutical market. Now the companies are trying to capture the market by
introducing high quality and low price medicines and drugs.

With the product patent act, which came into action in January 2005, this industry is able to
attract big MNCs to India. Earlier these firms had apprehensions in launching new drugs in
the Indian market.

At present, a large number of Indian pharmaceutical companies are looking for tie-ups with
foreign firms for in-license drugs. Glaxo smithkline is among the top choices for the firms
that wish to launch their product in India, but do not have any branch over here.

Contract research and pharmaceutical outsourcing are the new avenues in the pharmaceutical
market. Contract manufacturing is growing at a very fast pace and is estimated to grow to US
$30billion, whereas contract research is estimated to reach US $6-10billion.

Indian multinational companies like Dr.Reddy's Lab, Cipla, Ranbaxy, etc have created
awareness about the Indian market prospects in the international pharmaceutical market.
Approvals given by Foods and Drugs Administration (FDA) and ANDA (Abbreviated New
Drug Application)/DMF (Drug Master File) have played an important role in making India a
cost-effective and high quality product manufacturer. Furthermore, the changes that took
place in the patent law, change of process patent to product patent, have helped in reducing
the risk of loss for intellectual property.

In other words of Richard Gerster, the famous economist and activist from Switzerland,
“Indian pharmaceutical industry can be defined as a success story providing employment for
millions and ensuring that essential drugs are available at affordable prices to vast population
of Indian sub-continent.

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The pharmaceutical industry has witnessed a growth rate of about 10% over the last few years
and is expected to touch US$ 12 billion by 2010. Pharmaceutical industry has given
employment to approximately 2.86 million people and has around 20,053 units. Globally,
India is 4th in terms of volume (8% of world's production), 13th in terms of value, and 17th
in terms of pharmaceutical export value.

Classification of Indian Pharmaceutical Industry

The Indian pharmaceutical industry can be classified into organized and unorganized sectors.
Accounting for over 70% of total sales, the organized sector has about 250 manufacturing and
formulation units.
On the basis of management control, the organized sector can be further classified into MNCs
and Indian companies.
On the basis of the product manufactured, the pharmaceutical industry can be classified into:
• Bulk drugs: They are the key ingredients that form the basic raw material for the
manufacture of formulations.
• Formulation: Particular mixture of a bulk drug or a combination of different bulk drugs.

Scope and importance

Over the years pharmacy has grown in the form of pharmaceuticals sciences through research
and development processes. It is related to product as well as to services. The various drugs
discovered and developed are its products and the healthcare it provides comes under the
category of services.

Pharmacy involves all the stages that are associated with the drugs i.e. discovery,
development, action, safety, formulation, use, quality control, packaging, storage, marketing,
etc. This profession has a large socio-economic relevance to the Indian economy. In India this
sector is among the future economy drivers. It is committed to deliver high quality drugs and
formulations at an affordable price, so that majority of people can afford them.

Industry strength

• Capital Investment in Technology: Owing to the availability of advanced

technology at low costs, the companies can produce drugs at lower costs.
• Cost Effective: The filing cost of ANDAS and DMFs is comparatively low for the
Indian companies.
• Manpower: There is a large pool of technical experts available at modest salaries.
• Contract Research & Contract Manufacturing: There is a good scope for contract
research and contract manufacturing.

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• Infrastructure: There is a well-developed infrastructure for the pharmaceutical

industry.
• Generic Drugs: In the last few years, the generic drug-manufacturing segment has
received huge investments, in the process making it more competitive and efficient.

Indian pharmaceutical Sector: Current scenario

According to the Economic Survey (2006-07), the pharmaceuticals industry had achieved a
turnover of about US$ 12 billion in 2005-06, and is expected to grow by 13% in 2007. Its
pharma export value reached about US$ 4.7 billion during 2005-06.
Pharmaceutical industry accounts for about 2.91% of total FDI into the country. The FDI in
pharmaceutical sector is estimated to have touched US$ 172 million, thereby showing a
compounded annual growth rate of about 62.6%. Drugs and pharmaceuticals sector is at 8th
rank in India's top 10 FDI attracting sectors. According to the Economic Survey for the year
2006-07, the value of pharma output has increased ten times over the last 15 years.

