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ECONOMIC ANALYSIS

1.GDP: Gross domestic product (GDP) is the measure of national income. Its trend shows the actual picture of countrys economy. It is a measure of wealth and health of economy. India is one of the fastest growing economies in world today. Everybody is looking at India. Its GDP is higher than most countries in the world.

Source: CMIE The Goldman Sachs has projected long term trend in GDP, which is expected to be higher than other developing countries like china and Brazil.

Above is the long term forecast of GDP we can see that GDP of India is expected to grow at a consistent rate where as mighty Chinese GDP is expected to fall in coming years and will remain around 2%.

2.MONSOON AND AGRICULTURAL PRODUCTION : India is an agriculturist country. More than 70% of population of India depends on agriculture for their livelihood. And Indian agriculture depends mainly on monsoon because there is no proper irrigation infrastructure. If monsoon is below average it can negatively affect Indian economy at large. So, monsoon has direct impact on performance of any industry. The trend of monsoon over the years and its relationship with GDP has been given below:

From chart we can see that both lines move simultaneously in same direction. So, there is a strong relationship between monsoon and growth in GDP. But our agriculture production depends upon rain there are no proper irrigation facilities, if India wants to be world leader than it should have irrigation infrastructure.

Total Foodgrain production is expected to remain 220 Mn tons which is 5% more than previous year with projected rainfall of 80%.

Table: Foodgrain production versus monsoons

Exhibit: Total Foodgrain production in the country

3.SAVING AND INVESTMENT The latest estimates for saving and capital formation pertain to 2003-04.The CSOs quick estimates indicate that the rate of Gross Domestic Saving (GDS) rose to 24.2 per cent of GDP at current market prices in 2003-04, entirely due to reduction in the public sectors dis-saving. Households - the mainstay of overall saving in the economy recorded a decline in terms of financial saving which, in turn, marginally reduced the rate of household sector saving. There was also a marginal decline in the rate of private corporate sector saving in 2003-04.

4.INDUSTRIAL PERFORMANCE The strengthening of industrial growth in India was broad-based and occurred in an environment of accelerating industrial activity in various parts of the world, especially in East Asian economies. External demand embodied in exports provided a boost to a spectrum of manufacturing industries, supported by improvement in domestic demand conditions and reductions in excise duties on a host of intermediate inputs.

Growth of Index of Industrial Production

The CSOs advance estimates indicate a distinct pick-up in the growth of real GDP originating in industry from the second quarter that was sustained in the third quarter of 2003-04. The upturn was evident as early as May 2003 in terms of the index of industrial production (IIP) (Chart). Over the period April 2003-February 2004, industrial production rose faster than in the preceding year on account of higher growth in the manufacturing sector .The CSO has placed the growth of real GDP originating in manufacturing at 7.1 per cent in 2003-04 as against 6.2 per cent in the preceding year.

5.INFLATON High inflation can adversely affect Indian economy. It is a high inflation period in India due to increase in crude oil prices in international market and below average monsoon in India this year.

Exhibit: inflation during July-August 2004


inflation (WPI) in july-August 2004
8.5 percent 8 7.5 7 31-Jul 07-Aug 14-Aug 21-Aug week ended 7.61 7.96 7.94 8.17

Source: RBI Inflation, measured in movement in wholesale price index (WPI), has increased from 7.61% during week ended 31 July to 8.17% during week ended 21. August 2004.rising crude oil price in the international market is the min reason behind the recent spurt in inflation. In the mean time government has shown its sincerity in containing inflation within manageable limit.

High inflation discourages deposits especially long term. Because the real increase in deposit will be negligible if there is high inflation. So, people invest their money in mutual funds and stock market to earn higher return.

6.CURRENT ACCOUNT As in the preceding two years, the invisible surplus was able to fully offset the merchandise trade deficit. The surplus in the invisible account increased from US $ 12.6 billion in April-December 2002 to US $ 18.2 billion in April-December 2003, mainly on account of higher receipts from software services, private transfer receipts and tourism earnings. A revival of international interest in India as a tourist destination was reflected in an increase of 18.5 per cent in tourist arrivals in 2003-04. Exports of software and IT-enabled services have been growing at an average rate of 46 per cent since the mid-1990s. Despite the global slowdown, Indian IT industry raised its share in global IT-spending from about one per cent at the end of the 1990s to about three per cent currently. India is one of the most preferred destinations for outsourcing of IT services. With buoyant invisible receipts, the current account surplus increased to US $ 3.2 billion during April-December 2003 from US $ 2.9 billion during the corresponding period of the previous year

Exhibit: Current Account Balance

6.STOCK MARKET Recently there is a bullish trend in stock market. Sensex is going to touch 6000 points. Most of the shares are at their historic high positions. Investors confidence in stock market has increased. They expect this trend to persist for a long time. This also has boosted new issues in primary market. This has affected positively all industry. People has attracted toward direct investment in shares as they are giving higher return than any other investment opportunity. Mutual funds are performing best, so all these factors have contributed toward fall in deposits.

Primary Market trends: After a long period of lacklustre activity, the public issues market experienced a revival. Resource mobilisation in the public issues market (excluding offers for sale) amounted to Rs.7,190 crore through 35 issues during 2003-04, as against only Rs.4,867 crore raised through 17 issues during 2002-03 (Chart 53). Out of the issues floated in 2003-04, 28 were equity issues accounting for 40.5 per cent of resource mobilisation. Public sector entities accounted for 55.4 per cent of total resources mobilised in the primary market. Trend in Public issue
7000 6000 5000 4000 3000 2000 1000 0
19 97 -9 19 8 9 19 8-9 99 9 -2 00 20 0 00 -0 20 1 01 -0 20 2 02 -0 20 3 03 -0 4

Public issue(Pvt. Sector)

Public issue(Public sector)

Non-Government public limited companies (private sector) garnered Rs.3,210 crore through 27 issues during 2003-04 as compared with Rs.1,878 crore raised through nine issues during the previous year. In 2003-04, 24 equity issues aggregated to Rs.1,959 crore as compared with five equity issues aggregating Rs.460

crore during the previous year. Equity issances surged during the second half of 200304 (Chart 54). There were three debt issues of Rs.1,251 crore (all from ICICI Bank) during 2003-04 as compared with four bond issues of Rs.1,418 crore during 2002-03.

7.INTEREST RATE By monetary policy 2004-05 RBI kept interest rate unchanged at 6%. Before that Interest rate was decreasing. This will lead to increase in demand for loans because if the loans are available at cheaper rate then people will ask for more loans to make investments.

INDUSTRY ANALYSIS

INDUSTRY ANALYSIS: PHARMACEUTICAL

INTRODUCTION: The Indian pharmaceutical industry, which was operating in a protectionist regime, is now gearing to face competition emerging from product patents in a WTO era. Pharmaceuticals being essential items for humans, the industry is protected from cyclical fluctuations. The shift towards product patent era in 2005 has made the domestic industry conscious of the need to increase expenditure in Research. Hence, the market leaders' earnings are likely to show consistent growth, but for temporary aberrations resulting from increased R&D and global marketing expenses. However, globally as well as domestically, the industry is witnessing large-scale mergers and acquisitions, that will have drastic implications for the Indian market. With quality human resources, low cost of research and world wide opportunities, the industry is keen on replicating the success of IT in the global pharma industry. The Indian Pharmaceutical industry is highly fragmented with about 10,000 manufacturing units (300 in the organized sector). The top ten companies make up for more than third of the market. The revenues generated by the industry are approximately US$ 5 bn and growing at an average rate of 9% over last five years. While formulations account for around 35% of this industry, bulk drugs make up for the balance. The Indian pharma industry accounts for about 1% of the world's pharma industry in value terms and 8% in volume terms, which suggest that it has a huge potential to grow in value term. However, the annual per capita drug expenditure is still amongst the lowest in the world.

Per Capita Health Per 1000 people Expenditure (US$) India Brazil China Malaysia USA 94 453 143 189 3950 Source: World Bank 0.8 3.1 2.9 2 3.7

In recent past Indian companies have targeted international markets and have extended their presence there. While some companies are doing bulk drug exports some have moved up in the value chain and export formulations and generic products. The total exports from the country stood at Rs 141 bn in the year 2003. The country also offers excellent exports opportunities for clinical trials, R&D, custom synthesis, technical services like Bioinformatics. The drug price control order (DPCO) continues to be a menace for the industry. The pricing authority arbitrarily sets prices of drugs that fall within its ambit without giving due consideration even to the costs of production. There are three tiers of regulations on bulk drugs, on formulations and on overall profitability. This has made the profitability of the sector susceptible to the whims and fancies of the pricing authority. Consequently, MNCs show reluctance in launching patented drugs from their parent's product portfolio, thereby, affecting their market share. Although government has brought down the DPCO cover from 74 to 25 drugs in the new DPCO, the same has not been brought into effect due to impending litigation. However, once implemented, this could increase profitability of companies having relatively older portfolios, particularly MNCs.

