Sip 2

Table of Contents
Ch. Chapter Name Page

No. no.
1 Introduction of Novartis India 4
2 Production Department 10
3 HR Department 18
4 Finance Department 34
5 Purchase Department 48
6 Marketing Department 53
7 Industrial Analysis 56
8 Mini Project 67
9 Background of the study 68
10 Objectives of the study 70
11 Significance of the Study 71
12 Scope of the Study 72
13 Definitions of Significant Terms Used in the Study 73
14 Literature Review 75
15 Research methodology 82
 Research Design
 Population of the study
 Data Collection Method
 Data Analysis & Presentation
 Limitations of the study
16 Data Analysis & Interpretation 84
17 Findings 99
18 Recommendation 100
19 Conclusion 101
20 Annexure 105
1 Dharmika Bhavsar/Narmada College of Management

List of Tables
_________________________________________
Table Table Description Page

No. no.
1 Dosage & Schedule of Required vaccination 28
2 Aspects covered in induction program 29
3 Current Ratio 45
4 Quick Ratio 45
5 GP Ratio (%) 46
6 NP Ratio (%) 46
7 Proprietory Ratio 46
8 Return on Assets (%) 47
9 Return on capital employed (%) 47
10 Return on investment (%) 47
11 Competitors 55
12 Competitive Analysis 64
13 Working Capital 84
14 Net working Capital Ratio 85
15 Breakup of Working Capital 86
16 Notional interest on WC @ 9% 87
17 Current Ratio 88
19 Return on Capital Employed (%) 90
20 Return on Investment (%) 91
21 Average Collection Period (in days) 92
22 Average Payment Period (in days) 93
23 Inventory Turnover in Days (ITID) 94
24 Cash Conversion Cycle (in days) 95
25 Descriptive analysis 96
26 Correlation Matrix for Variables 97

List of Charts
_________________________________________
Chart Chart Description Page
no. no.
1 Net Working Capital 85
2 Net Working Capital Ratio 85
3 Breakup of Working Capital 87
4 Notional Interest on WC @ 9% 87
5 Current Ratio 88
7 Return on capital employed (%) 90
8 Return on investment (%) 91
9 Average Collection Period (in days) 92
10 Average Payment Period (in days) 93
11 Inventory Turnover (in days) 94
12 Cash conversion cycle (in days) 95

Part I: Introduction of Novartis India
______________________________________________
 Introduction of the Company:

Name of the company: Novartis India Ltd.
Industry: Pharmaceuticals
Founded: 1996 (from merger)
Headquarters: Basel, Switzerland
Revenue (2015): 957.35 Crores
 Registered Office:
Address Sandoz House, Shivsagar
Estate,, Dr Annie Besant
Road,
District Mumbai
State Maharashtra
Pin Code 400018
Tel. No. 022-24958400,022-24958888
Fax No. 24950221
Email: Internet :
girish.tekchandani@novartis.com http://www.novartis.in
 Product Portfolio:
As a science-based and patient-oriented healthcare company, Novartis
strive to be a global leader in growing areas of healthcare. Following a
corporate transformation Novartis is focused on three divisions with
global scale and innovation power – pharmaceuticals, eye care and
generic medicines. This has strengthened the future growth prospects
of the company.
Pharmaceuticals:
Pharmaceuticals portfolio includes more than 50 key marketed

products, many of which are innovative leaders in their therapeutic
areas.
Alcon (Eye Care):
Alcon provides innovative products that enhance quality of life by

helping people worldwide see better. Its three businesses – Surgical,
Ophthalmic Pharmaceuticals and Vision Care – offer the world's widest
spectrum of eye care products.
Sandoz (Generics):
Sandoz is a global leader in the rapidly growing generics industry,

offering more than 1,000 different types of high-quality, and affordable
medicines across a broad range of therapeutic areas. It is committed to
increasing global access to affordable medicine.
 Introduction of Management
NOVARTIS INDIA LTD is a well reputed limited Company

Professionally Managed by:
Chairman: Christopher Snook

Director: Jai Hiremath
Additional Director: Manisha Girotra
Vice Chairman & Mng.Director: Ranjit Shahani
Director: Rajendra Nath Mehrotra
Addl. Director& WTD: Dinesh Charak

Company Profile
_____________________________________________________
Novartis was created in 1996 through the merger of Ciba-Geigy and Sandoz,
two companies with a rich and diverse corporate history. Throughout the
years, Novartis and its predecessor companies have discovered and
developed many innovative products for patients and consumers worldwide.
Novartis has been in India since 1947. The Group operates in India through
four entities namely Novartis India Limited, listed on the Mumbai Stock
Exchange, Novartis Healthcare Private Limited, Sandoz Private Limited and
Chiron-Behring Vaccine Private Limited. In India Novartis have a presence in
pharmaceuticals, generics (pharmaceutical products that are off patent),
Vaccines, OTC (over-the-counter medicines), eye care and Animal Health.
Chiron Corporation was an American multinational biotechnology firm based

in Emeryville, California that was acquired by Novartis International AG on
April 20, 2006. It had offices and facilities in eighteen countries on five
continents. Chiron's business and research was in three main areas:
biopharmaceuticals, vaccines and blood testing Chiron's vaccines and blood
testing units were combined to form Novartis Vaccines and Diagnostics, while
Chiron Bio Pharmaceuticals was integrated into Novartis Pharmaceuticals.
In 1996, the vaccine line was expanded significantly in 1998 with the
acquisition of the European vaccine businesses of Behring (Germany) and
Sclavo (Italy). This was followed in 2003 by the acquisition of PowderJect, the
UK-based vaccines company, making Chiron the second-largest flu vaccines
provider and the fifth-largest vaccines business in the world
Novartis, also known as a global healthcare leader, is a company that has one
of the most exciting product pipelines in the pharmaceutical industry today.
Focused solely on healthcare, this company offers a diversified portfolio to
best meet these needs of innovative medicines, cost-saving generic

pharmaceuticals, preventive vaccines, diagnostic tools and consumer health
products.
The headquarters of Novartis International AG is located in Basel,

Switzerland. Where else, the Novartis Singapore Pharmaceutical
Manufacturing Pvt Ltd (NSPM) in Singapore has new facility which is
designed to manufacture drug products which contributes substantially to
Novartis AG. With more than 98,000 associates sited around the globe in over
140 countries, Novartis is recognised for its novelty.
 Achievements of Novartis in the Recent Years
With the advancement of technology in these recent years, Novartis has

greatly contributed to the pharmaceutical industry and sustained its reputation
being a global healthcare leader with the attainments of the company.
 Mergers & Acquisitions
The firm has expanded its operations in the US through a number of

purchases. For instance, in 2011 the company acquired Alcon, a global maker
of ophthalmic surgery systems, pharmaceuticals for optic disorders, and
contact lenses with a strong presence in the US market. Novartis' existing US-
based eye care unit, CIBA Vision, was merged into Alcon following the
transaction.
Additionally, Novartis Pharmaceuticals extended the reach of its US Molecular

Diagnostic division's operations by buying laboratory services firm Genoptix in
2011. In 2012, Novartis also expanded the US operations of the Sandoz
division through the purchase of dermatology medicines maker Fougera
Pharmaceuticals; Fougera's New York location became the headquarters for
Sandoz's generic dermatology operations.
 Divestment of non-influenza Vaccines to GSK

Novartis has divested its Vaccines business (excluding its vaccines influenza
business) to GSK for up to USD 7.1 billion plus royalties. The USD 7.1 billion

consists of USD 5.25 billion paid upon completion and up to USD 1.8 billion in
future milestone payments.
 Vision:
We will be a preferred global vaccine supplier touching more lives, in more
markets, with more vaccines.
 Mission:
Making the world rabies free by providing effective vaccines at affordable
price.

Organisation Chart
______________________________________________
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Production department

 Roles & Responsibility of Production Department:
 Primary manufacturing &Secondary Manufacturing
 Raise purchase requisition
 Keeping track of material consumption & inventory
 Production quantity & WIP
 Raw Materials:
 Fertilized Eggs (Chicken eggs)
 Rabies Virus
 Process Flow of Production of Rabies Vaccine:

 Process Description
 Per batch there are 2000 eggs.
 Eggs are incubated for 8 to 9 days rather than total 21 days.
 After that eggs are broken and baby comes out.
 Baby chicken is divided in two parts, head & body.
 From that head is disposed and body part is cut down.
 Trips in enzyme are put on those cells of body, which affect the
cells attachment, and the cells are separated.
 After that Rabies virus are inserted in cells and it grows.
 Then viruses are inactivated by using B.Proplapton (Chemical) so
that they cannot multiply.
 They are blended with stabilizer so that they can be stabilized.
 Then it is filled in vials.
 Lyophilisation is done.
 Packaging and labeling is done to deliver it to the customers.
 Production Planning:
 Production planning is the plan for the future production, in which the
facilities needed are determined and arranged.
 In CBVPL, in order to develop production plans, the production
planner work closely together with the marketing & sales department.
They provide sales forecasts, or a listing of customers’ orders.
 They makes forecast based on market survey as well as past years
data.
 They have the following objectives for production planning.
 To ensure right quantity and quality of raw material, equipments etc
are available during the time of production.
 To ensure capacity utilization is in tune with forecasted demand at
all the time.
 Production Control: CBVPL uses Production control technique

to achieve optimum performance out of the production system as to
achieve overall production planning targets.

 Therefore they have the following objectives under this.
 Regulate inventory management.
 Organize the production schedules.
 Optimum utilization of resources and production process.
 CBVPL apply production control to,
 Ensure a smooth flow of all production processes.
 Ensure production cost savings thereby improving the
bottom line.
 Control wastage of resources.
 It maintains standard of quality through production life cycle.
 They compare their production with the standard as per the plan and
if any deviations are there then corrective actions are taken.
 Plant Capacity:
 They have the capacity of producing 15 million doses per annumn.
 Export:
 CBVPL, Ankleshwar sells its entire production to parent and group
companies and from their vaccines are exported.
 They export in Bangladesh, Pakistan, Nepal, Philippines, China,
Thailand, etc.
 Patent:
 A patent is an exclusive right granted for an invention, which is a
product or a process that provides, in general, a new way of doing
something, or offers a new technical solution to a problem.
 CBVPL has a patent on Rabies Virus.
 Material Handling:
 Material handling refers to the process of moving, controlling,
protecting as well as storing material such as goods, items, etc. for
manufacture, disposal, and distribution or even for consumption.

 Material handling equipment encompasses a diverse range of tools,
vehicles, storage units, appliances and accessories involved in
transporting, storing, controlling, enumerating and protecting
products at any stage of manufacturing, distribution consumption or
disposal.
 In CBVPL, following material handling equipments are used.
1. Laminar Air Flows
2. Washing machines for vessels/vials
3. Centrifuges/zonal ultra centrifuges
4. Freeze driver
5. Auto claves (Wet Heat Sterilizer)
6. Dry Heat Sterilizer
 Roles & Responsibility of Quality Control & Quality Assessment

Department:
 Approval of incoming material
 Approval or rejection of production at various stage
 Inventory Management
 When there is a need for purchasing materials, purchase
department prepares purchase requisition and it is approved by head.
 Purchase order is placed online.
 Goods Receipt: Warehouse officer is responsible for
receiving and preparing GR in SAP. GR are accompanied by
corresponding supplier’s goods challan or invoice. The supplier challan
or invoice must state its related purchase order, purchase entered into
the SAP.
 Transfer & Consumption: SAP assigns lot/Control
number while entering the GR. Lot or control numbers are
systematically and consecutively numbered and can be tracked for all
goods movements. Goods are issued based on first in, first out.

Three storage locations are defined in SAP for identifying
custodian of material are:
1. WHPM (Warehouse Packing Material): GR is prepared in WHPM
and transferred to SHFL in SAP as per authorized issue slip from
the users. Selection head is authorized to sign such slips.
Consumption will be entered by the respective users in the SAP
against a batch on day to day bases.
2. WHRM (Warehouse Raw Material): GR are entered in WHRM and
physically stored in production area under specified storage
conditions. Consumption is entered by respective users in the SAP
against the respective batch order on day to day bases. Custodian
of the material is respective user and quantity used in batch is
recorded in batch manufacturing records.
3. SHFL (Shopfloor): GR is prepared in WHPM and transferred to
SHFL in SAP as per authorized issue slip from respective users.
Consumption will be shown by the respective users in the SAP on
day to day basis.
 Quality checks & release of material : SAP system is configured for
quality check & release for RM & PM.
1. Raw Material: RM is posted in QA status when received. Goods

that require quality inspection are checked in SAP by the Quality
Department before they are released into production. Withdrawals
for consumption are only being booked out of unrestricted stock.
However, testing material is not reflected in unrestricted stock but
reflected in ‘Quality Inspection’ stock in SAP system.
2. Packing Material: In case of rejection, quality control department

intimate warehouse, Purchasing and FA. Warehouse will reverse
the GR; Purchasing will contact the supplier of the product and
arrange for supply pickup or destruction.
 Production Performance: various KPIs for Production Department

are set at the time of budget preparation like number of batches,
yield, bulk & fill finish production, process loss, dispatch etc.
Production Head complies the production performance report every
month indicating Actual V/S Planned performance and this report is
circulated to senior management.
 Inventory Control: Physical stock count of all RM, PM, AUX inventory
materials is taken once in three months. For RM respective user and
for PM & AUX Warehouse Officer take the SAP stock statement from
the SAP system on the last working day of the third month. During
physical count, inventory movements are restricted in SAP. Statutory
auditors verifying physical stock lying at non- infected area twice in a
year i.e. Dec & March.
WIP physical inventory is taken once in a year by the production

team. This is typically done in March every year. Physical count
preformed with four-eye concept for confirming any mis-match in the
stocks and signs the stock status after the physical count.
Discrepancies are reported to accounts manager immediately and
investigated. Physical count report documented and approved by
Production Head and copy of the same is forwarded to the Finance
Manager.
Reconciliation of WIP inventory is also done monthly e.g. concentrate

produced during the month less use for filling and w/off must be a
closing stock of concentrates and approved by Production Head and
incorporated in monthly MIS. Every quarter end, Finance Manager
receives a confirmation from Production Head that inventory does not
included any items which needs provisioning. Any inventory
adjustments either as result of physical count or as reported by the
Production Head must be properly documented and approved by the
Production Head prior to booking the adjustments in GL. Finance
Manager ensures that all inventory adjustments are properly
authorized and supported.

