International Funding used in Dr.

Reddys Lab

Submitted in partial fulfillment of the requirements for Post Graduate Diploma in Management (PGDM)

By Sandeep Singh Roll no. 37 Section-A (Full Time) Class of 2010

Bharatiya Vidya Bhavans Usha & Lakshmi Mittal Institute of Management Copernicus Lane, Kasturba Gandhi Marg New Delhi

Jan 2012

Contents
1. Company Overview ................................................................................................................................... 4 2. International Fundings Used by the Organization: Annual Report 2010-2011 ........................................ 6 a) ADR Share and other Foreign ownership: ........................................................................................... 6 b) Schedules .............................................................................................................................................. 7 1.a: Schedule 1: Share Capital ............................................................................................................... 7 1.a: Interpretation:.............................................................................................................................. 10 1.b: Schedule 2: Reserves and Surplus................................................................................................ 11 1.b: Interpretation: ............................................................................................................................. 13 1.c: Schedule 4: Unsecured Load ........................................................................................................ 14 1.c: Interpretation: .............................................................................................................................. 15 1.d: Schedule 13: Other Income and Schedule 16: Operating and other expenses ............................... 16 1:d Interpretation: .............................................................................................................................. 17 3. Conclusion from Annual Statement 2010-2011: .................................................................................... 17 4. Analysis Based on Quarterly Results: Quarter 2, 2011-12 ..................................................................... 17 a) Effect of Depreciation in Rupee on Profits: ........................................................................................ 17 5. News Track .............................................................................................................................................. 18 6. Ratio Analysis: ......................................................................................................................................... 21

Table of Contents
Table 1: Distribution of shareholding on the basis of ownership ........................................................................... 6 Table 2: Distribution of Shareholding according to Shareholders' class ................................................................. 6 Table 3: Schedule 1 Share Capital .................................................................................................................................7 Table 4: Dr. Reddy's Employees ADR Stock Option Scheme 2007 ........................................................................... 8 Table 5: Category B Par Value Options 31March2010 ............................................................................................ 9 Table 6; Category Par Value Option Year ended 31March2011 ............................................................................ 10 Table 7 Schedule 2: Reserves and Surplus ............................................................................................................ 11 Table 8: Schedule 5 Unsecured Loans .................................................................................................................. 14 Table 9: Schedule 13 and 16: Operating Income and Operating & Other Expenses. ............................................. 16

Figures
Figure 1: CAGR ....................................................................................................................................................... 4 Figure 2: Revenue .................................................................................................................................................. 5

1. Company Overview Dr. Reddy's Laboratories Ltd. (NYSE: RDY) is established in 1984, It is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three businesses - Pharmaceutical Services and Active Ingredients, Global Generics and Proprietary Products Dr. Reddys offers a portfolio of products and services including Active Pharmaceutical Ingredients (APIs), Custom Pharmaceutical Services (CPS), generics, biosimilars, differentiated formulations and News Chemical Entities (NCEs). Dr. Reddys Laboratories Ltd. therapeutic focus is on gastro-intestinal, cardiovascular, diabetology, oncology, pain management, anti-infective and paediatrics. Major markets include India, USA, Russia and CIS, Germany, UK, Venezuela, S. Africa, Romania, and New Zealand. Dr. Reddy's began as a supplier to Indian drug manufacturers, but it soon started exporting to other less-regulated markets that had the advantage of not having to spend time and money on a manufacturing plant that that would gain approval from a drug licensing body such as the U.S. Food and Drug Administration (FDA). By the early 1990s, the expanded scale and profitability from these unregulated markets enabled the company to begin focusing on getting approval from drug regulators for their formulations and bulk drug manufacturing plants in more-developed economies. This allowed their movement into regulated markets such as the US and Europe. Dr. Reddy Labs have seen a CAGR of 21% in last 10 years. On 31st march 2001 their revenue was Rs, 10,975 million which is now raised to 74,693 on 31st march 2011. The Companys consolidated revenues increased by 6% to Rs. 74,693 million (US$ 1.7 billion) in 2010-11. Revenues from Global Generics increased by 10% while PSAI revenues decreased by 4%. In

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Figure 1: CAGR

2010-11, Dr. Reddys share of revenue from The international businesses stood at 81%. The remaining 19% came from India. North America (US and Canada) contributed to 31% of total revenues in 2010-11, versus 30% last year. Europe accounted for 21% of total sales in 2010-11, compared to 24% in 2009-10. Russia and other CIS countries contributed to 15% of total revenues
.

