CONTENTS

ABSTACT………………………………………….. 02
CHAPTER - I
INTRODUCTION……………………………………………03
OBJECTIVES OF THE STUDY…………………………….06
SCOPE AND SIGNIFICANCE OF THE STUDY…………..07
METHODOLOGY…………………………………………...08
LIMITATIONS OF THE STUDY…………………………...09
CHAPTER – II
INDUSTRY PROFILE……………………………………….10
CHAPTER – III
COMPANY PROFILE………………………………………..14
CHAPTER – IV
FINANCIAL ANALYSIS OVERVIEW……………………...17
CHAPTER – V
FINANCIAL ANALYSIS AND INTERPRETATION……….22
CHAPTER – VI
FINDINGS………………………………………………………
SUGGESTIONS…………………………………………………
CONCLUSIONS……………………………………………….43
BIBILOGRAPHY……………………………………………...44

1
 ABSTRACT
The Indian biotechnology industry has become an attractive destination
for foreign companies largely due to the increasing amount of
governmental support. The budgetary allocation to the department of
biotechnology has tripled in the last five years. The department’s budget
is forecasted to increase further, as the biotechnology industry is
expected to help India achieve an average growth rate of 9% during its
current 11th five year country plan.
The project was conducted to know about the bio pharma industry in
India and to know about the Celestial Labs Ltd. The financial
performance of the company is analyzed and how the company is
performing in the past few years.
One of the main findings was that the company having a considerable
increase in total profit which shows the operating efficiency of the
company. The main suggestions was the company should keep the
working capital as ideal, if it is high, indicates the wastage of money
otherwise inadequate working capital.

INTRODUCTION

2
Finance is regarded as the lifeblood of a business enterprise. The test of
success of business enterprise is its ability to earn profits and continue
its operation and growth. Profit earning is considered essential for the
survival of business. A business needs profits not only for existence but
also for its expansion and diversification. Profitability is barometer for
measuring efficiency and economic prosperity of a business enterprise.

Financial statements:
Financial statements are the basis for decision making by the
management as well as other outsiders who are interested in the affairs
of the firm such as investors, creditors, customers, suppliers, financial
institutions, employees, government researchers and general public. It is
a collection of data organized according to logical and consistent
accounting procedures. Its purpose is to convey an understanding of
some financial aspects of a business firm.
The term financial statement generally refers to two statements:
1) The position statement or the balance sheet
2) Income statement or the Profit and Loss Account
The primary objective of financial statement is to assist in decision
making.
Other objectives are:
1) To provide reliable financial information about resources and
obligation of a business firm.
2) To provide reliable information about changes in such economic
resources and obligations.
3) To provide financial information that assist in net earning
potentials of business activity.
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4) To provide financial information that assist in estimating the
earning potentials of business.
5) To disclose, to the extent possible other information related to the
financial statement that is relevant to the needs of the users of these
statements.
Financial analysis:
Financial analysis is the process of identifying the financial strength
and weakness of the firm by properly establishing relationship
between the items of the balance sheet and Profit and Loss account.
The management of the firm can undertake financial analysis or by
other parties outside the firm like owners, creditors and other
interested parties like bankers, journalists, legislatures, politicians etc.
Accounting to Myers, Financial statement analysis is largely a study
of relationship among the various financial factors in a business as
disclosed by the trend of these factors as shown in a series of
statements.
For the purpose of analyses individual items are studied; their
interrelationships with other related figures established, the data is
sometimes rearranged to have better understanding of the information
with the help of different techniques or tools for the purpose.
Analyzing financial statements is a process of evaluating relationship
between component parts of financial statements to obtain a better
understanding of a firm’s position and performance. The analysis is
financial statements thus refers to the treatment of the information
contained in the financial statements in way so as to afford a full
diagnosis of the profitability and financial position of the firm
concerned. For this purpose financial statements are classified
methodically, analyzed and compared with the figures of previous
years or other similar firms.
The purpose of financial analysis is to diagnose the information
contained in financial statement so as to judge the profitability and
4
 financial soundness of the firm. Just like a doctor examines his patient
by recording his body temperature, blood pressure etc., before making
his conclusion regarding the illness and before giving his treatment. A
financial analyst analyzes the financial health or weakness of an
enterprise. The financial analyst has also to be careful, about the
impact of price level changes, window dressing of financial
statements changes, in according policy of a firm, accounting concept
and personal judgment.
The future plan of firm should be laid down by the management in
view of the firm’s financial strength and weaknesses. The nature of
financial analysis will differ depending up on the purpose of the
analyst. The creditors are interested to know about the liquidity
position of the firm; the suppliers of the long-term debt are interested
in knowing about the firm’s profitability.