Indian pharmaceutical Sector: Future scenario

The dream of Indian pharmaceutical companies for marking their presence globally and
competing with the pharmaceutical companies from the developed countries like Europe,
Japan, and United States is now coming true.
The new patent regime has led many multinational pharmaceutical companies to look at India
as an attractive destination not only for R&D but also for contract manufacturing, conduct of
clinical trials and generic drug research. With market value of about US$ 45billion in 2005,
the generic sector is expected to grow to US$ 100billion in the next few years.
The future of Indian pharmaceutical sector is very bright because of the following factors:
• Clinical trials in India cost US$ 25 million each, whereas in US they cost between
US$ 300-350 million each.
• Indian pharmaceutical companies are spending 30-50% less on custom synthesis
services as compared to its global costs.
• In India investigational new drug stage costs around US$ 10-15 million, which is
almost 1/10th of its cost in US (US$ 100-150million).

Indian Pharmaceutical Sector: Economic value

The Indian pharmaceutical industry, which is now meeting over 95% of the country's
pharmaceutical needs, was almost non-existent before 1970. With the compound annual
growth of 19.8% the industry has grown from Rs.4 billion in 1970 to Rs.290 billion in 2003.
The pharma sector has shown tremendous growth over the years. About 250 Indian

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pharmaceutical companies hold 70% of the market share with top players controlling about
7% of the market share.
On 1st January 2005, the Government of India issued patent ordinance according to which
the Indian pharma companies can no longer produce patented drugs.
A few years ago, investment in R&D was as low as 0.001% of the total R&D worldwide, but
now companies are focusing on drug discovery and R&D. They are spending over 5% of
their turnover on R&D e.g. Wockhardt (8%), Cipla (4%), Cadila (4.45%).

The value of Indian Over-The-Counter Medicines (OTCs) market is over US$ 940 million
and is growing at the rate of 20% per year. There are about 61 US FDA approved plants in
India, which will help Indian companies grab the opportunity of contract manufacturing.

Top players in Pharma industry

• Aventis Pharma Limited

• Biocon
• Cadila Healthcare Limited
• Cipla Limited
• Dr Reddy's Laboratories
• Glaxo SmithKline Pharmaceuticals Limited
• Wockhardt Limited
• JB Chemicals
• Serum Institute of India
• Ranbaxy Laboratories
• Nicholas Piramal

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1.2 COMPANY PROFILE

India’s second largest pharmaceutical firm Cipla Ltd, edged out the multinational giant
GlaxoSmithKline which was reigning supreme in the country for long, in terms of drug sales
last year.
Consistently maintaining a fast-track growth momentum, Cipla has registered an 80-percent
jump in net profit for the quarter ended on March 31 2006, driven by growth in domestic
sales and exports.

In the fourth quarter, Cipla posted a net profit of 1.90 billion rupees. Net sales grew 63
percent to 8.7 billion rupees. Cipla's exports in the quarter grew 63.7 percent while domestic
sales rose 56.4 percent. Cipla anticipates 15 to 20 percent growth in this year.

1.2.1. CIPLA: BACKGROUND

Khwaja Abdul Hamied, the founder of Cipla, was born on October 31, 1898. The fire of
nationalism was kindled in him when he was 15 as he witnessed a wanton act of colonial
highhandedness. The fire was to blaze within him right through his life.
In college, he found Chemistry fascinating. He set sail for Europe in 1924 and got admission
in Berlin University as a research student of "The Technology of Barium Compounds". He
earned his doctorate three years later.

In October 1927, during the long voyage from Europe to India, he drew up great plans for the
future. He wrote: "No modern industry could have been possible without the help of such
centers of research work where men are engaged in compelling nature to yield her secrets to
the ruthless search of an investigating chemist." His plan found many supporters but no
financiers. However, Dr Hamied was determined to being "a small wheel, no matter how
small, than be a cog in a big wheel."

In 1935, he set up The Chemical, Industrial & Pharmaceutical Laboratories, which came to be
popularly known as Cipla. He gave the company all his patent and proprietary formulas for
several drugs and medicines, without charging any royalty. On August 17, 1935, Cipla was
registered as a public limited company with an authorized capital of Rs 6 lakhs.

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The search for suitable premises ended at 289, Bellasis Road (the present corporate office)
where a small bungalow with a few rooms was taken on lease for 20 years for Rs 350 a
month.

