Upload
venkateswarluirakasa
View
226
Download
0
Embed Size (px)
Citation preview
8/6/2019 Baskar New
1/75
ABSTRACT
The project work entitled inventory management includes detail study
about inventory, its importance and effectively it should be managed for Smooth
operations of business. Inventories are assets of the firm and require investment and
hence involve the commitments of the firms resources.
Every firm is required to manage the inventories in such a way as to get
the best returns. The objective of inventory management is to determine the
optimum level of the inventory that is the level at which the interest of all the
departments are taken off. The inventory management seeks to maximize the wealth
of the share holders by minimizing the cost of procuring and maintaining.
The objective behind the inventory management is maintaining sufficient
stock of raw material ensuring continuous supply to production process for
uninterrupted production schedule and minimizing the total annual cost of
maintaining inventories.
Inventories are assets of the firm and hence involve the commitment of firms
resources; managers must ensure that the firm maintains inventories at the correct
level.
1
8/6/2019 Baskar New
2/75
CONTENTS PAGE NO.
CHAPTER 1: INTRODUCTION 4
CHAPTER 2: OBJECTIVES & METHODOLOGY
OF THE STUDY 6 to 7
SCOPE OF THE STUDY 7
NEED FOR THE STUDY 8
LIMITATIONS OF THE STUDY 9
LITERATURE REVIEW 11 to 21
CHAPTER 3: INDUSTRY & COMPANYPROFILE 23 to 55
CHAPTER 4: DATA ANALYSIS AND INTERPRETATION 57 to 70
CHAPTER 5: SUMMARY 72 to 73FINDINGS 74
SUGGESTIONS 75
CONCLUSION 75
CHAPTER 6: BIBLIOGRAPHY 77
2
8/6/2019 Baskar New
3/75
Chapter-I INDRODUCTION
3
8/6/2019 Baskar New
4/75
Introduction of Inventory ManagementThe term inventory can be defined as tangible property held:
For sale in the ordinary course of business
In the process of production for such sale
For consumption in the production process or in the rendering of
services.
In manufacturing firms, items in inventory are called stocks. They are raw
materials, work-in-progress and finished goods and supplies. Inventory control
refers to those activities, which maintain stock at a desired level.
Need to hold Inventories
The question of managing inventories arises only when the company holds
inventories. Maintaining inventories involves tying up of the companys funds and
incurrence of storage and handling costs. If it is expensive to maintain inventories,
why do companies hold inventories? There are three general motives for holding
inventories.
Transaction Motive emphasizes the need to maintain inventories to
facilitate smooth production and sales operations.
Precautionary Motive necessitates holding of inventories to guard against
the risk of unpredictable changes in demand and supply forces and other
factors.
Speculative Motive influences the decision to increase or reduce inventory
levels to take advantage of price fluctuations.
4
8/6/2019 Baskar New
5/75
Chapter-II Objectives & Methodology of the Study
5
8/6/2019 Baskar New
6/75
OBJECTIVES OF THE STUDY
The present study has been taken up with the following objectives
To learn various inventory management procedures followed at Global
Business services of Dr. Reddys Laboratories ltd.
To understand relative advantage and disadvantage of various techniques.
To protect and minimize the inventory from theft, loss, damage and
unauthorized use.
To provide full range of reports that will satisfy informational requirements.
To review the ABC analysis and understand the impact of business dynamics
on inventory.
METHODOLOGY
For the preparation of project the collection of data is very essential & there are
two broad methods, which are followed in project. They are primary and secondary
data.
Primary Sources:
Direct and personnel & oral investigation.
The staff Finance, Production & Risk management.Secondary Sources:
Annual repots of the company
Other reports of the corporation
Textbooks
Internet
Magazines
6
8/6/2019 Baskar New
7/75
OBJECTIVES OF INVENTORY CONTROL :
The main objectives of inventory control are:
I. To maintain a large size of inventory for efficient and smooth production
and sales operation.
II. To maintain a minimum investment in inventories to maximize
profitability.
III. To ensure a continuous supply of raw materials to facilitate uninterrupted
production.
IV. To maintain sufficient stocks of raw materials in periods of short supply
and anticipate price change.
V. Maintain sufficient finished goods inventory for smooth sales operationand efficient customer service.
VI. Minimize the carrying cost and time.
VII. Control investment in inventories and keep it at an optimum level.
Scope of Inventory Management:
The area of the inventory management consists of the following phases:
Maintaining continuity of production or operation by ensuring thecontinuous supply of the standardized raw materials.
Providing the satisfactory service to customers. For ex. by ensuing the
continuous supply of quality products round the year.
Reducing the amount of the working capital tied up in inventories by
proper planning, and fixing up of maximum, minimum ad recorder
levels.Ensuring that the laid down procedures are follow in storage issue,
inspection etc. In respect of all items which comes into stores.
Conserving the material by eliminating the wastage in any form at any
stage of production, non-production operations.
To take the enough car to avail the concessions available in purchasing
the materials.
7
8/6/2019 Baskar New
8/75
Inventory control is the process of deciding what and how much of various
items are to be kept in stock. It also determines the time and quantity of various
items to be produced. The basic objective of the inventory control is to reduce the
investment in inventories and ensuring that production process does not suffer at the
same time.
NEED FOR THE STUDY
Materials are equivalent to cash and they make up an important part of the
total cost. It is essential that materials should be properly safeguarded and correctly
accounted. Proper control of material can make a substantial contribution to the
efficiently of a business. The success of a business concern largely depends upon
efficient purchasing, storage, consumption and accounting. Bulk Drugs is the backbone of Pharmaceutical industry and inventory plays a vital role in bulk drug
industry hence the study of Inventory Management in Bulk Activities of Dr. Reddys
has been selected for the project.
FRAME WORK OF THE STYDY
The frame work of the study is as follows The first chapter contains the introduction of inventory management,
objectives of the study, methodology and limitations of the study.
The second chapter consists of the profile of the pharmaceutical industry.
The Third Chapter contains of the profile of Dr.Reddys Laboratories Ltd.
The Fourth Chapter Consists of theoretical frame work of InventoryManagement.
The Fifth Chapter consist of data analysis and interpretation of inventory practices
The sixth chapter consist of summary, finding , suggestion and bibliography
LIMITATIONS
8
8/6/2019 Baskar New
9/75
Since the Study Covers Bulk activities Division of Dr.Reddys LaboratoriesLtd, It may not represent overall scenario of the bulk industry.
The Project deals with fewer areas of inventory.
The study is conduced within short period thus it may not be as detailed &fully fledged.
The collection of information is mainly through secondary data.
Data available during the work is insufficient. Data is not disclosed by thecompany because of various reasons.
Lack of additional information from the company due to confidential matters.
ORIGIN:
The exact date on which the allopathic systems of medicine make its entry
into the country is not available but it is generally estimated that it happened some
time during the early part of the 19 th century. The Britishers for their personal use
imported the medicines when they come to do business. This was the beginning of
the pharmaceutical industry in India. Later, when they ultimately took over the
country, the imports became a regular feature. These pharmaceutical products,
which were introduced in India to provide relief to Britishers, soon gained popularity
among the people in urban areas. For the first few decades after their introduction, pharmaceutical products were being imported into the country, mostly from
Germany and the United Kingdom.