OBJECTIVES OF THE STUDY

The objectives of the study are:-

5
• To evaluate the overall financial performance of CELESTIAL BIO
LAB LIMITED.
• To assess the liquidity and solvency on CELESTIAL BIO LAB
LIMITED.
• To get an idea about the profitability and solvency of CELESTIAL
BIO LAB LIMITED.
• To analyze the long-term financial position of CELESTIAL BIO
LAB LIMITED.
• To make suitable suggestions for improvement, for the future
benefit of CELESTIAL BIO LAB LIMITED.

SCOPE AND SIGNIFICANCE OF THE STUDY

6
Scope of the study:
This study concentrates on the financial performance of CELESTIAL
BIO LAB LIMITED.

Significance of the study:

Profitability is an indication of the efficiency with which the operations
of the business are carried on. The main objective of this study is to
evaluate the general financial performance CELESTIAL BIO LAB
LIMITED.
Financial analysis is helpful for providing guidelines to the guidelines to
the management and assists them to take future decisions. This analysis
helps the management to assess their financial position. This study also
helps the general public to evaluate the performance of the company
achieving in social objectives.

METHODOLOGY
The methodology used involves method used for collecting the data. The
data collection involved two types of data.
1) Primary data
2) Secondary data
This study majorly based on secondary data.

7
Primary data:
Primary data is the data which is collected by the researcher directly
from his observations and experiences. For example, if the researcher
conducts a survey for the collected of data then it is known as primary
data.
We have got the data from the employees of the company.
Secondary data:
Secondary data is data that has already been collected and collated by
somebody for some reason other than the current study. It can be used to
get a new perspective on the current study, to supplement or compare the
work or to use parts of it, as another study may prove costly and time
consuming.
Secondary data can further be divided into two parts. Qualitative data
includes biographies, personal letters, diaries, records, documents,
published material, computer database, policy statements, etc.
Quantitative data would have market research, census, and Economic
documents, planning documents or specimens. The list is endless and
once the type of secondary data is identified, it becomes easy to locate
the source.
Here we have collected the secondary data from internet, books and
reports.

LIMITATIONS OF THE STUDY

• Since the project is done in only two months duration, we could

not go indepth into all the aspects affecting the financials of the
company.

8
 • There are no companies which are matching with the exact profile
of this company. Hence, comparison with peers is also a challenge
to our study.