Cipla was officially opened on September 22, 1937 when the first products were ready for the
market. The Sunday Standard wrote: "The birth of Cipla which was launched into the world
by Dr K A Hamied will be a red letter day in the annals of Bombay Industries. The first city
in India can now boast of a concern, which will supersede all existing firms in the magnitude
of its operations. India has lagged behind in the march of science but she is now awakening
from her lethargy. The new company has mapped out an ambitious program and with
intelligent direction and skillful production bids fair to establish a great reputation in the East.

1.2.2. NATURE OF BUSINESS CARRIED

The Group's principal activity is to manufacture chemicals and pharmaceutical products. The
products of the Group include anti-asthmatics, anti-cancer, anti-inflammatory, anti-depressant
and other therapeutic index including animal health care products. The Group also provides
technology services for preparation of product, product and process know how and new
developments.

Today, Cipla is a leading player in anti-infective and anti-asthmatic formulations. The

company also specializes in the manufacturing of steroids and hormones. Cipla manufactured
ampicillin for the first time in the country in 1968. In 1983, Cipla developed two anticancer
drugs, vinblastine and vincristine from the common garden plant Vinca rosea in association
with the National Chemical Laboratory. The company pioneered the manufacture of the
antiretroviral drug, zidovudine, in technological collaboration with Indian Institute of
Chemical Technology in 1993. In 1997 Cipla became the first company in the world by
launching transparent Rotahaler, a dry powder inhaler device. In 1998 the company launched
lamivudine, and became one of the few companies in the world to offer all three component
drugs of retroviral combination therapy (zidovudine and stavudine already launched).Cipla
received clearance from the Drugs Controller General of India to manufacture and market the
country's first non-nucleoside reverse transcriptase inhibitor (NNRTI), nevirapine, for the
treatment of AIDS.

CIPLA – A WELL KNITTED BUSINESS STRATEGY

Amongst the Pharma majors Cipla is the third largest pharma company in the domestic retail
market with strength in formulations and bulk drugs manufacturing. All the bulk drug
manufacturing facilities of the company have been approved by the US FDA and the
formulation facilities have been approved by the Medicine Control Agency (UK), the
Medicine Control Council (South Africa), the Therapeutic Goods Administration (Australia)
and other international agencies.

For exports, Cipla has strategic alliance with major generic manufactures such as Watson,
Mylan, Barr and Ivax for supply of bulk drugs. It has a very wide product range in the
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domestic market, which includes antibiotics, anti‐bacterial, anti‐asthmatics, anti‐

inflammatory, antiretroviral, anti‐cancer and cardiovascular. The company also concentrates
on developing specialty bulk drugs for export markets.

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 1.2.3. CIPLA: VISION, MISSION AND QUALITY POLICY

VISION: Cipla started with a vision to build a healthy India. And along the way realized that
ORGANIZATION
in our own small STUDY
way, we could contribute to making the world a healthier place. We’ll
continue to bring a smile on as many faces as we can to heal the world as much as we can.
Because there’ll always be a better world out there for those who have the passion to create it.

MISSION: We use the latest in pharmaceutical technology to tunnel over seven decades of
experience into one capsule that cures, one drop that defends and one puff that protect. We
explore every drug to its last particle and instill safe and sure healing to create one does of
confidence. For us, the final measure of our success is a simple curve- the smile of health
regained

QUALITY POLICY: Cipla is one of the biggest exporters of low-cost, high quality APIs
across the world. It strives not just to meet international specifications, but to exceed, to
excel, to meet what we call the Cipla benchmark. In fact, it has set standards for the world to
follow and have contributed to more than 125 monographs in the last 15 years - to British,
European, US and international pharmacopoeia.

Today companies from around the world seek strategic alliances with Cipla for product
development, technical support and marketing. In a small way, it even helps countries set up
their pharmaceutical infrastructure and train their professionals, contributing to their quest for
self-reliance just the way we began healing India, seven decades ago.