Revenue
Row 14%
India 19%

India North America

Europe 21%

Russia and Other CIS Countries Europe

North America 31%

Row

Russia and Other CIS Countries 15%

Figure 2: Revenue

2. International Fundings Used by the Organization: Annual Report 2010-2011

a) ADR Share and other Foreign ownership:

Table 1: Distribution of shareholding on the basis of ownership

From the table 1 we can see that foreign holing comprises 46.27% of total ownership, out of which 18.74% is in the form of ADR (American Depository Receipt) / Foreign Nationals.
Table 2: Distribution of Shareholding according to Shareholders' class

From table 2 Distribution of shareholding according to Shareholders class we can see that DRL(Dr. Reddys Lab) has 1 shareholder a holding equtity shares underlying ADR and these are the benefecialries owners outside India.

b) Schedules 1.a: Schedule 1: Share Capital

Table 3: Schedule 1 Share Capital

1. Subscribed and paid-up share capital includes: (a) 111,732,202 (previous year: 111,732,202) equity shares of Rs. Rs. 5/- each fully paidup, allotted as bonus shares. Out of total, 34,974,400 shares were allotted by capitalization of General Reserve and 76,757,802 equity shares allotted as bonus shares by capitalization of the Securities Premium Account in earlier years. (b) 1,052,248 (previous year: 1,052,248) equity shares of Rs. 5/- each allotted pursuant to a scheme of amalgamation with Standard Equity Fund Limited without payments being received in cash.

(c) 20,571,768 (previous year: 20,571,768) equity shares of Rs. 5/- each allotted and 82,800 (previous year: 82,800) equity shares of Rs. 5/- each extinguished pursuant to a scheme of amalgamation with erstwhile Cheminor Drugs Limited (CDL) without payments being received in cash. (d) 40,750,000 (previous year: 40,750,000) equity shares of Rs. 5/- each allotted against American Depository Shares (ADS). (e) 17,204,304 (previous year: 17,204,304) equity shares of Rs. 5/- each allotted against Global Depository Receipts (GDR) that were converted into ADS during the year ended 31 March 2002. (f) 226,776 (previous year: 226,776) equity shares of Rs. 5/- each allotted to the erstwhile members of American Remedies Limited (ARL) pursuant to a scheme of amalgamation with ARL without payments being received in cash.. (g) 1,548,579 (previous year: 1,185,283) equity shares of Rs. 5/- each allotted to the eligible employees of the Company and its subsidiaries on exercise of the vested stock options in accordance with the terms of exercise under the Dr. Reddys Employees Stock Option Plan, 2002. (Refer Note 9, Schedule 20). (h) 190,634 (previous year: 146,583) equity shares of Rs. 5/- each allotted to the eligible employees of the Company and its subsidiaries on exercise of the vested stock options in accordance with the terms of exercise under the Dr. Reddys Employees Stock Option Plan, 2007. (Refer Note 9, Schedule 20). 2. Represents 200 (previous year: 200) equity shares of Rs. 5/- each, amount paid-up Rs. 500/(rounded off in millions in the Schedule above) forfeited due to nonpayment of allotment money. 3. 718,161 (previous year: 885,007) stock options are outstanding to be issued by the Company on exercise of the vested stock options in accordance with the terms of exercise under the Dr. Reddys Employees Stock Option Plan, 2002 and 124,559 (previous year: 112,390) stock options are outstanding to be issued by the Company on exercise of the vested stock options in accordance with the terms of exercise under the Dr. Reddys Employees ADR Stock Option Pl an 2007 (Refer Note 9, Schedule 20).
Table 4: Dr. Reddy's Employees ADR Stock Option Scheme 2007

Money realized by exercise of options Rs. 9, 53,170. Total number of options in force 124,559

Table 5: Category B Par Value Options 31March2010

Table 6; Category Par Value Option Year ended 31March2011

1.a: Interpretation: From Note 1 option d, e of table 3 Schedule 1 Share capital we can see that company had issued GDR which had maturing date of 31st March 2002, they had converted those GDR into ADS (American Depository Shares). In accounting year 2010-11, 40, 750,000 (previous year: 40,750,000) equity shares of Rs. 5/each allotted against American Depository Shares.

