Presented by:

Vibhaw

Shefali Mehra

Siddhant Tripathi

Sudhir Jha

Shweta Singh

Chatrapal Singh

Sonia

RANBAXY AT A GLANCE

Ranbaxy Laboratories Limited (Ranbaxy) is a research based international pharmaceutical company serving customers in over 150 countries.

For more than 50 years, the company is providing high quality, affordable medicines trusted by healthcare professionals and patients.

Ranbaxy is a member of the Daiichi Sankyo Group. Daiichi Sankyo is a leading global pharma innovator, headquartered in Tokyo, Japan.

Mission: Enriching lives globally, with quality and affordable pharmaceuticals.

Tag Line: Trusted Medicines. Healthier Lives

Chairman: Dr. Tsutomu Une

CEO & MD: Arun Sawhney

Listed on Stock Exchanges: BSE Ltd., National Stock Exchange of India Ltd., The Luxembourg Stock Exchange (Global Depository Shares)

Headquarters: Gurgaon, Haryana, India

Established: 1961

2013 Revenues: US$ 2.3 billion

Employees: More than 14,600

Area of Business: Develops, manufactures and markets Generic, Branded Generic, Value-added and Over-the-Counter (OTC) products, Anti-retrovirals (ARVs), Active Pharmaceutical Ingredients (APIs), and Intermediates

Product Portfolio: Over 500 molecules

Global Presence: Ground operations in 43 countries, products sold in over 150 countries

Manufacturing: 21 manufacturing facilities spread across 8 countries

FINANCIAL PERFORMANCE

Sales for the India region for the 12 month period ending March 2014 was Rs.22,796 million.

Ranbaxy sales growth in the home market was slower than the Indian pharmaceutical market sales growth, affected by a larger part of Ranbaxy products coming under price control (DPCO) and overall slower growth of the acute segment, where Ranbaxy has a stronger presence when compared to the chronic and lifestyle segment.

Financial Performance for the quarter ended June 30, 2014 (Apr-Jun 2014)

Consolidated Sales were Rs.23.7 Bn [Apr-June 2013: Sales Rs.25.8 Bn]

Earnings before Interest, Tax, Depreciation & Amortization (EBITDA) was Rs.2.4 Bn.

GLOBAL SALES

Consolidated sales for the Quarter were Rs.23.7 Bn as compared to Rs.25.8 Bn during the corresponding quarter.

North America: Sales for the Quarter were Rs.7.6 Bn.

India: In the domestic market, sales for the Quarter were Rs.6.1 Bn, a growth of 12% over the corresponding period.

FINANCIAL STATEMENT

Business and Financial

On June 26, 2014, the Company received approval from the Indian Food and Drug Administration to manufacture and market Valsartan 40 mg, 80 mg, 160 mg, and 320 mg tablets on an exclusive basis. Valsartanis indicated for the treatment of high blood pressure and heart failure. Total annual market sales for Diovan® were $2.19 billion (IMS – MAT: April 2014).

The India business recorded 12% growth as against the Indian Pharma Market (IPM) growth of 10%. The Company expects to continue the momentum in the months ahead.

Ranbaxy maintained its strong market share in India. As of June 27, 2014 market share was 20%.

Balance Sheet as at 31 March 2014(Rupees in millions except share data, per share data and unless otherwise stated)

Particulars As at 31st March 2013

As at 31st march2014

EQUITY AND LIABILITIES

Shareholders' funds

Share capital

Reserves and surplus

2116.60

8848.27

10,964.87

2114.57

17095.10

19,209.67

Share application money pending allotment

Non-current liabilities

Long-term borrowings

Other long-term liabilities

Long-term provisions

5.03

24,721.88

3,719.44

1,314.54

29,755.86

11.10

19,568.10

10,363.48

2739.04

32670.62

Current liabilities

Short-term borrowings

Trade payables

Other current liabilities

Short-term provisions

35,188.77

9,751.86

43,495.90

1,888.08

90,324.61

28,067.95

8,588.11

13,320.78

27,831.11

77,807.95

Total

ASSETSNon-current assetsFixed assetsTangible fixed assetsIntangible fixed assetsCapital work-in-progress Intangible fixed assets under developmentNon-current investmentDeferred tax assets (net) Long-term loans and advancesOther non-currentassets