 Access to inventory is only granted to authorize people.
All access to restricted area must be approved by the Production Head.
All goods are delivered to designated, physically secured locations
within a storage location and accepted by authorized personnel. Goods
leaving the premises are also accompanied by duly completed and
authorized documentation.

HR
DEPARTMENT

Structure of HR Department
_____________________________________________________
 Work Timings
 Report to work in the morning: 6:50 am, 8:20 am, 2:50 pm and 10:30
pm depending on shift (I, G, II & III respectively).
 Leave work in the evening: 3:30 pm, 5:30 pm, 11:30 pm and 7:10 am
depending on shift (I, G, II & III respectively) or as per work
requirement of overtime.
 Working hours means all times an Associate is at work other than

break periods.
 Associates are always required to be present for scheduled staff

meetings, team discussions/meetings and conference calls.
 Dress Code
Associates are required to wear Business Formal or Business Casual
attire from Monday to Thursday. CBVPL has adopted a casual business
dress code but emphasizes that some positions may call for more
professional attire. The dress code at CBVPL is Business casual, broadly
defined as a clean, neat look that would be appropriate for any office
situation. Few examples of Business casual are collared shirts, formal
trousers, khaki-style pants, corduroy pants and dress shoes. Female
associates’ business casual may be broadly defined as short sleeves,
modest necklines, tailored dresses, skirts and tradition Indian attire.
Business dresses that are more formal than business casual dresses are
always considered more appropriate. On weekends, associates are
allowed to wear Jeans and other casual attire generally acceptable in
professional work environment.
 Safety, Health And Environment
CBVPL is committed to providing a safe and healthy work place for its
Associates and visitors. The Company is equally committed to preventing
the deterioration of the environment and minimizing the impact of its
operations on the land, air, and water. These commitments can be met
only through the awareness and cooperation of all Associates. Personal
safety, as well as that for co-workers and the general public, is the
responsibility of every Associate. They need to always notify their
supervisor of any suspected unsafe or unhealthy conditions in the work
place. This would include hazardous materials or wastes coming in
contact with the environment or being improperly handled or discarded,
or where a potential violation of the law may exist. Job related illnesses
or injuries should be immediately reported to supervisor.
 Drug-Free Workplace
Drug and alcohol abuse impairs employees’ ability to perform their job
and to provide the quality service to customers. Associates who work
under the influence of alcohol or drugs may be a danger to themselves
and others. As a result, the Company prohibits Associates from
working under the influence of, possessing, consuming, distributing, or
selling illegal drugs or alcohol while on company premises or company
arranged vehicles. Due to the increased risk of injury created by drug
and alcohol abuse, the Company reserves the right to administer drug
or alcohol tests to Associates believed to be under the influence of
drugs or alcohol. If employee suspects he/she has an alcohol or drug
abuse problem he/she may consult the HR team for assistance.
 Smoking & Tobacco

While the company respects the personal preference of each individual
whether or not to smoke, it is the objective of the company to provide a
smoke free, comfortable and healthy work environment for all its
Associates. Smoking in the establishment is not allowed. Smoking in
company arranged vehicles during travel to and from the establishment
is prohibited. Consumption of tobacco (Gutaka / Jarda) or related
products inside the premises of the company is strictly prohibited. No
Associate can enter the premises of the company while in possession
of these products. It is a violation of this policy for Associates to use,
possess, manufacture, distribute, dispense, purchase, sell or be under
the influence of tobacco related products while on or in CBVPL
property or premises. Violations of this policy are reported to the HR
Department immediately and the company reserves the right to carry
random checks on the employees to ensure conformity to this policy.
 Holidays
HR notifies the holidays of the coming years in the month of December of
each year.
The following are mandatory holidays:

 Republic day (January 26)
 Independence Day (August 15)
 Mahatma Gandhi’s Birthday (October 2)

Mandatory holidays may be declared by the State and this is set off with
other holidays as the case may be. If any of the mandatory holidays fall on
a weekend, then the same is compensated in the same calendar year as
notified by HR.
 Types of Leave
 Privilege Leave
 PL is earned leave.
 All associates having a minimum 240 days attendance during a
year will be eligible for a maximum of 25 PL during the consecutive
year.
 All associates who satisfy the above criteria are entitled to 25
working days of PL for the calendar year, which are credited in
their leave book on 1st January every year.
 Casual Leave (CL)

 7 days Casual Leave per annum to the Associate to cover
emergency or unforeseen circumstances. For new joiners on
probation, it is calculated on pro-rate basis and is given after
confirmation.
 Sick Leave (SL)

 12 days Sick Leave per annum to the Associate.
 In case of a long illness, if an associate exhausts his / her SL then
PL and Compensatory offs can be clubbed after that.
 Half day SL can be taken.
 Maternity Leave (ML) / Paternity Leave

 Pregnant associates & nursing mothers are given this leave.
 Male Associates are entitled for 5 days of paternity leave.
 Female Associates can avail of this leave subject to submission of
all relevant documentation to the HR department. The Associate
and immediate Manager agree the start date of the ML and send
the communication to the HR department.
 The female Associates are entitled to 12 weeks of Maternity leave

for each delivery, up to two deliveries in her service tenure.
 Leave Without Pay (LWP)

 Leave without Pay (LWP) will be given to Associates only in
exceptional circumstances purely at the discretion of immediate
manager, HR and if required - site management. LWP can be
availed only AFTER exhausting the Earned Leave.
 Maximum of 30 days in a year, at the discretion of the immediate
manager, HR and site head.
 Compensatory Off (CO)

 Compensatory off is basically availed by management associates
in cadres E-V to E- VIII only. Associates in these cadres can claim
overtime money or avail CO if he/she has worked overtime for one
complete shift. For overtime below 8 hours and above 1.5 hours,
he/she can claim overtime money only.
 Maximum of 2 Compensatory Offs can be taken in a month
(applicable to all management associates in all cadres).
 Leave Policy For Fixed Term Management Trainees

 All trainees (fixed term) are entitled for PL on a pro-rata working
basis (one earned leave is given against 20 days of working).
 Unauthorized Absence
 Unauthorized absence refers to absence from work without
requisite approval.
 The Associate need to offer an explanation to his/ her immediate
manager in the event of any unauthorized absence.
 In the event of an associate failing to give an explanation to the
satisfaction of the immediate manager, the Company is liable to

take disciplinary action leading up to termination as per the
Company rules.
 The Associate is not eligible for payment of salary during this
absence.
 Salary, Benefits And Payments

 It is CBVPL’s policy to reward its Associates for their services in line
with the Remuneration strategy of the company.
 The compensation package is based on the total cost to company
concept.
 The compensation structures are subject to change depending on the
modification/change in the applicable rules in force from time to time.
 In case of any additional income tax liability at the hands of the
Associate as result of any policy change / different interpretation of the
IT rules / guidelines or directives from the Income Tax authorities, the
additional tax liability needed to be borne by the Associate and the
company would not be liable to make any adjustments or pay any
amount towards this additional tax liability.
 Confidentiality of Salary of Individual Associate

It is the policy of CBVPL that salaries of Associates are strictly
confidential information, and Associates are not permitted to share the
details of their salaries to any other Associate at CBVPL. If any
Associate is found violating this policy, it would lead to Disciplinary
action.
 Pay Cycle
 The payroll cycle is from 1st of the month to end of month.
 Generally salary is credited into the Associate’s account in the last
week of every month before last working day. Any change in this
date, for whatever reason, will be intimated in advance to the
Associate. In case of queries on administration of compensation,
clarifications can be sought from payroll.

 LTA (Leave Travel Assistance)
 LTA is part of the total compensation of an associate. LTA is
credited to all Associates in advance for the financial year in the
month of April every year. Associates joining during the year are
credited with their prorated LTA in the following March
 To claim tax benefit on LTA, Associate needs to make the necessary
declaration in the Income tax declaration portal and submit proof as
required by Income Tax rules.
 Other Benefits
 Medical & Hospitalization Benefits all the associates of CBVPL
are covered under the Hospitalization & Mediclaim. The company
has obtained the Hospitalization policy with external Insurance
Company.
 Responsibilities Related to Staffing and Workforce

Management:
 Hr Head manage overall process of recruitment and selection
including finalization of salary packages and joining date in
consultation with functional head and/ or Site Head.
 Hr Department arranges interviews and complete joining formalities.
 Department Head submit approved ‘Man Power Requisition Form’
along with the signed ‘Job Description’.
 Site Head review and final approval of the man power requisition.
 Definitions as per SOP of NOVARTIS

 Recruitment: recruitment is the premier major step in the selection
process. It has been extend as an activity director to attract
appropriate human resources whose qualifications and skills match
functions of the relevant posts in the organisation.
 Selection: it is a process that starts from the interview and ends with
the offer letter.

 Procedure for Staffing:
1. Keeping in view the Manpower Budget and separation based
vacancies; Department Head and Hr Head will initiate the process
by getting appropriate approval from the Site Head.
2. After the approval, HR initiate procurement of CVs through
appropriate sources such as placement agencies, web portals,
company data bank, employee referrals etc.
3. To each Manpower Requisition Form assign a unique requisition
number as per XXX-YY-MM-NN syntax.
4. Where XXX denotes 3 alphabet letters common, YY represents
year of the request in two digits, MM represents month of the
request and NN represents serial number of the requisition in that
particular month which shall start.
5. Use this requisition number throughout the corresponding process.
6. On receipt of CVs, HR Department scrutinizes the same and
forwards it to the concern department Head for future scrutiny.
7. When CVs are used as complimentary information, the prospective
employee is accountable for the content of his/her CV or employee
information form and for maintaining it to reflect current status.
8. All CVs or employee information forms are signed before
submission.
9. CVs are to be securely stored or, if required archived.
10. On receipt of list of short listed candidates from the department
heads, HR department schedules the interviews.
11. Interviewer shall record his/her remarks on ‘Interviewee
Assessment Form’.
12. A minimum of three people, including the HR head and Site Head,
interview the candidate and arrive at a list of recommendation.
13. In case of positions reporting directory to the Site Head or Hr Head
the requirement of minimum three interviews is not required.
14. Hr Head negotiate the CTC and other details based on the list.
15. The selected candidate is sent for pre-employment medical check-
up by registered medical practitioner.
16. The pre-employment medical check-up include minimum of X-ray,
routing urine test, blood test and physical examination.
17. On being found fit for the job, make offer of employment to the
candidate. Otherwise evaluate other candidates.
 Delegation of Responsibility
 Department head or section in-charge may delegate their
responsibilities and authorities to other personnel.
 The person who is delegating his/her responsibilities and authorities
document the same either through update in job description on
signed memo or email.
 Exit Formalities
At the time of leaving the organisation the employee need to submit the
duly filled and signed ‘Exit Check-out Form’ to HR.
 Health, Safety and Environment

 Key Hazards: slips, falls, noise, repetitive movement, electricity,
moving machinery.
 Associated Risks: injury, health effect, harm to the environment,
loss of asset.
 General precautions:
1. All personnel entering into site must be free from contagious or
obnoxious disease.
2. Only healthy individuals are allowed to enter production, storage
and laboratory areas.
3. Entries to production, storage and laboratory areas are restricted
only to authorized personnel.
4. Visitors must not enter the production, storage and laboratory areas
unless authorized by the site management and authorized
personnel.
5. Visitors need to restrict their entry only into the areas for which they
have been authorized and should not try to visit any other restricted
area without proper authorization.
6. In case a person need to enter live areas e.g. animal testing lab
and virus production areas, then they need to have appropriate
vaccination as per following table.
Purpose Required Dosage &

vaccination schedule
Working in or visiting Rabies Vaccines Initially at least 2
live areas (Infected completed doses
Animal House and/or followed by 1
Virus Production booster dose every
Area) year
Handling of Animals Tetanus Vaccines Initially 1 dose
followed by booster
dose every year
Table 1: Dosage & Schedule of Required vaccination
7. For entry into production, storage and laboratory areas, all need to
follow respective entry-exit procedures along with all applicable
gowning and safety instruction.
8. Smoking, eating, drinking, chewing tobacco and related products
are not permitted within the site premises of NOVARTIS.
9. Eating, drinking, chewing or keeping food, drink and personal
medicines are not permitted in production, laboratory and storage
areas.
10. Any person who visited live areas and/or handling animals and
microorganisms is not permitted to visit other manufacturing,
storage and testing areas on the same day unless requirements
mentioned in SOP are fulfilled.
11. Personnel shall report pertinent changes in their state of health to
the management before entering any GMP areas. The same
requirements also apply to maintenance, sampling and service
personnel.
12. All personnel must follow the minimum requirements for personnel
hygiene before entering into any GMP areas.
 Training and Development