9
8/6/2019 Baskar New
10/75
Indigenous production of these medicines, however, was started in
1901 with the establishment of the Bengal chemical and pharmaceutical works, due
o the pioneering efforts of Acharya P.C.Roy. The world of medical treatment was
witnessing some significant developments like Lours Pasteurs discovery of
pathogenic bacteria as the cause of infectious diseases while the Indian
Pharmaceutical Industry was in its early stages.
Scientists in India undertook research in tropical diseases like
malaria, typhoid and cholera. Between 1904 and 1907 four research institutes,
namely the Haffkine Institute and Pasteur Institute were established. Yet another
significant development of this period was the use of chemicals for treating various
diseases. Some very important drugs like aspirin and barbiturates were made
available during this period. The First World War gave a real stimulus to domestic
production of pharmaceuticals. There was a step rise in demand and a drastic cut in
imports. Consequently, the production of quinine salts registered a substantial
increase for the first time. Production of caffeine from tea waste and manufacture of
surgical dressings were also taken up during this period. However with the
resumption of imports after the war the industry was back to square one it received a
setback, as it was unable to compete with imported products.
The Bengal Chemical and Pharmaceutical works started production of
Titanus antitoxin, a basic drug in 1930. Indigenous production in 1939 was
sufficient to meet only about 13 percent of medical requirements. Thus a large part
of domestic demand for drugs was still met by imports.
10
8/6/2019 Baskar New
11/75
The Second World War was another landmark in the history of the Indian
Pharmaceutical industry. It provided a propitious atmosphere for further expansion
of production. By 1941 the industry took up the manufacture of new drugs like
lodochlorohydorxy Quinoline as well as a number of alkaloids like ephedrine and
codeine. Besides, the industry made a beginning in the production of
Chemotherapeutic Drugs like Arsenicals. Antileprotic Drugs and Colloidal
Preparations of Calcium, Silver, Manganese and Iodine. The production of
glandular products like liver extracts was also undertaken. The production of
several formulations based on imported bulk drugs also showed a significant
expansion during the period. Medicines, the industry could not make much headway,
in the absence of consistent governmental support to a nascent industry. The
estimated value of production of pharmaceuticals in 1947 was Rs.10 Cr.
THE PHARMACEUTICALS INDUSTRY CAN BE DIVIDED INTO TWO
SEGMENTS:
Bulk Drugs:
Which are the active ingredients with medicinal properties and are the basic raw
materials for making formulations?
Formulations: Which are specific dosage forms of a bulk drug or of a
combination of different bulk drugs and the final form in which the drugs are sold
i.e. syrups, injections, tablets and capsules? With the objective of controlling prices
of important drugs and making them available at reasonable rates to the consumer,
the Government introduced the Drug Price Control Order (DPCO) in 1970.
11
8/6/2019 Baskar New
12/75
It specifies the maximum selling price of bulk drugs and formulations
and the turnover ceiling for exemption from the DPCO. At present DPCO fixes and
monitors the prices of 74 bulk drugs, and all the formulations manufactured using
any of these bulk drugs thus covering 50 percent of the pharmaceuticals market.
DPCO has been amended with three revisions in 1979, 1987 and 1995. The numbers
of drugs under price control have been reduced with every revision.
Pharma Industry are immense flexibility in the industry to move from
one drug to another with ability to respond quickly to new demands and needs,
strong distribution networks with strong presence in the foreign markets (net
exporter of bulk drugs & formulations), advantage of low production and R&D costs
as compared to other nations and availability of high skills in process development,
low R&D expenditure by Indian manufacturers mainly due to relative small size and
resource base of individual units compared to major international Pharma companies
limiting R&D options, world class manufacturing plants approved by US-FDA, and
low profit margins as it is a highly fragmented industry with intensive competition.
POST-INDEPENDENCE ERA: Immediately after independence, the
government addressed itself to the task of achieving a high rate of economic
progress either special emphasis on speedy industrialization. When the government
of independent India embarked on planned economic expansion about four decades
ago, the development of the Indian Pharmaceutical Industry was not commensurate
with the size of the country and the growing needs of its population. Since, then
progress of the pharmaceutical industry in the country has been substantial and many
sided and can bet be describes as dramatic.
12
8/6/2019 Baskar New
13/75
8/6/2019 Baskar New
14/75
8/6/2019 Baskar New
15/75
RP = (MC+CC+PM+PC)*2+excise duty.
MC is the material cost, including cost of bulk drugs/recipients and process losses.
CC is the conversion cost.
PM is the cost of packing material including process losses.
PC is the packing charges.
DPCO applies only to allopathic drugs.
Investment policies
1. FDI up on to 100% is permitted the automatic route for manufacture of
drugs and pharmaceutical, provided the activity does not attract compulsory
licensing or involve use of recombinant DNA technology, and specific cell /
tissue targeted formulations.
2. FDI proposals for the manufacture of licensable drugs and pharmaceuticals
and bulk drugs produced by recombinant DNA technology, and specific cell /
tissue targeted formulations will require prior Government approval.
Industrial Licensing:
Industrial licensing for all bulk drugs cleared by Drug controller
General (India), all their intermediates and formulations has been abolished, subject
to stipulations laid down from time to time in the industrial policy except in the case
of
1. Bulk drugs produced by the use of recombinant DNA technology.
2. Bulk drugs requiring in-vivo use of nucleic acids as the active principles and
15
8/6/2019 Baskar New
16/75
3. Specific cell/tissue targeted formulations.
SWOT ANALYSIS
It is often said that the pharma sector has no cyclical factor attached to it.
Irrespective of whether the economy is in a downturn or in an upturn. The general
belief is that demand for drugs is likely to grow steadily over the long-term. True in
some sense. But are there risks? This article gives a perspective of the Indian pharma
industry by carrying out a SWOT analysis. The SWOT analysis of the industry
reveals the position of the Indian pharma industry in respect to its internal and
external environment.
STRENGTHS:
1. India with a population of over a billion is a largely untapped market. In fact
the penetration of modern medicine is less than 30 percent in India. To put
things in perspective, per capita expenditure on health care in India is $93,
while the same for countries like Brazil is $453 and Malaysia $189.
2. The growth of middle class in the country has resulted in fast changing
lifestyles in urban and to some extent rural centers. This opens a huge
market for lifestyles drugs which has a very low contribution in the Indian
market.
3. Indian manufactures are one of the lowest cost producers of drugs in the
world. With a scalable labour force. Indian manufactures can produce drugs
at 40 percent to 50 percent of the cost to rest of the world. In some cases,
this cost is low as 90 percent.
16
8/6/2019 Baskar New
17/75
4. Indian pharmaceuticals industry posses excellent chemistry and process
reengineering skills. This adds to the competitive advantage of the Indian
companies. The strength in chemistry skill helps Indian companies to
develop processes, which are cost effective.