Cipla’s manufacturing facilities have been approved by the following regulatory authorities:
• Food and Drug Administration (FDA), USA
• Medicines and Healthcare products Regulatory Agency (MHRA), UK
• Therapeutic Goods Administration (TGA), Australia
• Medicines Control Council (MCC), South Africa
• National Institute of Pharmacy (NIP), Hungary
• Pharmaceutical Inspection Convention (PIC), Germany
• World Health Organization (WHO) Department of Health, Canada
• State Institute for the Control of Drugs, Slovak Republic ANVISA, Brazil

1.2.4 CIPLA:PRODUCT AND SERVICE PROFILE

Cipla Limited engages in the manufacture, sale, and export of pharmaceutical products in
India and internationally. It offers various prescription pharmaceutical products for various
diseases; and animal health care products, including aqua, equine, poultry, companion
animals, and livestock animal products, as well as herbal specialty and therapeutic group
products. The company also provides over the counter drugs, comprising child care, eye care,
food supplement, foot care, hair care, health drink, life style, low-calorie sweetener,
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nutraceutical and tonic, oral hygiene, pain care, probiotics/indigestion, skin care, sports
care/muscle building, and vitamin and mineral products, as well as cough, cold, and flu
products. In addition, it offers flavors to food and beverage, and pharmaceutical industries for
use in fruit juices, medicinal liquids, baked goods, and oral hygiene products; and fragrances
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1.2.8. INFRASTRUCTURAL FACILITIES

Manufacturing and R&D facilities

• Mumbai: Corporate Office and R& D centre for formulations

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• Vikhroli(Corporate office): Manufacturing of bulk drugs & formulations (Liquid

Orals, Aerosols), R&D bulk drugs & formulations.

• Bangalore: Manufacturing of bulk drugs & formulations (R&D Bulk drugs)

Approved by US FDA (for bulk drugs); WHO

• Patalganga: Manufacturing plant for bulk drugs & formulations (R&D Bulk drugs)

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• Kurkumbh: Manufacturing facility for bulk drugs & formulations

(R&D Bulk drugs)

• Goa: Manufacturing set up for formulations

• Baddi, Himachal Pradesh: Manufacturing of tablets & capsules, formulations

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• Sikkim: Manufacturing formulations

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1.2.9 CIPLA: MILESTONES, ACHIEVEMENTS AND AWARDS

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1935: Dr K A Hamied sets up "The Chemical, Industrial and Pharmaceutical Laboratories Ltd." in
a rented bungalow, at Bombay Central.
ORGANIZATION STUDY

1941: As the Second World War cuts off drug supplies, the company starts producing fine
chemicals, dedicating all its facilities for the war effort.
1.2.10 FUTURE GROWTH AND PROSPECTS

1952: Sets up first research division for attaining self-sufficiency in technological development.

1960: Starts operations at second plant at Vikhroli, Mumbai, producing fine chemicals with
special emphasis on natural products.

1968: Cipla manufactures ampicillin for the first time in the country.

1972: Starts Agricultural Research Division at Bangalore, for scientific cultivation of medicinal
plants.

1976: Cipla launches medicinal aerosols for asthma.

1980: Wins Chemexcil Award for Excellence for exports.

1982: Fourth factory begins operations at Patalganga, Maharashtra.

1984: Develops anti-cancer drugs, vinblastine and vincristine in collaboration with the National
Chemical Laboratory, Pune. Wins Sir P C Ray Award for developing in house technology for
indigenous manufacture of a number of basic drugs.

1985: US FDA approves Cipla's bulk drug manufacturing facilities.

1988: Cipla wins National Award for Successful Commercialisation of Publicly Funded R&D.

1991: Lauches etoposide, a breakthrough in cancer chemotherapy, in association with Indian

Institute of Chemical Technology.
The company pioneers the manufacture of the antiretroviral drug, zidovudine, in technological
collaboration with Indian Institute of Chemical Technology, Hyderabad.

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1994:
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Cipla keeps the steady momentum of growth with an overall growth of more than 57% in
income from operations for the quarter ended March 2006. Currently, we are one of the
largest exporters of pharmaceutical products in India, exporting APIs and formulation
products to more than 160 countries including the U.S., and a number of countries in Europe,
Africa, Australia, Latin America and the Middle East.

Both the international as well as the domestic business have recorded a growth of more than
56% and 63% respectively, in the last quarter. All the major segments including anti-
asthmatics, cardiovascular and anti-biotics/bacterials segments have shown good performance
in the domestic market.