 Definition of Induction: Introduction of a new employee to the
company goals, history, management, culture, policies, and
organisation structure of departments, divisions, products, safety
and physical layouts and communicate what is expected of them
and their responsibilities.
 Induction Program:

 Concerned department head/section in-charge, along with HR is
responsible for induction of a new employee.
 Responsible HR person, with concerned department head, section in-
charge prepare induction plan for each new employee.
 Complete induction of all the new employees within 14 business days
from joining date of the individual (excluding date of joining).
 At minimum following aspects are covered in the induction program:
Table 2: Aspects covered in induction program
Aspects/Topics for Induction Program Responsible

Introduction to company goals, history, management & HR/Self-training
organisation chart, divisions, culture, company policies
Introduction to company culture & policies (CLC) Compliance Officer
Aspects/Topics for Induction Program Responsible

Introduction personal hygiene, process flow & products Process owners/Quality
Assurance
Genera Safety, basic site layouts, Handling of biological Health, Safety and
materials, and Novartis Emergency Management, On- Environment (HSE)
site emergency plan
Introduction to departmental organisation chart Concerned Department
department’s functions/processes Head/Section In-charge
Formal introduction to individual employees is applicable
 Training Topics and Key Elements:

 Provide basic quality, technical, safety, health and hygiene training to
the employees according to the specific job requirements, including
‘on-the-job’ trainings as appropriate.
 Train and qualify them in the key operational elements of the job
including documentation requirements, relevant SOPs, company
quality policies, etc. before they undertake tasks independently,
 Training Categories:
 Basic Training: Minimum training required before a person can
become operational in a job function. Includes a general common, not

function specific part and a further specific section. Usually provided
by owner of the process for the non-function specific.
 Technical Training: Specific training required to be completed before

a person can perform a specific activity. Usually provided by the
owner of system or process.
 Quality Training: All training linked to compliance rules & regulations

in which some elements are common across functions, others may
be more specific. Certified Personnel is responsible to impart such
trainings.
 Initial Training: Provide trainings to each newly recruited personnel

based on the individuals’ training needs to appropriately fulfill the duties
assigned to them.
 Do not independently engage new personnel in their duties until
completion of their full training and documentation of their successful
qualification.
 Continuous Training: Provide continuous training in accordance

with the needs, and periodically assess its effectiveness.
 Training Execution:

1. Identify Training Needs:
 Manager is responsible for identifying training needs of all existing job
descriptions in their departments. It requires a careful evaluation of the
department function, job descriptions of the personnel.
 Identified training needs are summarized in individual training plans.
2. Individual Training Plans:

 In agreement with the HR Department, the manager is responsible for
creating a list of job functions (e.g. Aseptic operator, QC Analyst, QC
Specialist, and QC Manager).
 For each role, prepare a complete list job/role specific training, skills
and knowledge that are required to qualify and associate for the role.
 This is the basis for assessing the learning needs and developing the
individual training plans for new employees or for existing employees
taking on new roles, maintaining an employee’s qualifications based on
re-training or for continuous improvement.
 The individual training plan also serves as the bases for checking the
qualification status of the personnel for specified role.
 For each activity or process, list controlled documents such as SOPs
and available courses that are necessary to qualify an individual to
execute the well-defined process.
 It is the responsibility of the line function (Immediate Supervisor) to
define the individual training plan for all roles in their areas of
responsibility.
 The individual training plan includes:
 Basic Training and related activities based on a new employee
orientation training:
 Introduction to the company (products/process, organisational
structure, policy on business conduct, and out mission) and
may include also a plant tour.
 Introduction to access rule (site, controlled areas, LAN, etc).
 Introduction/overview of the Environmental/Health and Safety
Policy led by the HSE department
 Technical Training:

 Specific training required to be completed before a person can
perform a specific activity. It includes training on
procedures/courses which are considered as mandatory to
execute a specific activity linked to job task identified. Training
is usually provided by SME’s.
 GxP Training:
 For GxP responsibilities include initial training on regulatory
requirements in the individual training plan as it pertains to
operations and responsibilities of the function and individuals
role. Training is usually provided by the certified trainer.
3. Training Delivery: Training is delivered to employees as per the

individual plans.
4. Training Effectiveness Assessment & Evaluation:

 For all comprehension and performance level trainings, determine and
document the training effectiveness using methodologies appropriate
to the situation, including completed written and/or oral tests, trainee
demonstrations, performance observation or other objective means.
 Through the tools that measure training effectiveness, challenge the
knowledge and skill of the trainee sufficient to accomplish the training
objectives.

Finance
Department

Structure of Finance Department
______________________________________________
 Budget
 Company is following budgetary control process on calendar year
bases. Initially in the month of September, company prepares a
budget for the following year and presents it to global senior
leadership team.
 After adopting top down approach, a target letter is issued by the
global team. Basically budgeting process covers all the important
KPIs like supply volume and realization, quality and compliance,
production volume, yield, cost of goods manufacturing, productivity
initiatives, CAPEX.
 On monthly bases target letter review with the global leadership
team. Any deviation between the actual and budget is explained and
corrective actions are taken.
 Investment Analysis
 Company is having enough reserves & surplus and company’s
liquidity position is also good, hence company has find avenue for
investing surplus fund only with the group company mainly fixed
deposit of the Group Company as well as short term investment with
the bankers.
Investment Decisions:
 Determining Annual CAPEX, Fixed Asset
 Propose various projects for investment.
 Globally approval by senior management team.
 Capital appropriation request when the proposal is above threshold
limit.
 Various parameters like NPV, IRR, and PBP are measured.
 Approved as per the finance authority matrix.
 Sources of Capital and Cost of Capital

 As explained earlier company is profit making hence internally
generated cash is only used as short-term sources of capital.
 As a long-term source, company has Equity shares for fulfilling its
capital requirement.
 Banking and Cash Management:

 Company is operating with Bank of America is a leading bank, HDFC
bank for creditors’ payment and SBI for statutory payment.
 Company is monitoring its fund position on day to day bases and any
surplus or shortfall in the fund is managed from short term Fixed
Deposits with the bankers.
 Creditors and Suppliers Management:

 Company purchases various materials and services on various credit
terms vary from 7days to 90days.
 Average creditors in days – 2 days

 Cash Flow Analysis:
 Cash flow from operating activities:
Company is not able to liquidate its entire production and hence
inventory amount is increasing and so the cash flow from operating
activity looks declining.
 Cash flow from Investing activities

Company is having only one manufacturing plant in Anklehwar and
it is 20-year-old plant and hence capital expenditure is required for
maintaining the facility as per the prevailing standards of quality
regulation, Food & Drug Administration (FDA). Company doesn’t
have any cash flow from financial activity except dividend payout.
 Taxation:
 Company is in the ambit direct and indirect taxation, which covers
income tax, excise, service tax, Value Added Tax (VAT) and CST.
Company is paying taxes regularly to the government authority and
complies with the all necessary regulations.
 Accounting Policy:
 Accounting Policy covers valuation of fixed assets, depreciation rate,
method of inventory valuation, approach adopted for foreign
currency transaction, revenue recognition, employees benefits &
methodology for taxes on income, provisions and contingent
liabilities and use of estimates.
a) Basis of preparation:
The financial statements are prepared in accordance with the
generally accepted accounting principles in India. These financial
statements are prepared to comply in all material aspects.

b) Fixed Assets:
Fixed Assets are stated at cost of acquisition, including any
attributable cost for bringing the asset to its working condition for its
intended use, less accumulated depreciation and impairment loss.
Depreciation is provided on Straight Line Method, pro-rata to the
period of use, at the rates based on useful lives of the assets as
estimated by the management.
Impairment loss is provided to the extent the carrying amount of
assets exceeds their recoverable amount.
c) Investments:
Long-term investments are stated at cost. Provision is made to
recognize a decline, other than temporary, in the value of long-term
investments.
d) Inventories:
Inventories are valued at lower of cost and net realizable value.
Cost is determined on moving weighted average basis. Cost of
work-in-progress and finished goods include labour and
manufacturing overheads, where applicable, based on normal
capacity. Net realizable value is the estimated selling price in the
ordinary course of business less estimated costs of completion and
selling expenses.
e) Foreign Currency Transactions:

Foreign Currency Transactions are recorded at the exchange rates
that approximate the actual exchange rates prevailing on the date
of the transaction. Gain and losses arising out of subsequent
fluctuations are accounted for on actual payment or realization.
Monitory items denominated in foreign currency as at the Balance
Sheet date are converted at the exchange rates prevailing on that
date. Exchange differences are recognized in the Statement Profit
& Loss.

f)Revenue Recognition:
Sales are recognized when goods are supplied to customers and
are recorded net of excise duty, sales tax and non-sellable sales
returns.
g) Employee Benefits:
I. Long-term Employee Benefits
 Defined Contribution Plans:
The company has defined contribution plans for post
employment benefits in the form of Provident Fund,
Employees’ Pension Scheme and Employees’ State
Insurance Scheme are classified as Defined Contribution
Plans as the company has no further obligation beyond
making the contributions. The company’s contributions to
Defined Contribution Plans are charged to the statement of
Profit and Loss as incurred.
 Defined Benefit Plans:

The company has Defined Benefit Plans for post
employment benefits in the form of Gratuity and Pension.
Gratuity scheme of the company is administered through Life
Insurance Corporation of India. Liability for Defined Benefit
Plans is provided on the basis of valuations, as at the
balance sheet date, carried out by independent actuary. The
actuarial valuation method used by independent actuary for
measuring the liability is the Projected Unit Credit method.
 Other Long-term Employee Benefits:

The employees of the company are entitled to other long-
term benefits in the form of Leave Encasement,
Compensated Absences and Long Service Awards as per
the policy of the company. Liability for such benefits is
providing on the basis of valuations, as at the Balance Sheet

date, carried out by independent actuary. The actuarial
valuation method used by independent actuary for
measuring the liability is the Projected Unit Credit method.
II. Termination benefits are recognized as an expense as and when
incurred.
III. Actuarial gains and losses comprise experience adjustments and the
effects of changes in actuarial assumptions and are recognized in the
Statement of Profit & Loss in the year in which they arise.
(h) Taxes on Income:

 Current tax is determined as the
amount of tax payable in respect of estimated taxable income
for the year.
 Deferred tax is recognized, subject
to the consideration of prudence in respect of deferred tax
assets, on timing differences, being the difference between
taxable incomes and accounting income that originate in one
period and are capable of reversal in one or more subsequent
periods.
(i) Provisions and Contingent Liabilities:

The company recognizes a provision when there is a present obligation
as a result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which reliable
estimate can be made. A disclosure for a contingent liability is made
when there is a possible obligation or a present obligation that may, but
probably will not, required an outflow of resources. Where there is a
possible obligation or a present obligation and likelihood of outflow of
resources is remote, no provision or disclosure is made.
(j) Use of Estimates:

The preparation of financial statements in accordance with the
generally accepted accounting principles requires the management to

make estimates and assumptions that affect the reported amounts of
assets and liabilities as at the Balance Sheet date and the result of
operations during the reporting period. The actual results could differ
from these estimates. Any revision to such accounting estimates is
recognized in the accounting period in which such revision takes place.
 Costing of the Product:

 Company is doing its product costing in terms of direct COGS and
indirect COGS.
 Direct Costs include Raw Material, Packing Material, Expenses
incurred for producing sellable products.
 Indirect Costs include write offs due to any abnormality in the
product, any project related expenditure and other overheads
which are not related to the production.
 Apart from this, company has adopted various cost centers
concept by which selling and administration expenditure is
captured separately in the cost sheet.
 Transfer Pricing:
 Company reveling transaction with their group companies, which
include sales of the product in domestic, import of the essential
raw material from group companies. All the transactions are at the
arm length price.
 Dividend Policy:
 Liquidity position of the company is analyzed yearly. Based on
next year’s fund requirement it determines current and surplus
balance, which is limited to the shareholders as D/P.
 Treasury and Controlling:

 Company is having two locations, as
one is Factory in Ankleshwar and Corporate Office in Mumbai.
 All the fund receipts from debtors are
received at Mumbai and fund required for payment to the creditors
at Ankleshwar is received from Mumbai office with close co-
ordination.
 IT Influence:
 Company is using SAP
 SAP is integrated
system from purchase requisition to sale of finished product or
use of various modules like
 FI
 Financial Accounting
 PPC - Production Planning & Control
 CO – Costing
 MM – Material Management
 SD – Sales and Distribution
 FA – Fixed Assets
 Steps involved in acquiring, using and disposing of fixed

assets:
1. Segregation of duties/access rights:
 Adequate segregation of duties exists between the physical custody
of property, plant & equipment, acquisition authorization, and
accounting duties. A segregation of duties matrix is maintained to
document the related job description. In the absence of adequate
segregation of duties, compensating manual controls are
established to mitigate the risk.
2. Acquisition of fixed assets:

 A request for purchasing a fixed asset is initiated by the user
department. There can be three types of requests for capital
expenses. It can be either to replace an existing asset, or upgrade
an existing asset or acquisition of a new asset.
 For any capital expenses / fixed asset requirement, the initiator
must complete a User Requirement Sheet (URS) and forward it to
engineering. Based on URS, Engineering department formulates
the Project Sheet and a Capital Purchase Requisition (CPR).
 All fixed asset acquisitions are initiated using a CPR that is
prepared or approved by the Head of Engineering department.
Projects and capital expenditure under INR 5 lakhs are not subject
to CPR approvals. However, such CPR must be approved as per
the Delegation of Financial Authority (DAL).
 Once CPRs are properly approved, Purchasing Department will
initiate the purchasing process on receipt of the CPR in accordance
with the Master SOP on indirect purchasing.
 The purchase department raises a Purchase Order in SAP.
 Purchase and Engineering department for all future references
maintains the approved copy of the CPR. A copy is also forwarded
to the Factory Accountant.
3. Asset Tagging:
 All assets are physically tagged with the unit asset code numbers
appearing in Fixed Assets registered (in SAP) in order to easily
locate the asset. Items like vehicles need to have their license
plates recorded in the Fixed Assets register.
 Engineering department tag assets number immediately for
equipments which do not require installation report. For sanctioned
project items a list is furnished by factory accounts to engineering
after capitalization and subsequently engineering tag these assets
accordingly.
4. Receipt & Documentation of Fixed Assets:

 Once a valid PO and asset code is in SAP, capital expenditure can
start and orders can be placed.
 Upon receipt of the assets, user department acknowledge the
delivery challan / supplier invoice and forward the challan to

engineering stores for preparing Receiving Report (RR)
immediately.
 The user department verifies and document/right on the supporting
documents whether the assets are received in good condition.
 Delivery Challan and LR slips are retained with engineering stores.
 All project transactions are promptly recorded in the project
accounts in SAP and reported in the correct accounting period as
capital Work-in-Progress.
5. Fixed Assets Accounting and Installation Report:

 There are two types of capital expenditure, first is against routine
capital expenditure budget and second is against approved
project’s budget.
 Fixed assets purchased under routine capital expenditure budget
that do not require an exhaustive installation period, RR date can
be considered as capitalization date. For those requiring installation
and qualification, engineering department classify such expenses
as ‘Under Installation’. Such expenses are capitalized upon the
completion or installation.
 Capital expenditure incurred against approved projects budget are
accounted in Capital Work In Progress. Such expenses are tracked
in SAP with specific CWIP code and class.
6. Write-off /Sale /Disposal of fixed Assets:

 Assets which are recommended for write-off either due to
destruction, obsolescence or any other reason require the sponsor
to obtain approvals of the Technical Director/ Site Head with
recommendation of Factory Account after assessing the financial
implications.
 Sale/disposal of fixed assets is initiated by inviting quotations from
at least three potential buyers. Purchase/engineering department
initiate the process of inviting bids.

7. Depreciation:
 Depreciation is charged from the month the assets are capitalized.
Depreciation will be charged for the whole month even if the assets
are capitalized any time during the month. The rates used for
depreciation are entered in SAP as communicated by Novartis
Corporate Finance, which shall be determined on the bases of
useful life of assets classification.
8. Insurance and Physical Verification:

 Factory Accountant shall initiate asset valuation once in three years
with necessary technical inputs from Head Engineering on
replacement cost. Engineering Head shall approve the asset value
for insurance purpose considering replacement cost etc. Based on
this valuation adequate insurance is underwritten by the Factory
Accountant or CFO.
 Ratio Analysis:
 Table 3: Current Ratio
Current Ratio
2010 2011 2012 2013 2014
Current assets 61.5 76.78 100.73 127.99 109.22
Current Liabilities 14.69 11.86 12 15.56 19.29
Current Ratio 4.186521 6.473862 8.394167 8.225578 5.662001
 Table 4: Quick Ratio

Quick Ratio
2010 2011 2012 2013 2014
Liquid Assets 18.18 13.89 16.86 25.02 15.06

Quick Ratio 1.24 1.17 1.41 1.61 0.78

 Table 5: GP Ratio (%)
GP Ratio (%)
2010 2011 2012 2013 2014
sales 85.82 129.53 152.98 120.81 129.34
Gross Profit 17.09 51.55 60.62 23.27 1.82
GP Ratio (%) 19.91377 39.79773 39.62609 19.26165 1.407144
 Table 6: NP Ratio (%)
NP Ratio (%)
2010 2011 2012 2013 2014
sales 85.82 129.53 152.98 120.81 129.34
net profit after tax 17.74 38.5 46.84 20.6 7.75
NP Ratio 20.67117 29.72284 30.61838 17.05157 5.991959
 Table 7: Proprietory Ratio
Proprietory Ratio
2010 2011 2012 2013 2014
Shareholders fund 148.07 186.57 233.41 254.01 261.76
Total Tangible Assets 180.22 204.35 269.06 276.45 287.94
Proprietory Ratio 0.821607 0.912992 0.867502 0.918828 0.909078

Profitability Ratios Relating to Investment
 Table 8: Return on Assets (%)
Return on Assets (%)

2010 2011 2012 2013 2014
NPAT 17.74 38.5 46.84 20.6 7.75
Interest 3.95 5.72 8.4 7.63 8.97
Average Total Assets 26.39 24.375 22.77 32.39 28.91
Return on Assets (%) 52.25 134.48 168.82 40.043 - 4.22
 Table 9: Return on capital employed (%)
Return on capital employed (%)

EBIT 17.48 53.11 61.73 23.43 3.11
Average total capital employed 74.04 93.29 116.71 127.01 130.88
ROCE(%) 23.61 56.93 52.89 18.45 2.38
 Table 10: Return on investment (%)
Return on investment (%)

EBIT 17.48 53.11 61.73 23.43 3.11
capital employed 148.07 186.57 233.41 254.01 261.76
ROI(%) 11.81 28.47 26.45 9.22 1.19

Purchase Department structure
_____________________________________________________

Purchase Procedure
Purchase
Inquire
Inquire
Requisition
Quotation
Comparison
Purchase
Order
Follow up
Material
Received
1. Purchase Requisition:
 Purchase department is responsible for receiving and processing a
Purchase Requisition.
 Purchase Requisition is the basic document for Material
Procurement and must be initiated for all material/direct purchases.
 Purchase Requisition categorized as:
 Non project related Requisition.
 Project related Requisition
 All Projects related Requisitions are forwarded to Engineering
department.
2. Inquiry
3. Quotation:

 Purchase manager is responsible for floating Request for Quotation
(RFQ) and receiving offer/regret letter.
 After initial scrutiny of Requisition, Purchase flows the RFQ,
Technically/Personally/e-mail/by Fax to vendors for items, which are
not covered under Rate Contract or Works Contract. In the case of
works contract, i.e. work which are to be executed in the factory
premises, a copy of ‘EHS requirements’ and ‘Contractor Information
Sheet’ is also given to the vendors. The technical specification and
drawing are also attached if necessary along with the inquiry.
 Float the RFQ to minimum 3 vendors for Annual Rate Contracts
and Work Contracts.
4. Competitive Bidding and Supplier Selection:

Purchase along with User department/Engineering is responsible for
Vendor selection and negotiations,
 The quotations are received from various sources as per RFQ.
 It is ensured that whether the vendor is authorized stock
list/distributor/manufacturer for Indirect Material.
 Bid evaluation Sheet is made by Purchase, in consultation with User
department.
 Once quotation of material is received from supplier, the price is
checked with last purchase of material from same supplier or same
material from another.
 Prices are negotiated based on historical price/market trend.
 Subsequently offer is evaluated in co-ordination with engineering
department/User department whenever necessary.
 Suppliers who are capable to supply material as per defined
specification are selected.
5. Purchase Order:
 Purchase is responsible for the preparation of PO, and initial
approval of the PO.
 Purchase orders are signed/approved as per the delegation of
Financial Authorities prior to any further processing. Purchase Head
ensures that all the required approvals are obtained before its PO is
issued.
 Purchase Head/Finance Head is authorized to approve the PO in
SAP, after that manual print of the PO is duly signed by Purchase
executive, Purchase Head, Finance Head and Site Head and CFO
as per finance approval matrix.
 Based on Negotiation, Purchase prepares the Purchase Order
through computerized system SAP.
6. Follow up:
 Purchase manager is responsible for follow up for delivery.
 Purchase orders are closed when goods are fully received or
the services are fully performed.
 Review of the overdue PO from system/manually on a
quarterly base and record the comments on the list of open
PO, which is documented and kept in record.
 Goods/Services should deliver on or before delivery date
prescribed in the PO otherwise it will be considered as
overdue.
 Purchase department is responsible too in case of follow up
with the supplier for open purchase orders.
 If goods are already dispatched or about to be dispatched,
then get the dispatch details like mode of dispatch, LR
number, Courier Docket number etc.
 Confirm with transporters regarding arrival of the material at
their go-down.
 Enquiry with Stores regarding receipt of material.
 Inform the indenter regarding the delivery status.
 If goods are not already dispatched, Purchase enquires with
Engineering Department/User Department if PO can be
closed.

 If the User department in favor of closer of PO, then close PO
in SAP system, cancel the PO and intimate supplier about
closer of PO.
 If User department is not in favour of closer of PO, then
Purchase does not close PO in SAP.

Marketing
Department

 Product:
 Company is manufacturing Rabies Vaccine which is used for
preventing and curing rabies virus. One dose consists of 1 vaccine
vial, 1 bottle for injection, niddle syringe.
 For administering rabies vaccine for injection and vaccine vial
diluted niddle syringe then after it is given to the patient.
 Price:
 Company is selling its product to the domestic as well as export
market segment. There are two stream for domestic sale namely to
group company and government institution and export to group
companies.
 For group companies price is determined based on cost+margin

method.
 For government institution (hospitals), price is decided based on
competitive bidding.
 Promotion:
 Company is selling mainly to group company and government
institution so promotional activities are absent at CBVPL,
Ankleshwar.
 Parent/group Company uses personal selling as a tool of
promotion.
 Place:
 Company is sending goods directly to customers in case of
government sell & export sell.
 In case of Group Company in India they send goods to warehouse
and from there to distributors and from them to agents, wholesaler
and then retailers for trade market.
 So Novartis is using 4 level Distribution Channel.

 Comparison to other Vaccine companies:
Comparing to other companies, CBVPL has 60-70% market share in all
over India.
 Region of Market:
Company is having its market in all over India and exporting to
neighboring countries like Bangladesh, Pakistan, Nepal, Philippines,
Thailand, China, etc. as well as to PAHO (Pan American Health
Organization) country.
 Targeting:
As far as India is concerned, people are not very much concerned about
prevention of rabies vaccine. Company is continuously targeting pre
exposure usage of vaccine.
 Customer Relationship Management:

 Company is maintaining at most quality of product. However if any
complain comes from customer it is addressed to QC department
and in turn, QC investigate causes of customer complains.
 In accordingly company takes corrective and preventive action for
future complaints from customers.
 Market Innovation:
This company is MNC. Its R&D department is in abroad/other country.
CBVPL, Ankleshwar established mainly for manufacturing and selling of
only one product.
Table 11: Competitors
Zydus (VAXIRABN) Zydus (VAXIRAB)

Ranbaxy (XRAB) Serum institute (RABIVAX)
INDIAN IMMUNOLOGICAL (ABHAYRAB) WOCLKHARDT (WORAB)
BHARAT BIOTECH (INDIRAB) BHARAT SERUM (ZOONOVAC)
MERCK Pfizer
GSK

Part III: Industry Analysis
_____________________________________________________
 Company SWOT Analysis:
Strength:
1. Has a global reach in over 140 countries.
2. Wide product range in pharmaceuticals, vaccines, consumer health,
generics and animal health.
3. Novartis Biotechnology leadership camp organized by it is a unique
step.
4. Mergers and acquisitions have it a strong brand.
6. First company-wide health and well-being initiative at Novartis
Employee strength of over 120,000.
7. Excellent reputation in developing first class Rx pharmaceuticals that
maintain high entry barriers to new entrants and competitors.
8. Well developed and rapidly expanding research and development
centers in Bassel, Sanghai and Boston.
9. Superb portfolio of young fast growing medicines.
10. Second largest market of generic drugs in the world.
11. Second largest biotech company in the world.
12. Market leader in terms of sales.
13. Good return providing company to the investors.
Weakness:
1. Brand name harmed due to the legal case against the Indian
government.
2. Controversies regarding their advertising of certain products affected
brand image.
3. FDA charged the company with unethical advertising practices.
4. Charged and fined by US district court for practicing sexual
discrimination against twelve female sales representatives which
ruined the image of the company (2008)
5. No special drug formation for children.

6. Charged by US federal prosecutor for paying illegal kickbacks to
healthcare professional which damaged the company’s name.
7. Failure of Galvus to position Novartis in the diabetes market.
8. Lack of resources to exploit prominent opportunities.
9. Case regarding Indian patent laws also created a problem for the brand
Opportunities:
1. Broad-based medical innovation, in technologies and businesses

across the spectrum of health care.
2. Venture into health needs in under-developed and poor countries.
3. Potential to establish Sandoz subsidiary as leading manufacturer of
bio-similar.
4. Strong research and development base can help in considerable
movement to multiple sclerosis and respiratory markets.
5. High market growth rate due to increasing rate of diseases because of
pollution and other environmental factors.
6. Low threat of new entrants/high competition because of huge
investments required to setup a major pharmaceutical firm.
Threats:
1. Long term patent expiry risk for Glivec in 2015.