Dr. Reddys Employees ADR Stock Option Pl an 2007 The Company instituted the DRL 2007 Plan for all eligible employees in pursuance of the special resolution approved by the shareholders in the Annual General. Meeting held on 27 July 2005. The DRL 2007 Plan came into effect on approval of the Board of Directors on 22 January 2007. The DRL 2007 Plan covers all employees of DRL and its subsidiaries and directors (excluding promoter directors) of DRL and its subsidiaries (collectively, eligible employees). Under the DRL. 2007 Plan, the Compensation Committee of the Board (the Compensation Committee) shall administer the DRL 2007 Plan and grant stock options to eligible employees of the Company and its subsidiaries. The Compensation Committee shall determine the employees eligible for receiving the options, the number of options to be granted, the exercise price, the vesting period and the exercise period. The vesting period is determined for all options issued on the date of the grant. The
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options issued under the DRL 2007 plan vest in periods ranging between one and four years and generally have a maximum contractual term of five years. During the current year, the Company under the DRL 2007 Plan has issued 58,660 options to eligible employees. The vesting period for the options granted varies from 12 to 48 months. The date of grant, number of options granted, exercise price fixed by the Committee for respective options and the market price of the shares of the Company on the date of grant is given below:

1.b: Schedule 2: Reserves and Surplus

Table 7 Schedule 2: Reserves and Surplus

(I): Schedule 20 Notes 1: a) Foreign currency transactions and balances.

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Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognised in the profit and loss account. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at year-end rates. The resultant exchange differences are recognised in the profit and loss account. Non-monetary assets are recorded at the rates prevailing on the date of the transaction. Income and expenditure items at representative offices are translated at the respective monthly average rates. Monetary assets at representative offices at the balance sheet date are translated using the year-end rates. Non-monetary assets are recorded at the rates prevailing on the date of the transaction. Forward contracts are entered into to hedge the foreign currency risk of the underlying outstanding at the balance sheet date. The premium or discount on all such contracts is amortized as income or expense over the life of the contract. Any profit or loss arising on the cancellation or renewal of forward contracts is recognised as income or expense for the period. In relation to the forward contracts entered into to hedge the foreign currency risk of the underlying outstanding at the balance sheet date, the exchange difference is calculated and recorded in accordance with AS-11 (revised). The exchange difference on such a forward exchange contract is calculated as the difference of the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognized in the profit and loss account in the reporting period in which the exchange rates change. Exchange differences arising on a monetary item that, in substance, forms part of an enterprises net investment in a non-integral foreign operation has been accumulated in a foreign currency translation reserve in the enterprises financial statements until the disposal of the net investment, at which time they should be recognised as income or as expense. The financial statements of the foreign integral subsidiaries, representative offices and collectively referred to as the foreign integral operations are translated into Indian rupees as follows: Revenue items, except depreciation are translated at the respective monthly average rates. Depreciation is translated at the rates used for the translation of the values of the assets on which depreciation is calculated.
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Monetary items are translated using the closing rate. Non-monetary items are translated using the exchange rate at the date of transaction i.e. the date when they were acquired. The net exchange difference resulting from the translation of items in the financial statements of foreign integral operations is recognised as income or as expense for the year. Contingent liabilities are translated at the closing rate.

b) Derivative instruments and hedge accounting Pursuant to ICAI Announcement Accounting for Derivatives on the early adoption of Accounting Standard AS-30 Financial Instruments: Recognition and Measurement, the Company has adopted the Standard, to the extent that the adoption does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company law and other regulatory requirements.

1.b: Interpretation: In Table 7 we can see that Dr. Reddy has increased its Foreign Currency Translation Reserve by Rs.36, 30, 00,000 and at the end of year 2010-11 they have total foreign currency translation reserve of Rs. 2, 89, 80, 00,000. In case of Hedging there are two types of hedges: Cash Flow Hedges and Fair Value Hedges: Cash Flow Hedges: Exchange differences arising on re-measurement of such non-derivative liabilities and changes in the fair value of derivative hedging instruments designated as a cash flow hedges are recognized directly in hedging reserve and presented within reserves and surplus, to the extent that hedging relationship is considered effective. To the extent that the hedge is ineffective, changes in fair value are recognized in profit and loss account.