WEAKNESS:
1. The Indian pharmaceutical companies are marred by the price regulation.
Over a period of time, this regulation has reduced the pricing ability of
companies. The NPPA (national pharma pricing authority), which is the
authority to decide the various pricing parameters, sets prices of different
drugs, which leads to lower profit ability for the companies. The companies
which are lowest cost producers are the advantage while who cannot
produce have either to stop production or bear losses.
2. Indian pharma sector has been marred by lack of product patent, which
prevents global companies to introduce new drugs in the country and
discourages innovation and drug discovery. But this has provided an upper
hand to the Indian pharma companies.
3. Indian pharma market is one of the least penetrated in the world. However
growth has been slow to come by. As a result Indian majors are relying onexports for growth. To put things into perspective, India accounts for almost
16 percent of the world population while the total size of industry is just 1
percent of the global pharma industry.
4. Due to very low barriers to entry, Indian pharma industry is highly
fragmented with about 300 large manufacturing units and about 18,000
17
8/6/2019 Baskar New
18/75
8/6/2019 Baskar New
19/75
4. Being the lowest cost producer combined with FDA approved plants.
Indian companies can become a global outsourcing hub for pharmaceutical
products.
THREATS:
1. There are certain concerns over the patent regime regarding its current
structure. It might be possible that the new government may change certain
provisions of the patent Act formulated by the preceding government.
2. Threats from other low cost countries like china and Israel exist. However
on the quality front India is better placed relative to china. So,
differentiation in the contract manufacturing side may wane.
3. The short-term threat for the pharma industry is the uncertainty regarding
the implementation of VAT. Though this is likely to have a negative
impact in the short-term, the implications over the long-term are positive
for the industry.
PRESENT SCENARIO :
The pharmaceutical Industry is the largest industry after the software industry.
The pharmaceutical industry is said to be the second fastest growing industry and
perhaps the most challenging one of the Indian industrial scene today. The
pharmaceutical companies have out performed by substantial margin.The 58
industries index covered by CIME in terms of growth in sales profit after tax and
asset creation. It is characterized by:
1. Very intense competition with about 10,000 companies large, big, medium
and small lighting for their own place under the sun in $ 900 billion Market.
19
8/6/2019 Baskar New
20/75
2. The seemingly ever increasing in and almost never ending governmental
regulations and policy changes since the output of the industry is usually to
the basic health requirement and quality of life emphasis is placed on
controlling the quality at all stage of production, including a check on the
ingredient used.
Government intervention exists in the form of price control and compulsory
licensing etc.
3. Entry barriers due to initial setting up costs are extremely high.
4. Stiffing price controls, eroding profits and consequently a vanishing bottom
line.
5. Rigorous control on formulations and an absence of international patient
production resulting in too maze of product with little or no product
differentiation.
6. Increasing dominance of trade associations and then constants demand per
increasing trade margins.
7. In the pharmaceutical industry firms have to come up with new drugs and
newer ways of combating existing as well as newly identified diseases. This
makes the industry highly R&D expensive. As a comparison the R&D sales
ratio world wide 7.5% for the electronics industry, 11.8% for computers and
18% for pharmaceuticals.
8. The path of a drug evolution from molecule synthesis to find approval by the
FDA in an expensive affair costing a few hundred million dollars per a single
drug. The possibility of the molecule or drug getting rejected because of side
effects, unacceptable toxicity, exists at every stage of evolution. This implies
20
8/6/2019 Baskar New
21/75
a high degree of risk in pharmacy basic research. However, a margins
potential drug commands makes basic research a high risk and high gain
game. Block buster patented drugs are known to have brought in revenue of
more than dollar one a year enabling the others not so successful products
with in the company a piggy back side.
21
8/6/2019 Baskar New
22/75
Chapter-III INDUSTRY&COMPANY
PROFILE
PHARMACEUTICAL INDUSTRY:
From ancient times, two systems of medicine were practiced in India. Firstly
there was Ayurvedic medicine, which dates back to the Vedic period. Ayurvedic
medicine depends largely on the combination of various herbs minerals and metals
like gold, copper etc.
Secondly there was the Arabian system of medicine. An innumerable invasion
has brought the Arabian system in to India. In contrast two other systems of
22
8/6/2019 Baskar New
23/75
medicine, namely Allopathic and Homeopathy were in vagary in the western part of
the world.
Despite of being very advanced indigenous systems of medicines. Ayurvedic
medicine has not really become popular enough; probably because of very long
British rule and the consequent development of an educational system including
medical education based on typical British model. As Allopathic medicine started
taking routes in India all the research and development activities of the world over
filled its growth in India as well. Conversely, there was hardly any research and
development activity in the area of Ayurvedic medicine. Though the govt. has been
making some efforts to promote Ayurvedic medicine, its development seems to be
long way off. It is the still popular in rural areas, may be because modern medicine
cannot reach there. In urban areas it has yet to gain importance in so far ad the
prescription drug market is concerned. Allopathic doctors towards prescribing an
Ayurvedic medicines very loss indeed. Of late, however, the attitude of customers
towards Ayurvedic medicine seems to be increasingly favorable.
Some of the pharmaceutical companies are planning to diversify into
Ayurvedic drugs mainly to improve their profitability. Ayurvedic drugs are
exempted from price control.
BACK GROUND
Dr. Reddys Laboratories was founded by Dr. Anji Reddy, an entrepreneur
scientist in 1984. The DNA of the company is drawn from its founder and his vision
23
8/6/2019 Baskar New
24/75
to establish Indias first discovery led global pharmaceutical company. In fact, it is
the spirit of entrepreneurship that has shaped the company to become what is today.
The company is focused on creating and delivering innovative and quality products
to help people lead healthier lives.
Dr. Reddys is the research based company with vertically integrated
operations. The company develops manufactures and markets a wide range of
pharmaceutical ingredients, diagnostic, kits, critical are and biotechnology products.
The basic research program of Dr. Reddys focuses on cancer diabetes, bacterial
infections and pain.
The company has several distinctions to its credit. Being the first
pharmaceutical company from Asia Pacific (out side the Japan) to be listed on the
NewYork stock exchange in 2001 on April 11 th is only one among them. And
always, Dr.Reddys come up trumps not only having its stock oversubscribed but
also becoming the best performing IPO that year.
Dr. Anji Reddy is well known for his passion for research and drug discovery.
Dr.Reddys, s started its drug discovery program in 1993, and with in three years it
achieved its first break through be out licensing an ANTI-DIABETES molecule to
NOVO NORDISK in March 1997. With this very small but significant step, the
Indian industry went through a paradigm shift in its image from being known as just
COPY CATS to INNOVATORS. Through its success Dr.Reddys pioneered
drug discovery in India. There are several such infection points in the companys
evolution form a bulk drug (API) manufacturer into a vertically integrated global
pharmaceutical company today.