INDUSTRY STRUCTURE: The industry comprises about 18000 players, of which 250 leading players control almost 70% of the market. The domestic formulation market grew by modest 6.3% to Rs 18212 crore in the twelve months ended Feb'03 as per ORG MAT Feb'03. The growth rate in the industry has come down considerably from around 16% in the 90's particularly in view of the hectic competition from generic generics. Domestic players account for over 70% market share and the rest is accounted for by MNCs. The leading domestic companies are Dr. Reddy's Laboratories (DRL), Ranbaxy Laboratories (RLL), Sun Pharmaceuticals, Cipla, Lupin Laboratories, Orchid Chemicals and Wockhardt while the leading MNCs are Glaxosmithkline, Pfizer, Aventis Pharma and Merck India. If one considers the entire healthcare scenario, allopathy accounts for 50% of the overall Indian market, ayurveda accounts for 30% and sidha, unani, homeo and other systems share the rest.

Financial Year '04 FY04 was relatively a good year for the markets in India for domestic and to extent MNC pharma companies also. ON back of low growth rate last the market grew by about 7.3% this year in value terms. However, severe competition led to significant price erosion to an extent of 2%, which led to lower growth in value term. Commoditisation of the domestic pharma market severely impacted the anti-infective segment, which grew only by 5%. The point to note here is that anti-infective segment constitutes about 17% of the pharma market. However, new product launches contributed significantly in the growth of the market. In view of the intense competition in the domestic markets, Indian pharma majors are increasingly tapping the export market for growth. Export revenues now contribute more than two third of the revenues of Dr. Reddy's and about 80% of the revenues of Ranbaxy. Apart from export of formulations and bulk drugs, Indian

revenues of Ranbaxy. Apart from export of formulations and bulk drugs, Indian companies have also entered into contract manufacturing. Though exports are providing growth impetus and size to Indian majors, it will be a while before Indian majors can make their presence felt in the global markets.

The research initiatives of the pharma industry have been commendable. It is not only the majors who are committing substantial research efforts but also the comparatively smaller companies like Glenmark, Lupin and Cadila. The country now boasts of several state of the art pharma research centers dedicated to basic research. MNC's continued to under perform their domestic peers. While the top 5 domestic companies recorded a revenue growth of more than 20% last year, consolidated MNC pharma growth was around 12% with net margins 11% as against 17% of domestic majors. However, MNCs have been quick in responding to this trend with most companies have intensively restructured their operations in a bid to bounce back. Post restructuring, MNC pharma majors are expected to record healthy growth rates which was evident in the last two quarters of last year. MNC pharma companies have also started gearing up for the post product patent regime. Many like Aventis Pharma have already started making aggressive launches of patented drugs from their parent's product portfolio. This has also helped the MNCs companies in reducing their exposure to drugs covered by DPCO.

PROSPECTS: While FY04 recorded a good growth and the markets grew by about 7.3% mainly driven by high growth in lifestyle segment such as CVS (17%), CNS (9%), antidiabetic (12%) and respiratory (9%) therapeutic segments. However, intense competition ensured that the values of the products to decline. In fact the growth in volume terms was about 2% more than growth in value terms. In the year while Indian companies performed very well both in exports as well as the domestic markets, performance of the MNC's was not very impressive. However, in the longer run, Indian companies would face fresh competition from MNCs, as they would make aggressive new launches once product patents are recognized post 2005. The DPCO is likely to be significantly diluted soon though there is litigation pending over it in supreme court. In case the new order is passed the pressure on pricing of MNC pharma products is likely to go away. Companies with high DPCO coverage currently and strong brands in place are expected to benefit. The penetration of health insurance is abysmally low in the country. The entry of private players would not only bring in quantum leap in the health insurance business but also increase capital inflows into this sector. With drug prices expected to increase post 2005, health insurance could provide a cushion against it and thus maintain the demand for drugs. On the exports front, the global generics market is growing at the rate of 10% to 12% and drugs having estimated sales of over US$ 55 bn expected to go off patent in the next few years. This coupled with the fact that the US government is facilitating a speedy introduction of generic drugs into the market, increasing the number of generics drugs in its Mediclaim policy, bodes well for generic exporters. However the opportunity here may not be as big as stated above, because the prices fall drastically once the drug goes off patent.

CRITICAL SUCCESS FACTORS:

Investment in R & D (especially basic research), an extensive distribution network and marketing strategies, new product introductions, penetration into global generics markets, effective anti-dumping duties, logistics management and brand building are critical. Compliance with international GMP is critical to expand the markets beyond the domestic market. Likewise, compliance with domestic GMP, which will become mandatory from Dec'03 will be critical for sustaining in the domestic market. Domestic pharma companies which target global generics and in US in particular, have to gain vast expertise to challenge the patent holders, that are likely to take the generic firms to court, just to protect their patents even after their expiry. Likewise, innovations are also likely to be challenged before court, and the home grown companies need to specialise and gain expertise in dealing not only with chemicals but also on and off the court, to reap benefits from their research.

DEMAND DRIVERS : An increase in coverage (currently at 35% of the population), opening up of health insurance, becoming global sources for MNCs and the growing global generics segment are demand drivers. An increase in health consciousness and growing advertising and marketing efforts by corporates will boost the demand for the OTC segment. Lifestyle diseases are increasing at a fast pace, consequent to the fast changing life style of Indians. The huge and growing generics opportunity and the regulatory compliance by domestic firms have resulted in wider acceptability of pharma products from India, as could be guaged by increased exports. Hence, low cost quality production and regulatory compliance have also become demand drivers for the domestic industry, for increased pharma exports.

Pharma: Through Porters eyes


Today's business environment is extremely competitive and in economics parlance where perfect competition exists, the profits of the firms operating in that industry will become zero in long run. However, this is not possible because, firstly there is no perfect competition and no company is a passive price taker (i.e. no company will operate where profits are zero). Secondly, they strive to create a competitive advantage to thrive in the competitive scenario. Michael Porter, considered to be one of the foremost gurus of management, developed the famous five-force model, which influences an industry. In this article, we apply this model for the Indian pharma industry.

INDUSTRY COMPETITION: Pharma industry is one of the most competitive industries in the country with as many as 10,000 different players fighting for the same pie. The rivalry in the industry can be gauged from the fact that the top player in the country has only 6% market share, and the top five players together have about 18% market share. Thus, the concentration ratio for this industry is very low. High growth prospects make it attractive for new players to enter in the industry. Another major factor that adds to the industry rivalry is the fact that the entry barriers to pharma industry are very low. The fixed cost requirement is low but the need for working capital is high. The fixed asset turnover, which is one of the gauges of fixed cost requirements, tells us that in bigger companies this ratio is in the range of 3.5 to 4 times. For smaller companies, it would be even higher. Many smaller players that are focused on a particular region, have a better hang of the distribution channel, making it easier to succeed, albeit in a limited way. An important fact is that pharma is a stable market and its growth rate generally tracks the economic growth of the country with some multiple (1.2 times average in India). Though volume growth has been consistent over a period of time, value growth has not followed in tandem.

The product differentiation is one key factor, which gives competitive advantage to the firms in any industry. However, in pharma industry product differentiation is not possible since India has followed process patents till date, with laws favouring imitators. Consequently, product differentiation is not the driver, cost competitiveness is. However, companies like Pfizer and Glaxo have created big brands in over the years, which act as product differentiation tools. This will enhance over the long term, as product patents come into play from 2005.

BARGAINING POWER OF BUYERS: The unique feature of pharma industry is that the end user of the product is different from the influencer (read Doctor). The consumer has no choice but to buy what doctor says. However, when we look at the buyer's power, we look at the influence they have on the prices of the product. In pharma industry, the buyers are scattered and they as such does not wield much power in the pricing of the products. However, government with its policies, plays an important role in regulating pricing through the NPPA (National Pharmaceutical Pricing Authority). BARGAINING POWER OF SUPPLIERS: The pharma industry depends upon several organic chemicals. The chemical industry is again very competitive and fragmented. The chemicals used in the pharma industry are largely a commodity. The suppliers have very low bargaining power and the companies in the pharma industry can switch from their suppliers without incurring a very high cost. However, what can happen is that the supplier can go for forward integration to become a pharma company. Companies like Orchid Chemicals and Sashun Chemicals were basically chemical companies, who turned themselves into pharmaceutical companies. BARRIERS TO ENTRY: Pharma industry is one of the most easily accessible industries for an entrepreneur in India. The capital requirement for the industry is very low, creating a regional distribution network is easy, since the point of sales is restricted in this industry in India. However, creating brand awareness and franchisee amongst doctors is the key for long-term survival. Also, quality regulations by the government may put some hindrance for establishing new manufacturing operations. Going forward, the impending new patent regime will raise the barriers to entry. But it is unlikely to discourage new entrants, as market for generics will be as huge.

