Summer Internship Project at Alembic Ltd.

Financial Management And Cost Accounting

SUBMITTED TO: Prof.Rajiv Naik

TO PREPARE A BUSINESS MODEL FOR FINANCE AND ACCOUNTING

SUBMITTED BY: MANDAR DHAVLE PG10043 Roll No. -

A REPORT SUBMITTED TO THE UNIVERSITY/INSTITUTE AND ALEMBIC LTD. IN PARTIAL FULFILMENT OF THE SYLLABUS OF POST GRADUATE DIPLOMA IN MANAGEMENT FOR THE ACADEMIC YEAR 2010-2012.

UNDER THE GUIDANCE OF

_________________________________ (Mr. Ajay Desai A.V.P. Finance and Accounting)

ALEMBIC LIMITED

CERTIFICATE FROM THE ORGANIZATION

This is to certify that Mr. Mandar Dhavle has successfully completed a study on TO at M/s Alembic Ltd. and submitted a project report on the same. The study conducted was satisfactory. We wish him all the best.

PLACE: DATE:

_______________ _______________

OFFICER-IN-CHARGE NAME:

____________________________

DESIGNATION: ____________________________ ____________________________

(SIGNATURE)

HUMAN RESOURCE OFFICER-IN-CHARGE NAME:

____________________________

DESIGNATION: ____________________________

____________________________
(SIGNATURE)

ACKNOWLEDGEMENT
I would like to allow and extend our heartfelt gratitude to the people responsible for the success of this study. I would like to thank Mr. Ajay Desai for his guidance and supervision and providing necessary information regarding this report. His kind co-operation and encouragement has helped in completion of this report and also given a clear picture of how the finance and accounting process is carried out and who are the participants and documents required.. I would like to express special gratitude to the industry person Mr. Prashant Bendre and Mr. Pankaj Rathi for giving me their attention, time and also willingness to help out. I am thankful to Professor Vikas Naik (Coarse Coordinator), Mumbai Educational Trust, for extending his support.

TABLE OF CONTENTS SR. No. 1. 2. 3. 4. 5. 6. Particulars Introduction Scope of the project Procedure for analysis Overview of departments Overview of business unit segments Conclusion Page No.

INTRODUCTION About Company: Established in 1907, Alembic Pharmaceuticals Limited is a leading pharmaceutical company in India. The Company is vertically integrated with the ability to
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develop, manufacture and market pharmaceutical products, pharmaceutical substances and Intermediates. Alembic's manufacturing facilities are located in Vadodara and Baddi in Himachal Pradesh. The plant at Vadodara has the largest fermentation capacity in India. The Panelav facility houses the API and formulation manufacturing (both US FDA approved) plants. The plant at Baddi, Himachal Pradesh manufactures formulations for the domestic and non-regulated export market. The company has a state of the art Research Centre at Vadodara. Company has four business segements: 1. Active Pharmaceuticals Ingredient 2. Bulk pharmaceutical chemicals 3. Formulation
4. Herbal Nutraceuticals

SCOPE OF THE PROJECT: This is project report covers profitability and cost accounting analysis of the Marketing office, located at Andheri, Mumbai, catering to formulation business of Alembic Pharmaceuticals Ltd.

PROCEDURE FOR ANALYSIS:

1. Actual and Budgeted expenses for all the segments (e.g. Veterinary, Eye care,

etc.) have been documented on monthly, quarterly and annual basis for FY 2010
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and FY 2011. Budget expenses for FY 2011-12 have been provided by respective segments, on request.
2. Actual and Budgeted expenses for all the divisions (e.g. HR, Finance, Marketing

etc.) of marketing office have been documented on monthly, quarterly and annual basis for FY 2010 and FY 2011. Budget expenses for FY 2011-12 have been provided by respective divisions, on request. 3. Net sales have been calculated by using gross sales, goods returned, commission, other income etc.
4. Cost of goods sold (COGS) have been downloaded from ERP, from allocated

cost centers. 5. Gross profit margin was calculated as follows: GPM = (Net sales COGS)/Netsales 6. Contribution to Net sales (after direct expenses) is calculated by deducting COGS from Net sales. 7. Indirect expenses such as Promotional cost, Distribution cost, Interest/Finance cost, Field cost have been calculated to find out total indirect expenses. 8. Finally total marketing profit is calculated by deducting total indirect expenses from Net sales.
9. Other gains / losses such as foreign exchange etc. are adjusted to marketing

profit.
10. Cost variance, which is the difference between Budgeted and Actual expenses

of each department, was calculated and respective department was accounted for the responsibility. 11. Finally, Net profit margin (NPM) has been calculated as follows: NPM = Total marketing profit / Net sales.

OVERVIEW OF DEPARTMENTS: 1. 2. Distribution Finance

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3. 4. 5. 6.
7.

Human resource and Administration Information Technology Marketing Marketing services Management information system (MIS) Medical Supply chain management

8. 9.

10. Training

OVERVIEW OF BUSINESS UNIT SEGMENTS: 1.

2.

Antibacterial, Cough and cold Antibacterial, Enzyme preparations

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3. 4.

Antibacterial, Gynecology Cardio-vascular/diabetes Gynecology Musculoskeletal Eye care Urological products Gastro-intestinal

5. 6.
7. 8.

9.

10. Critical care, Injections

11. Generic 12. VET (Veterinary) 13. Exports

CONCLUSION The departments with high cost variance were recommended to reassign their upcoming budgets.

Industry average for Indian pharmaceutical industry was compared with Gross profit margin and Net profit margin and finally respective business unit segments, with low profit margins were requested to discuss for ways and means to improve their margins.

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