2. Uncertain political environment world wide.

 PESTEL Analysis:
The PESTEL framework is a method to analyze the macro environment of a

company. It assists in understanding the external factors that influence the
development of a company. There a six such type of factors: political,
economical, socio-cultural, technological, environmental and legal. These
factors are not mutually exclusive and can affect a company from more than
just one angle.
 Political
With exhaustive need for new development of medicines to meet all the
medical requirements, Novartis requires political and legal support in order
to venture into this pharmaceutical and biomedical industry. Besides,
Novartis being a MNC, it needs to accordingly abide to the legislations of
different countries. This would greatly influence the development of Novartis
when it's one of the emerging global healthcare leaders.
Despite the heated debate about healthcare costs, people and regulators
(who still demand effective and a high quality medicines) easily forget that
developing new drugs is a lengthy, risky and costly process that is far from
certain which often does not result in a desired outcome, namely a new
approved drug (Schwartz and Moon, 2000, pp.87- 88). Regulatory Approval
for new drugs might take up to ten years and can involve costs of over one
billion USD but productive R&D activities remain vital to the success of
Novartis (Novartis, 2007, p.132). Therefore long patent protection periods
are necessary to enable innovative pharmaceutical companies, such as
Novartis, that do not just produce generics, to get compensation for their
investments in research and development. Furthermore, if healthcare
authorities will start to regulate prices for new medicines, as suggested by
politicians in Europe and the United States, in order to lower prices and thus
costs to the healthcare systems, Novartis and it peers will face further
problems to recover their initial product development costs.

 Economic
The global economic crisis would greatly impact the trust of the society
towards Novartis. The people believes that the above mentioned crisis might
lead the business and its entrepreneurs to be involved in misleading factors
such as scandals, bankruptcies and unethical practices.
Economic factors also play an important role, that effect a pharmaceutical

company such as Novartis. Maintaining a healthcare system that provides
effective treatment and medicines costs a lot of money. Therefore it is not
surprising that Novartis generates about three quarters of its group net sales
in countries of the developed world, such as the US, EU and Japan, that
generate considerable economic strength.
Another important factor that affects Novartis in some way is the situation on
global capital markets. Even though financial markets have recovered to a
somewhat stable situation after the global financial crisis the ex-ante
situation where corporations had almost unlimited access to money will
unlikely be restored. This however, does not pose too much of a problem for
Novartis since it follows a more conservative capital structure.
 Socio-Cultural Analysis
Socio-cultural factors are fundamental growth drivers for Novartis and they
remain strong for the foreseeable future increasing demand for healthcare
products. Main drivers are demographic and socio-economic developments
such as increasing population, higher life expectancy as well as changing
lifestyle due to increased prosperity. Novartis expects to keep expanding in
the next years both in traditional markets such as the United States, Europe,
Japan and emerging markets. Emerging markets are considered by IMS
Health as Brazil, China, India, Mexico, Russia, South Korea and Turkey.
The world population is expected to surpass nine billion in 2050 with

increase portion of the population being 65 years or older. A study by the US
State Department in 2007 forecasted that in 2030 one billion people

worldwide will be 65 years or older. Studies show that disease occurrence
and drug consumption rise with age (Novartis, 2010, p.143). Furthermore
economic growth, increased automation and changing lifestyle and eating
habits will continue to cause chronic diseases such as cardiovascular
diseases, diabetes, cancer and serious other diseases.
 Technology
Information technology is already having a significant impact on healthcare

innovation and presents vast untapped potential.
Recent research shows that patients now better understand the benefits of
technology and are embracing it to improve their health. In recent market
research carried out for Novartis, 92 percent of patients and 84 percent of
seniors said that they were comfortable using technology. Almost two-thirds
of patients also think technology is helping them to better manage their
health.
Novartis defines e-health and m-health as the healthcare system's adoption

of the channels and tools of the digital and mobile world: the digitization of
healthcare.
E-Health is reshaping the entire healthcare system which exists to deliver

interventions such as diagnosis, medicines, care and advice, and
technology is impacting every aspect.
Novartis has developed a number of online communities and mobile apps

that help patients better manage their own health.
Novartis is committed to investing in valuable, innovative technologies and

has initiated a number of pilot programs using remote monitoring devices.
These devices may someday provide physicians with a wealth of information
to proactively manage the health of patients by monitoring adherence to
treatment.

 External Environment
Environmental factors are important external aspects that cannot be ignored

by companies, especially pharmaceutical companies. Increased
environmental awareness among patients, consumers and people in
general, combined with global warming and other environmental hazards
have forced companies to make adjustments. Increasingly consumers do
not only request high quality and safe medicines from producers but also
environmental friendly production procedures and plans to reduce energy
and resource consumption. This has led pharmaceutical companies and
companies from other industries to create environmental friendly images as
well as plans for sustainable development. Failure to follow this trend could
have serious consequences on the company’s image leading people to
belief that the company is polluting the environment and ruthlessly exploiting
the resources of the planet.
As a result Novartis has early on included environmental issues in his code

of ethical business conduct in which it commits itself to the conservation of
energy and other resources. Furthermore, Novartis recognizes the rights of
animals. Animal testing is an indispensable part of experimental studies for
new drugs without which the development of new drugs would be nearly
impossible. Despite the fact that Novartis abides to the highest standards for
its animals and reduces animal testing whenever possible the company and
its employees are frequently harassed by militant animal rights activists in
an almost terroristic manner (Novartis, 2010, p.66).
 Legal
Companies active in the pharmaceutical industry face already strict and rigid
legal regulation around the world, especially in the United States and
Europe. There, the local health authorities responsible for drugs approvals
and related matters are the Food and Drug Administration (FDA) and the
European Medicines Agency (EMEA) respectively. These agencies have
immense political and legal power and are pressuring Novartis and other
industry peers to lower prices and provide enormous loads of information on
safety, efficiency and risk/benefit profile for evaluation and approval
purposes. This development is likely to continue and even increase with
requirements and legislation getting stricter and more involved. Proof for this
is the Food and Drug Administration Amendments Acts 2007 signed by
former President George W. Bush.
As a result, the drug approval rate in general is expected to decline. For

Novartis and other industry peers this means that research and approval
activities will get increasingly expensive and will further elevate the risk of
recalls, setback and possible loss of market share.

Competitive Analysis
____________________________________________
Companies Novartis Sanofi GSK Pfizer Merck
Points of
Comparison
Tagline/ No pipelines, Because Do more, Doing A Whole new
Slogan just health feel better, things world of
pipedreams matters live longer differently possibilities;
Be well
Segment Animal health, Cardiovascu Consumer Heart Pharmaceutica
Diagnostics, lar, CNS, healthcare, disease, l products,
Oncology, diabetes, prescriptio Obesity, vaccines,
vaccines & thrombosis, n psychiatric prescription
generics oncology medicines disorders, products,
& vaccines cognitive animal health
enhancers, & chemicals
oncology &
animal
health
segment ,
dysfunction
Target Healthcare Healthcare Patients & Large Large
Group professionals, professional healthcare business business
Doctors s, doctors & profession owners & owners &
hospitals als seeking operators operators
detection,
prevention
&
treatment
of disease
Sales 839.78 1,875.00 2,639.94 1,004.27 867.49
turnover
(Rs. Crore)
Profit 14.24% 11.51% 62.59% 21.87% 10.11%
margin
Market 2,765.73 8,841.46 28,656.72 9,599.48 1,325.46
capital(Rs.
Cr)
Points of Novartis Sanofi GSK Pfizer Merck
Comparison

P/E 35.35 31.22 76.39 100.64 26.89
EPS 30.83 114.46 55.68 74.01 26.04
Net Profit 11.42 12.91 14.34 18.08 4.86

Margin (%)
ROA (%) 313.51 645.16 218.61 220.64 333.93
Return on 9.37 20.63 _ 51.63 51.63

capital
employed
(%)
Current 4.97 1.85 2.13 3.22 3.55
Ratio
Debtors 10.79 16.94 33.43 7.05 9.20
Turnover
Ratio
Number of 395.73 124.61 154.65 180.68 162.02
Days In
Working
Capital
Table 12: Competitive Analysis
 Interpretation:
 Sales turnover: Novartis has a turnover of 839.78 crore. Sanofi’s

turnover is 1875 crore. GSK’s turnover is 2,639.94 crore. Pfizer’s
turnover is 1,004.27 Crore and MERCK’s turnover is 867.49 crore.
GSK’s turnover is highest which shows it is more efficiently money
spent on purchasing goods into profit.
 Profit margin: Novartis profit margin is 14.24%, Sanofi’s profit margin

is 11.51%, GSK’s turnover is 62.59%, Pfizer’s turnover is 21.87% and
MERCK’s turnover is 10.11%. GSK is the highest profit making and this
shows it has a better control over its cost compared to its competitors.
Sanofi has to lowest profit margin.

 Capital employed: Novartis has 2765.73 crore capital employed.
Sanofi has 8841.46 crore of capital. GSK has the highest capital
employed in the market of 28656.72crore which shows it has the
slower growth with lower risk, Pfizer has capital of 9599.48 crore and
MERCK is with the lowest capital employed of 1325.46 crore which
shows the higher growth with higher risk.
 P/E: Pfizer is with the highest P/E which suggests that investors of
Pfizer are expecting higher earnings growth in future compared to other
competitors. GSK is with 76.39 P/E ratios which also suggest that its
investors are expecting higher growth in future. Novartis has 35.35 P/E.
Sanofi’s P/E is 31.22 and MERCK has the lowest P/E.
 EPS: as per the EPS Sanofi is the highest profit making from
shareholders’ prospective as it shows company has more profit to
distribute its’ shareholders. After that Pfizer’s EPS is 74.01 crore which
is also profit making from the shareholders’ prospective. Novartis EPS
is 30.83 crore. MERCK is with the lowest EPS of 26.04 crore.
 Net Profit Margin (%): Novartis net profit margin is 11.42%, Sanofi’s
profit margin is 12.91%, GSK’s net profit margin is 14.34%, Pfizer has
the highest net profit margin of 18.08% and MERCK is with the lowest
profit margin of 4.86%.
 ROA (%): Sanofi’s return on asset is highest which is 645.16% which

shows that it is most efficiently managing its assets to earn higher
return. Novartis and MERCK are also have good ROA which is
313.51% & 333.93% respectively. GSK and Pfizer are with 218.61% &
220.64% ROA respectively which shows they are less efficiently
managing their assets compare to other 3.

 Return on capital employed (%): Pfizer and MERCK is with the
highest ROCE which is 51.63% which shows they are efficiently
managing their capital to earn good return. Novartis has the lowest
ROCE which is 9.37% and Sanofi is with the 20.63% ROCE.
 Current Ratio: Novartis, GSK, Pfizer and MERCK are with the current
ratio of 4.97, 2.13, 3.22, and 3.55 respectively. These shows these
company’s’ liquidity position is good and they can easily pay all
liabilities. Sanofy’s CR is 1.85 which shows it doesn’t have good
liquidity.
 Debtors Turnover Ratio: GSK is with the highest debtors turnover

which shows that it is not managing is collection well. It may be
because of poor communication with its customers. Novartis DTO is
10.79, Sanofi’s DTO is 16.94. Pfizer and MERCK are with lowest DTO
which are 7.05 and 9.20 respectively that means they are managing
their collection well.
 Number of Days in Working Capital: Sanofi is with the lowest days in

working capital. It takes 124.61 days to convert its working capital into
revenue. Novartis takes 395.73 days to convert its working capital into
revenue. GSK’s working capital days are 154.65. Pfizer and MERCK’s
working capital days are 180.68 & 162.02 days respectively.

Mini Project

 MINI PROJECT ON
“IMPACT OF WORKING CAPITAL MANAGEMENT ON FIRM’S PROFITABILITY”
Background of the Study

_____________________________________________________
 The term working capital has several meanings in business and economic
development finance. In accounting and financial statement analysis,
working capital is defined as the firm’s short-term or current assets and
current liabilities. Net working capital represents the excess of current
assets over current liabilities and is an indicator of the firm’s ability to meet
its short term financial obligations. Effective working capital management
consists of applying the methods which remove the risk and lack of ability
in paying short term commitments in one side and prevent over investment
in these assets in the other side by planning and controlling current assets
and liabilities.
 Profitability can be termed as the rate of return on investment. If there will

be an unjustifiable over investment in current assets, this would negatively
affect the rate of return on investment, (Ntui Ponsian, 2014). The basic
purpose of managing working capital is controlling of current financial
resources of a firm in such a way that a balance is created between
profitability of the firm and risk associated with that profitability. Working
Capital management explicitly impacts both the profitability and level of
desired liquidity of a business. Hence, it may have both negative and
positive impact on firm’s profitability, which in turn, has negative and
positive impact on the shareholders’ wealth. If a firm invests heavily on
working capital i.e. more than its needs, the profits which can be
generated by investing these resources in fixed or long term assets
diminishes. Moreover the firm has to endure the cost of storing inventory
for longer periods as well as the cost of handling excessive inventory. It is
therefore a critical issue to know and understand the effects of working
capital management and its influence on firm’s profitability.

 Problem Statement:
“Impact of Working Capital on Profitability of the firm”
 Research question:
Is there any significant relationship between profitability (ROA) and
working capital management (ACP, APP, ITID, CCC, CR, OP)?

Research objectives
_____________________________________________________
“Impact of Working Capital Management on Firm’s Profitability”
The general of this study was to analyze the relationship between working
capital management and company profitability. The study had the following
specific objectives and hypotheses.
i. To analyze the relationship between average collection period and

profitability.
ii. To assess the relationship between inventories turnover in days and

profitability.
iii. To establish the relationship between average payment period and

profitability.
iv. To evaluate the relationship between cash conversion cycle and

profitability.
v. To evaluate the relationship between current ratio and profitability.
H01: There is no statistically significant positive relationship between average

collection period and profitability of CBVPL.
payment period and profitability of CBVPL.
H03: There is no statistically significant positive relationship between
inventory turnover in days and profitability of CBVPL.
H04: There is no statistically significant positive relationship between cash
conversion cycle and profitability of CBVPL.
H05: There is no statistically significant positive relationship between current
ratio and profitability of CBVPL.