The expectations of the indigenous pharmaceutical sector were belied, once again, in
the absence of any concrete measures to boost the industry. Despite several assurances,
there was no relaxation in the drug pricing policy. Besides lacking transparency, the
policy guidelines are based on outdated criteria and continue to be applied in an
arbitrary and inequitable manner. In this era of liberalization, the pharmaceutical
industry is eagerly waiting steps to relax pricing and other controls that have been
hampering its growth for years.

As regards the impending introduction of product patents, it is fervently hoped that the
Government will provide for compulsory licensing to protect Indian consumers, while
finalizing the patent amendment bill. India would do well to learn from the experience
of the African countries, which are caught in the patent bind and are unable to provide
life-saving drugs, like those to fight AIDS, to their ailing millions.

Regardless of the challenges posed by the changing business environment, Cipla is

confident of maintaining its leadership position in the coming years on the basis of its
inherent technological strengths and a highly committed and skilled manpower.

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CHAPTER 2: THE MCKINSEY 7S FRAMEWORK

Developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working
at the McKinsey & Company consulting firm, the basic premise of the model is that there are
seven internal aspects of an organization that need to be aligned if it is to be successful.
The 7S model can be used in a wide variety of situations where an alignment perspective is
useful, for example to help you:

• Improve the performance of a company.

• Examine the likely effects of future changes within a company.
• Align departments and processes during a merger or acquisition.
• Determine how best to implement a proposed strategy.

The Seven Elements

The McKinsey 7S model involves seven interdependent factors which are categorized as
either "hard" or "soft" elements:
Hard Elements Soft Elements
Strategy Shared Values
Structure Skills
Systems Style
Staff

"Hard" elements are easier to define or identify and management can directly influence them:
These are strategy statements; organization charts and reporting lines; and formal processes
and IT systems.

"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and
more influenced by culture. However, these soft elements are as important as the hard
elements if the organization is going to be successful.
The way the model is presented in Figure 1 below depicts the interdependency of the
elements and indicates how a change in one affects all the others.

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Let's look at each of the elements specifically:

• Strategy: The plan devised to maintain and build competitive advantage over the
competition.
• Structure: The way the organization is structured and who reports to whom.
• Systems: The daily activities and procedures that staff members engage in to get the
job done.
• Shared Values: Called "super ordinate goals" when the model was first developed,
these are the core values of the company that are evidenced in the corporate culture
and the general work ethic.
• Style: The style of leadership adopted.
• Staff: The employees and their general capabilities.
• Skills: The actual skills and competencies of the employees working for the company.

7S Checklist Questions.

Strategy:

• What is our strategy?

• How do we intend to achieve our objectives?
• How do we deal with competitive pressure?
• How are changes in customer demands dealt with?
• How is strategy adjusted for environmental issues?

Structure:

• How is the company/team divided?

• What is the hierarchy?
• How do the various departments coordinate activities?
• How do the team members organize and align themselves?

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• Is decision making and controlling centralized or decentralized? Is this as it should be,

given what we're doing?
• Where are the lines of communication? Explicit and implicit?

Systems:

• What are the main systems that run the organization? Consider financial and HR
systems as well as communications and document storage.
• Where are the controls and how are they monitored and evaluated?
• What internal rules and processes does the team use to keep on track?

Shared Values:
• What are the core values?
• What is the corporate/team culture?
• How strong are the values?
• What are the fundamental values that the company/team was built on?

Style:

• How participative is the management/leadership style?

• How effective is that leadership?
• Do employees/team members tend to be competitive or cooperative?
• Are there real teams functioning within the organization or are they just nominal
groups?

Staff:

• What positions or specializations are represented within the team?

• What positions need to be filled?
• Are there gaps in required competencies?

Skills:

• What are the strongest skills represented within the company/team?

• Are there any skills gaps?
• What is the company/team known for doing well?
• Do the current employees/team members have the ability to do the job?
• How are skills monitored and assessed?

Key Points

The McKinsey 7Ss model is one that can be applied to almost any organizational or team
effectiveness issue. If something within your organization or team isn't working, chances are
there is inconsistency between some of the elements identified by this classic model.

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Once these inconsistencies are revealed, you can work to align the internal elements to make
sure they are all contributing to the shared goals and values.

The process of analyzing where you are right now in terms of these elements is worthwhile in
and of itself. But by taking this analysis to the next level and determining the ultimate state
for each of the factors, you can really move your organization or team forward.