131,050.37

19460.46660.681791.80

44.53

40789.89

10779.89

1741.14

75268.59

129,699.34

19308.43626.851465.37

130.59

31281.37

10107.12

215.70

63135.43

Current assets

Current investments

Inventories

Trade receivable

Cash and bank balances

Short-term loans and advances

Other current assets

18.95

16951.44

12374.65

7905.72

12732.86

5798.16

55781.78

30.32

17318.39

14358.88

28347.73

5041.48

1467.11

66563.91

Total 131050.37 129699.34

Statement of Profit and Loss for the fifteen months ended 31 March 2014(Rupees in millions except share data, per share data and unless otherwise stated)

Particulars For the fifteen months ended 31st March 2014

For the year ended 31st

December 2012

INCOMERevenue from operations Sale of products (gross) Less: Excise dutySale of products (net)Other operating revenues

Other income

Total revenue

67010.59440.2066570.392078.98

68649.37

7848.90

76497.57

61403.57279.1461124.431911.01

63035.44

2571.63

66607.07

EXPENSESCost of materials consumed

Purchases of stock-in-trade

Change in inventories of finished goods, work-in-progress andstock-in-trade

Employee benefits expenses

Finance costs

Depreciation and impairment

Amortisation and impairment

Other expenses

20653.28

9826.43

(1751.22)

12747.28

5470.48

2474.18

327.54

30418.44

61403.57

279.14

(492.45)

10195.89

2969.82

1610.70

250.91

25526.16

Total expenses 80166.41 63437.65

(Loss)/ profit before exceptional items and tax

Exceptional items:

Profit on sale of intellectual property rights

Settlement provision reversal

Provision in respect of non-current investment in a subsidiary

Provision for other-than-temporary diminution in value of noncurrentinvestment in an associate

Inventory provision/ write off and other costs

(3668.84)

4327.69

1458.05

(3050.96)

(713.11)

(3557.92)

2169.42

(1030.00)

Loss on foreign currency option derivatives, net (other than on loans)

Product recall expenses

(3279.16) (412.05)

(2370.20)

Loss before tax (8484.25) (1642.83)

Income tax expenseCurrent tax expense/ (benefit) 305.70 (19.44)

Loss after tax for the period (8789.95) (1623.39)

Loss per equity share [par value of Rs. 5(previous year Rs. 5) per equity share]

Basic and diluted (20.79) (3.85)

Cash Flow Statement for the fifteen months ended 31 March 2014(Rupees in millions except share data, per share data and unless otherwise stated)

Particulars For the fifteen monthsended 31 March 2014

For the year ended31 December 2012

A. Cash flow from operating activitiesNet loss before taxes

Adjustments for:

Depreciation and impairment

Amortisation and impairment

Fixed assets written off

Employee stock option expense

(8848.25)

2474.18

327.54

25.58

326.59

(1642.53)

1610.70

250.91

35.34

222.47

Loss/ (profit) on sale of fixed assets, net

Provision for diminution in value of current investments

Provision in respect of non-current investment in a subsidiary

Provision for other-than-temporary diminution in value of non-current investment in an associate

Finance costs

44.14

1.53

3050.96

713.11

5470.48

(9.54)

5.99

1030.00

2969.82

Provision/ write-off of doubtful trade receivables and loans and advances

Non-compete fee –

Foreign exchange gain, net (Refer to note 4 below)

Unrealised foreign exchange gain, net on currency options

Dividend on non-current investments with overseas subsidiaries

34.44

(2729.68)

(4712.73)

(6121.32)

45.54

(210.00)

(1557.93)

(5341.23)

(10.04)

Profit on disposal/ sale of non-current investment

Unclaimed balances/ excess provision written back

Interest income

(169.71)

