liquidity position of biocon

8/14/2019 liquidity position of biocon

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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)


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About theAbout the

Biocon is India's leading biotechnology enterprise. Established in1978, the company today is an integrated biotechnology enterprisefocused on the development of biopharmaceuticals. The companyserves partners and customers in over 50 countries. Within thebiotechnology 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 foran IPO in 2004. Biocon became only the second Indian company tocross a market capitalisation of one billion U.S. $ on the first day oflisting. 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.


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LiquidityLiquidity

Liquidity is the ability to transform a securityinto cash The degree to which an asset orsecurity can be bought or sold in the market

without affecting the asset's price.

Liquidity is characterized by a high level oftrading activity.The ability to convert an assetto cash quickly. Also known as "marketability".

It is safer to invest in liquid assets thanilliquid ones because it is easier for aninvestor to get his/her money out of theinvestment. Examples of assets that are


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(contd.)(contd.)

Companys primary liquidity needs have beento finance the working capital requirements

and their capital expenditures. These costshave been funded principally by cash flowsfrom operations and short-term borrowings.

The Company has during the year deployedthe amounts realised from sale of Enzymesbusiness in money market instruments.


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has four components:has four components:

1. Sales of Biopharmaceuticals products;

2. Sales of Enzymes products;3. Technical Licensing fees; and

4. Other income.


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each of these components of Biocon's incomeeach of these components of Biocon's income

expressed as a percentage of Biocon's totalexpressed as a percentage of Biocon's total

income for the years ended March 31, 2008 andincome for the years ended March 31, 2008 and

March 31, 2007:March 31, 2007:

Sale of products 2008 2007

Biopharmaceuticals 84.6 82.6

Enzymes 4.9 12.6

Technical LicensingFees

4.8 3.2

Other Income 5.6 1.4

Total 100 100


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Operational ResultsOperational Results

During the year under review the operationsexcluding exceptional items reflected 10

percent growth in consolidated revenueswhile Operating Profits (EBITDA) and Profitafter Tax grew by 17 percent and 12 percentrespectively.

Appropriations Dividend The Board ofDirectors recommend a dividend of 60%,which is Rs 3.00 per equity share and alsorecommend a Special Dividend of 40% (Rs 2/-

per share) pursuant to the divestment ofenz me business takin the total dividend


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Cash FlowsCash Flows

In 2008 - 2007 -

Net cash generated from operating activitiesRs. 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 cashequivalents Rs. 4,555 & Rs. 55,969.


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(contd.)(contd.)

Investing activities - The Company's cashflows from investing activities were used

primarily to fund purchase of fixed assets andtrade investments.

Financing activities - The net cash flows fromfinancing activities increased due to increasein short-term borrowings.


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lC l


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Current assets, loansCurrent assets, loans

and advancesand advances

The current assets, loans and advances have increased fromRs 5,114,969 to Rs 5,250,680 , an increase of 3% over theprevious year. This was mainly due to - Increase in

inventories from Rs 1,506,589 to Rs 1,677,350 largely onaccount of increase in purchase of raw materials andsemifinished goods which rose by Rs 87,376 and Rs 84,216respectively 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 ascompared to Rs 2,748,526 (net of provision for doubtful debtsof Rs 29,555) as at March 31, 2007. These debtors areconsidered good and realisable. Provision for doubtfulreceivables as on March 31, 2008 has been made for debtorsoverdue for more than 360 days subject to review of

collectibility of specific dues. 2007 respectively.


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(contd.)(contd.)

Debtors represent an outstanding of 99 daysand 116 days of revenue as at March 31,2008 and March 31, 2007 respectively on a

moving average of 3 month's sales. Provisionfor doubtful debts represents 0.13% and0.12% of gross sales for the year ended March31, 2008 and March 31,

Loans and advances has increased from Rs783,541 to Rs 1,235,457 as on March 31,2008. This increase of 57.7% is mainly onaccount of increase in inter corporate deposits

to subsidiary / Joint venture company ,


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An Inter-Corporate Deposit (ICD) is anunsecured loan extended by one corporate to

another. Existing mainly as a refuge for lowrated corporates, this market allows fundssurplus corporates to lend to othercorporates. Also the better-rated corporatescan borrow from the banking system and lendin this market. As the cost of funds for acorporate in much higher than a bank, therates in this market are higher than those inthe other markets. ICDs are unsecured, and

hence the risk inherent in high. The ICD


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(contd.)(contd.)

which has increased from Rs 316,447 to Rs581,540 , increase in balances with customs,

excise and sales tax authorities, which hasincreased from Rs 173,149 to Rs.281,568compared to the previous year and increasein advance income tax (net of provisions)amounting to Rs 87,405 as against theprevious year.

C li bili i d


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Current liabilities andCurrent liabilities and

provisionsprovisions

The current liabilities and provisions hasincreased by 8.3 % from Rs 2,164,442 as at

March 31, 2007 to Rs 2,345,166 as at March31, 2008. This increase is primarily due toproposed dividend of Rs 500,000 (100%) forthe year ended March 31, 2008 as against300,000 (60%) in the previous year .There is adecrease in Sundry creditor balances forcapital expenditure as well as other creditorsfrom Rs 370,630 to Rs 301,351 and fromRs.1,105,800 to Rs 1,030,374 respectively as

at March 31, 2007.


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C i f Li iditC i f Li idit


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Comparison of LiquidityComparison of Liquidity

RatiosRatios

Liquidity Ratios

Mar08 Mar07 Mar06 Mar05 Mar04

Current

Ratios

1.91 1.87 1.34 1.13 3.71

CurrentRatios(includingshort

termloans)

1.16 1.28 0.86 0.81 2.26

QuickRatios

1.30 1.29 0.91 0.84 3.13

InventoryTurnoverRatios

5.19 5.82 6.97 9.71 6.34


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Thank YouThank You

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liquidity position of biocon