24
8/6/2019 Baskar New
25/75
Today, the company manufactures and markets API (Bulk activities), finished
dosages and biologics in over hundred countries world wide, in addition to having a
very promising drug discovery pipeline. When Dr.Reddys started its first big move
in 1986 form manufacturing and marketing bulk activities to the domestic (Indian)
market to manufacturing and exporting difficult-to-manufacture bulk activities such
as methyldopa to highly regulated overseas markets. It had to not only overcome
regulatory and legal hurdles but also battle deeply entrenched mindset issues of
Indian pharmacy being seen as producers of CHEAP and therefore LOW
QUALITY pharmaceuticals. Today, the Indian pharma industry, in stock contras, is
known globally for its proven high quality low cost advantage in delivering safe
and effective pharmaceuticals. This transition, a tough and often perilous one, was
made possible thanks to the pioneering efforts of companies such as Dr.Reddys
laboratories.
Today, Dr.Reddys continues its journey. Leveraging on its LOW COST,
HIGH INTELLECT advantage. Foraying into new markets and blew businesses
taking on new challenges and growing stronger and more capable. Each failure and
each successes renewing the sense of purpose and helping the company evolve.
With over 950 scientists working across the globe, around the clock, the
company continues its relentless march forward to discover and deliver a break
through medicine to address and unmet medical need and make a difference to the
people lives worldwide. And when it does that it would only be beginning and yet it
would be the most important step. As LAO TZU wrote a long time ago, EVEN A
1000 MILE JOURNEY STARTS WITH A SINGLE STEP.
25
8/6/2019 Baskar New
26/75
8/6/2019 Baskar New
27/75
process and production of METHYLODOPY was the ultimate challenge.
Chemists at Dr.Reddys steam lined and simplified the unit processes for it. In spite
of the complicated nature of the process for it and with in a matter of 6 months the
company was ready to manufacture the drug.
VISION, MISSION AND VALUES:
Core Purpose
To help people lead healthier lives
Vision
To become a disvery led global pharmaceutical company
The company will achieve the vision by building
1. Work places that will attract, energize, help and retain finest talent available.
2. An organization culture that is relentlessly focused on the speedy translation
of scientific discoveries into innovative products that makes a significant
difference in people lives.
3. A global marketing organization that understands and response to needs of
customers.
Mission27
8/6/2019 Baskar New
28/75
To become first Indian pharmaceutical company that successfully takes its
products form discovery to commercial launch globally.
Values
We strive for excellence in everything we think, say and do
Respect for the individual
Innovation & continuous learning
Collaboration & Teamwork
Harmony & social responsibility Quality
Quality
We are dedicated to achieve the highest level of quality in every thing we do
to delight internal & external customers every time.
Respect of Individual
We uphold the self esteem and dignity of each other by creating an open
culture conductive for expressing of view and ideas irrespective of hierarchy.
Innovation and Continuous Learning
We create an environment of innovation and learning that fosters, in each one
of us, as desire to excel and willingness of experiment.
Collaboration and Teamwork
28
8/6/2019 Baskar New
29/75
We seek opportunities to build relationship and leverage knowledge, expertise
and resources to create greater values across function, businesses and locations.
Harmony & Social Responsibility
We take at most care to protect our natural environment and serve the
community in which we live and work. Our business practices are guided by the
highest standards of truth, integrity and transparency
Dr. REDDYS CULTURE!
Customer Focused and Performance Driven where both external and
internal customers are accorded the highest priority and where everyone is
sensitive to commitments, time & cost and focuses on delivering innovative
affordable medicines globally.
Entrepreneurial and Innovative where genuine mistakes are tolerated,
intelligent risk-taking is encouraged and people feel a sense of empowerment.
Egalitarian and Trusting where rank and status consciousness is low;
leadership walks the talk, where credibility & trustworthiness are championed
and leaders provide access to people, resources and information.
Flexible and Adaptive where change is welcome and initiatives are
implemented with sincerity and commitment, diversity is understood and
accepted and mutual respect for diversity and various ethnic cultures coexist.
MILESTONES OF Dr. REDDYS
S.NO YEAR DESCRIPTION
29
8/6/2019 Baskar New
30/75
1. 2009
Dr.Reddys's crosses $ 150 million revenue mile stone in
Russua & CIS region
2. 2008
Acquire BASF's Pharmaceutical manufacturing contract
business and related facility at Shreveport, LOUISIANA
Acquires Dowpharama's small molecule business at its
Mirfied and Cambridge facilities, UK Dr. Reddys formally announces its US Specialty
Business, Promius Pharma, LLC.
3. 2007
Become No.1 pharmaceutical company in India in
turnover and profitability. Launches Reditux (Rituximab) -- the World's first
biosimilar of a monoclonal antibody. Blaglitazone (DRF 2593) enters Phase III of clinical
trials becoming India's most advanced NCE
4. 2006
Acquires betapharm- the fourth- largest generics
company in Germany for a total enterprise value of 480
million Euros.
5. 2005
Acquires Roches API business at the state-of the art
manufacturing site. In Mexico with a total investment of
USD 59
Announces the formation of pelican pharmacy Indias
First integrated Drug Development Company.
Announces Indias first major co-development and
commercialization deal for its molecule Balaglitazone
(DRF 2593), with Rheoscience.
Announces a unique partnership for the30
8/6/2019 Baskar New
31/75
commercialization of Andes with ICICI venture.
6. 2004
Acquires access to Drug Delivery Technology
platforms in the Dermatology segment through the
acquisition of Triteness.
7. 2003
Announces a 15-years exclusive product development
and marketing agreement for OTC drugs with Leaner
Health Products in the US
Launches Ibuprofen, first generic product to be
marketed under the Dr.Reddys label in the US.
8. 2002
Conducts its first overseas acquisition BMS
Laboratories Limited and Meridian Healthcare in UK
9. 2001
Become the first Asia pacific pharmaceutical company,
outside Japan, to list on the New York Stock Exchange.
Listed with the Symbol RDY on April 11, 2001.
Out license Drf 4158 to Novelties for up to US $55
million up front payment.
Launches its first generic product, ranitidine, in the US
market.
Become the first Indian pharmaceutical company to
obtain a 180-day exclusively marketing right for a
generic drug in the US market with the launch of
Fluoxetice 40 mg capsules on August 3, 2001.
10. 2000
Dr.Reddys Laboratories becomes Indias third largest
pharmaceutical company with the merger of Cheminor
31
8/6/2019 Baskar New
32/75
8/6/2019 Baskar New
33/75
19. 1988
Acquires Benzes Laboratories Pvt. Limited to expand its
Bulk Actives business.
20. 1987
Obtains its first USFDA approval for Ibuprofen API
Starts its formulations operations
21. 1986
Dr.Reddys goes public
Dr.Reddys enters international markets with exports of
Methyldopa.
22. 1984
Dr. Anji Reddy establishes Dr.Reddys
Laboratories with an initial capital outlay of
Rs.25 lakhs.Dr. REDDYS BUSINESS
Dr. Reddys is a vertically integrated, global pharmaceutical company with
proven research capabilities and presents across the pharmaceutical value chain.