THREAT OF SUBSTITUTES: This is one of the great advantages of the pharma industry. Whatever happens, demand for pharma products continues and the industry thrives. One of the key reasons for high competitiveness in the industry is that as an on going concern, pharma industry seems to have an infinite future. However, in recent times, the advances made in the field of biotechnology, can prove to be a threat to the synthetic pharma industry. CONCLUSION This model gives a fair idea about the industry in which a company operates and the various external forces that influence it. However, it must be noted that any industry is not static in nature. It's dynamic and over a period of time the model, which have used to analyse the pharma industry may itself evolve. Going forward, we foresee increasing competition in the industry but the form of competition will be different. It will be between large players (with economies of scale) and it may be possible that some kind of oligopoly or cartels come into play. This is owing to the fact that the industry will move towards consolidation. The larger players in the industry will survive with their proprietary products and strong franchisee. In the Indian context, companies like Cipla, Ranbaxy and Glaxo are likely to be key players. Though consolidation within the current big names is not ruled out. Smaller fringe players, who have no differentiating strengths, are likely to either be acquired or cease to exist. The barriers to entry will increase going forward. The change in the patent regime, will see new proprietary products coming up, making imitation difficult. The players with huge capacity will be able to influence substantial power on the fringe players by their aggressive pricing which will create hindrance for the smaller players. Economies of scale will play an important part too. Last but not the least, in a vast country of Indias size, government too will have bigger role to play.

Indian Pharma Industry: SWOT analysis


It is often said that the pharma sector has no cyclical factor attached to it. Irrespective of whether the economy is in a downturn or in an upturn, the general belief is that demand for drugs is likely to grow steadily over the long-term. True in some sense. But are there risks? This article gives a perspective of the Indian pharma industry by carrying out a SWOT analysis (Strength, Weakness, Opportunity, Threat). Before we start the analysis lets look a little back in the industrys last six years performance. The Industry is a largely fragmented and highly competitive with a large number of players having interest in it. The following chart shows the breakup of the growth (YoY) of Indian pharmaceutical industry in last six years.

*Volume growth of existing products The SWOT analysis of the industry reveals the position of the Indian pharma industry in respect to its internal and external environment.

Strengths: 1. Indian with a population of over a billion is a largely untapped market. In fact the penetration of modern medicine is less than 30% in India. To put things in perspective, per capita expenditure on health care in India is US$ 93 while the same for countries like Brazil is US$ 453 and Malaysia US$189. 2. The growth of middle class in the country has resulted in fast changing lifestyles in urban and to some extent rural centers. This opens a huge market for lifestyle drugs, which has a very low contribution in the Indian markets. 3. Indian manufacturers are one of the lowest cost producers of drugs in the world. With a scalable labor force, Indian manufactures can produce drugs at 40% to 50% of the cost to the rest of the world. In some cases, this cost is as low as 90%. 4. Indian pharmaceutical industry posses excellent chemistry and process reengineering skills. This adds to the competitive advantage of the Indian companies. The strength in chemistry skill help Indian companies to develop processes, which are cost effective.

Weakness: 1. The Indian pharma companies are marred by the price regulation. Over a period of time, this regulation has reduced the pricing ability of companies. The NPPA (National Pharma Pricing Authority), which is the authority to decide the various pricing parameters, sets prices of different drugs, which leads to lower profitability for the companies. The companies, which are lowest cost producers, are at advantage while those who cannot produce have either to stop production or bear losses. 2. Indian pharma sector has been marred by lack of product patent, which prevents global pharma companies to introduce new drugs in the country and discourages

innovation and drug discovery. But this has provided an upper hand to the Indian pharma companies. 3. Indian pharma market is one of the least penetrated in the world. However, growth has been slow to come by. As a result, Indian majors are relying on exports for growth. To put things in to perspective, India accounts for almost 16% of the world population while the total size of industry is just 1% of the global pharma industry. 4. Due to very low barriers to entry, Indian pharma industry is highly fragmented with about 300 large manufacturing units and about 18,000 small units spread across the country. This makes Indian pharma market increasingly competitive. The industry witnesses price competition, which reduces the growth of the industry in value term. To put things in perspective, in the year 2003, the industry actually grew by 10.4% but due to price competition, the growth in value terms was 8.2% (prices actually declined by 2.2%)

Opportunities 1. The migration into a product patent based regime is likely to transform industry fortunes in the long term. The new patent product regime will bring with it new innovative drugs. This will increase the profitability of MNC pharma companies and will force domestic pharma companies to focus more on R&D. This migration could result in consolidation as well. Very small players may not be able to cope up with the challenging environment and may succumb to giants. 2. Large number of drugs going off-patent in Europe and in the US between 2005 to 2009 offers a big opportunity for the Indian companies to capture this market. Since generic drugs are commodities by nature, Indian producers have the competitive advantage, as they are the lowest cost producers of drugs in the world.

3. Opening up of health insurance sector and the expected growth in per capita income are key growth drivers from a long-term perspective. This leads to the expansion of healthcare industry of which pharma industry is an integral part. 4. Being the lowest cost producer combined with FDA approved plants, Indian companies can become a global outsourcing hub for pharmaceutical products.

Threats: 1. There are certain concerns over the patent regime regarding its current structure. It might be possible that the new government may change certain provisions of the patent act formulated by the preceding government. 2. Threats from other low cost countries like China and Israel exist. However, on the quality front, India is better placed relative to China. So, differentiation in the contract manufacturing side may wane. 3. The short-term threat for the pharma industry is the uncertainty regarding the implementation of VAT. Though this is likely to have a negative impact in the short-term, the implications over the long-term are positive for the industry.

POLITICAL-LEGAL FACTORS:
There are so many government rules and regulations for pharmaceutical industries in India. Government has played supportive role in the development of pharmaceutical industry in India. Because pharma products is basic or necessity for human beings. As Indian population touches to 120 crores in these days it is very necessary product. There are so many ways pharma industry can be affected by political and legal factors.

1.LIBRALISATION POLICY:

Through libralisation policy 1991, government made it easy for private companies to start their business by deregulation and delicencing measures. Now, There is need for few statutory requirement to start a pharma company. so any person with limited capital and expertise and skill can start new business. Government also provides many types of facilities for new entrepreneur. 2. Goverment has established many special economic zones where pharma companies are provided with infrastructural facilities like rail, road, drainage, desposal of hazards, etc. with tax holiday for some period. So any existing company can expand their business because all supported facilities are available at one place with tax benefits . 3 multinational companies are allowed to carry on their business &Indian companies can globally compete. There are so many multinational companies in India are working because they see India or big market place . there is no competition for pharma company.
TAX STRUCTURE:

Pharmaceutical companies have to pay excise sales tax and corpate tax according to law. But they pass all this to their customer as this is necessity &no perfect subsidies is available customer pay price.

ECONOMICAL FACTOR:

1) High inflation rate negatively affect pharmaceutical industrys life saving drugs become costlier people tend to be consume less. Even if they are

unavoidable & basic basic commodity the demand is negatively 2) Insurance protection can positively affect pharmaceutical industry. People have enough money to spend on. It there was no insurance and if any major surgery is to be taken place turn and people can not afford & get died. 3) Compare to develop countries people spent less proportion of their income on health. 4) Saving can positively affect Parma industry if people have enough saving they can afford costly treatment and get well soon many people died off

due to improper treatment while in critical situation.


5) 70% of Indian population depends on agriculture for their livelihood. There is no proper infrastructure for irrigation so people have to depend on rain. If monsoon remain below average then people will suffer and try to spend less on their health by using home made medicine.

SOCIO-CULTURAL FACTORS:

1) Demographic: its population explosion in India population of India is increasing at a accelerated rate and is compounding. Population touches 120 crores it is a matter of serious concern for any economy but pharma industry gain positively because it is necessity to survive. 2) Culture, Taboo, Customs of India are so strong and prosperous. They affect adversely. Indian culture is oldest one it has Vedas . Means how to maintain good

health how to cure your disease and people have been using there for themselves effectively.

3) In India there are still many village where doctors have not reached there .so, people treat their daises by traditional way by using home made medicine& taking treatment from vidhya. A traditional professional person who cures people & without getting degree. 4) People of India are very religious especially in village. They take bhoova & leave everything on god pledge for quickly recovery.

5) Literacy level in India is very low compare to developed country. People do not know effectiveness of medicine and put more trust on traditional way of curing disease.

6) life style of people of India is very poor . They spend less too many on their health.

