Liquidity Position Of Biocon

Presented to – Dr. Vidhya Shekri IMS Ghaziabad

Presented by – Rahul Kumar (BM 08136) Rohit Sharma (BM 08153) Rohit Verma (BM 08155) Rohit Yadav (BM 08156) Shivam Aggarwal (BM 08180)

About the Biocon is India's leading biotechnology enterprise. Established in 1978, the company today is an integrated biotechnology enterprise focused on the development of biopharmaceuticals. The company serves partners and customers in over 50 countries. Within the biotechnology space, the company ranks first in Asia in terms of revenues and market capitalisation and sixteenth globally. The company is headed by Kiran Mazumdar-Shaw. Biocon went for an IPO in 2004. Biocon became only the second Indian company to cross a market capitalisation of one billion U.S. $ on the first day of listing. Mazumdar-Shaw and her husband John Shaw own over 60% of the company's stock. It is among the top 10 biotech company in the world.

Liquidity Liquidity is the ability to transform a security into cash The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity.The ability to convert an asset to cash quickly. Also known as "marketability". It is safer to invest in liquid assets than illiquid ones because it is easier for an investor to get his/her money out of the investment. Examples of assets that are

(contd.) Company’s primary liquidity needs have been to finance the working capital requirements and their capital expenditures. These costs have been funded principally by cash flows from operations and short-term borrowings. The Company has during the year deployed the amounts realised from sale of Enzymes business in money market instruments.

Biocon's total income has four components: 1. Sales of Biopharmaceuticals products; 2. Sales of Enzymes products; 3. Technical Licensing fees; and 4. Other income.

each of these components of Biocon's income expressed as a percentage of Biocon's total income for the years ended March 31, 2008 and March 31, 2007: Sale of products

2008

2007

Biopharmaceuticals

84.6

82.6

Enzymes

4.9

12.6

Technical Licensing Fees Other Income

4.8

3.2

5.6

1.4

Total

100

100

Operational Results During the year under review the operations excluding exceptional items reflected 10 percent growth in consolidated revenues while Operating Profits (EBITDA) and Profit after Tax grew by 17 percent and 12 percent respectively. Appropriations Dividend The Board of Directors recommend a dividend of 60%, which is Rs 3.00 per equity share and also recommend a Special Dividend of 40% (Rs 2/per share) pursuant to the divestment of enzyme business, taking the total dividend

Cash Flows In 2008 - 2007 Net cash generated from operating activities Rs. 2,647,224 & Rs. 1,168,145. Net cash used for investing activities Rs. 2,708,798 & 867,749. Net cash generated from/(Used) in financing activities Rs. 66,129 & Rs. 244,427. Net increase/(decrease) in cash and cash equivalents Rs. 4,555 & Rs. 55,969.

(contd.) As at March 31, 2008, cash and cash equivalents amounted to Rs 79,834. The principal source of cash and cash equivalents in fiscal 2008 was from cash flows from operations and cash realised from divestment of Enzymes business amounting to Rs 2,647,224 which was partly invested in fixed assets to the extent of Rs 960,856 and the balance was deployed in non-trade instruments. Operating activities - Net Cash flows from operating activities for fiscal 2008 increased

(contd.) Investing activities - The Company's cash flows from investing activities were used primarily to fund purchase of fixed assets and trade investments. Financing activities - The net cash flows from financing activities increased due to increase in short-term borrowings.

Current assets, loans and advances The current assets, loans and advances have increased from Rs 5,114,969 to Rs 5,250,680 , an increase of 3% over the previous year. This was mainly due to - Increase in inventories from Rs 1,506,589 to Rs 1,677,350 largely on account of increase in purchase of raw materials and semifinished goods which rose by Rs 87,376 and Rs 84,216 respectively as compared to the previous year. – Sundry debtors stood at 2,256,629 (net of provision for doubtful debts of Rs 40,454) as at March 31, 2008 as compared to Rs 2,748,526 (net of provision for doubtful debts of Rs 29,555) as at March 31, 2007. These debtors are considered good and realisable. Provision for doubtful receivables as on March 31, 2008 has been made for debtors overdue for more than 360 days subject to review of collectibility of specific dues. 2007 respectively.

(contd.) Debtors represent an outstanding of 99 days and 116 days of revenue as at March 31, 2008 and March 31, 2007 respectively on a moving average of 3 month's sales. Provision for doubtful debts represents 0.13% and 0.12% of gross sales for the year ended March 31, 2008 and March 31, Loans and advances has increased from Rs 783,541 to Rs 1,235,457 as on March 31, 2008. This increase of 57.7% is mainly on account of increase in inter corporate deposits to subsidiary / Joint venture company ,

An Inter-Corporate Deposit (ICD) is an unsecured loan extended by one corporate to another. Existing mainly as a refuge for low rated corporates, this market allows funds surplus corporates to lend to other corporates. Also the better-rated corporates can borrow from the banking system and lend in this market. As the cost of funds for a corporate in much higher than a bank, the rates in this market are higher than those in the other markets. ICDs are unsecured, and hence the risk inherent in high. The ICD

(contd.) which has increased from Rs 316,447 to Rs 581,540 , increase in balances with customs, excise and sales tax authorities, which has increased from Rs 173,149 to Rs.281,568 compared to the previous year and increase in advance income tax (net of provisions) amounting to Rs 87,405 as against the previous year.

Current liabilities and provisions The current liabilities and provisions has increased by 8.3 % from Rs 2,164,442 as at March 31, 2007 to Rs 2,345,166 as at March 31, 2008. This increase is primarily due to proposed dividend of Rs 500,000 (100%) for the year ended March 31, 2008 as against 300,000 (60%) in the previous year .There is a decrease in Sundry creditor balances for capital expenditure as well as other creditors from Rs 370,630 to Rs 301,351 and from Rs.1,105,800 to Rs 1,030,374 respectively as at March 31, 2007.

Comparison of Liquidity Ratios Liquidit y Ratios

Mar’08

Mar’07

Mar’06

Mar’05

Mar’04

Current Ratios

1.91

1.87

1.34

1.13

3.71

Current Ratios(in cluding short term Quick loans) Ratios

1.16

1.28

0.86

0.81

2.26

1.30

1.29

0.91

0.84

3.13

Inventory 5.19 Turnover Ratios

5.82

6.97

9.71

6.34

Thank You