(296.50)

(1390.22)

(2951.61)

(13.76)

(26.76)

(2236.64)

(3235.13)

Operating cash flow before working capital changes

Adjustments for:Decrease/ (increase) in inventories

Decrease in trade receivables

(11435.86)

366.95

2076.95

(766.08)

24500.39

520.58

(Increase)/ decrease in loans and advances and other assets

Increase/ (decrease) in trade payables, other liabilities and provisions

1193.28

(639.27)

(12272.32)

(11982.57)

Cash (used in)/ generated from operations before taxes

Income taxes paid

Net cash (used in)/ provided by operating activities

(12075.13)

(95.84)

(12170.97)

7104.61

(483.81)

6620.80

B. Cash flow from investing activitiesPurchase of fixed assets

Proceeds from sale of fixed assets

Investments in overseas subsidiaries

Decrease/ (increase) in deposit accounts (having original maturity of more than three months)

Proceeds from disposal of non-current investment

Increase in loans and advances to subsidiaries/ associate

(3478.99)

70.25

(12,200.74)

24627.50

179.55

(7384.96)

(2701.17)

74.27

(16038.18)

(34.48)

Interest received

Tax deducted at source on interest income

Dividend on non-current investments with overseas subsidiaries

Tax deducted at source on dividend income

1709.88

(117.68)

6121.32

(305.70)

1980.63

(208.40)

10.04

Net cash provided by/ (used in) investing activities 9220.43 (16917.29)

C. Cash flow from financing activities

Proceeds from issue of equity share capital (including share application money and securities premium)

Increase in other short term bank borrowings (net)

Proceeds from long-term bank borrowings

Long-term borrowings from redeemable non-convertible debentures

Re-payment of long-term borrowings (Refer to note 5 below)

72.75

972.03

5651.00

(486.88)

159.33

3270.37

5196.38

5000

(3241.67)

Proceeds from issue of commercial papers

Re-payment of commercial papers

Finance costs paid (including premium paid on derivative instruments relating to borrowings)

22366.93

(17803.11)

(3599.96)

3879.93

(9800)

(1318.84)

Net cash provided by financing activities

Increase/ (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

7172.76

4222.22

665.71

3145.50

(7150.99)

7811.93

Effect of exchange gain on cash and cash equivalents

Cash and cash equivalents at the end of the period

(8.64)

4879.29

4.77

665.71

CAPITAL STRUCTURE

Every company has to have a balanced capital structure, means should be balance of equity and debt in the company’s capital formation. Traditionally firms have looked at certain ratios to assess whether they have A satisfactory capital structure. The commonly used ratios are- interest coverage ratio, cash flow coverage ratio, debt service coverage ratio and fixed asset coverage ratio.

CAPITAL STRUCTURE OF RANBAXY

Period

From To

Instrument AuthorizedcapitalRs cr.

Issued capital

Rs cr.

Paid up

Face value Capital

2013 2014

2012 2012

2011 2011

2010 2010

2009 2009

2008 2008

2007 2007

2006 2006

2005 2005

Eq. Share

Eq. Share

Eq. Share

Eq. Share

Eq. Share

Eq. Share

Eq. Share

Eq. Share

Eq. Share

299

299

299

299

299

299

299

299

299

211.66

211.46

211

210.52

210.21

210.18

186.54

186.34

186.22

5 211.66

5 211.46

5 211

5 210.52

5 210.21

5 210.18

5 186.54

5 186.34

5 186.22

CHANGES IN CAPITAL STRUCTURE

Allotment of shares on exercise of Stock Options by the Employees

During the period, the ESOPs Allotment Committee allotted Equity Shares pursuant to exercise of stock options granted prior to 2011 under the old ESOP Schemes as summarised below:

Date of Allotment No. of Shares

January 11, 2013 93,050April 15, 2013 94,136

July 10, 2013 28,520

October 11, 2013 12,273

January 10, 2014 37,281

The Allotment Committee of Directors on December 11, 2013, allotted 600,000 Equity Shares of Rs.5 each for cash at par to Ranbaxy ESOP Trust (Trust), set up to administer Ranbaxy Employee Stock Option Plan-2011 (ESOP-2011). The Trust allocates the shares to the employees of the Company and of its subsidiaries on exercise of stock options from time to time under ESOP-2011.