They manufacture active pharmaceutical ingredients and finished dosage forms and
market them globally, with a focus on United States, Europe, India and Russia. In
addition, the discovery arm of the company conducts basic research in the areas of
diabetics, cardiovascular, in Flomaton and bacterial infection.
BULK ACTIVITIES & INTERMEDIARIES
Dr.Reddys offers an unparalleled portfolio to its customers who include
innovators and generic formulators worldwide. The companies operations are fully
integrated through global supply chain practices response and services to customers
33
8/6/2019 Baskar New
34/75
8/6/2019 Baskar New
35/75
8/6/2019 Baskar New
36/75
Custom pharmaceutical services, a strategic Business Unit of Dr.Reddys
aspires to be the partner of choice for all the strategic sourcing needs of innovators
worldwide.
Dr.Reddys is the first company in India to fully develop in-house- from the
molecular biology stage to production a biogenetic, GRASTIM, in India. Grastim
(Generic name: filgrastim), the human Granulocyte Colony Stimulating Factor (Hg-
CSF), is a recombination protein used in chemotherapy- induced Neutrogena and in
bone marrow transplantation. Gratin has been well accepted by medical
professionals and enjoy a market share of almost 50% in India. They have also
launched Grastim in a few markets in Asia.
The recombinant proteins technology platform is Dr.Reddys core
competency. Dr.Reddys use technology and multiple expression systems (Ecoli,
yeast and mammalian cells) ensure high expression levels in yield apart form cost
and market leadership.
Dr. Reddys view biologics as business with tremendous upside potential. Dr.
Reddys commitment to the business is shown in the heavy investments they have
mad to develop the infrastructure and skill set. They have inaugurated a new R&D
facility in May 2004, which spans an area of 36,000 sq. feet. This multi-product
facility will cater to the highest developments standards (Camp, GLP and bio-safety
level 2a). They have significantly augmented our team to put more steam in our
development efforts.
36
8/6/2019 Baskar New
37/75
Dr. Reddys have a pipeline comprising several recombinant proteins in
Mammalian cell culture s well as E. Coil in various phases of development. The
portfolio consists of biogenetics and variants of current molecules
R&D Emerging Business
The research and development division, established in late 1980s is central to
the active pharmaceutical ingredients business. It contributes significantly to
Dr.Reddys business by creating intellectual property, providing research to reduce
the cost of production of their products and playing an active role in selection and
development of new products.
Strategic Business Units
Cheminor drug Ltd. Merged into Dr.Reddys laboratories in the year 2000-01,
restructured as a strategic business units.
Bulk
Branded formulations
Generics
R&D emerging business
Corporate center
37
8/6/2019 Baskar New
38/75
8/6/2019 Baskar New
39/75
8/6/2019 Baskar New
40/75
8/6/2019 Baskar New
41/75
8/6/2019 Baskar New
42/75
Awards and Recognition
Chemtech Cew Award 2000 Chemtech FoundationEntrepreneur of the year ERNST
& YOUNG2001 Healthcare & Life Sciences India
Best Employer Award 2002 Business TodayIndia Star 2002 Indian Institute of Packaging
World Star 2003 Award for Packaging ExcellenceMost Respected Company Award 2004 The Business WorldPHARMBIO Award 2004 Chemtech FoundationSodex Ho Pass for HR Excellence 2004 Asia Pacific CongressBest Employers in India 2004 HEWITT CNBC TV 18Indias Best Managed Company 2004 Business Today
Best Management Award 2005 Govt of A. P- labour departmentDH Avenue Award HR
Excellence2005 Center for Change Management
Pharma Excellence Award 2005 Leveraging Global OpportunityIBLA Indian Corporate Citizen of
the year 2005
Pharma Excellence Award 2006
Dun & Bradstreet American
Express Corporate Awards 20072007
Best Corporate Social
Responsibility Initiative 20072007 BSE & NASSCOM Foundation
Pharma Excellence Awards 2006-
072007
Category : The Lifetime
Achievement Award to Dr. K.
Anji Reddy, ChairmanPharma Excellence Awards 2006-
072007 The Indian Express
The Best Companies to Work for
in India Survey, 20072007
BT - Mercer - TNS Survey,
Rank 10Best Employers in India 2007
Award2007
Hewitt Associates & The
Economic TimesSouth Asian Federation of 2007 2nd Best Annual Report in the
42
8/6/2019 Baskar New
43/75
Accountants (SAFA) Award 2007 South Asian Region
Asia-Pacific HRM Congress 2007 2007Global HR Excellence Award for
Innovative HR Practices
Asia-Pacific HRM Congress 2007 2007
Recruitment and Staffing Best In
Class (RASBIC) Award - Best
Overall Recruiting and Staffing
Organization of the Year
Employer Branding Awards 2007 2007Excellence in Human Resources
Award - Talent ManagementBest Workplaces 2008 2008 The Econimoic TimesCorporate Citizen of the Year
2007-082008 The Economic Times
Global HR Excellence Awards
2008-092008 Asia Pacific HR Congress
HIGHLIGHTS
o Dr.Reddys is planning to provide a major thrust to its research &
development initiatives to benefit form opportunities in the biotechnology
sector.
o That the company is likely to discover a new molecule over next one-year
form its genomic initiative in the US.
o The company has formed a fully owned subsidiary called Aurigene
Discovery Technologies in India to focus on Proteomics ( specialized branch
genomics)
o Dr.Reddys is likely to invest Rs.25crores in this venture.
43
8/6/2019 Baskar New
44/75
The growth momentum was likely to be maintained through Dr.Reddys
moving up the value chain particularly in their US business with focus on branded
products.
Work Environment
Dr.Reddys work environment values creativity. They believe in teamwork,
delegation of responsibility, competitive challenges and growth. Dr.Reddys
work place strives to attract energies and retain the finest talent.
Continuously strive towards working with a multi faced and talented work
force that will Bering different perspectives to the table.
Provide an evenhanded opportunity foe individual development and
advancement based on merit.
Attract, develop and retain versatile achievers. Regardless of their nationalityand provide them with the resources to bring the best in them.
Build and organization that is continuously learning and changing to suit the
dynamic business environment.
CORPORATE GOVERNANCE
Dr.Reddys long standing commitment to high standards of corporate
governance and ethical business practices is a fundamental shared value off its board
of directors, management and employees. The companys philosophy of corporate
governance stems form its beliefs that timely disclosures, transparent accounting
44
8/6/2019 Baskar New
45/75
policies and a strong an independent board go a long way in preserving share holders
thrust wile maximizing long term share holder value.
Good corporate governance lows out of the commitment of the management
and the board of directors. When the commitment is backed by the fundamental
beliefs of maximizing value for stakeholders, transparent action in the business
values of corporate; and mutual trust amongst all constituents of the business, the
organization transforms itself into a higher plane of leadership.
The forward looking approach of Dr.Reddys has always helped it, in
achieving the desired results. This approach has transformed the companys culture
to one that is relentlessly focused on the speedy translation of scientific discoveries
into innovative products. Dr.Reddys commitment towards corporate governance
started well before law mandated such practices.
The company has identified and established its core purpose, mission and core
values for achieving corporate excellence. Dr. Reddys.