Fair Value Hedges: The Group does not apply hedge accounting to certain derivative instruments that economically hedge monetary assets and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are recognized in profit and loss account as part of foreign currency gains and losses.
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At the beginning or the year the year 1st April 2010 Hedging Reserve Balance was Rs. 508 Million during the year ended 31 March 2011, the Group has designated certain non-derivative financial liabilities as hedging instruments for hedging of foreign currency risk associated with forecasted transactions and accordingly, has applied cash flow hedge accounting for such relationships. Consequently foreign exchange differences amounting to Rs.38 Million arising on re-measurement of these non-derivative financial liabilities from their initial recognized value to the value in INR terms as at the reporting dates has been disclosed as part of Hedging reserve and at the end of the year 31st March 2011 the closing balance was of Hedging Reserve was Rs. 546Million. Foreign currency cash flow hedge options are for the next 18 months stand at $345 million as of date, hedged largely in the range of Rs. 45 to Rs. 47 a dollar.

1.c: Schedule 4: Unsecured Load

Table 8: Schedule 5 Unsecured Loans

Notes: 1. Amount repayable in 12 months is Rs. 2. 2. Foreign Currency Packing Credit comprises loans from J.P.Morgan Chase, The Bank of Tokyo-Mitsubishi UFJ LTD, BNP Paribas and HSBC carrying interest rates of LIBOR plus 52 80 bps; loan from Credit Agricole Corporate & Investment Bank and The Bank of Nova Scotia carrying a fixed rate of. Packing Credit loans for the previous year comprised foreign currency
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packing credit loan that were taken from Standard Chartered Bank, The Bank of Nova Scotia, BNP Paribas, ABN Amro Bank and HSBC carrying interest rates of LIBOR plus 40 75 bps, repayable on expiry of 6 months from the date of drawdown and Rupee packing credit from State Bank of India carrying interest rate of 5% per annum. 3. Long-term foreign currency loan was guaranteed by the Company and certain subsidiaries of the Group. The loan carried an interest rate of EURIBOR plus 150 basis points. Effective 24 November 2006 the interest rate was changed to EURIBOR plus 70 basis points on euro portion of the loan and LIBOR plus 70 basis points on dollar portion of the loan. During the year the Group repaid the balance outstanding amount through three new short-term borrowings aggregating to Rs. 5,972. 4. Bank overdraft is on the current accounts with Citibank, State Bank of India, HDFC and HSBC bank carrying interest rates of 10.50%, 11.00%, 12.00% and 10.50% per annum, respectively. (Bank overdraft in the previous year was on current accounts with Citibank, State Bank of India and HDFC Bank carrying interest rates of 10.75%, 10.25% and 14.50% per annum, respectively). 5. Short-term loan taken by subsidiary from Citibank carrying interest rates of 1.95% 8% per annum, from Bank of America carrying interest rate of 1.61% 1.79% per annum and from Royal Bank of Scotland carrying interest rate of 5.38% per annum. 6. Loan from the State Bank of India taken by Aurigene Discovery Technologies Limited is covered by way of Corporate Guarantee given by Parent Company. The loan carried an interest rate of 11.75% per annum. This loan was fully repaid during the year. 7. Refer Note No 23 of Schedule 19. Amount repayable in 12 months is Rs. Nil.

1.c: Interpretation: During the year 2010-2011 DRL has paid the Long term foreign currency loans of Rs.8, 899 Million. On the other hand company has raised its packing credit loans in which they have borrowed money from various institutions like. J.P.Morgan Chase. The Bank of Tokyo Mitsubishi UFJ LTD, BNP Paribas
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HSBC

On which they are paying interest rates of LIBOR plus 52 80 bps. Then they have taken fixed interest rate loans from: Credit Agricole Corporate & Investment Bank The Bank of Nova Scotia

Packing Credit loans for the previous year comprised foreign currency packing credit loan that were taken from Standard Chartered Bank, The Bank of Nova Scotia, BNP Paribas, ABN Amro Bank and HSBC carrying interest rates of LIBOR plus 40 75 bps, repayable on expiry of 6 months from the date of drawdown and Rupee packing credit from State Bank of India carrying interest rate of 5% per annum.

1.d: Schedule 13: Other Income and Schedule 16: Operating and other expenses
Table 9: Schedule 13 and 16: Operating Income and Operating & Other Expenses.