WORKING CAPITAL

“Working capital includes the current assets and current liabilities areas of the balance sheet. Working capital can be called by it’s alternative name – Net current assets.”

Working capital management is the process of planning and controlling the level and mix of current assets of the firm as well as financing these assets.

“It is also regarded as the life of business”

Working capital management of RanbaxyDefining the problem

Areas of working capital has different problems and these are discussed as follows:-

Stock Control

Problem:-

If too much stock is held, the organisation wastes money through a variety of factors

Debtor control

Problem:-

“ It is better to have cash in your bank account than in your customers”

Cash flow management

Cash flow managent is about achieving maximum

effectiveness of cash receipts and payment

Creditor control

Creditor control is managing your relationship with organisations or people you owe money e.g. suppliers

LOAN

Ranbaxy Laboratories, are going to raise loans if cash outflow from additional forex loss continues this fiscal.

"In 2008, cash outgo on forex losses cancelled all the operating profit. With very little operating profit expected this year, forex losses are likely to deliver a significant cash outflow, even if there is a marginal gain because of the appreciating rupee. The company may have to raise more debt to settle these losses.

Ranbaxy recorded a loss of about Rs 2,670 crore ($540 million) on forex contracts in 2008. This was booked under current liabilities, implying that the cash outflow may happen this fiscal. But amendment to the accounting norms made this year allows companies not to book forex losses in their books.

If the rupee dollar exchange rate stays at Rs 57 ,the company may actually make a forex gain of over $100 million this quarter." As much as 80% of Ranbaxy's $1.6 billion sales comes from overseas markets, making it vulnerable to forex swings.

Ranbaxy scrip rose 1.05% to close at Rs 177.50 at the Bombay Stock Exchange. At present, Ranbaxy has a cash reserve of around $300 million, largely representing the balance from the $735 million preferential allotment made to Daiichi Sankyo

Commenting on the business results for the Quarter, Arun Sawhney, CEO & Managing Director, Ranbaxy, said, “We continue to work towards growing our base business with focus on emerging markets, while at the same time, restoring the business on growth trajectory in our traditional markets such as India.”

AGENCY PROBLEM

During 2004–2005, Dinesh Thakur and RajinderKumar, two Indian employees of Ranbaxy, blew the whistle on Ranbaxy's fabrication of drug test reports. Thakur's office computer was soon found tampered with. Ranbaxy then accused Thakur of visiting graphic websites using his office computer, forcing him to resign in 2005. Thakur escaped from India to the USA and contacted the FOOD and Drug Administration which started investigating his claims.

As a result, on 16 September 2008, the Food and Drug Administration issued two warning letters to Ranbaxy Laboratories Ltd. and an Import Alert for generic drugs produced by two manufacturing plants in India. By 25 February 2009 the US Food and Drug Administration said it halted reviews of all drug applications including data developed at Ranbaxy's Paonta Sahib plant in India because of a practice of falsified data and test results in approved and pending drug applications.

On 8 February 2012, three batches of the proton-pump were recalled in the Netherlands due to the presence of impurities.

On 9 November 2012, Ranbaxy halted production and recalled forty-one lots of atorvastatin due to glass particles being found in some bottles. Also in 2012, an apparent dosage mistake was reported in which 20 mg tablets were found in a bottle of atorvastatin labeled as containing 10 mg tablets; this led in 2014 to the voluntary recall in the United States of some 64,000 bottles.

In September 2013, further problems were reported, including apparent human hair in a tablet, oil spots on other tablets, toilet facilities without running water, and a failure to instruct employees to wash their hands after using the toilet. Ranbaxy is prohibited from manufacturing FDA-regulated drugs at the Mohalifacility until the company complies with U.S. drug manufacturing requirements.