OTHER FACILITIES
Dr.REDDYS QUALITY POLICY
Customer Focus
We are committed delight customers by providing products and services
exceed expectations consistently in terms of quality, speed to market, delivery and
competitiveness.
45
8/6/2019 Baskar New
46/75
Execution Excellence
We will constantly improve systems, technologies, infrastructure, regulatory
compliance and technical support.
Competency Building
We will ensure high level of competency by attracting and retaining talented
personnel in all areas through continual education and development.
Beneficial Partnerships
We will develop and maintain mutually beneficial relationships with all
business associates and provide lasting value to all stakeholders.
Dr. REDDYS SHE
Safety Health Environment An integral part of Dr.Reddys business
As a responsible corporate citizen espoused to the cause of better quality life
Dr.Reddys accounts high priority to health, safety and environment. They are
committed to protecting the environment they operate in, and ensuring the health
and safety of their employees and stakeholders.
As evinced by the business council of sustainable development, approaching
environmental concerns form a business perspective would enable both industries
and government to orchestrate pragmatic policies towards their resolution. The
threat of global worming and reduction of carbon dioxide emission can be viewed as
a potential opportunity for energy conservation. The threat of stringent environment
standards can be seen as an apt occasion for harnessing Dr.Reddys resources and
managing our process in an optimal manner.
46
8/6/2019 Baskar New
47/75
Dr.Reddys see statutory compliance as a minimum requirement and not an
end in itself. They intend to drive improvement in all areas impacting SHE concerns
on an ongoing basis. Their actions in finding technological solutions, rigorously
tracking performance, continuous education and celebrations of successes are all
designed towards this end. In face SHE thinking has become part of the companys
fabric and has been incorporated into everything Dr.Reddys do right from brew
product development.
Dr.Reddys people now see SHE as an integral part of their job on an everyday
business, and the motto is REDUCE, RECOVER, RECYCLE, REUSE.
Dr.Reddys not only treat SHE as an important instrument of building trust between
their various stakeholders and them, Dr.Reddys actually consider being green as a
sustainable, long- term competitive edge for their business.
1.1 Inventory Management
The term inventory can be defined as tangible property held:
For sale in the ordinary course of business
In the process of production for such sale
For consumption in the production process or in the rendering of
services.
In manufacturing firms, items in inventory are called stocks. They are raw
materials, work-in-progress and finished goods and supplies. Inventory control
refers to those activities, which maintain stock at a desired level.
TYPES OF INVENTORIES:
Inventories play a major role in a business or company depending on nature of
the business. The inventories may be classified as under.
(i) Raw materials.
47
8/6/2019 Baskar New
48/75
The raw materials include the materials, which are used in the production
process, and every manufacturing firm has to carry certain stock of raw materials in
stores. These units of raw materials are operations. Inventory of raw materials are
held to ensure that the production process is not interrupted by storage of these
materials. Amount of raw materials to be kept by a firm depends upon number of
factors, including the speed with which raw materials can be ordered and received.
Its purpose is to uncouple the production function from the purchasing function i.e.
to make these two functions independent of each other sot that delay in procurement
of raw materials do not cause production delays and the firm can satisfy its need for
raw-materials out of the inventory lying in the stores.
(ii) Work in process / progress:
It refers to the raw materials engaged in various phases of
production process. The degree of completion may be varying for
different units some units may be 40% finished, or some other 90%
completed. The value of work in progress involves material costs, the
direct wages and expenses already incurred and the overheads if any. So,
work in progress inventory contains partially produced or completedgoods. The purpose of work-in-progress inventory is to uncouple the
various operations in the production process, so that machine failures and
stoppage in operations will not affected by one another.
(iii) Finished Goods:
In trading firm purchases are made where as in the manufacturing firm
produce or process the goods. However, it may be. These are goods that are either
being purchased by the firm or are being produced or processed in the firm. These
are just ready for sale to customers. Inventory of finished goods arise because of the
time involved in production process and to meet customers demand promptly. If the
firms do not maintain a sufficient finished goods inventory, they run the risk of
losing sales due to customer dissatisfaction. The purpose of finished goods inventory
is to uncouple the production and sale can be made directly out of inventory.
48
8/6/2019 Baskar New
49/75
Valuation of Inventory:
The methods of valuing inventory are combination of the actual cost and
replacement cost plans. The chief advantage of the cost or net realizable value rule
is that it is conservative. Hence the methods of valuation of inventory are quite
independent of systems of mincing.In balance sheet closing stock is shown under current assets and is also
credited to manufacturing or trading accounts. The inventories are valued on the
basis as follows.
(i) Cost of raw materials in stock may include freight charges and
carrying cost. But such cost should not exceed market price,
(ii) Work in -process is generally valued at cost, which includes cost of
materials, labor. And the proportionate factory overhead, as it is reasonable
according to degree of completion,
(iii) Cost of finished goods wound normally to be total or full cost it
includes prime cost plus appropriate amount of the overhead. Selling anddistribution cost is deducted on the other hand work in progress may be
valued at work in progress may be valued at work cost, marginal cost, prime
cost or, even at direct materials,
Valuation of Inventories at the Division
(As well as whole DRL)
Indian GAAP US GAAP
Inventories are valued at the lower of Cost of Net realizable values
Inventories are stated at lower of Cost or Market values.
49
8/6/2019 Baskar New
50/75
8/6/2019 Baskar New
51/75
8/6/2019 Baskar New
52/75
8/6/2019 Baskar New
53/75
Issue materials and supplies for use upon presentation of
authorized requirement.
Record quantities received and issued on bin lards or stock
ledger cards consisting the perpetual inventory records.
Production departments :
Make out materials requirements note i.e., of requisite quantity and quality of
materials at the right moment so the all materials may be available without delay
on production.
Check and verify that the materials of requisite quantity and quality have been
received and charged to production.
Keep proper records of materials received and their progress through different
operations or progress.
Prepare materials return note for excess materials.
Prepare materials transfer note to cover any transfer of materials.
Inventory Control Department :
In many is a subdivision of the cost accounting department, although in many
concerns, it is a part of the stores keeping department.
It keeps perpetual inventory records.
Adjust the stock on receipt of the property authorized adjustment notes.
Prepare weekly or monthly, statements of receipts, issue, balance and averageconsumption of materials both in terms of quantity and value.
53
8/6/2019 Baskar New
54/75
Chapter-IV DATA ANALYSISDATA ANALYSIS
ANDAND
INTERPRETATIONINTERPRETATION
54
8/6/2019 Baskar New
55/75
ABC Analysis
ABC analysis is a technique of inventory controlling based on their value,significance and quantities. It is properly known as Always Better Control. It is
also known as Control Importance and Exception. It is based on the concept of
Selective Inventory Management.
It is based on proposition that
(ii) Managerial items and efforts are scare and limited
(iii) Some items of inventory are more important than others.
ABC Analysis classifies various inventory into three sets or groups of priority
and allocate managerial efforts in proportion of the priority the most important item
are classified into class-A, those of intermediate importance are classified as class-
B and remaining items are classified into class-C.