INDUSTRY PROFILE
The bio pharma market having grown at 16.5% from 2004’s revenue of $60.7
billion was valued at $70.8 billion in the year 2005 (Vision Gain report 2005). At
present, the US is dominating the biotech market. The major thrust in
biotechnology is in bio-pharmaceuticals, with more than 350 products under
various phases of advanced clinical trials. In the US alone, more than 90 new
products have been approved by the FDA, while more than 2000 products are
9
under development. India being on the threshold of biotech revolution has 280
biotech and 180 bio suppliers contributing to the total biotech market worth
$1.07billion. The Indian biotech industry in 2004-05 registered revenues of Rs.
4,745 crore recording a 36% growth compared to the previous year.
This sector offers good growth potential. Drug molecule development and allied
services are growth areas in bio pharma industry and successful product
innovations results in company commanding good premium in the market.
These are exciting times for the Indian biotechnology industry. The industry has
doubled in size within the last two years buoyed by a strong growth in biotech
exports. In the year 2006-07, it passed the USD 2 billion mark in revenues and
registered a 31% growth rate as compared to the fiscal year of 2005-06. The Indian
biotechnology industry offers immense potential for investments thanks to its large
marketplace, strong government support and low-cost English speaking
professionals. The industry currently has around 340 companies which employ
25,000 technologists and the latter is expected to double by the year 2010.
The biotechnology market in India consists of agricultural biotechnology,
industrial biotechnology, bioinformatics, biopharmaceuticals and biotechnology
related services, with the last two being the main pillars of growth.
The biopharma sector leads the pack having generated 70% of the total industry’s
revenue. Domestic firms dominate this sector, accounting for fourteen of the top
twenty firms.
The biopharma sector is comprised of 130 companies involved mainly in the
production of vaccines, therapeutic drugs, animal biologicals, statins and
diagnostics. Vaccine production is the most profitable, with five of the top ten
companies in the biopharma segment dealing primarily in vaccines.
Interestingly enough, even though there is a large domestic market for such
products, the Indian biopharma sector is export-driven, with exports accounting for
more than 58% of revenue in 2006.
Bioservice is another fast-rising segment in the Indian biotechnology industry,
recording a growth of 70% in revenues in 2005-06. Bioservices mainly include
clinical research and contract research organizations (CRO) and to some extent,
custom manufacturing. There are 70 companies in the sector offering services in
areas such as data management, clinical trials, site management, bio-equivalence,
toxicity studies and knowledge process outsourcing for pharmaceutical companies.
Nascent attractiveness
The Indian Government plans to follow the American biotechnology industry
model, where governmental investment only accounts for 20% of the industry’s
total funding. Hence, the government has come out with a list of incentives to
attract foreign direct investment into the biotechnology industry. These incentives
10
include a 150% weighted tax deduction on R&D expenditure; a three-year excise
duty waiver on patented products; and 100% foreign equity investments in the
manufacturing of all drugs (except recombinant DNA products and cell targeted
therapies).
Currently the top three biotech hubs are located in Bangalore, Hyderabad and
Pune. Bangalore today is the most popular choice for most biotech companies due
to its highly developed infrastructure and networking options. More than half of
biotech firms based in India can be found in and around Bangalore. Leveraging on
a well-trained talent-pool, MNC’s such as Novo Nordisk and Reametrix have set
up operations there. Indian Department of Biotechnology’s budget increases
threefold over last five years.
India’s scientific knowledge pool stands at 3 million graduates, 700,000 post-
graduates and 1,500 PhD’s. A comparison of several countries shows that these
numbers are increasing in India annually at a faster rate than in other countries.
India is estimated to add 690,000 graduates annually which is significantly higher
than in China, Japan, the United States, or Europe.
Key Indian opportunities for outsourcing are available in bio-processing, drug
discovery and in clinical research. The cost differential for drug discovery between
the United States and India is around 75%. In India, a drug discovery process may
be around USD 200 million in versus USD 800 million in the US. India has now
become a key destination for outsourced biotechnology R&D. Clinical trials cost
30% less to carry out in India than in Australia and about 50% less than in the US.
On average for 2005, the starting annual salary for an Indian PhD biotechnology
scientist in India with no experience was USD 15,000, whereas a counterpart in the
United States or Singapore would cost around USD 80,000 and 64,000
respectively. However, the growing demand for talent against a short supply is
increasing India’s labor costs. As a result, any cost advantage is dwindling fast.
Usual suspects
There are several complications that may arise as a result of operating in India.
These include operational disruptions caused by worker disputes, interrupted
power supplies, and antiquated transport infrastructure in many regions. Also
animal rights activists, religious and cultural barriers may disrupt operations given
the Indian reverence for certain animals such as cows, monkeys and snakes.
The main problems that foreign investors face include the presence of bureaucracy,
corruption, the lack of precise ethical regulations and inadequate intellectual
property (IP) protection and enforcement. The Indian biotechnology sector is
governed by five central ministries and six state ministries which have created lot
of red tape complications when it comes to ruling decisions and new product
launches. A new product launch, for example, has to clear not only the district and
state ministries but by also several national regulatory bodies.