Significance of the Study
______________________________________________
 The study’s findings may help the manufacturing firms and other
companies in general improve on their financial decision making so as to
optimize the value of the shareholders and maintain a favorable trade- off
between liquidity and profitability.
 The study will may help CBVPL to understand their present efficiency in
managing working capital management and how they can improve it to
earn higher profitability.
 The findings may also be of great benefit to future researchers in the field
of working capital management in providing relevant literature in building
up the course of study. It may benefit other scholars and students of
finance who may use the findings for academic purposes.
 With the working capital management playing a major role in financial

stability of different firms its efficient utilization is necessary in achieving
the goals of financial stability. The study recommended ways through
which working capital can be effectively utilized in financial decision
making. This effective utilization in the long run will increase wealth of the
shareholders.

Scope of the Study
______________________________________________
This study tries to find impact of working capital management on Profitability.

So the working capital is termed as independent variable and profitability as
dependent variable. The independent variables of this study are
components of WCM, namely average collection period; average payment
period; inventory turnover in days and cash conversion cycle, current ratio.
The dependent variable which is profitability is termed as Return on Assets.
This study is limited to Chiron Behring Vaccines Ltd. and the consolidated
financial records from the year 2010 to 2014.

Definitions of Significant Terms Used in the Study
______________________________________________
The following terms assumed the stated meanings in the context of the study:
 Average collection period (ACP) refers to the average time required

for changing the company's receivables into cash. It is calculated as:
ACP = (Receivable Accounts/Sales) * 365
 Average payment period (APP) refers to the average number of days

a company takes to pay off credit purchases. Average Payment Period is
calculated as:
APP = (Payable Accounts/Cost of Goods Sold)*365
 Cash conversion cycle (CCC) The sum of days of sales outstanding

(average collection period) and days of sales in inventory less days of
payables outstanding. It is calculated as:
CCC= Days of Avg. + Days of Sales – Days of Avg.
Collection Period Inventory Payment Period
 Inventory turnover in days (ITID) is the average required time to

change the materials into the product and then sell the goods. It is calculated
as:
ITID = (Inventory/Cost of Goods Sold)*365
 Working capital: Working capital, also known as net working capital or

NWC, is calculated as current assets minus current liabilities. The major
components of working capital are accounts receivable, inventories, cash and
cash equivalents and accounts payable.
 Profitability: There is a difference between profit and profitability.
Profit refers to the gain in business activity, which is served for the benefit of
business owners. It is usually measured for a certain period of time such as a

financial year, and calculated by the revenues obtained from business
activities minus the expenses used to achieve those revenues (N. T. Huynh,
2012)
Profitability is interpreted as a ratio explaining the rate of some profit amount

which is benchmarked against some point of reference such as, Assets,
Investments or Equity of the company. Percentage is used as the unit
measure of those ratios. As decision tools, profitability ratios can be used to
assess the financial health of business.

Literature Review
_____________________________________________________
Various studies have analyzed the relationship of working capital

management (WCM) and firm profitability in various markets. The results are
quite mixed, but a majority of studies conclude a negative relationship
between WCM and firm profitability. The studies reviewed have used various
variables to analyze the relationship, with different methodology such as linear
regression and panel data regression. This section presents the chronology of
major studies related to this study in order to assess and identify the research
gap.
1. Ntui Ponsian, Kiemi Chrispina, Gwatako Tago, Halim Mkiibi (2014)

examined the effect of working capital management on company
profitability. Data is analyzed on quantitative basis using Pearson’s
correlation. The key findings from the study are; firstly, there exists a
positive relationship between cash conversion cycle and profitability of the
firm. This means that as the cash conversion cycle increases it will lead to
an increase in profitability of the firm, and managers can create a positive
value for the shareholders by increasing the cash conversion cycle to a
reasonable level; Secondly, there is a negative relationship between
liquidity and profitability showing that as liquidity decreases, the
profitability also increases; Thirdly, there exists a highly significant
negative relationship between average collection period and profitability
indicating that a decrease in the number of days a firm receives payment
from sales affects the profitability of the firm positively; Fourthly, there is a
highly significant positive relationship between average payment period
and profitability. This implies that the longer a firm takes to pay its
creditors, the more profitable it is; and Fifthly, there exists a highly
significant negative relationship between inventory turnover in days and
profitability hinting that firms which maintain sufficiently low inventory
levels reduce the cost of storing the inventory which results to higher
profitability.

2. Hina Agha, Mba, Mphil(2014) tested the impact of working capital
management on profitability. To investigate this relationship between
these two, the author collected secondary data from Glaxo Smith Kline
pharmaceutical company registered in Karachi stock exchange for the
period of 1996-2011. For this purpose, in this study they used variable of
return on assets ratio to measure the profitability of company and
variables of account receivable turnover, creditor’s turnover, inventory
turnover and current ratio as working capital management criteria. The
results of the research show that there is a significant impact of the
working capital management on profitability of company. Therefore,
managers may enhance the profitability of their firms by minimizing the
inventory turnover, account receivables ratio and by decreasing creditors
turnover ratios but there is no significant effect of increasing or decreasing
the current ratio on profitability. So, the results indicate that through
proper working capital management the company can increase its
profitability.
3. Gul, Khan, Rehman, Khan, Khan and Khan (2013) investigated the
influence of working capital management (WCM) on performance of small
medium enterprises (SMEs) in Pakistan. The dependent variable of the
study was Return on Assets (ROA) which was used as a proxy for
profitability. Independent variables were Number of Days Account
Receivable (ACP), Number of Day’s Inventory (INV), Cash Conversion
Cycle (CCC) and Number of Days Account Payable (APP). In addition to
these variables some other variables were used which included Firm Size
(SIZE), Debit Ratio (DR) and Growth (GROWTH). Regression analysis
was used to determine the relationship between WCM and performance
of SMEs in Pakistan. Results suggested that APP, GROWTH and SIZE
have positive association with Profitability whereas ACP, INV, CCC and
DR have inverse relation with profitability.
4. Daniel Mogaka, Ambrose Jagongo(2013) investigated the effect of

working capital management on firm’s profitability in Kenya for the period
2003 to 2012. For this purpose, balanced panel data of five

manufacturing and construction firms each which are listed on the Nairobi
Securities Exchange (NSE) is used. Pearson’s correlation and Ordinary
Least Squares regression models were used to establish the relationship
between working capital management and firm’s profitability. The study
finds a negative relationship between profitability and number of day’s
accounts receivable and cash conversion cycle, but a positive relationship
between profitability and number of days of inventory and number of day’s
payable. Moreover, the financial leverage, sales growth, current ratio and
firm size also have significant effects on the firm’s profitability. Results
suggested that managers can create value for their shareholders by
reducing the number of day’s accounts receivable and increasing the
accounts payment period and inventories to a reasonable maximum.
5. Agyemang Badu Ebenezer, Michael Kwame Asiedu (2013) examined

the effect of working capital management on the profitability of companies
listed on the Ghana Stock Exchange. Secondary data from the Ghana
Stock Exchange on manufacturing companies within the Accra metropolis
was used to examine whether working capital management influence the
profitability of manufacturing companies in the country. The study found
out that, the major component of working capital management such as
inventory days, account payable and cash conversion cycle have
influence on the profitability of manufacturing companies. The study
recommended that, manufacturing companies should adopt efficient and
effective ways of efficiently managing these components of working
capital management.
6. Paul Muoki Nzioki, Stephen Kirwa Kimeli, Marcella Riwo Abudho and
Janiffer Mwende Nthiwa (2013) analysed the effects of working capital
management on the profitability of manufacturing firms listed on the
Nairobi Securities Exchange. Diagnostic research design was utilized and
the study targeted the nine CBVPL trading on the Nairobi Securities
Exchange. Multiple regression and correlation analyses were carried out
to determine the relationships between components of working capital
management and the gross operating profit of the firms. The results from
the study revealed that gross operating profit was positively correlated
with average collection period and average payment period but negatively
correlated with cash conversion cycle. The relationship between inventory
turnover in days and gross operating profit was insignificant. From this
study, it is recommended that managers focus on reducing cash
conversion cycles and try to collect receivables as soon as possible.
7. Rekha Gulia(2014) studied the impact of working capital management

on the firms’ profits after tax and cash profits of the leading
pharmaceuticals firms. The data is analysed using correlation and
multiple regression and the outcome pinpoints that there exists correlation
among variables and the net working capital and debt ratios of the firms
have significant impact on the profits of the firms.
8. Hassan Aftab Qazi, Syed Muhammad Amir Shah, Zaheer Abbas and
Tanzeela Nadeem (2011) investigated the Impact of working capital on
firms’ profitability. Different variables affecting the profitability of firms
were selected. In this study, networking capital, inventory turnover in
days, average account receivable and financial asset to total assets
(FATA) were taken as independent variables. The result shows positive
movement of working capital (WC) on firm’s profitability.
9. Melita Stephanou Charitou, Maria Elfani, Petros Lois (2010)

investigated the effect of working capital management on firm’s financial
performance in an emerging market. They hypothesized that working
capital management leads to improved profitability. Data set was
consisting of firms listed in the Cyprus Stock Exchange for the period
1998-2007. Using multivariate regression analysis, results supported
hypothesis. Specifically, results indicated that the cash conversion cycle
and all its major components; namely, days in inventory, day’s sales
outstanding and creditor’s payment period – are associated with the firm’s
profitability. The results of this study should be of great importance to
managers and major stakeholders, such as investors, creditors, and

financial analysts, especially after the recent global financial crisis and the
latest collapses of giant organizations worldwide.
10. Parul Mehra (2013) analysed the effect of working capital management
on the profitability of the Indian Pharmaceutical Sector. An attempt has
been made to study the relationship of working capital management with
its important components such as profitability, liquidity and debt used by
these Indian pharmaceutical firms. In this study they used cash
conversion cycle model. Using descriptive statistic they concluded that
the firm can increase their profitability by reducing the cash conversion
cycle which is used as a proxy of the working capital management in
research. They found negative relationship between the APP and the net
operating profitability and positive relationship between current ration and
profitability. They found negative relationship between debt ratio and
profitability.
11. Dr.K.C.Biswal (2014) investigated the impact of working capital

management on profitability of Mawluh Cherra Cement Limited in
Meghalaya. Correlation and regression models were used to establish the
relationship between working capital management and firm’s profitability.
The study finds a negative relationship between profitability and current
ratio, but a positive relationship between profitability and debtor turnover
ratio, inventory turnover ratio, creditor turnover ratio. Moreover the
financial leverage, sales growth, current ratio and firm size also have
significant effects on the firm’s profitability. The management can also
create value to their shareholders by increasing their inventories to a
reasonable level. Firms can also take long to pay their creditors in as far
as they do not strain their relationships with these creditors. Firms are
capable of gaining competitive advantage by efficient utilization of the
resources and cared full reduction of the cash conversion cycle to its
minimum. In so doing, the profitability of the firms is expected to increase.
12. Dr. Srinivas Madishetti (2013) investigated the impact of receivables

and payables management on the profitability of SMEs in Tanzania. The
purpose of this paper was to determine the impact of average collection
period and average payment period on SMEs profitability in Tanzania.
The study was carried out using dependent variable as gross operating
profit and independent variable as average collection period and average
payment period employing relevant information of 38 Tanzania SMEs for
the period from 206 to 2011. This study employed regression analysis to
determine the impact of average collection period and average payment
period on gross operating profit taking current ratio, size of the firm,
financial debt ratio as control variables. The results indicate that there is a
significant negative relationship between average collection period and
profitability. Positive relationship is observed between average payment
period and gross operating profit. The relationship between two control
variables viz; current ratio, financial debt ratio and gross operating profit
indicate the expected negative relationship whereas the firm size indicate
unexpected negative relationship which may be due to gaps in
managerial performance.
13. Shaskia G. Soekhoe (2012) investigated the effects of Working Capital

Management on the profitability of Dutch listed companies. The focus in
this study was on the net working capital. For this research secondary
research is utilized namely the annual reports provided by Dutch Listed
companies to the public. The findings of this study shows that there is
significant and negative relationship between the profitability of Dutch
listed firms and the number of days accounts payables and the number of
days accounts receivables. This implies that firms which wait longer to
pay their bills to suppliers and which grant a longer credit period to their
customers generate less profit. Furthermore, there is a positive and
significant correlation between the profitability and the number of day’s
inventories which indicates that firms with high inventory levels have high
profits. The study also results in a positive correlation between the
profitability of firms and the cash conversions cycle.
14. N.T.Huynh (2012) investigated the influence of working capital

management on profitability of listed companies in the Netherlands.
Pearson correlation analysis was employed to indentify the association
between the determinants of working capital management and the

company profitability. Number of day’s inventory and cash conversion
cycle are shown to negatively affect the profitability of companies
operating in manufacturing area whereas they have positive influences on
profitability of service companies. In addition, manufacturing and service
sectors respectively witness negative influences of number of day’s
accounts payable and aggressive financing policy on their company
profitability.
15. Barot Haresh (2012) investigated the impact of Working Capital

Management on profitability of pharmaceuticals firms. The study focuses
exclusively on the firms listed in CNX Pharma. Index of national stock
exchange of India. The data reported in this paper were collected for a
period of 2005-06 to 2009-10 as a part of study designed to analyze
profitability and working capital management from financial reports. This
study used descriptive statistic and regression analysis to identify the
relation between working capital components and profitability. This paper
observed a negative relationship between accounts receivables and
corporate profitability and a positive relationship between accounts
payable and profitability. Consequently, it appears that profitability dictates
how managers act in terms of managing accounts receivables. Thus, the
findings of this paper suggest that managers can create value for their
shareholders by reducing the number of days for accounts receivables. In
addition, the negative relationship between accounts receivables and
firm’s profitability suggest that less profitable firms should pursue a
decrease of their accounts receivables in an attempt to reduce their cash
gap in the cash conversion cycle.