CEMENT

INTRODUCTION One of the oldest of brick and mortar industries, the Indian cement sector is now hogging the limelight as leading players are gearing to face the new economy. The cement sector has undergone a veritable metamorphosis after the decontrol. Further, it witnessed a blistering pace of growth in the succeeding years and now the industry is estimated to have a turnover of Rs 25,000 crore. Virtually thrown open to market forces, the sector stands witnesses to large-scale consolidation moves via acquisitions, mergers or hostile takeovers. However, the domestic players appear to have successfully scuttled the MNC players from playing a greater role in the domestic cement industry. Aditya Birla group will eventually emerge as the largest player in the domestic cement industry, with the proposed take over of the cement business of Larsen & Toubro. Earlier, Gujarat Ambuja had acquired 14.43% strategic stake in ACC. In the process, Grasim Industries will control about 22% of the domestic large plant capacity while Gujarat Ambuja will control about 20%. As a result, these two players alone control over 42% of the capacity of large cement plants in India.

The Indian cement industry with a total capacity of 144 m tonnes (including mini plants) in FY04, has surpassed developed nations like USA and Japan and has emerged as the second largest market after China. Although consolidation has taken place in the Indian cement industry with the top six players controlling almost 60% of the capacity, the remaining 40% of the capacity remains pretty fragmented with around 40 players in the fray. Despite the fact that Indian cement industry has clocked a production of more than 100 m tonnes for the second year in succession, the per capita consumption of 110 kgs

compares poorly with the world average of 260 kgs. This, more than anything underlines the tremendous scope for growth in the Indian cement industry in the long term. Cement, being a bulk commodity, is a freight intensive industry and transporting cement over long distances can prove to be uneconomical. This has resulted in cement being largely a regional play with the industry divided into five main regions viz. north, south, west, east and the central region. While the southern region is excess is capacity owing to the availability of limestone, the western and northern region are the most lucrative markets. Therefore, players like Grasim, L&T and Gujarat Ambuja enjoy high price realisations compared to the all India average. Given the high potential for growth, quite a few foreign transnationals have been eyeing the Indian markets and are planning to acquire domestic companies. Already companies like Lafarge and Italicementi have made a couple of acquisitions and other majors like Holcim and Cemex are waiting for a favorable opportunity to do the same. However, the transnationals will find the going tough since cement is a game of volumes and with the median capacity of fragmented players being just about 1 m tonne, the transnationals will have to acquire capacities piecemeal and this route is fraught with a lot of uncertainties. Although the government has reduced the import duty on cement, imports do not pose a threat since prices of cement in India are lower than those prevailing in the international markets. Moreover, the storage facilities on the Indian ports are inadequate for large-scale imports.

Financial Year '04 In FY04, the cement sector grew at a slower rate of 5.5% as compared to 8% last year owing to prolonged monsoons, which affected cement demand in the first half of the fiscal year. To put things in perspective, in 1HFY04, the cement sector grew by an estimated 4.4% as compared to almost 7.1% in 2HFY04. As is evident from the graph below, after a slower growth in revenues in the first half of the fiscal, the second half of the year witnessed a recovery. Cement prices also followed suit.

Although the demand grew by only 5.5% y-o-y, there was a 5% growth in industry realisation owing to the fact that the demand-supply situation is slowly improving. The price realisation also has to be viewed in the context of additional supply of around 2 MT with the commissioning of the Sanghi Cement facility. Had the demand grown at a faster rate, the improvement in price realisation would have higher. In effect, we believe that FY04 was a positive year for the industry.

While cement prices, on a YoY basis, were higher by around 5% for the industry, the rise in prices was higher in the western and the northern region as compared to the southern market. The pricing scenario is relatively unfavorable in the southern market given the fact that this region has an excess capacity of close to 11 MT, the highest among all the regions in the country.

PROSPECTS: The industry is likely to maintain its growth momentum and continue growing at around 8% in the medium to long term. Government initiatives in the infrastructure sector (such as the commencement of second phase of NHDP, rural roads, 10,000 kms of additional highways as announced in Finance Budget) and the housing sector are likely to be the main drivers of growth for the industry. The acquisition of L&T's cement division by Grasim has changed the landscape of the entire cement industry and in one fell swoop has catapulted Grasim to the leadership position. This is a healthy sign for the industry, as this would result in consolidation and would give significant pricing power to the bigger players. With consolidation taking place at the lower end also, the unviable units will be forced to shut down thus benefiting the long-term interests of the industry. With no major capacity expansion in the pipeline, the demand supply level is expected to achieve parity on a macro level by FY07 and this will help in the improvement of prices. However, since the level of demand supply mismatch is higher in the southern region, it will take longer to achieve demand supply parity. The industry worked at estimated 84% capacity in FY04 and given the current growth rates and also assuming no major capacity expansion in the near future, the capacity utilisation is likely to go up significantly in the future. This will help in improving the margins of all the major players and will lead to higher profitability. Despite these positives, the possibility of interest rates heading north and the consequent impact on housing demand remains to be seen. While infrastructure spending was a boon, there was a strong cushion from the steady growth of the construction sector. the hike in prices of coal and petroleum products could impact cement companies margins (account for around 40% of sales). Though the pricing cushion exists, the margin rise will be mitigated to this extent.

CRITICAL SUCCESS FACTORS: Better cost control, lowering debt-equity ratio caused by funding of acquisitions and Greenfield projects primarily through borrowings and better capacity utilization is critical success factors. Freight and transport costs being significant in cement industry, efficient logistics management is equally critical. With power and fuel costs exceeding 21% of the sales, units with captive power plants have a distinct advantage. This is particularly because of unreliable supply from SEBs that comes at a huge cost, as against reliable and relatively low cost captive power plants. With growing interests shown by MNCs in the Indian market, the competitive milieu is shifting towards companies with deep pockets who can absorb temporary losses.

DEMAND DRIVERS Indias per capita consumption is about 90 kg compared to the world average of 250 kg. This implies great growth potential for the domestic industry. With 60% of the demand coming from the housing sector, the fortunes of cement industry are closely linked to it. The soft interest rates prevailing in the country, and ever increasing need for housing and easy availability of finance have enabled strong growth in the housing construction sector, thereby leading to improved demand for cement. Further, the huge investment flows into the roadways and highway projects have stimulated demand growth for the cement industry. The roadways and highways project in general, and the golden quadrilateral project in particular, has generated significant demand for cement in the last couple of years and continues to propel demand for FY 2002-03 also.

Greater thrust on continued investments in new infrastructure projects like ports, roads and highways will power the demand growth for cement for next few years. With nearly Rs. 8,00,000 crore worth of investments likely in electricity generation in the coming decade, the overall prospects of the growth in demand appears bright.

Of late, exports are also increasing at impressive rates. The export of cement and clinker, together, rose from 3.14 million tonne in 1999-00 to 6.92 million tonne in 2002-03. The cement and clinker exports grew by impressive 37.8% in two months ended May03 to 1.35 million tonne. If the tempo of growth is maintained, the industrys cement and clinker exports can even cross 8 million tonne in the current year.

PORTERS FIVE FORCE ANALYSIS: Supply There is an oversupply situation in the industry due to capacity additions by the major players in the industry. The situation is likely to improve, as there is no major Greenfield expansion in sight. Demand Housing sector acts as the principal growth driver for cement. However, in recent times, industrial and infrastructure sector have also emerged as demand drivers for cement. Barriers to entry High capital costs and long gestation periods. Access to limestone reserves (principal raw material for the manufacture of cement) also acts as a significant entry barrier. Bargaining power of suppliers Bargaining power of customers Licensing of coal and limestone reserves, supply of power from the state grid and availability of railways for transport are all controlled by a single entity, which is the government. Cement is a commodity business and sales volumes mostly depend upon the distribution reach of the company. However, things are changing and few brands such as Gujarat Ambuja and L&T have started commanding a premium on account of better quality perception. Competition Due to large number of players in the industry and very little brand differentiation to speak of, the competition is intense with players resorting to frequent price cuts in order to gain market share.

COMPANY ANALYSIS

ABBOTT INDIA
BASIC INFORMATION:

Incorporation year Ownership Main activity

1949 Private (Foreign) Drug formulations

HISTORY: Abbott India Ltd (formerly known as Knoll Pharmaceuticals Ltd) is one of the largest MNC Pharma company operating in India. The company has presnt in both OTC drugs and formulations(dosage form). Further it has also have a number of best selling and well known brands in its portfolio. Digene, Creamafin and Brufen are some examples. The company incorporated in 1944 became the subsidiary of Knoll AG, Germany following the integration of the Pharmaceutical activities of Boots worldwide with those of BASF, Germany(the parent company of Knoll AG). Subsequent to this the name of the company has got changed to Knoll Pharmaceuticals from Boots Pharmaceuticals. Abbott Laboratories based in Illinois, USA acquired the pharma business of BASF South East Asia Pvt Ltd on Dec 2000. Abbott Laboratories have increase its stake in the company to 58.2 % by acquiring another 7.2% via mandatory open offer made to the Indian public. The name of the company has also changed to Abbott India Ltd w.e.f July 2002. .