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Finally, there is a lack of IP protections to guard against corporate theft and
copycats. In the past, many Indian biotech firms faced theft either from their
employees, running away with vital product data, or by the hacking of their
databases by external parties. In an industry where a single product can spell
success, stolen ideas translate to millions of dollars. Although India has a proper
English-based legal system, many employers are unwilling to take their employees
to court due to the slow judiciary process. India has begun to tackle its copyright
troubles with recent changes in intellectual property regulations. For example,
there has been a restructuring of patent laws to focus on product protection rather
than only process protection. This allows companies to patent their final product
and as well as the processes that lead up to that product. This reduces the
opportunity for copying and is the right start in the improvement of IP regulations
in India.
India’s biotechnology industry is on a roll. It has already a strong global presence,
producing the fourth largest volume of products in the world. Revenues could
increase to a formidable USD 25 billion by 2015. India’s vast pool of skilled
manpower, huge patient base and relatively low costs drives many global biotech
giants to partner, acquire or outsource to Indian companies. Likewise, some of the
larger Indian companies have even begun acquiring foreign entities in the Unites
States and Europe, to retail their products and expand product offerings.
The success of Indian companies in reducing the prices of drugs, has made most
multinationals realize that it is now impossible to ignore India. A good illustration:
Hyderabad-based Shantha Biotechnics, which offers a combination vaccine for
Hepatitis-B for USD 2 per dose versus USD 5 per dose by MNC’s such as Chiron.
Major improvements are needed for India’s biotech industry to surge. First, there
needs to be more protection and enforcement of intellectual property rights.
Secondly, regulations to control the testing of products on unsuspecting patients
need to be put in place. Lastly, the government needs to streamline all of the
biotechnology activities under one body, to simplify proceedings and to create
some transparency for investors in the industry.

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 COMPANY PROFILE
CELESTIAL BIO LABS LIMITED was incorporated as a Private Limited
Company on November 19, 1997 as "Celestial Technologies Private Limited". The
subscribers to the memorandum were Mr. Rajani Kanth Katragadda and Mr. Vijay
Marur. The company was later converted into a Public Limited Company under the
name "Celestial Technologies Limited" on December 6, 1999 and has been
subsequently renamed as "CELESTIAL BIO LABS LIMITED" effective from
February 13, 2004. The present promoter of the company is Mr. Aditya Narayan
Singh. The Original promoters sold their holding to the present promoter on
7.11.1998.
CELESTIAL BIO LABS LIMITED is a Hyderabad based ISO 9001-2000 certified
company. It has been providing customized enterprise solutions, bioinformatics
services and also involved in development of biopharmaceuticals and industrial
enzymes. CELESTIAL BIO LABS is in contact with Centre for Cellular &
Molecular Biology (CCMB) under the aegis of Council for Scientific and
Industrial Research, Ministry of Science and Technology, Government of India
and Indian Institute of Chemical Technology (IICT), premier chemical and
Biological Institutions in Hyderabad to work on collaborative research projects to
be funded by Department of Science and Technology New Delhi. The in-house
research and development centre of CELESTIAL BIO LABS is recognized by the
Department for Scientific and Industrial Research, Ministry of Science and
Technology, New Delhi.
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Major Events in the history of the Company are given below:
In the Year 1997 company is incorporated. In the year 1999 Conversion of Private
Limited Company to Public Limited Company and Change of Management has
taken place. 2004 ISO Certification 2004 Development of a denovo drug design
tool" CELSUITE" 2004 Change of name from Celestial Technologies Limited to
Celestial Labs Limited 2004 Developed a bio-molecule to treat Vitiligo 2005
Designed a bio- molecule to treat multi cancer.
The company has developed a de novo drug design tool "CELSUITE" to aid the
pharma industry in discovering new molecules for curing different diseases. This
tool will enable the company not only to design new molecules for its own purpose
but also to provide the bio-informatics services to the various pharma and biotech
companies. This tool has filed for protection of the IPR under the Copy Right Act
vide Dairy no 147-151 /05 on 20.06.2005 to the department.
Based on the company's in silico expertise (applying bioinformatics tools), the
company has developed therapeutic molecules to treat Leucoderma and multiple
cancers. The cloned molecules are being subjected for purification by the wet lab
procedures at the company's collaborative Institute, Department of Microbiology,
Osmania University, Hyderabad.
In the industrial biotechnology area, the company has signed the technology
transfer agreement with IMTECH Chandigarh (a very reputed Council of Scientific
& Industrial Research organization) for the manufacture of two industrial enzymes
- alpha Amylase and alkaline Protease. Initially these would be marketed in India
and later overseas.
The company has initiated setting up of a biotechnology facility to develop its drug
molecules and manufacture industrial enzymes. This facility would also include the
research laboratories for carrying out further R & D activities to develop new
related products for reducing wrinkles / stretch marks and acceleration of wound
healing from the same chemical structure of vitiligo. The proposed facility will be
set up at Shapoorji Pallonji Biotech Park in Genome Valley at Hyderabad in
Andhra Pradesh.
The company has also plans to cater to the laboratory process outsourcing by using
innovative platform technologies/services in the field of analytical laboratory and
bio-computational systems. The company is positioned to drive innovations and
support activities in post genome advancements via clinical trials (CT) and
laboratory process outsourcing (LPO) to be a significant player in personalized
medicine in select disease areas.
2009
- Celestial BIO Labs Ltd has informed that the Board of Directors of the Company
by a resolution passed by circulation has appointed Mr. Subhash C Srivastava as an
Additional Director of the Company w.e.f. April 15, 2009.