The Financial manager has to monitor the items belonging to monitor the
items belonging to different groups in that order of priority and depending upon the
consumptions.
The items with the highest value is given top priority and soon and are more
controlled then low value item. The re-rational limits are as follows:
Category % of items % of total materials
A 5-10 70-85B 10-20 10-20
55
8/6/2019 Baskar New
56/75
C 70-85 5-10
Procedure:
(i) Items with the highest value is given top priority and soon.
(ii) Thereafter cumulative totals of annual value of consumption are expressed
as percentage of total value of consumptions.
(iii) Then these percentage values are divided into three categories.
ABC analysis helps in allocating managerial efforts in proportion to
importance of various items of inventory.
INVENTORY TURNOVER RATIO
What it is:
This ratio how often a firms inventory turns over during the course of theyear. Because inventories are the least liquid form of asset, a high inventory turnover
ratio is generally positive. On the other hand, an unusually high ratio compared to
the average for the industry could mean a business is losing sales because of
inadequate stock on hand.
When to use it:
If a firms business has significant assets tied up in inventory, tracking its
turnover is critical to successful financial planning. If inventory is turning too
slowly. It could indicate that it may be hampering the firms cash flow. Because this
ratio judges annual inventory turns, it is usually conducted once a year.
The formula: Cost of goods sold
Average value of Inventory
Table:-5.1
INVENTORY TREND WITH RESPECT TO TURNOVER
YEAR MARERIAL
INVENTORY
PRODUCTION
INVENTORY
ENGINEERING
INVENTORY
TOTAL
INVENTORYTURNOVER
56
8/6/2019 Baskar New
57/75
2004-2005 53657482 127667802 3700516 185025800 972625415
2005-2006 59247801 148119504 4231986 211599291 1081139341
2006-2007 81485686 193879736 5619702 280985124 1976597554
2007-2008 84068811 210172029 6004915 300245755 1600863896
2008-2009 77460244 164828669 6016084 248304997 1580000000
Source:- Data is collected from annual reports of the company
TOTAL INVENOTY = MATERIAL INVENTORY + PRODUCTION INVENTORY+ENGINEERING INVENTORY
SHOWS THE VARIOUS LEVELS OF INVENTORIES
Table:-5.2
MATERIAL INVENTORY
Source:- Data is collected from annual reports of the company
YEAR MARERIALINVENTORY
2004-2005 53657482
2005-2006 59247801
2006-2007 81485686
2007-2008 84068811
2008-2009 77460244
57
8/6/2019 Baskar New
58/75
The above table 5.2 shows us the various levels of inventories which are used
in Dr.REDDYSS LAB (UNIT-V TH BLOCK) for the five year period.
SHOWS THE VARIOUS LEVELS OF MATERIAL INVENTORY
M A R E R IA L IN V E
5 3 6 5 7 45 9 2 4 7 8
8 1 4 8 5 6 8 4 0 6 8 87 7 4 6 0 2
0
1 0 0 0 0 0 0 0
2 0 0 0 0 0 0 0
3 0 0 0 0 0 0 0
4 0 0 0 0 0 0 0
5 0 0 0 0 0 0 0
6 0 0 0 0 0 0 0
7 0 0 0 0 0 0 0
8 0 0 0 0 0 0 0
9 0 0 0 0 0 0 0
2 0 0 4 - 2 0 0 52 0 0 5 - 2 0 0 62 0 0 6 - 2 0 0 72 0 0 7 - 2 0 0 82 0 0 8 - 2 0 0 9
M A R E R IAIN V E N TO
Chart-5.1
The above chart 5.1 shows us a clear picture of the various levels of material
inventories which are used in Dr.REDDYSS LAB (UNIT-V TH BLOCK) for the
five year period. Compared to 2004-2005, material inventory increased by year
when it comes to 2008-2009.
58
8/6/2019 Baskar New
59/75
8/6/2019 Baskar New
60/75
Table:-5.4
ENGINEERING INVENTORY
Source:- Data is collected from annual reports of the company
SHOWS THE VARIOUS LEVELS OF ENGINEERING INVENTORY
ENGINEERING INVENTORY
37005164231986
56197026004915 6016084
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
ENGINEERING
INVENTORY
Graph-5.3
The above graph5.3 shows us a clear picture of the various levels of
Engineering inventories which are used in Dr.REDDYSS LAB (UNIT-IV TH
BLOCK) for the five year period. Compared to 2004-2005, engineering inventory
increased by year when it comes to 2008-2009.
YEAR ENGINEERING
INVENTORY
2004-2005 3700516
2005-2006 4231986
2006-2007 561970202007-2008 6004915
2008-2009 6016084
60
8/6/2019 Baskar New
61/75
Table:-5.5
INVENTORY TURNOVER RATIO
YEAR TOTAL
INVENTORYAVERAGE
INVENTORY TURNOVER
INVENTORYTURNOVER
RATIO
2004-2005 185025800 185025800 972625415 6.32
2005-2006 211599291 198312546 1081139341 5.45
2006-2007 280985124 246292208 1976597554 8.03
2007-2008 300245755 290615400 1600863896 5.51
2008-2009 248304997 274275377 1580000000 5.76
Source:- Data is collected from annual reports of the company
PREVIOUS YEAR + PRESENT YEAR AVG. INVENTORY = -----------------------------------------------------
2
INVENTORY TURNOVER RATIO TURNOVER / AVG. INVENTORY
61
8/6/2019 Baskar New
62/75
SHOWS THE VARIOUS LEVELS OF TURNOVER INVENTORY RATIO
Graph-5.4
The above graph5.4 shows us a clear picture of the various levels of Inventoryturnover ratio in Dr.REDDYSS LAB (UNIT-IV TH BLOCK) for the five year
period. Compared to all years the inventory turnover ratio has increased as well asdecreased. This is due to various steps taken by the company.
TREND ANALYSIS:
The term trend is very commonly used in day to day operation. For example
we often talk of increasing the rising trend of share market, population, prices etc,
and trend also called secular or long term trends in the basic tendency of production,
sales, income, employment, etc, to grow or decline over a period of time .
FORMULA FOR CALCULATING TREND :
Y = a+bx
Ya = -----------
N
6.325.45
8.03
5.51 5.76
0
2
4
6
8
10
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
INVENTORY TURNOVER RATIO
INVENTORYTURNOVER RATIO
62
8/6/2019 Baskar New
63/75
XYb = -- ----------
X 2
Where,
X = years
Y= inventory
N = total no. of years
Table:-5.6
TREND ANALYSIS FOR INVENTORY
Table showing trend analysis for inventory
Year(X)
Inventory(Y)
X= (x-2007) X
2 XY TrendValue
2005 185025800 -2 4 -370051600 202191222
2006 211599291 -1 1 -211599291 223711708
2007 280985124 0 0 0 245232193
2008 300245755 1 1 300245755 266752679
2009 248304997 2 4 496609994 288273165
Y =1226160967 X = 0
X2 =10
XY=215204858
Source:- Data is collected from annual reports of the company
Equation Y = a + bx
63
8/6/2019 Baskar New
64/75
Ya = -----------
N
1226160967=--------------------
5
= 245232193.4
XYb = -- ----------
X 2
215204858= ----------------
10
= 21520485.8
Substitute these values into the equation Y = a + bx
= 245232193.4 + (21520485.8*3)
= 309793651
Table:-5.7
TABLE SHOWS THE ESTIMATED INVENTORY FOR THE COMING 5 YEARS
64
8/6/2019 Baskar New
65/75
Source:-Data iscollectedfromannualreportsof thecompany
The above table 5.7
shows a positive trendof the inventory for the coming five years.