Knoll Pharma's revenues largely come from insulin and formulation sales. In fact, the biggest contribution comes from insulin, where the company has a marketshare of over 60%. Other products like Brufen and Digene are leaders in their

respective therapeutic segments. Besides these, the CNS (central nervous system) range is one of Knoll's core focus areas. It has also launched Ganaton,own research product for gastric motility disorders, in 2001-02. The company has commenced marketing various products such as Lucrin,Norvir,Klacid IV,Forane and Sevorane,which are imported from the parent company. .

The company is in the process of amalgamating its wholly owned subsidiary Lenbrook Pharmaceuticals Ltd with itself. It has obtained the approval of H'ble High Court of Bombay for its scheme of amalgamation.

BOARD OF DIRECTORS:

NAME

POSITION

Munir Shaikh D M Gavaskar R A Shah Thomas Chen David Wardell Ashok Dayal G S Kurmi

CH MD & President Director Director Director Director Co. Secretary

EQUITY HOLDING INFORMATION:

Type/Name of holder

No of shares

% of total shares

Foreign Promoters Lupharma UK Holding One Ltd Abbott Equity Holdings Ltd

82,62,000 11,66,184

54.07 7.63

Mutual Funds And Uti Unit Trust of India

3,35,100

2.19

BANKS,FI'S,INSURANCE COS. National Insurance Company Ltd Life Insurance Corporation of India United India Insurance Company Ltd 8,11,806 2,34,766 1,69,514 5.31 1.54 1

About 54% of the shares of Abbott are held by Lupharma UK Holding One Ltd which is UK based Company. UTI has about 2% holding and insurance companies hold about 8% of total shares. Mutual funds have not purchased this companys shares. This may be weak side otherwise fundas of this company is very good. It is consistently increasing its scope in Indian market.

FUND FLOW ANALYSIS:

200311 Sources of funds

200211

200111

200012

199912

Cash profit Increase in other networth Increase in loan funds Decrease in gross block Decrease in investments Decrease in working capital Total Inflow

70.61 0 0 0 0 36.6 107.21

61.16 1.5 0 0.36 0 4.86 67.88

52.66 1.06 0 0 0 0 53.72

75.27 0 1.76 0 47.22 0 124.25

71.59 0 0 0 0 66.11 137.7

Application of fund:

Decrease in networth Decrease in loan funds Increase in gross block Increase in investments Increase in working capital Dividend Others Total Outflow

34.45 0.15 0.69 18.44 0 53.48 0 107.21

0 0.03 0 48.41 0 19.44 0 67.88

0 1.66 1.91 3.96 29.99 16.2 0 53.72

21.59 0 1.05 0 28.71 72.9 0 124.25

5.62 0.18 1.87 64.42 0 65.61 0 137.7

INTERPRETATION OF FUND FLOW STATEMENT:

Profit of the company is increasing at a consistent rate. It was 52.66 crores in 2001, Rs. 61.16 Cr. In year 2002 and was increased by Rs.9.45 Cr.to Rs.70.61Cr. in the fiscal year 2003. so. Cash profit is increasing at 15% every year. On the other hand companys investmet has decreased. In the year 2002 investment was Rs.48 crores which was decreased to 18 in the previous year. It means company is not finding enough investment opportunities and its distributing most of earnings to its shareholders in the form of dividends.

So, company need to find good investment opportunities. It should invest in increase its scope rather than distributing as dividends.

CASH FLOW ANALYSIS: Dec Abbott India Ltd. Rs. Crore (Non-Annualised) 1999 12 mths Dec 2000 12 mths Nov 2001 11 mths Nov 2002 12 mths Nov 2003 12 mths

Net profit before tax & extra ord. Items Add: depreciation Interest payable Gain transactions Write offs / amortisation Profit on sale of investments Profit on sale of assets Interest income Dividend income Other income / provision adjustments Cash flow before working cap. Changes Trade receivables Inventories Trade payables Others Cash flow from operations Interest paid Direct taxes paid Dividend tax paid 83.94 -0.32 -12.99 0 58.18 -1.46 -13.84 0 47.12 -0.12 -13.43 0 86.58 -0.12 -22.4 0 85.1 -0.1 -30.57 0 50.01 23.56 1.11 9.26 0 56.67 -1.59 -16.45 19.55 0 61.15 -1.75 4.28 -16.56 0 85.19 -1.7 9.29 -6.2 0 86.26 1.46 14.35 -16.97 0 0.44 0.51 0.01 0.15 0.67 or loss on forex 0 0 -0.63 -0.38 -1.2 0 0.03 0 -18.45 -0.24 0 -3.48 -0.01 0 -5.69 -0.27 0 -2.06 0.01 0 -3.62 -0.72 0 -0.84 0 0 -11.28 0.18 0 -2.86 46.37 5.09 0.32 71.51 5.33 1.46 64.57 4.48 0.12 84.77 5.32 0.12 95.06 4.39 0.1

Cash flow before extra ord. items Extraordinary items Cash flow from operating 70.63 42.88 33.57 64.06 54.43 70.63 0 42.88 0 33.57 0 64.06 0 54.43 0

activities Net cash used in investing

activities Purchase of fixed assets Sale of fixed assets Acquisition / merger of cos. Purchase of investments Sale of investments Dividend received Other income

-60.49 -3.54 6.08 0 -93.89 29.66 1.2 0

79.89 -3.07 13.82 0 -123.01 188.67 3.48 0

2.43 -2.09 0.73 0 -57.76 59.49 2.06 0

-47.13 -6.46 3.28 0 -148.39 103.6 0.84 0

-1.6 -2.31 0.31 0 -204.29 201.83 2.86 0

Net

cash

used

in

financing -11.64 0 -126.67 0 -26.78 0 -16.23 0 -53.04 -32.2

activities Proceeds from share issues Total borrowings Proceeds from long term borrowings Proceeds from short term borrowings Repayment of long term borrowings Repayment of short term borrowings proceeds from

0.05

0.1

-0.03

-0.15

Share issue expenses Dividend paid Other cash from financing activities Net cash flow Opening cash balance Closing cash balance

0 -11.69

0 -126.77

0 -26.78

0 -16.2

0 -20.69

-1.5

-3.9

9.22

0.7

-0.21

6.17 4.67

4.67 0.77

0.77 9.99

9.99 10.69

10.69 10.48

INTERPRETATION OF CASHFLOW ANALYSIS:

The cash flow analysis show the liquidity position of the firm. The profit of the company is in dec 99 is 46.37 cr. Ids increase to 95.06 cr. In November 2003 the cash flow before working capital IN NOV. 99 is 50.01 cr. Is increased in nov. 2003 is to 86.26 the cash flow from operation is 83.26 cr. In dec. 99 is increased to 85.26 in nov. 2003.

RATIO ANALYSIS: Profitability Ratios % Period Ended Dec2003 (11 Months) -22.93 -23.53 -24.97 3.60 8.92 2.17 1.64 0.71 -11.78 -18.00 -33.00 0.00 71.00 Period Ended Period Ended Dec2002 Mar2002 (9 Months) (12 Months) -3.02 4.84 -1.74 5.14 -4.42 3.53 2.97 8.59 6.39 12.19 2.63 5.55 2.59 2.52 0.02 0.00 -12.39 21.95 -4.00 13.00 -5.00 9.00 0.00 0.00 2.00 0.00

Operating Profit Margin Gross Profit Margin Net Profit Margin Inventory Turnover Ratio Debtor Turnover Ratio Fixed Asset TurnoverRatio Current Ratio DebtEquity Ratio Interest Covering Ratio Return On Investment Return On Networth Dividend Yield Debt Equity Ratio

PROFIT AND LOSS A/C % Period Period Ended Ended Mar2004 Mar2003 5018.82 68.60 5087.42 2553.67 290.28 631.67 1611.80 31.71 1580.10 138.53 1441.56 228.08 1213.49 33.24 1246.73 100.00 +98.65 +1.35 +50.20 +5.71 +12.42 +31.68 +0.62 +31.06 +2.72 +28.34 +4.48 +23.85 +0.65 +24.51 +1.97 2556.39 11.91 2568.30 1216.69 208.22 501.29 642.11 50.58 591.53 120.17 471.36 118.53 352.82 5.91 358.73 0.00

Sales Other Income Total Income Raw Material Cost Excise Other Expenses Operating Profit Interest Name Gross Profit Depreciation Profit Bef. Tax Tax Net Profit Other Non-Recurring Income Reported Profit Equity Dividend

+99.54 +0.46 +47.37 +8.11 +19.52 +25.00 +1.97 +23.03 +4.68 +18.35 +4.62 +13.74 +0.23 +13.97 0.00