CHAPTER 3: CIPLA: SWOT ANALYSIS

STRENGTHS WEAKNESS
• Cost effective technology • Low Indian share in world
• Strong and well developed pharmaceutical market (about 2%)
manufacturing base
• Clinical research and trials • Lack of strategic planning
• Knowledge based, low-cost
• Fragmented capacities
manpower in Science and technology
• Proficiency in path-breaking research • Low R&D investments
• High-quality formulations and drugs
• Absence of association between
• High standards of purity
• Non-fringing processes of Active institutes and industry
pharmaceutical ingredients
• Low healthcare expenditure
• Future growth driver
• World-class process development labs • Production of duplicate drugs
• Excellent clinical trial centers
• Chemical and process development
competencies
OPPORTUNITIES • THREATS
• Incredible export potential • Small number of discoveries
• Increasing health consciousness • Competition from MNCs
• New innovative therapeutic products • Transformation of process patent to
• Globalization product patent (TRIPS)
• Drug delivery system management
• Outdated Sales and marketing

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• Increased incomes methods

• Production of generic drugs • Non-tariff barriers imposed by
• Contract manufacturing developed countries
• Clinical trials & research
• Drug molecules

CHAPTER 4: CIPLA: ANALYSIS OF FINANCIAL STATEMENT

For the fiscal year ended 31 March 2010, Cipla Limited's revenues increased 7% to
RS57.18B. Net income increased 39% to RS10.82B. Revenues reflect an increase in income
from operations and higher other income. Net income also reflects a decrease in other
expenditure and improved gross & operating profit margins. Cipla Limited is focused on
developing new formulations for existing and new drug substances.

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Shareholding Pattern as on 31st March 2010

Number
Total
Number of shares
Categor Total shareholding as a Shares Pledged
Category of of held in
y number percentage of or otherwise
Shareholder Share demateri
code of shares total number of encumbered
holders alized
shares
form
As % of
As % of
No. of As a
(A+B+ shares %
(A+B)1
C)
(IX)=
(I) (II) (III) (IV) (V) (VI) (VII) (VIII (VIII)/
(IV)*100
Promoter and
(A)
Promoter Group
(1) Indian
Individuals/
Hindu 12272050 8422000
(a) 15 15.41 15.28 NIL NIL
Undivided 0 0
Family
Central
(b) Govt./State - - - - -
Govt.(s)
Bodies
(c) 9 6022791 6009375 0.76 0.75 NIL NIL
Corporate
Financial
(d) Institutions/ - - - - -
Banks
AnyOthers(Spec
(e) - - - - -
ify)
12874329 9022937
Sub-Total (A)(1) 24 16.17 16.03 NIL NIL
1 5
(2) Foreign
Individuals
(Non-Resident
16674268 1667426
(a) Individuals/ 4 20.94 20.77 NIL NIL
7 87
Foreign
Individuals)
Bodies
(b) - - - - -
Corporate
(c) Institutions - - - - -
Any
(d) - - - - -
Others(Specify)
SubTotal 16674268 1667426
4 20.94 20.77 NIL NIL
(A)(2) 7 87
Total Share
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Promoter and 29548597 2569720
28 37.11 36.80 NIL NIL
Promoter Group 8 62
(A)= (A)(1)+
(A)(2)
 Public share
(B) NA NA
holding
(1) Institutions NA NA
ORGANIZATION STUDY
Mutual Funds/ 3990657
(a) 151 39906570 5.01 4.97
UTI 0
Financial
(b) Institutions / 39 2261723 2187623 0.28 0.28
Banks
Central
(c) Govt./State - - - - -
Govt.(s)
Venture Capital
(d) - - - - -
Funds
Insurance 9147055
(e) 18 91470557 11.49 11.39
Companies 7
Foreign UNAUDITED FINANCIAL RESULTS
13495151 1349515
(f) Institutional
FOR THE254QUARTER ENDED 31st 16.95 16.81 2010
MARCH,
7 17
Investors (Rupees in crores)
Quarter Ended Year Ended
Foreign Venture
- (g) Capital Investors
- - -
- 31.03.2010 -
31.03.2009
-
31.03.2010 31.03.2009
(Audited)
1(h) Any Othera) Gross
- Sales - 1329.01
- - 1248.66
- 5410.25 5021.64
(specify)
Less: Excise Duty 11.52 13.49 52.16 61.04
26859036 2685162
Sub-Total (B)(1) 462 33.73 33.45
Net Sales 7 1317.49
67 1235.17 5358.09 4960.60
(2) Non-institutions
b) Other Operating Income 57.20 127.53 NA271.92
NA 296.42
BodiesIncome (a+b)
Total Operating 3115993
1374.69 1362.70 5630.01 5257.02
(a) 1969 31598596 3.97 3.94
Corporate 4
2 Expenditure
(b) Individuals
- i.a)Individual
(Increase)/decrease in (88.72) (1.65) (179.53) (113.55)
Stock-in-trade
shareholders and work in
progress 5078214
holding nominal 147905 56742319 7.13 7.07
4
- share capital up
b) Consumption of Materials 566.12 451.42 2040.79 1892.18
to Rs 1 lakh
- c) Purchase of Traded Goods 133.42 116.75 620.53 588.04
ii. Individual
- shareholders
d) Employee Cost 99.86 77.88 370.25 316.95
holding nominal 11672808 7157615
437 14.6655.6614.54
share capital e)in Depreciation 1 49.48
7 188.77 170.61
excess of Rs. 1
f) Other Expenditure 406.02 369.15 1417.74 1537.27
lakh.
Any Other g) Total 1166.18 1069.21 4458.55 4391.50
(c)
3 (specify)
Profit (+)/Loss (-) from Operations 208.51 293.49 1171.46 865.52
before Other Income, Interest &
(c-i) Trust 16 37801 37801 0.00 0.00
Exceptional Items (1-2)
(c-ii) Foreign Bodies 3 85995 85995 0.01 0.01
4 Other Income 45.08 15.45 87.71 69.75
Non-Resident
5(c-iii) Profit (+)/LossIndians
(-) before2733
Interest 26681945
& 4053045 3.35308.94
253.59 3.32 1259.17 935.27
Exceptional Items (3+4)
Clearing
6(c-iv) Members
176
Interest384232 384232
0.46 0.05 13.27
0.05 23.66 33.96