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1:d Interpretation: In Table 9 we can see that during financial year 2009-10 company has seen the profit of Rs.73 Million but in next financial year 2010-2011 they have seen the loss of 46 million.

3. Conclusion from Annual Statement 2010-2011: DRL (Dr. Reddys Lab) has continuously used various sources of international funding and if we talk about the ownership, foreign holing comprises 46.27% of total ownership. Initially they were using GDR which they had converted into ADS and then again they converted those ADS into equity shares. They have issued to ADR to their employees in subsidiary. They have taken loan from various foreign financial institutions and banks like J.P Morgan, HSBC, ABN AMRO, The Bank of Tokyo, and Mitsubishi UFJ LTD on LIBOR basis. They have also paid the loan raised from European companies on EURIBOR. They are aware of foreign currency fluctuations therefore they have created reserves like Foreign currency translation reserve and Hedge Reserve. But last year they have seen the loss of Rs.43Million because of the foreign currency fluctuations.

4. Analysis Based on Quarterly Results: Quarter 2, 2011-12

a) Effect of Depreciation in Rupee on Profits:

The convenience dollar rate for the quarter was at Rs. 49.05 per dollar, and the average dollar rate for the quarter is at Rs. 45.80. As the Dollar rate was to volatile company had spent more on Hedging. DRL has also seen Net forex gain of Rs. 151 mn ($3mn) versus net forex loss of Rs.49mn ($1mn) in Q2 FY11. Till now they are getting benefit of this Rupee depreciation as they got their major revenues from other countries and relatively their interest payment and other foreign expenses are less.

b) Effect on Depreciation on Cash Flows: Similarly their cash flows has also been improved by 22.58% with this depreciation.

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Cash Flows in Lakhs (Rs): 30.9.2011 7 5,961 30.9.2010 6 1,966

5. News Track

Dr. Reddy's Lab inches up as ADR gains

Capital Market / 09:18 , Dec 26, 2011 Dr. Reddy's Laboratories rose 0.33% to Rs 1,595 at 9:17 IST on BSE after the company's American depository receipt, or ADR gained 1.11% to settle at $30.01 on the New York Stock Exchange Friday, 23 December 2011. Meanwhile, the BSE Sensex was up 63.13 points, or 0.4% to 15,801.83. On BSE, 230 shares were traded in the counter as against an average daily volume of 33,606 shares in the past one quarter. The stock hit a high of Rs 1,619 and a low of Rs 1,595 so far during the day. The stock had hit a 52-week high of Rs 1730.45 on 27 December 2010. The stock had hit a 52-week low of Rs 1387 at 22 August 2011. The large-cap stock had outperformed the market over the past one month till 23 December 2011, gaining 3.88% compared with the Sensex's 0.25% rise. The scrip had also outperformed the market in past one quarter, surging 7.02% as against 2.62% fall in the Sensex. The company has equity capital of Rs 84.77 Crore. Face value per share is Rs 5. On a consolidated basis, Dr. Reddy's Laboratories' net profit rose 7.3% to Rs 307.80 Crore on 21.2% growth in net sales to Rs 2267.79 Crore in Q2 September 2011 over Q2 September 2010. Dr. Reddy's Laboratories is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. http://www.indiainfoline.com/Markets/News/Dr-Reddys-Lab-inches-up-as-ADR-gains/4086759061

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Pharma firms to gain on depreciating rupee