 Research Methodology
______________________________________________
Research has been carried out to know how the working capital affects the
firms’ Profitability. For this the following research methodology has been
followed.
 Research Design: The study adopted the diagnostic research design.

The study was concerned with the effects of working capital components
on profitability. Diagnostic research tries to determine the association of
the subject matter with something else. This design enabled the
researcher to identify the relationship that existed between the
independent variables and dependent variable.
It aimed at identifying the impact of working capital components i.e. the
Average collection Period (ACP), Average Payment Period (APP),
Inventory Turnover in Days (ITID) and Cash Conversion Cycle (CCC) on
profitability.
 Population of the Study: The population of this study includes Chiron

Behring Vaccine Private Ltd, Ankleshwar.
 Data Collection:
The data has been obtained from document analysis of consolidated
financial reports of years ending March 2010, 2011, 2012, 2013, and 2014
of CBVPL.
The use of the secondary data enabled me to collect reliable information
from the target population. These reports enabled me to save time in data
collection; they were cost effective and contained the required information.
 Data Analysis and Presentation:

Correlation Analysis: the correlation analysis describes the relationship
between variables. In this investigation of the relationship between working
capital management and the profitability of a firm the Pearson correlation
analysis has been used.
The data collected has been analyzed using correlation analysis to
establish the relationship between the independent variables of working
capital: ACP, APP, ITID and CCC and the dependent variable Profitability
(ROA).
Data presentation has been made in charts and tabular forms.

Data Analysis and Interpretation
____________________________________________
Rs In Crores
Particulars 2010 2011 2012 2013 2014
Current Assets
Inventory 43.32 62.89 83.87 102.97 94.16
Debtors 15.35 10.81 14.20 21.79 12.88
Others 2.83 3.08 2.66 3.23 2.18
Total Current Assets (A) 62 77 101 128 109
Current Liability
Creditors 13.29 8.83 9.12 13.07 16.59
Others 1.40 3.03 2.88 2.49 2.70
Total Current Liability (B) 14.69 11.86 12.00 15.56 19.29
Working Capital (A-B) 46.81 64.92 88.73 112.43 89.93
Sales 85.82 129.53 152.98 120.81 129.34
Cost of Sales 68.73 77.98 92.36 97.54 127.52
Working Capital turnover Ratio 54.54 50.12 58.00 93.06 69.53
Inventory Turnover Ratio 63.03 80.65 90.81 105.57 73.84
Debtors Turnover Ratio 17.88 8.35 9.28 18.04 9.96
Operating Cycle (Months)

Debtors Days (DSO) 2.7 1.7 1.9 2.7 1.2
Inventory Days (DIV) 6.1 5.9 6.7 10.4 8.9
Less : Creditors’ Days (DPO) 2.4 1.4 1.2 1.6 1.6
Total Months 6.5 6.2 7.3 11.5 8.5

Table 13: Working Capital
Figure 1: Net Working Capital
 Table 14: Net working Capital Ratio
Net Working Capital Ratio of CBVPL

Particulars 2010 2011 2012 2013 2014
Current Assets 6150.15 7678 10073 12799 10922
Net Working Capital 4681 6492 8873 11243 8993
Net WC Ratio (%) 76.11 84.55 88.09 87.84 82.34
Figure 2: Net Working Capital Ratio
 Interpretation:

As per the above chart, net working capital ratio was 76.11% and it was
further increased by 8.14% in 2011 and again by 3.54% in 2012. It was
because of increase in current assets as there was more demand in the
market for CBVPL product (Vaccine). In 2013 there was fall in working
capital by 0.25% because of increase in current liability again in 2014 WC
fall by 5.5% because of decrease in current assets and increase in
current liability. Current liability increased because of more requirements
for vaccine and so company required to purchase raw material.
 Table 15: Breakup of Working Capital (Rs. In Crores)
Break up of Working Capital (Rs. In Crores)
2010 2011 2012 2013 2014
Permanent Working Capital
Inventory
Raw Material 5.93 4.84 4.1 5.07 9.67
Packing Material 1.37 1.92 5.58 4.59 3.86
Stores & Spare Parts 3.18 2.26 3.07 2.76 4.64
Work-in-progress 28 28 28 28 28
Debtors 15.35 10.81 14.2 21.79 12.88
Total 53.83 47.83 54.95 62.21 59.05
Temporary Working Capital
Work-in-progress 4.01 25.11 41.89 62.01 45.72
Total 4.01 25.11 41.89 62.01 45.72

Figure 3: Breakup of Working Capital
 Interpretation:
Above chart shows that permanent working capital remains nearly same in
the five years from 2010 to 2014 with a slight variation in the long run. But
temporary working capital varies. In 2010 it was 4.01crore which increased
in 2011 and went to the 25.11crore. furthur there was increase in
temporary working capital in 2011 and reached to 41.89crore and in 2013
it highly jumped to 62.01crore nearly to permanent working capital
because of increase in demand of CBVPLs’ Vaccine and then decreased
in 2014.
 Table 16: Notional interest on WC @ 9%
Working Capital 46.81 64.92 88.73 112.43 89.93

Notional Interest on WC @ 9% 4.21 5.84 7.99 10.12 8.09
Figure 4: Notional Interest on WC @ 9%

 Interpretation:
As per the above chart in 2010, notional interest of 9% was able to save
4.21 crore against taxable income. It increased in 2011 with the increase in
WC and saved 5.84 crore as retained earnings. Further it increased in
2011 and 2012 and then fall by 2.03 crore because of decrease in WC.
Increase in the cost of inventory reduced EBIT.
 Table 17: Current Ratio
Particulars 2010 2011 2012 2013 2014
Current assets 61.5 76.78 100.73 127.99 109.22

Current Ratio 4.19 6.47 8.39 8.23 5.66
Figure 5: Current Ratio
 Interpretation:
CR is also called working capital ratio. In 2010, CR was 4.19 which was
good for the company as it shows that company’s liquidity position is good
and it can easily pay all of its current liabilities and still have current assets
left over. And in the following years in 2011, 2012, 2013 it was improved
more and slight fall in 2014 though it represents high liquidity and low risk.
Profitability Ratios Relating to Investment

Dependent Variable
 Table 18 Return on Assets (%)
Return on Assets (%)

Particulars 2010 2011 2012 2013 2014
NPAT 17.74 38.50 46.84 20.60 7.75
Interest 3.95 5.72 8.40 7.63 8.97
Average Total Assets 26.39 24.38 22.77 32.39 28.91
Return on Assets (%) 52.25 134.48 168.82 40.04 -4.22
Figure 6: Return on Assets (%)

 Interpretation:
As per the above chart, CBVPL was earning 52.25% on assets in 2010
which increased in 2011 and reached to 134.48% which shows that
company was most effectively managing its assets to earn higher return
on assets and in 2012 it went high and reached to 168.82% return which is
very good for the companys’ profitability. It suddenly fell in 2013 and 2014
and reached to 40.04% and -4.22% respectively which shows company
had loss on assets which indicates its ineffective management of assets.
In these two years there was also loss on sell of fixed assets.
 Table 19: Return on Capital Employed (%)
Return on capital employed (%)

EBIT 17.48 53.11 61.73 23.43 3.11
Average total capital employed 74.04 93.29 116.71 127.01 130.88
ROCE(%) 23.61 56.93 52.89 18.45 2.38
Figure 7: Return on capital employed (%)
 Interpretation:
As per the above chart, Return on Capital Employed(ROCE) was 23.61%
in 2010 further it increased by 33.32% and reached to 56.93% in 2011
which is good sign because of increase in EBIT by 35.63% whereas
capital employed was increased by 19.25%. In 2012 it was decreased by
4.04% because of increase in capital employed. Again in continued to fall
by 34.45% & 16.07% in 2013 & 2014 respectively. It was because of
excess of capital employed which can not give high return in case of less
profit. This shows that company is not employing its capital effectively and
is not generating shareholders’ value.
 Table 20: Return on Investment (%)
Return on investment (%)

EBIT 17.48 53.11 61.73 23.43 3.11
capital employed 148.07 186.57 233.41 254.01 261.76

ROI(%) 11.81 28.47 26.45 9.22 1.19
Figure 8: Return on investment (%)
 Interpretation:
As per the above chart in 2010, ROI was 11.81% which was increased by
16.66% in 2011 which shows efficient investment. Year on year it
continuously decreased by 2.02%, 17.22% & 8.04% in 2012, 2013, & 2014
respectively. It was because of excess of investment. Even a small
investment with the greater profit can earn good return.

Independent Variables
 Table 21: Average Collection Period (in days)
Particulars 2014 2013 2012 2011 2010

Receivable accounts 12.88 21.79 14.2 10.81 15.35
Sales 129.34 120.81 152.98 129.53 85.82
Average Collection Period (in 36.35 65.83 3.88 30.46 65.28
days)
Figure 9: Average Collection Period (in days)
 Interpretation:
As per the above chart in 2010, average collection period was 65.28 days
which shows company was not able to manage its collection well. After
that ACP fall down and reached to 30.46 days in 2011 which company
usually wish to have. In 2012 it was 33.88 days which is also okay but in
2013 it again reached to 65.83 days because of poor communication with
customers regarding their debts and company’s’ expectation of payment.
In 2014, it decreases and reached to 36.35 days which shows
improvement in management of collections.

 Table 22: Average Payment Period (in days)
Particulars 2014 2013 2012 2011 2010

Payable accounts 16.59 13.07 9.12 8.83 13.29
cost of goods sold 127.52 97.54 92.36 77.98 68.73
Average Payment Period (in 47.49 48.91 36.04 41.33 70.58
days)
Figure 10: Average Payment Period (in days)
 Interpretation:
As per the above chart in 2010, Average Payment Period (APP) was 70.58
days which was a very long period which shows that it was not good for
companys’ creditworthyness and it might happen that company would not
have been able to buy on credit from the same supplier in future. In 2011
APP went down and reached to 41.33 days which shows that companys’
credibility was improved. In 2012 it was 36.04 days and in 2013 it was
increased by 12.87 days and reached to 48.91 days. Same in 2014 APP
was 47.49 days. This shows that company was taking full advantage of
credit terms allowed by suppliers.

 Table 23: Inventory Turnover in Days (ITID)
Particulars 2010 2011 2012 2013 2014

Inventory 43.32 62.89 83.87 102.97 94.16
Cost of Sales 68.73 77.98 92.36 97.54 127.52
Inventory Turnover 230.06 294.37 331.45 385.32 269.51
in days (ITID)
Figure 11: Inventory Turnover (in days)
 Interpretation:
As per the above chart, inventory turnover in days was of 230.06 days.
Year on year it was increased by 64.30 days, 37.08 days & 53.87 days
and reached to 294.37 days, 331.45 days & 385.32 days in 2011, 2012 &
2013 respectively, which shows that excessive maintanance of inventory
needlessly that means poor inventory management. In 2014, it was
improved little bit and reached to 269.51 days which shows that
management of inventory was done carefully.

 Table 24: Cash Conversion Cycle (in days)
Particulars 2014 2013 2012 2011 2010

Average collection Period 36.35 65.83 33.88 30.46 65.28
Days of Sales Inventory 265.72 311.10 200.11 77.22 184.25
days of payable outstanding 47.49 48.91 36.04 41.33 70.58
Cash conversion cycle 254.58 328.03 197.95 166.35 178.96
(days)
Figure 12: Cash conversion cycle (in days)
 Interpretation:
As per the above chart in 2010, cash conversion cycle of CBVPL was
178.96 days. In 2011 it was decreased in reached to 166.35 days because
of decrease in all the three factors (ACP, APP & Sales inventory). In 2012
CCC was increased by 31.60 days and reached to 197.95 days because of
increase in days of sales inventory and decrease in APP. In 2013 CCC was
increased by 130.08 days which is not good sign for the company. It was
because of company was not efficient in managing its collection from
debtors and also because of increase in days of sales inventory. In 2014 it
was decreased by 73.44 days because of improvement in debtor’s
collection & decrease in days of sales inventory.
 Table 25: Descriptive analysis
Particulars Mean std. dev min max

ACP 46.36 17.65 30.46 65.83
Days of Sales Inventory 302.14 59.37 230.06 385.32
APP 48.87 13.18 36.04 70.58
CCC(days) 225.17 66.67 166.35 328.03
Interpretation:
 The credit period that CBVPL granted its customer is on an average 46
days with a standard deviation of 18 days. Minimum time that company
takes to collect the receivables is 30 days and maximum 66 days.
 The inventory takes on an average 302 days to be sold with a standard
deviation of 59 days. Minimum time the company takes to sell its
inventories is 230 days and maximum 385 days.
 The company itself takes on an average 49 days to pay its’ bills to
suppliers and a standard deviation of 13 days. Minimum time the
company takes to pay its bills is 36 days and maximum 71 days.
 Overall the cash conversion cycle is ranged at an average of 225 days
with standard deviation of 67 days. Minimum cash conversion cycle is
166 days and maximum 328 days.