23225896 1580793
Sub-Total (B)(2) 153239 29.17 28.93
9 08
CMRIT Page 24
Total Public
Shareholding 50084933 4265955
153701 62.89 62.38 NA NA
(B)= (B)(1)+(B) 6 75
(2)
 153729 100 99.18 NIL NIL
(A)+(B) 4 37

ORGANIZATION STUDY
Shares held by
Custodians and
against which
(C) 2 6586043 6586043 NA 0.82 NA NA
Depository
Receipts have
7 Profit (+)/Loss (-) after Interest but 253.13 295.67 1235.51 901.31
been issued
before Exceptional Items(5-6)
GRAND
8 Exceptional items*
80292135 95.00
6901536 - 95.00 -
TOTAL 153731 100 NIL NIL
7 80
9 (A)+(B)+(C)
Profit (+)/Loss (-) before Tax(7+8) 348.13 295.67 1330.51 901.31
10 Tax Expense NA - Not applicable
a) Current Tax 67.60 32.75 228.50 101.00
b) Deferred Tax 5.00 7.50 20.00 15.00
c) Fringe Benefit Tax - 2.50 - 8.50
11 Net Profit (+)/Loss (-) after Tax(9-10) 275.53 252.92 1082.01 776.81
12 Paid-up Equity Share Capital (Face 160.58 155.46 160.58 155.46
Value Rs.2/- per share)

13 Reserves excluding Revaluation 4186.32

Reserves as per Balance Sheet of
previous Accounting Year
14 Earning per Share (Rs.) 3.43** 3.25** 13.69 9.99
** Not Annualised
15 Public Shareholding
- Number of Shares 500849336 462918088 500849336 462918088
- Percentage of Shareholding 62.38 59.56 62.38 59.56
16 Promoters and Promoter Group
Shareholding
a) Pledged/Encumbered
- Number of Shares NIL NIL NIL NIL
- Percentage of shares NIL NIL NIL NIL
(as a % of the total shareholding
of promoter and promoter group)
- Percentage of shares (as a % of NIL NIL NIL NIL
the total share capital of the
Company)
b) Non Encumbered
- Number of Shares 295485978 306108047 295485978 306108047
- Percentage of shares 100.00 100.00 100.00 100.00
(as a % of the total
shareholding of promoter and
promoter group)
- Percentage of shares 36.80 39.38 36.80 39.38
(as a % of the total share capital
of the Company)