BALANCE SHEET Period Ended Mar2004 500.00 4,916.31 5,416.31 646.91 0.00 6,063.23 Period Ended Mar2004 1,912.29 471.20 1,441.09 543.12 89.33 839.52 1,159.64 3,175.11 287.27 (i) Current Liabilities Provisions (ii) Net Curr. Assets (i - ii) (D) Misc. Expenses (E) Total Assets (A+B+C+D+E) 5,461.54 1,329.09 142.77 1,471.86 3,989.68 0.00 6,063.23 Period Ended Mar2003 18.38 1,248.72 1,267.10 685.65 0.00 1,952.75 Period Ended Mar2003 1,555.46 335.56 1,219.90 79.84 84.83 466.96 737.47 10.22 156.84 1,371.48 777.58 25.72 803.30 568.18 0.00 1,952.75 Period Ended Mar2001 15.00 565.10 580.10 343.00 38.90 962.00 Period Ended Mar2001 786.70 164.10 622.60 25.20 0.60 217.60 391.70 0.10 59.90 669.30 355.70 0.00 355.70 313.60 0.00 962.00

LIABILITIES Share Capital Reserves & Surplus Net Worth (1) Secured Loans (2) Unsecured Loans (3) Total Liabilities (1+2+3) ASSETS Gross Block (-) Acc. Depreciation Net Block (A) Capital Work in Prgs. (B) Investments (C) Inventories Sundry Debtors Cash And Bank< Loans And Advances

BIOCON
BASIC INFORMATION: Incorporation year Ownership Main activity Subsidiary/ies 1978 Private (Foreign) Bio-tech base drugs Biocon Biopharmaceuticals Pvt. Ltd. Clinigene International Pvt. Ltd. Syngene International Pvt. Ltd.

HISTORY:

Biocon is India's largest biotech company with a presence in bio-pharmaceuticals, enzymes, customs research and clinical research. Chairman Kiran Mazumdar Shaw promoted the company as a joint venture with Ireland-based MNC Biocon Biochemicals. Later, Unilever Plc acquired Biocon Biochemical's stake in February 1995, but sold it to the current promoters in June 1999. .

Kiran Mazumdar Shaw is a first generation entrepreneur with over 25 years of experience in biotechnology. She is the recipient of several awards, the most noteworthy being the Padmashri, conferred in 1989; the Ernst & Young Entrepreneur of the Year Award in 2002 for the Healthcare & Lifesciences category; and, more recently, in 2003, the BioSpectrum Person of the Year award. She heads several biotechnology task-forces including the Karnataka Vision Group on Biotechnology, an initiative by the government of Karnataka, and the National Taskforce on Biotechnology for the Confederation of Indian Industry. .

Key management personnel of the company include Arun Bhardwaj,

Arun Chandavarkar and Shrikumar Suryanarayanan, apart from Mr and Mrs Shaw. Arun Bhardwaj is the group's marketing president and has nearly 20 years of experience in direct marketing, sales and strategy and served as project engineer in Max India prior to joining Biocon. Dr Chandavarkar is the group's president - manufacturing and has over 13 years of experience in manufacture and scale-up of fermentation process, projects, maintenance and quality assurance. Suryanarayanan is the group's R & D president with about 20 years of experience in research of fermentation-based manufacturing techniques and was instrumental in the company's R & D functions. .

Biopharmaceuticals (biopharma) and enzymes together constitute about 90 to 93% of the group revenues. But Biocon has been progressively increasing the share of biopharma from 61% in FY 2001 to 64% in FY 2002 to 71% in FY 2003 and to 81% in the nine months ended December 2003 in the total group revenues.

Biopharmaceuticals has been and will continue be the mainstay of Biocon it promise exciting growth opportunities. This segment is involved primarily in manufacture and marketing of active pharmaceutical ingredients (API) that require advanced fermentation and other skills and offer significant market potential in the regulated markets once the product goes off patent. Within this segment, statins constitute major products. Statins are a group of popular cholesterol-lowering drugs.

The significant growth in sales in the recent past has resulted in full utilisation of capacity in the existing manufacturing facilities. A number of generic companies who are in the process of registering their formulations in the US and Europe for sale (upon expiry of patents) have evinced interest to use Biocon's statins. The company has already filed 8 drug master files in the US and 7 in the Europe for its various products. To cater to this increased demand, it plans to invest Rs 413.4 crore over a period of time up to FY2006 towards setting up a new fermentation and chemical synthesis facility as a 100% EOU. .

In March 2004, the company tapped the capital market through 100%

book building method. The IPO comprises of 10 million equity shares of Rs 5 each with a price band of Rs.270 -Rs.315 per equity share. The proceeds from the book building will be utilised for setting up a new facilities and chemical synthesis operations with an estimated fund of Rs.413.40 crores.

BOARD OF DIRECTORS:

NAME

POSITION

Kiran Mazumdar-Shaw John Shaw Neville Bain (Dr.) Charles L Cooney (Prof.) Suresh Talwar Ravi Mazumdar (Prof.) Catherine Rosenberg (Prof.) Ada K H Tse (Ms.)

CH & MD Vice CH Director Director Director Director Director Director

FUND FLOW STATEMENT:

200403 SOURCES OF FUNDS Cash profit Increase in equity Increase in other networth Increase in loan funds Decrease in investments Decrease in working capital Total Inflow 138.47 48.16 252.41 0 0 0 439.04

200303

200203

47.82 0.02 3.39 2.1 0 0 53.33

41.68 1.82 63.39 66.46 0 0 173.35

APPLICATION OF FUNDS

Decrease in networth Decrease in loan funds Increase in gross block Increase in investments Increase in working capital Dividend Others Total Outflow

0 3.87 82.25 0.45 342.15 10 0.32 439.04

0 0 33.94 0 19.12 0 0.27 53.33

0 0 127.17 8.48 37.7 0 0 173.35

INTERPRETATION OF FUND FLOW: Cash profit of the company was about Rs. 138 Crores which is thrice than previous year. It means company has enough liquidity. But still it did not find good investment opportunities. In the previous year company made investment of Rs.45 lacs. only. there was huge increase in working capital of the company, it was increased to Rs. 342.15 Crores in the financial year 2003-04 from Rs. 19.12 crores in the year 2002-03.

RATIO ANLYSIS: Profitability Ratios % Period Ended Period Ended Period Ended Dec2003 Dec2002 Mar2002 (11 Months) (9 Months) (12 Months) -22.93 -3.02 4.84 -23.53 -1.74 5.14 -24.97 -4.42 3.53 3.60 2.97 8.59 8.92 6.39 12.19 2.17 2.63 5.55 1.64 2.59 2.52 0.71 0.02 0.00 -11.78 -12.39 21.95 -18.00 -4.00 13.00 -33.00 -5.00 9.00 0.00 0.00 0.00 71.00 2.00 0.00

Operating Profit Margin Gross Profit Margin Net Profit Margin Inventory Turnover Ratio Debtor Turnover Ratio Fixed Asset TurnoverRatio Current Ratio DebtEquity Ratio Interest Covering Ratio Return On Investment Return On Networth Dividend Yield Debt Equity Ratio

P& L A/C
. Period % Period % Period Ended Ended Ended Mar2002 Dec2003 Dec2002 (11 (9 Mnts.) Mnts.) 300.02 +98.67 414.25 +98.50 991.96 4.05 +1.33 6.30 +1.50 5.22 304.07 420.56 997.18 179.84 +59.14 32.15 +10.57 156.84 +51.58 -64.75 -21.29 5.84 +1.92 -70.59 -23.21 14.62 +4.81 -85.21 -28.02 -10.28 -3.38 -74.93 -24.64 -42.17 -117.09 0.00 -13.87 -38.51 0.00 250.78 +59.63 8.63 +2.05 167.36 +39.80 -6.21 -1.48 1.01 +0.24 -7.22 -1.72 7.89 +1.88 -15.12 -3.59 3.18 +0.76 -18.30 -4.35 -6.82 -1.62 -25.12 -5.97 0.00 0.00 490.11 60.66 393.23 53.18 2.18 51.00 10.56 40.44 5.37 35.06 -22.90 12.16 0.00 %

Sales Other Income Total Income Raw Material Cost Excise Other Expenses Operating Profit Interest Name Gross Profit Depreciation Profit Bef. Tax Tax Net Profit Other NonRecurring Income Reported Profit Equity Dividend