Malini Bhupta / Mumbai December 20, 2011, 0:47 IST

Revenues and earnings to improve for companies with low forex liabilities and no forward cover. The falling rupee is expected to benefit pharmaceutical companies in a positive way, claim analysts. The local currency has depreciated 18 per cent over the last few weeks and this spells good news for domestic pharmaceutical firms. Last year, the domestic pharma market grew at 15.3 per cent, nearly three times the growth in developed markets, says Centrums Ranjit Kapadia. While this growth is expected to continue this year too, the falling rupee will add to it. Analysts say, for several large players, half the total revenues come from global markets. For these, the falling rupee will shore up earnings and revenues. But, only those having no or low forex liabilities and forward covers will gain. For instance, 91 per cent revenues of Divi's Laboratories come from global sales, so the rupee fall will impact these by an estimated 12 per cent in the second half of FY12 and seven per cent for the full year. According to Emkay Global, the firm has not taken any forward covers and, as a result, the rupee depreciation will have an estimated positive impact on Ebitda of 37 per cent in the second half of FY12 and 21 per cent in FY12. Overall, the profit after tax (PAT) is expected to increase 37 per cent in H2 and 21 per cent in FY12. Like Divi's, there are several others that have a high share of global sales and low forex liabilities. Dr Reddy's, for instance, derives 80 per cent of its revenues from global sales, but the firm has taken forward covers of $775 million and hedged its cash flows. As a result, the impact on the EBITDA will be limited to 14 per cent in H2 and eight per cent for the full year. The company has foreign currency loans of $200 million. According to analysts, the overall PAT is expected to increase 16 per cent in the second half of this year and nine per cent in FY12. Cipla is another player that will see some benefit flowing into its bottom line due to a weaker rupee. However, Glenmark is unlikely to benefit much from the rupee, though 72 per cent of its revenues come from global sales. Though the company has not taken any forward cover, it has foreign currency loans of $350 million, which will result in raising total liabilities by Rs 155 Crore in FY12. Despite this, PAT is expected to remain flat, claim analysts.
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http://www.business-standard.com/india/news/pharma-firms-to-gaindepreciating-rupee/459047/

Pharmaceutical results preview for Q3FY12: Emkay

Published on Tue, Jan 10, 2012 at 18:34 | Source : Moneycontrol.com Updated at Tue, Jan 10, 2012 at 19:08

Emkay Global Financial Services has come with its December quarterly earnings estimates for pharmaceutical sector. According to the research firm the sector is expected to report a growth of 18% YoY (5% QoQ) in revenues partly driven by Rupee depreciation which is likely to be 4-5% of the overall growth. Divi's Lab (+32%), Sun Pharma (+27%), Ipca Labs (+28%), Glenmark Pharma (+27%), Dr. Reddys (+23%) and Ranbaxy (+17%) will be outperformers. The laggards will be Uncihem Labs (+6%), Aurobindo (+6%) & GSK (+11%). OPM for the Emkay Pharma Universe is expected to 24% compared to 22% in Q2FY12 and 21% in Q3FY11. Expansion in EBIDTA margins will 200-250bps on account of Rupee depreciation and 100-150bps due to Para-IVs. EBITDA margin expansion will be led by Ranbaxy Labs (+1000bps YoY & +1389bps QoQ), Ipca Labs (+678bps YoY & +108bps QoQ), Sun Pharma (+1000bps YoY & -280bps QoQ) and Dr. Reddys (+617bps YoY & 504bps QoQ). PAT of Pharma universe is likely to grow by 51% YoY (25% QoQ) compared to 4% YoY growth in Q2FY12 driven by Rupee depreciation and Para-IVs Growth in APAT will be on account of 69% growth in Sun Pharma, 77% growth in Dr. Reddys (led by Zyprexa), 420% growth in Ranbaxy (led by Lipitor) and 35% growth in Divi's Lab. In the generics space -Ipca Labs and Glenmark Pharma are our preferred bet. In the CRAMS space -Divi's and Jubilant Life are our preferred bet.

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6. Ratio Analysis:

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Debt Equity Ratio: All these figures are in (Rs.) lakhs

Year/Qtr

Qtr 2

2011

2010

Debt Equity Ratio Total Debt / Owners Fund :Total Debt : Owners Fund

0.651049271 0.380940909 313,031 172,359 480,810 452,456

DRL has increased the level of debt in the organization from .38 to .65 by raising loans and short term borrowings. Earlier on 30.9.2010 their loans and short term borrowing were Rs.121,214lakhs which is on 20.9.2011 is Rs.260,093lakhs.

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A) Returns to Sale

Qtr 2

2011

2010

Operating Profit Ratio Operating Profit / Net Sales *100 : Operating Profit = : Net Sales = Net Profit Ratio : Net Profit = : Net Sales = Net Profit / Net Sales *100

17% 17% 37,445 32,266 226,779 187,037 14% 15% 30,780 28,682 226,779 187,037

DRL second qtr 3-.9.2011 Net profit is increased by Rs.2098Lakhs but their net profit ratio is declined by 1%. And in case of Operating profit their profit is increased by Rs.5179lakhs but there is no change in their operating profit ratio.

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