IAETSD JOURNAL FOR ADVANCED RESEARCH IN APPLIED SCIENCES ISSN NO : 2394-8442
A COMPARATIVE STUDY OF SOLVENCY AND PROFITABILITY POSITION OF SUN PHARMACEUTICAL INDUSTRIES LTD AND CIPLA LTD
#Dr. Partap Singh Chahal Associate Professor, Deptt. of Management Studies, Samalkha Group of Institutions (SGI), Samalkha, Panipat, Haryana Email: [email protected]
ABSTRACT; The Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value, and it accounts for 20 per cent in the volume terms and 1.4 per cent in value terms of the Global Pharmaceutical Industry as per a report by Equity Master. The liquidity, solvency, and profitability position of Sun Pharmaceutical Industries Limited and CIPLA Limited are much helpful in taking investment decision by investors. The present paper studies the liquidity position, solvency position, and profitability position of Sun Pharmaceutical Industries Limited and CIPLA Ltd through the application of ratio analysis in measuring financial health of the company.
Keywords: Liquidity, Solvency, Efficiency of Management of Current Assets, Profitability, Return, Equity, Working Capital, Capital Employed, Shareholder’s Fund, Proprietor’s Fund.
I. INTRODUCTION
The Pharma industry has registered growth growing exponentially over the last few years. It has increased life spans and fostered hope to people who have given up on everything. Improved life style and the capability to trust the Indian pharmaceutical industry is proof of the positive outcome of the Pharma industry. Indian Pharma companies in the recent times have increased spending on R&D specifically in specialty drugs and complex generics.
Profile of the pharmaceutical Industry The pharmaceutical industry in India ranks 3rd in the world terms of volume and 14th in terms of value and Sun Pharma, officially known as Sun Pharmaceutical Industries Limited is headquartered Mumbai, Maharashtra in India, was founded in 1983 by Dilip Shanghvi is the 1st largest pharma company in India along with the capitalization of Rs.155716 crore. In 2007, Sun Pharma demerged its innovative R&D arm, and listed it separately on the stock market as the Sun Pharma Advanced Research Company Ltd. It is an Indian multinational pharmaceutical company that manufactures and sells pharmaceutical formulations and active pharmaceutical ingredients (APIs) primarily in India and the United States which offers formulations in various therapeutic areas, such as cardiology, psychiatry, neurology, gastroenterology and diabetology. It also provides APIs such as warfarin, carbamazepine, etodolac, and clorazepate, as well as anticancer, steroids, peptides, sex hormones, and controlled substances.
Profile of Cipla Limited: Cipla is a leading global pharmaceutical company, dedicated to high-quality, branded and generic medicines, was established in India in the year 1935. Its net capitalization is about Rs48, 788 Crores. It is an Indian multinational pharmaceutical and biotechnology company, headquartered in Mumbai, India and it is functioning in more than 150 countries all over the world at the moment. It largely developed medicines to treat cardiovascular disease, arthritis, diabetes, weight control and depression; other medical conditions. Cipla has 34 state-of-the-art manufacturing facilities that make Active Pharmaceutical Ingredients (APIs) and formulations and it has over 2,000 products in 65 therapeutic categories as well as strong presence in over 170 countries. Company are now strengthening its global focus by consolidating and deepening its presence in the key markets of India, South Africa, the US, and other economies of the emerging world
VOLUME 4, ISSUE 5, OCT/2017 177 http://iaetsdjaras.org/ IAETSD JOURNAL FOR ADVANCED RESEARCH IN APPLIED SCIENCES ISSN NO : 2394-8442
II.RESEARCH METHODOLOGY The Objective of the Paper To analyze the liquidity, solvency, and profitability& return of Sun Pharmaceutical Industries Limited and CIPLA Limited by using the Liquidity ratios, Long-term Solvency Ratios, and Profitability Ratios. Besides these To study the comparative valuation of performance of Sun Pharmaceutical Industries Limited and CIPLA Limited. Collection and Analysis of Data The paper is based on the secondary data only. The secondary data has been collected from Annual Report from 2013 to 2017 of Sun Pharmaceutical Industries Limited and Cipla Limited from different websites, articles etc. The various Liquidity Ratios, Long-term Solvency Ratios, Turnover Ratios and Profitability Ratios have been used to analyze the data. Besides this, EPS, Earning Yield and P/E ratios have also been used to give true picture of the both companies: , EPS = (Higher Ratio is better) Earning Yield =