CMRIT Page 25
ORGANIZATION STUDY

Notes:

1. The Company is essentially in the pharmaceutical business segment.

2. No investor grievances were pending at the beginning of the quarter. During the quarter
ended 31st March, 2010, four investor grievances were received. As of 31st March,
2010 all grievances have been suitably replied to.
3. The Company has commenced commercial production at its state-of-the-art formulation
facility located at Pithampur SEZ, Indore.
4. During the quarter, the Company sold its intellectual property rights and technical
knowhow of “i-pill”, an emergency contraceptive brand, to Piramal Healthcare Limited
for the territory of India at an aggregate consideration of Rs. 95 crores.
5. The figures of the previous year have been regrouped/recast to render them comparable
with the figures of the current year.

6. The above results after being reviewed by the Audit Committee were approved at the
meeting of the Board of Directors held on 7th May, 2010. Limited Review as required
under Clause 41 of the Listing Agreement has been completed by the Statutory Auditors
of the Company.

Financial Review - Period ended March 2010

Financial performance:
(Rupees in crores)
Quarter Ended Year Ended
31-03-10 31-03-09 %change 31-03-10 31-03-09 %change
Domestic 568.78 524.45 8.5% 2511.32 2278.95 10.2%
Exports

Formulations 613.93 555.27 10.6% 2318.76 2161.91 7.3%

APIs & others 146.30 168.94 -13.4% 580.17 580.78 -0.1%
Total Exports 760.23 724.21 5.0% 2898.93 2742.69 5.7%
% of exports to
57.2% 58.0% 53.6% 54.6%
total sales
Total Sales 1329.01 1248.65 6.4% 5410.25 5021.64 7.7%
Other operating
income
Technology
13.55 99.89 160.29 217.75
knowhow/fees
Others 43.65 27.64 111.63 78.67
Total 57.20 127.53 -55.2% 271.92 296.42 -8.3%
Income from 1386.21 1376.19 0.7% 5682.17 5318.06 6.8%

CMRIT Page 26
ORGANIZATION STUDY

Operations
Material Cost 610.82 566.52 2481.79 2366.67
% to total sales 46.0% 45.4% 45.9% 47.1%
Operating margin 257.99 349.15 -26.1% 1360.23 1036.13 31.3%
% to income from
operations
18.6% 25.4% 23.9% 19.5%

Profit before tax 348.13 295.67 17.7% 1330.51 901.31 47.6%

% to income from
operations
25.1% 21.5% 23.4% 16.9%

Profit after tax 275.53 252.92 8.9% 1082.01 776.81 39.3%

% to income from
operations
19.9% 18.4% 19.0% 14.6%

During the year, the company posted a growth of about 7% in income from operations.
During the quarter, domestic sales grew by about 9% and export sales grew by 5%. Exports
of formulations grew by more than 10% whereas exports of APIs & others have declined by
about 14%. The decline in exports of APIs & others is primarily due to seasonal variations.
Technical knowhow/fees for the quarter have decreased by about Rs. 87 cr on account of a
high base on a year-on-year basis (mainly due to one-time payment for certain technical
services).

Material cost (as a percent to total sales) has marginally increased during the quarter due to
changes in product mix. Operating margins have reduced by about 26% mainly due to lower
technical knowhow/fees as indicated above.

The increase in staff cost (Rs. 22 cr) is due to overall increase in manpower as well as annual
increments. The increase in other expenditure is in line with the increase in operations.
Interest cost has decreased by about Rs. 13 cr due to repayment of short-term working capital
loans and fixed deposits availed by the company. While depreciation is lower by about Rs. 6
cr, it is in line with the current year’s trend.

The Company has provided for tax under Minimum Alternate Tax (MAT). However, the
liability for the current quarter has increased due to the increase in rate of MAT.
During the quarter, the company signed an agreement with Piramal Healthcare Limited for
sale of intellectual property rights in India related to the brand “i-pill” for an aggregate
consideration of Rs. 95 crore.

CMRIT Page 27
ORGANIZATION STUDY

CHAPTER 5: REFERENCES
Website
1) http://www.google.com
2) http://www.wikipedia.com
3) http://www.cipla.com
4) http://www.theofficialboard.com

CMRIT Page 28