SHOWS THE ESTIMATED INVENTORY FOR THE COMING 5 YEARS
Graph-5.5The above graph 5.5 shows a positive trend of the inventory for the coming five
years.
Table:-5.8
YEAR ESTIMATEDINVENTORY
2010 309793651
2011 331314137
2012 352834622
2013 374355108
2014 395875594
309793651331 314137352 834622
374 355108395 875594
0
50000000
100000000
150000000
200000000
250000000
300000000350000000
400000000
2010 2011 2012 2013 2014
ESTIMATED INVENTORY
ESTIMATEDINVENTORY
65
8/6/2019 Baskar New
66/75
8/6/2019 Baskar New
67/75
= 1442245241+ ( 1734473725.5 *3)
= 1962587359
Table:-5.9
TABLE SHOWS THE ESTIMATED TURNOVER FOR THE COMING FIVE YEARS
YEAR ESTIMATED TURNOVER
2011 1962587359
2012 2136034731
2013 2309482104
2014 2482929476
2015 2656376849
Source:-Data is collected from annual reports of the company
The above table5.9 shows a positive trend of the turnover for the coming five
years.
SHOWS THE ESTIMATED TURNOVER FOR THE COMING FIVE YEARS
67
8/6/2019 Baskar New
68/75
Graph-5.6
The above graph5.6 shows a positive trend of the turnover for the coming five years .
19625873592136034731
23094821042482929476
2656376849
0
500000000
1000000000
1500000000
2000000000
2500000000
3000000000
2010 2011 2012 2013 2014
ESTIMATED TURNOVER
ESTIMATED
TURNOVER
68
8/6/2019 Baskar New
69/75
Chapter- v
FINDINGS ANDAND
SUGGESTION SUGGESTION
SUMMARY69
8/6/2019 Baskar New
70/75
The Project work was undertaken at Dr.Reddys Laboratories Ltd.,
Hyderabad. The company started functioning in 1984 mainly to enable a strong base
in the areas of Chornic, Acute and Management Speciality.
Dr.Reddys vision to become a discovery led global pharmaceutical
company. The company will achieve the vision by building.1) Work place that will attract, energize help and retain finest talent
available.
2) An organization culture that is reclentlenly focused on the speedily
translation of scientific, discoveries into innovative products that make
a significant difference in people lives.
3) A global marketing organization that understands and response to needsof customers.
Dr.Reddy Laboratories was founded by Dr Anji Reddy, an entrepreneur
scientist in 1984. The DNA of the company is drawn from its founder and his vision
to establish Indias first discovery led global pharmaceutical company. In fact, it is
the spirit of entrepreneurship that has shaped the company to become what is today.
The company is focused on creating and delivering innovative and quality products
to help people lead healthier lives.
Dr.Reddys Laboratories produce finished dosage form, active pharmaceutical
ingredients and critical care, diagnostics and biotechnology products. The basic
research program focuses on cancer, Diabetes, Bacterial infection and pain
Management.
DRL is the first Indian Company to out license an NCE molecule for clinical
trials. To strengthen their research arm, they have set up a research subsidiary,
Reddy US Therapeutics Inc., in Atlanta, USA.
The finished dosage have an enviable track record. Some of them such as
Nise, OMez, Enam, stamlo, stamlo Beta, Gaiety and ciprolet are among the top
brands in India, and many have become household names in near regulated countries
too. Indias pharmaceutical Industry presently as nearly 60,000 formulations and
70
8/6/2019 Baskar New
71/75
20,000 Manufacturers. The industry has a turn over of 145 billions with a growth
rate of 15%. The annual turnover of herbal medicine industry is about Rs.23 billion.
Indian pharmaceutical industry has emerged as a net foreign exchange earner.
The bulk industry in India was for many years. The monopoly of the
multinational corporation in India. It was in 1960s and 1970s that indigenous
facilities were set up in the public sector.
Indigenous production of these medicines however was started in 1901 with
the establishment of the Bengal chemical and pharmaceutical 1901 with the
establishment of the Bengal chemical and pharmaceutical work due to pioneering
efforts of Acharya P.C.ROY. The World of Medical treatment was witnessing some
significant developments like Lours Pasteurs discovery of pathogenic bacteria as
the cause of infectious diseases while the Indian pharmaceutical industry was in its
early stages.
Almost every business must stock goods to ensure efficient and smooth
running of its operation Decisions regarding how much and when to order are
typical of every inventory problem. The required demand may be satisfied bystocking once for the year or by stocking separately for every month. The two cases
correspond to either overstocking or under stocking. As overstocking requires
higher invested capital per unit time but with less frequent occurrences of shortages
and placement of orders under stocking on the other hand, decreases the invested
capital per unit time but increase the frequency of ordering as well as the risk of
running out of stock. The two extreme situations are costly. Decisions regarding thequality ordered of an appropriate cost function that balances the total costs resulting
from overstocking an under stocking.
FINDINGS
Inventory kept in the factory is based on the sales figures.
71
8/6/2019 Baskar New
72/75
Raw material inventory turnover ratio reveals a good raw material inventory
management.
The company has a good finished goods turnover ratio it is good for the
company.
The trend value for inventory shows the amount spend for inventory for the
next five years
The trend value for turnover shows the amount spend for inventory f or the
next five years.
The company has a computerized inventory system
The company implementing SAP system in analyzing the financial statements .
SUGGESTIONS
1. Finding of item that reached the reorder level and raises the procurement of
indent is done by the stores clerk but this can be done by the system itself by
72
8/6/2019 Baskar New
73/75
setting the appropriate system software programmed. It will reduce the work
load.
2. Simple modification procedure may exist to correct the occurrence in the
existing system.
3. Conversion period of raw materials to finished goods in varying from time to
time. This variation can be reduced by better coordination of the activities of
all departments concerned.
4. The ABC analysis used in monitoring and control of inventories is not revised
and reviewed periodically. Therefore, there is a scope for revision of the
method.
5. Proper planning in advance is suggested for frequency of movement of
commonly used inventories.
Conclusion
Dr.Reddys Laboratories produce finished dosage form, active pharmaceutical
ingredients and critical care, diagnostics and biotechnology products. The basic
research program focuses on cancer, Diabetes, Bacterial infection and pain
Management.
73
8/6/2019 Baskar New
74/75
BIBLIOGRAPHY
BIBLIOGRAPHY
Referred following standard texts and websites:
74
8/6/2019 Baskar New
75/75