Relationship between Working Capital variables (ACP, APP,
ITID, CCC, CR) and Profitability (ROA)
_____________________________________________________
Correlation Matrix for the Variables

ACP APP ITID CCC CR OP
ACP 1
APP 0.97 1.00
ITID -0.90 -0.97 1.00
CCC -0.03 -0.26 0.47 1.00
CR -0.20 -0.78 0.93 0.44 1.00
OP (ROA) -0.93 -0.99 1.00 0.40 0.46 1
Table 26: Correlation Matrix for Variables
 Correlation between Average Collection Period (ACP) and Profitability

(ROA):
collection period and profitability of CBVPL.
From the above data, H01 is accepted.
Above matrix shows there is a negative coefficient (-0.93) between ACP and
profitability (ROA). This negative relationship result suggests that firm can
improve its profitability by reducing number of day’s accounts receivable
outstanding.
 Correlation between Average Payment Period (APP) and Profitability

(ROA):
payment period and profitability of CBVPL.
From the above data, H02 is accepted.
Above matrix shows that there is a negative coefficient (-0.99) between APP
and profitability (ROA). This negative relationship indicates that company
takes long time to pay their bills taking advantage of credit period given by
their suppliers.
 Correlation between Inventory Turnover in Days (ITID) and Profitability
(ROA):

H03: There is no statistically significant positive relationship between
inventory turnover in days and profitability of CBVPL.
From the above data, H03 is rejected.
Above matrix shows that there exist a positive coefficient (1) between ITID
and profitability. This positive relationship implies that when the average time
required in converting materials into finished goods and then to sell those
goods decreases, it leads decrease in profitability.
 Correlation between Cash Conversion Cycle (CCC) and Profitability

(ROA):
H04: There is no statistically significant positive relationship between cash
conversion cycle and profitability of CBVPL.
Above matrix shows that there is a positive coefficient (0.40) between CCC
and profitability. This positive relationship indicates that long cash conversion
cycle can increase the profitability and shorter CCC decreases the profitability.
 Correlation between Current Ratio (CR) and Profitability (ROA):

H05: There is no statistically significant positive relationship between current
ratio and profitability of CBVPL.
Above matrix shows that there is a positive coefficient (0.46) between CR and
profitability. This positive relationship indicates that current assets and
liabilities are well managed and so profitability increases.

Findings
_________________________________________
 There is a negative coefficient (-0.93) between ACP and profitability
(ROA). This negative relationship result suggests that firm can improve
its profitability by reducing number of day’s accounts receivable
outstanding.
 This finding can be interpreted that increase in amount of account

receivable has opportunity costs and bad debt hence profitability of the
firm is affected negatively in the long run.
 There is a negative coefficient (-0.99) between APP and profitability

(ROA). This negative relationship indicates that company takes long time
to pay their bills taking advantage of credit period given by their
suppliers.
 There exist a positive coefficient (1) between ITID and profitability. This
positive relationship implies that when the average time required in
converting materials into finished goods and then to sell those goods
decreases, it leads to decrease in profitability.
 There is a positive coefficient (0.40) between CCC and profitability. This

positive relationship indicates that long cash conversion cycle can
increase the profitability and shorter CCC decreases the profitability.
 There is a positive coefficient (0.46) between CR and profitability. This

positive relationship indicates that current assets and liabilities are well
managed and so profitability increases.

Recommendation
______________________________________________
 There is a negative relationship between ACP and profitability (ROA).
This result suggests that firm can improve its profitability by reducing
number of day’s accounts receivable outstanding.
 There exist negative relationship between APP and profitability. As per

the working capital management rule, company should strive to lag their
payments to creditors as much as possible, taking care not to spoil their
business relationship because it can affect company’s’ creditworthiness.
 Inventory should be managed efficiently. Management is recommended

to maintain optimum level of inventory. Optimum level of inventory can
be found by using EOQ model.
 The managers can create value for shareholders by handling correctly
the cash conversion cycle and by proper investment in working capital.

Conclusion
______________________________________________________________
 The study used 5 measures of working capital to test whether working
capital management has a significant impact on profitability. The above
findings indicate clearly that three measures (Inventory Turnover, Cash
Conversion Cycle and Current Ratio) have positive impact on profitability.
 Other 2 variables which are, ACP and APP has a negative impact on
profitability.
 Sufficient level of working capital should be present for smooth running

of a business. The management of a firm can create value for their
shareholders by reducing the number of day’s accounts receivable; this
is because as the ACP decreases, profitability of the firm increases. It is
noted that as ACP increases, the level of bad debt also increases which
in long-run results to reduction in profitability. The management can also
create value for their shareholders by managing inventory optimally.
Decrease in inventory conversion can lead to shortage cost. Firm can
also take long time to pay their creditors in as far as they do not strain
their business relationships with these creditors as indicated by
profitability increases with an increase in APP.
 The conclusion indicates that manager should employ efficient and

effective working capital management practices to ensure the survival of
the business.

Reference
______________________________________________________________
 International Journal of Economics, Finance and Management Sciences

2014; 2(6): 347-355. “The effect of working capital management on
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Mkiibi
 European Scientific Journal January 2014 edition vol.10, No 1 ISSN: 1857

– 7881. “IMPACT OF WORKING CAPITAL MANAGEMENT ON
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Campus, Pakistan
 Gul, S., Khan, M. B., Raheman, S.U., Khan, M.T., Khan, M., & Khan, W.
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2013 ©American Research Institute for Policy Development “Working
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Manufacturing and Construction Firms Listed on Nairobi Securities
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-3, No.-2, February 2013 “The Relationship Between Working Capital
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 International journal of Business & Finance Management Research,
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 African Journal of Business Management Vol. 5(27), pp. 11005-11010, 9

November, 2011 Available online at
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Number 12 “The Effect Of Working Capital Management On Firm’s
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Stephanou Charitou, University of Nicosia, Cyprus Maria Elfani, University
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Computer Applications Vol. 2, Issue 3, March 2013 ISSN NO: 2319-7471
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Annexure

Balance Sheet as at 31st March,2014
Rs. In Lakhs
Particulars As at As at
31st March,2014 31st March,2013
Equity and Liabilities

Shareholders' funds
Share capital 1000 1000
Reserves and surplus 25176 24401
26176 25401
Non-current liabilities
Deferred tax liabilities(Net) 137 256
Long term provisions 319 309
456 565
Current liabilities
Trade Payables 1659 1307
Other current liabilities 481 355
short-term provisions 22 17
2162 1679
28794 27645
Assets
Non-current Assets
Fixed Assets
Tangible assets 5782 6478
Intangible assets 7 11
Capital Work-in-progress 1097 111
6886 6600
Non-current investments 6 6
long term loans and advances 797 898
other non-current assets - -
7689 7504
Current assets
Inventories 9416 10297
trade receivables 1288 2179
cash and bank balances 218 323
short-term loans and advances 10182 7342
other current assets 1 -
21104 20141
28793 27645

Rs. In Lakhs
Shareholders' funds
25401 23341
565 468
Current liabilities
1679 3097
27645 26906
Assets
Non-current Assets
Fixed Assets
6600 6633
other non-current assets - 32
7504 7194
Current assets
other current assets -
20141 19712
27645 26906

Rs. In Lakhs
Shareholders' funds
23341 18657
468 538
Current liabilities
3097 1240
26906 20435
Assets
Non-current Assets
Fixed Assets
6633 4995
other non-current assets 32 32
7194 5506
Current assets
other current assets 2
19712 14929
26906 20435

Rs. In thousand
31st March,2011 31st
March,2010
Shareholders' funds
1865746 1480
707
deferred taxation
Deferred tax liability 37954 40089
Less: Deferred tax assets 10843 11663
27111 2842
6
1892857 1509
133
Application of Funds
Fixed Assets
Gross block 924619 896434
Less: Depreciation 436414 372784
Net block 488205 523650
503632 5278
44
Investments 591 504
Current assets, Loans & Advances
Loans and Advances 768247 658807
1539296 1273822
Less: Current Liabilities and Provisions
Liabilities 122849 146915
Provisions 27813 146122
150662 1388634 293037 9807
85
1892857 1509
133

Statement of profit & loss for the year ended 31st March,2014
Rs in Lakhs
Particulars Year ended Year ended 31st
31st March,2013
March,2014
revenue
revenue from operations(gross) 13112 12297
less: excise duty 178 216
revenue from operations(net) 12934 12081
other income 1026 779
total revenue 13960 12860
Expenses
cost of material consumed 3466 3849
changes in inventories of finished goods & 1456 -1943
working progress
employee benefit expense 1292 1189
depreciation & amortization expense 988 776
other expense 5550 5883
total expenses 12752 9754
profit before tax 1208 3106
tax expense
current tax 552 1010
deferred tax -119 433 36 1046
profit for the year 775 2060
earnings per share-basic & diluted( Rs. Per 7.75 20.6
equity share of Rs 10 each)

Rs in Lakhs
Particulars Year ended 31st Year ended
March,2013 31st
March,2012
revenue
Expenses
changes in inventories of finished goods & -1943 -1725
working progress
tax expense
deferred tax 36 1046 -51 2329
earning per share-basic & diluted( Rs. Per 20.6 46.84

Rs in Lakhs
Particulars Year ended Year ended 31st
31st March,2011
March,2012
revenue
Expenses
changes in inventories of finished goods & -1725 -2103
working progress
tax expense
deferred tax -51 -13
2329 2002
for earlier years- Current Tax - 31
2329 2033
earnings per share-basic & diluted( Rs. Per 46.84 38.5
Rs in thousands
Particulars Year ended 31st Year ended 31st
March,2011 March,2010
Income
gross sales 1293581 858222
less: excise duty on sales 299 -
net sales 1293282 858222
1368180 901635
Expenditure
material's cost 152632 121544
personnel cost 105006 106702
manufacturing & other expenses 458277 392471
depreciation 63901 66625
779816 687342
profit before taxation 588364 214293
provision for taxation
for the year
deferred tax -1315 8933
200225 73433
for earlier years
current tax 3100 -36476
fringe benefits tax - -33
203325 36924
profit after taxation 385039 177369
balance brought forward from 1201223 1158200
previous years
1586262 1335569
Appropriations
Transfer to general reserves 17737
proposed dividend 100000
tax on proposed dividend 16609
balance carried to balance sheet 1586262 1201223
1586262 1335569
earnings per share- basic & 38.5 17.74
diluted ( Rs per Equity Share of
Rs 10 each)

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Table of Contents

Ch. Chapter Name Page

1 Dharmika Bhavsar/Narmada College of Management

Table Table Description Page

2 Dharmika Bhavsar/Narmada College of Management

Chart Chart Description Page

3 Dharmika Bhavsar/Narmada College of Management

 Introduction of the Company:

Pharmaceuticals portfolio includes more than 50 key marketed

Alcon provides innovative products that enhance quality of life by

Sandoz is a global leader in the rapidly growing generics industry,

NOVARTIS INDIA LTD is a well reputed limited Company

Chairman: Christopher Snook

5 Dharmika Bhavsar/Narmada College of Management

Chiron Corporation was an American multinational biotechnology firm based

6 Dharmika Bhavsar/Narmada College of Management

The headquarters of Novartis International AG is located in Basel,

 Achievements of Novartis in the Recent Years

With the advancement of technology in these recent years, Novartis has

 Mergers & Acquisitions

The firm has expanded its operations in the US through a number of

Additionally, Novartis Pharmaceuticals extended the reach of its US Molecular

 Divestment of non-influenza Vaccines to GSK

7 Dharmika Bhavsar/Narmada College of Management

8 Dharmika Bhavsar/Narmada College of Management

9 Dharmika Bhavsar/Narmada College of Management

10 Dharmika Bhavsar/Narmada College of Management

 Process Flow of Production of Rabies Vaccine:

11 Dharmika Bhavsar/Narmada College of Management

 Production Control: CBVPL uses Production control technique

12 Dharmika Bhavsar/Narmada College of Management

13 Dharmika Bhavsar/Narmada College of Management

 Roles & Responsibility of Quality Control & Quality Assessment

14 Dharmika Bhavsar/Narmada College of Management

1. Raw Material: RM is posted in QA status when received. Goods

2. Packing Material: In case of rejection, quality control department

 Production Performance: various KPIs for Production Department

WIP physical inventory is taken once in a year by the production

Reconciliation of WIP inventory is also done monthly e.g. concentrate

16 Dharmika Bhavsar/Narmada College of Management

17 Dharmika Bhavsar/Narmada College of Management

18 Dharmika Bhavsar/Narmada College of Management

 Working hours means all times an Associate is at work other than

 Associates are always required to be present for scheduled staff

 Safety, Health And Environment

 Smoking & Tobacco

The following are mandatory holidays:

21 Dharmika Bhavsar/Narmada College of Management

 Casual Leave (CL)

 Sick Leave (SL)

 Maternity Leave (ML) / Paternity Leave

 The female Associates are entitled to 12 weeks of Maternity leave

 Leave Without Pay (LWP)

 Compensatory Off (CO)

 Leave Policy For Fixed Term Management Trainees

23 Dharmika Bhavsar/Narmada College of Management

 Salary, Benefits And Payments

 Confidentiality of Salary of Individual Associate

24 Dharmika Bhavsar/Narmada College of Management

 Responsibilities Related to Staffing and Workforce

 Definitions as per SOP of NOVARTIS

25 Dharmika Bhavsar/Narmada College of Management

 Health, Safety and Environment

Purpose Required Dosage &

 Training and Development

28 Dharmika Bhavsar/Narmada College of Management