+99.48 +0.52

+49.15 +6.08 +39.43 +5.33 +0.22 +5.11 +1.06 +4.06 +0.54 +3.52 -2.30 +1.22 0.00

BALANCE SHEET
Period Ended Dec2003 (11 Mnts.) 26.10 199.74 225.83 4.00 155.94 385.77 Period Ended Dec2003 (11 Mnts.) 229.33 90.82 138.52 0.00 0.00 102.58 33.62 4.77 70.18 (i) Current Liabilities Provisions (ii) Net Curr. Assets (i - ii) (D) Misc. Expenses (E) Total Assets (A+B+C+D+E) 211.14 125.33 3.65 128.98 82.16 165.09 385.77 Period Ended Dec2002 (9 Mnts.) 26.10 321.22 347.31 6.96 0.64 354.91 Period Ended Dec2002 (9 Mnts.) 233.66 76.42 157.24 3.29 0.00 143.71 64.85 1.23 106.79 316.58 117.14 5.07 122.21 194.38 0.00 354.91 Period Ended Mar2002 (12 Mnts.) 257.99 79.13 178.86 3.29 0.15 109.86 81.35 73.44 51.95 316.60 117.23 8.27 125.50 191.10 0.00 373.40 Period Ended Mar2002 (12 Mnts.) 26.10 346.34 372.44 0.00 0.96 373.40

LIABILITIES

Share Capital Reserves & Surplus Net Worth (1) Secured Loans (2) Unsecured Loans (3) Total Liabilities (1+2+3)

ASSETS

Gross Block (-) Acc. Depreciation Net Block (A) Capital Work in Prgs. (B) Investments (C) Inventories Sundry Debtors Cash And Bank< Loans And Advances

ACC

BASIC INFORMATION: Incorporation year Ownership Main activity Subsidiaries 1936 ACC Group Cement A C C Machinery Co. Ltd. A C C-Nihon Castings Ltd. Bargarh Cement Ltd. Bulk Cement Corpn. (India) Ltd. Cement Marketing Co. Of India Damodhar Cement & Slag Ltd. Everest Industries Ltd.

HISTORY:

Associated Cement Companies (ACC), one of the leading Cement producer in India came into existence consequent to the amalgamation of ten cement companies in 1936. Manufacturing and marketing of cement, redymix concrete, refractories and refractory products are the main business of ACC. Further the company is also into consultancy and engineering services.ACC's manufacturing base consists 14 cement plants spread well all over India, two refractory plants one each at maharashtra and MP and 6 RMC plants near to four metros of India and Bangalore. The total cement capacity of ACC stands at 161.47 lakh tonnes at March 31, 2003. .

In Jan. 1999, the company came out with a rights issue to fund its capex projects involving modernisation/ expansion of existing plants and creation of new capacity at Wadi. The company meets around 83% of its power requirements from its captive power plants. The captive power plant at Jamul and Kymore with an capacity of 25 MW each was commissioned in Nov 1999. The 15 MW capitive powerplants at Chanda, Tikaria and Madukkarai were commissioned during the year 2002-03. .

In 2000, Tata group has exited from the company by divesting their 14% equity stake in favour of Gujarat Ambuja group. Notably, Gujarat Ambuja group is the most efficient and aggressive cement group in India. The disinvestment was done in phases at Rs 370 per share. ACC has completed the modernization and expansion of the Chanda and Madukkarai cement plants for increasing their capacities to around 1 MTPA each. These plants started production from 1 September 2000 and 1 October 2000 respectively. The debottlenecking at Chanda, Gagal and Madukarrai plants have added 1 MT to ACC's installed capacity. The 2.6 MTPA Cement plant at Wadi with largest Kiln in the country has started its commercial production from Oct 2001.

The company has decided to exit from the non-core businesses in an optimal manner. The company has completed divestment of its stake in Floatglass India Ltd([13% stake] in 2001-02), International Ferrites Ltd.([35% stake] in 2002-03) and Bridgestone ACC India Ltd.([19% stake] in 2002-03). Further it has also sold its stake(5,00,000 E.Shares) in Tata Industries in 200102. The company is making all efforts to hive off the ACC Nihon Casting, a 100% subsidiary of ACC manufacturing alloy steel casting but has not met success yet. .

At the same time of existing from non-core businesses the company has not failed to invest in core activities it has acquired 76.01% stake in Eternit Everest from Etex Group in Feb 2002. Consequent to the acquisition the Eternit everest became the subsidiary of ACC w.e.f from Feb 12, 2002.

BOARD OF DIRECTORS / KEY PERSONNEL:

NAME

POSITION

Tarun Das Narotam Sekhsaria M L Narula A K Jain N A Soonawala O P Dubey A L Kapur Cyril S Shroff Amitabha Ghosh A Anjeneyan Naresh Chandra R K Vashishtha

CH Deputy CH MD Exec. Director Director Director Director Director Director Director (UTI) Co. Secretary Director

EQUITY HOLDING INFORMATION:

Banks, FIIs and mutual fund companies have holdings in ACC. This shows that this is considered to be fundamentally strong company and it has good prospects. They have about 35% of total holding in this company. So, it is horse of long race. Every professional institution is keeping eyes on this company.

EQUITY HOLDING INFORMATION: Type/Name of holder No of shares % of total

shares

MUTUAL FUNDS AND UTI HSBC Equity Fund UTI - Master Share Unit Scheme 31,32,771 18,31,622 1.76 1.03

BANKS,FI'S,INSURANCE COS. Life Insurance Corporation of India New India Assurance Company Ltd Oriental Insurance Company Ltd 2,84,49,758 33,33,612 22,49,247 15.97 1.87 1.26

FII'S Small Cap World Fund Inc HSBC Global Investment Funds A/c Government of Singapore Investment Corporation Pte Ltd Capital Research & Management Company A/C New World Fund Inc Merrill Lynch Capital Markets

71,50,000 56,93,500

4.01 3.2

26,22,675

1.47

25,00,000

1.4

Espana SA SVB

19,17,207

1.08

PRIVATE CORPORATE BODIES Ambuja Cement India Ltd

2,46,70,000

14

ANY OTHER Shares underlying GDRs Shares held by Pakistani Citizens 28,50,000 3,85,965 1.6 0.22

FUND FLOW STATEMENT:

200403 SOURCES OF FUNDS Cash profit Increase in equity Increase in other net worth Increase in loan funds Decrease in investments Decrease in working Capital Others Total Inflow 345.95 6.27 140.83 0 0 49.81 17.23 560.09

200303

200203

200103

200003

265.36 0.14 0 0 47.57 104.94 21.44 439.45

289.87 0.11 0 0 6.14 278.47 0 574.59

174.75 0 5.56 231.62 0 3.72 17.15 432.8

58.8 34.04 147.24 49.8 0 53.71 0 343.59

APPLICATION OF FUNDS Decrease in net worth Decrease in loan funds Increase in gross block Increase in investments Increase in working capital Dividend Others Total Outflow 0 78.94 162.3 247.97 0 70.88 0 560.09 4.38 92.11 300.23 0 0 42.73 0 439.45 211.23 130.65 177.93 0 0 51.24 3.54 574.59 0 0 387.9 9.27 0 34.14 1.49 432.8 0 0 253.19 25.49 0 15.65 49.26 343.59

Fund flow statement is very useful to know application of funds in particular period and also from where those funds came.

Cash profit of the company is increasing at a consistent rate. In the year 2003-04 the cash profit of the company was Rs. 345.95 Cr. Increase in net worth was RS. 140.83 Cr. In the financial year 203-04 there was decrease in working capital. These were sources of funds.
Company also paid back its loan of Rs.78.94 Cr. And paid dividend to its shareholders in current financial year due to increase in net cash profit. So, company is earning good cash profit and repaying its long-term obligations. Company has also invested Rs. 248 Crores. And a company has enough investing opportunities.

CASH FLOW STATEMENT: 200403 Cash Flow Summary Cash and Cash Equivalents at 34.82 478.29 27.49 442.04 200403 200303 200303 200203

Beginning of the year Net Cash from Operating Activities Cash Flow From Operating Activities Net Profit before Tax & Extraordinary Items Adjustment For Depreciation Interest (Net) Dividend Received P/L on Sales of Assets P/L on Sales of Invest Prov. & W/O (Net) 176.85 92.91 -37.6 -4.38 0.05 57.25 264.16

135.14

200.33

164.56 103.91 -0.39 -5.19 -50.36 45

151.14 139.95 0 -2.74 -9.13 43.02

P/L in Forex Fin. Lease & Rental Chrgs Others Total Adjustments (PBT & Extraordinary Items) Op. Profit before Working Capital

-20.44 0 0.83

-2.18 0 -5.22

0 0 -0.03

265.47

250.13

322.21

Changes Adjustment For Trade & 0th receivables Inventories Trade Payables Others Total (OP before Working Capital Changes) Cash Operations Interest Paid (Net) Direct Taxes Paid Advance Tax Paid Total-others Cash Flow before Extraordinary Items Extraordinary Items Payment Towards VRS Others
NET CASH USED IN INVESTING ACTIVITIES

529.63

385.27

522.54

-64.22 -33.5 95.29 -10.15

13.67 -47.67 74.57 -10.3

24.11 12.68 3.92 0

-12.58 Generated from/(used in) 517.05 0 -38.76 0 -38.76 478.29

30.27

40.71

415.54 0 26.5 0 26.5 442.04

563.25 0 -44.61 0 -44.61 518.64

0 0 415.45 -58.15

0 0 159.33 275.38

-28.4 -6.26

Net Cash Used in Financing Activities Net Inc/(Dec) in Cash and Cash Equivalent Cash and Cash Equivalents at End of the year

4.69

7.33

39.51

34.82

Cash flow statement is very useful to know the liquidity position of the company. Which activity produced how much cash. It bifurcate cash in three ways cash flow from financing, operation and investing activities.

Net cash used in investing activities in the year 2002-03 was Rs. 159.33 Crores which was increased to Rs.415.45 crores in the financial year 2003-04. it means company is expanding its capacity and investing in valuable projects. Net cash used in financing activities was 58.15 Crs . it indicates company has borrowed from outside in form of debt to invest in new projects. Cash Generated from Operations was also increased to Rs.517.05 Cr. In the year 2003-04 from 415.54 in the financial year 2002-03. it was increased by 23%.

So, cash flow from operation is increasing which is very good. The revenue is increasing and profitability is also increasing. on the other hand companys investment has also increased they are trying to increase their capacity.

RATIO ANALYSIS:

Ratios Profitability Ratios % Period Period Ended Period Ended Period Ended Period Ended Mar2003 Mar2002 Mar2001 Ended Mar2004 (12 Months) (12 Months) (12 Months) Mar2000 (12 (12 Months) Months) 13.26 12.61 4.64 7.54 18.01 1.38 11.74 8.81 1.59 7.40 15.90 1.22 15.90 11.54 3.84 7.88 12.98 1.27 14.20 8.85 2.15 7.07 10.40 1.38 8.16 2.76 -3.18 7.46 9.28 1.28

Operating Profit Margin Gross Profit Margin Net Profit Margin Turnover Ratios Inventory Turnover Ratio Debtor Turnover Ratio Fixed Asset TurnoverRatio Solvency Ratio Current Ratio DebtEquity Ratio Interest Covering Ratio Performance Ratio % Return On Investment Return On Networth Dividend Yield Debt Equity Ratio

0.82 0.98 3.88

0.85 1.30 2.47

0.94 1.48 2.86

1.37 1.44 1.96

1.45 1.27 1.21

16.00 11.00 0.40 98.00

14.00 4.00 0.25 130.00

18.00 11.00 0.30 148.00

13.00 5.00 0.20 144.00

8.00 -7.00 0.09 127.00

PROFIT AND LOSS A/C:


. Profit & Loss Accounts (Rs.in Millions) Period % Period Ended Ended Mar2004 Mar2003 (12 (12 Mnts.) Mnts.) 3,2839.80 +97.31 2,8944.10 908.10 +2.69 527.00 3,3747.90 2,9471.10 1,2183.00 +36.10 6870.90 6150.40 +18.22 5013.80 1,0152.90 +30.08 1,3662.00 5261.60 +15.59 3924.40 1121.70 +3.32 1373.00 4139.90 +12.27 2551.40 2071.80 +6.14 1941.10 2068.10 +6.13 610.30 543.20 +1.61 150.90 1524.90 +4.52 459.40 477.50 +1.41 579.50 2002.40 +5.93 1038.90 708.80 +2.10 427.30 % Period Ended Mar2002 (12 Mnts.) 2,8106.30 339.60 2,8445.90 6960.60 4292.80 1,2384.60 4807.90 1564.70 3243.20 1816.70 1426.50 347.00 1079.50 224.80 1304.30 512.40 %

Sales Other Income Total Income Raw Material Cost Excise Other Expenses Operating Profit Interest Name Gross Profit Depreciation Profit Bef. Tax Tax Net Profit Other Non-Recurring Income Reported Profit Equity Dividend

+98.21 +1.79 +23.31 +17.01 +46.36 +13.32 +4.66 +8.66 +6.59 +2.07 +0.51 +1.56 +1.97 +3.53 +1.45

+98.81 +1.19 +24.47 +15.09 +43.54 +16.90 +5.50 +11.40 +6.39 +5.01 +1.22 +3.79 +0.79 +4.59 +1.80

BALANCE SHEET: Balance Sheet (Rs.in Millions) LIABILITIES Share Capital Reserves & Surplus Net Worth (1) Secured Loans (2) Unsecured Loans (3) Total Liabilities (1+2+3) ASSETS FIXED ASSETS Gross Block (-) Acc. Depreciation Net Block (A) Capital Work in Prgs. (B) Investments (C) CURRENT ASSETS, LOANS & ADVS. Inventories Sundry Debtors Cash And Bank< Loans And Advances (i) Current Liab. & Provs. Current Liabilities Provisions (ii) Net Curr. Assets (i - ii) (D) Misc. Expenses (E) Total Assets (A+B+C+D+E) 10,939.60 1,625.40 12,565.00 -2,214.00 349.20 26,809.70 9,825.30 1,175.40 11,000.70 -1,651.60 521.50 24,814.90 8,712.70 1,072.60 9,785.30 -624.60 735.90 25,301.40 3,780.10 1,823.70 395.10 4,352.10 10,351.00 3,453.90 1,820.90 348.20 3,726.10 9,349.10 3,001.20 2,165.00 274.90 3,719.60 9,160.70 37,897.50 14,141.40 23,756.10 1,161.00 3,757.40 36,369.90 12,684.30 23,685.60 981.70 1,277.70 33,260.60 11,069.60 22,191.00 1,245.70 1,753.40 Period Ended Mar2004 1,779.40 11,757.90 13,537.30 10,401.30 2,871.10 26,809.70 Period Ended Mar2004 Period Ended Mar2003 1,711.40 9,056.00 10,767.40 12,874.20 1,173.30 24,814.90 Period Ended Mar2003 Period Ended Mar2002 1,710.50 8,488.20 10,198.70 11,054.00 4,048.70 25,301.40 Period Ended Mar2002

JAIPRAKASH
BASIC INFORMATION:

NAME: Incorporation year Ownership Main activity

Jaiprakash Associates Ltd. 1996 Jaiprakash Group Ordinary Portland cement

HISTORY Jaiprakash Associates (JAL), promoted by erstwhile Jaiprakash Industries was incorporated on 15th Nov. 1995 under the name Bela Cement. Its name was changed to Jaypee Rewa Cement w.e.f 30th Aug 2000 and then to Jaypee Cement w.e.f 3rd Jan 2002. The company was a wholly owned subsidiary of erstwhile Jaiprakash Industries and was engaged in manufacturing and marketing of cement.

Pursuant to the Scheme of Amalgamation of erstwhile Jaiprakash Industries with the company, the name has been changed to present one w.e.f 11th March 2004. JAL is presently engaged in the business of manufacturing and marketing of cement, construction of infrastructure projects like Dams, Barrages, Tunnels, Underground Power Houses, Highways/Express way etc. and Hoteliering.

BOARD OF DIRECTORS:

NAME
Jaiprakash Gaur Manoj Gaur P V Vora Ranvijay Singh Rahul Kumar V K Jain R S Kuchhal

POSITION
CH MD Director Director Director Director VP & Secretary

EQUITY HOLDING INFORMATION: Type/Name of holder No of shares % of total shares

INDIAN PROMOTERS Jaypee Ventures Ltd Jaiprakash Enterprises Ltd FII'S GMO Emerging Markets Fund Merrill Lynch Capital Markets

4,74,32,830 1,17,24,262

26.92 6.65

1,46,35,020 46,93,921

8.31 2.66

Espana SA SVB Arisaig Partners (Asia) Pte Ltd A/C Arisaig Fund Ltd UBS AG A/c Long - Term India Investments Fund Ltd PRIVATE CORPORATE BODIES HB Stockholding Ltd Har Sai Investments Ltd Matchless Investments Ltd 18,29,784 1.04 40,00,000 2.27

29,32,135 22,40,267 19,20,000

1.66 1.27 1

ANY OTHER Shares in transit / Pool a/c

16,62,592

0.94

Jaiprakash is fundamentally strong company. When you see its equity holding information you will find that about 15% of its total shares are held by FIIs. foreign institution put trust on this company .about 27% of holdings are with Jaypee Ventures Ltd and 7% with Jaiprakash Enterprises Ltd.

BALANCE SHEET Annual Unaudited Results (Rs. in Millions) Period Ended Period Ended . Mar2004 Mar2003 (12 Months) (12 Months) Sales Turnover 2,3860.00 2,5150.00 Other Income 1320.00 880.00 Total Income 2,5180.00 2,6030.00 Total Expenditure 1,9190.00 2,0520.00 Operating Profit 5990.00 5510.00 Interest 2050.00 2050.00 Gross Profit 3940.00 3460.00 Depreciation 1270.00 1080.00 Tax 970.00 1260.00 ReportedPAT 1700.00 1120.00

% Change -5.13 + 50.00 -3.27 -6.48 + 8.71 0.00 + 13.87 + 17.59 -23.02 + 51.79