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R&D Activities:
Celestial will always continue to upgrade packaged ERP and
Bioinformatics’ tools to meet the latest requirement of various clients.
Celestial is in advance stage of clinical trials of new bio peptide
molecules applicable for the treatment of
• Vitilogo
• Psoriasis
• Wound Healing
• Anti Wrinkles
• Wrinkles and skin aging
• Skin Tan
Celestial is in the process of developing formulations particularly by
taking the molecules that has become of patatents combining with new
herbal and enzyme ingredients to improve the efficacy and reduce the
side effects of new combination drugs.
Major strengths:
• Technical expertise
• Process adherence
• Domain knowledge
• Quality policies
• Better ROI
• Market competence
Modules of SAP been implemented:
• Financial Accounting
• Customer Relationship Management
• Sales & Distribution
• Global Trade Services
• Supply Chain Management
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 • Material Management
• Work Flow
• Industry solutions for Public Sector

Source: Celestial Biolabs, Annual Report, 2008-2009

FINANCIAL ANALYSIS OVERVIEW

Nature of Financial Statements
Financial statements are prepared for the purpose of presenting a
periodical review or report by the management and deal with the state of
investment in business and result achieved during the period under
review. They reflect a combination of recorded facts, accounting
conventions and personal judgements. Only those facts, which are
recorded in the business books, will be reflected in the financial
statements. For example, fixed assets are recorded in the books at cost
price and shown in the balance sheet at cost price irrespective of their
market and realizable price. Again, financial statements are prepared by
following certain principles, which are in use from a long time. For
example, the conservatism principles indicates that all the anticipated
losses are to be provided whereas all the anticipated profits are to be
taken into account while preparing financial statements. Such
conventions will not reflect the true position of the business, as the
actual position of the business will definitely be better as compared to
the position depicted from the financial statements.
The following points reflect truly the nature of the financial
statements of the business entities:

16
 i. These are reports or summarized review about the performance,
achievements and weakness of the business.
ii. These are prepared at the end of the accounting period so that the
various parties may take decisions of their future action in respect
of the relationship with the business.
iii. The reliability financial statements depend on the reliability of
accounting data. These statements can not be said true and fair
representatives of the strength or profitability. There are numerous
frauds and defalcations in accounts.
iv.The figures in the financial statements are a combination of
recorded facts. There may be certain development and factors
which may be very important for the business, are not taken into
account, as these are not recorded in the routine of the accounting.
Moreover, fixed assets are recorded values without taking into
consideration the change in their value due to the fluctuations.
v. These statements are to be prepared as per accounting standards
and conventions.
vi.These statements are influenced by personal judgement of the
accountant though he is expected to be more objective in his
approach. These judgements may relate to valuation of inventory,
depreciation of their fixed assets and while making distinction
between capital and reserves.
Types of Financial Analysis
A distinction between various types of analysis on the basis of:
A. Material use
B. Objectives of analysis
C. According to the modus operandi of the analysis
On the basis of material use
1. External data
This analysis is done by the outsiders who do not have access to
the detailed informal accounting records of the business firm. The
outsiders include investors, creditors, potential government
agencies and the general public. The position of the external
analyst has been improved in recent times owing to government
17
 regulations requiring business undertaking to mate available
detailed information to the public through audited accounts.

2. Internal analysis
The internal analysis is accomplished by those who have access to
the books of accounts and all other information relate to the
business analysis for managerial purpose is the internal type of
analysis and is conducted by employees and executives of the
enterprise as well as governmental and cost agencies, which may
have a major regulatory and jurisdiction over the business.
On the basis of objectives of analysis
On the basis of objectives, financial analysis is divided into two.
1. Short term analysis
This analysis is mainly concerned with the working capital
analysis. In the short run, a company must have ample funds
readily available to meet its currents needs and sufficient
borrowing capacity to meet the contingencies. In short term
analysis current assets and current liabilities are analysed and
liquidity is determined.
2. Long term analysis
In long term analysis, a company must earn a minimum amount
sufficient to maintain a reasonable rate of return on the company
and to beat the cost capital. Thus in the long term analysis, the long
run stability and earning potentiality of the company is analysed.

On the basis of modus operandi of analysis

There are 2 types of financial analysis based on modus operandi.

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1. Horizontal Analysis –it refers to comparison of financial data of a company
for several years.
2. Vertical Analysis (static analysis)- it refers to study of various items to the
financial statements one accounting period.

TOOLS OF FINANCIAL ANALYSIS

The analysis and interpretations of financial statements is used to determine

the financial position and results of operation as well.
1. Comparative statement-
These are statements of different periods of time
It shows
a. Absolute figures of comparing years
b. Changes in absolute figure
c. Absolute data in terms of percentages
I. Comparative balance sheet- it is study of the trend of the same
items and computed items in two or more in balance sheets of
the same business enterprise on different dates.
II. Comparative income statement- it gives the results of the
operation of a business and progress of business over a period
of time.
1. Trend analysis-
The financial statements may be analyzed by computing trends of series
information. It determines the direction upwards or downwards and
involves the computation of percentage relationship that each statement
items bears to the same item I base year.
2. Common size statement-
These are shown in analytical percentages. The figures are shown as
percentages of total assets, total liability and total sales.
a. Common size balance sheet – a statement in which balance sheet are
expressed as the ratio each asset to total asset and the ratio each
liability to total liabilities.
b. Common size incomes statement- the items in income statement can
be shown as percentage of sales to show the relation of each item to
sales.

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1. Funds flow statement-
The funds flow statement is designed to analyze the change in the
financial condition of business enterprise between two periods. One word
‘fund’ is use to denote working capital.

2. Cash flow statement-

It is a statement of changes in financial position of firm on cash basis.
a. It enumerates net effects of the various business transactions on cash
and takes in to account receipts and payment of cash
b. It summarizes the causes of changes in cash position of a business
enterprise between dates of balance sheets.

1. Ratio analysis-
A ratio is an expression of the quantitative relationship between two
numbers.
a. It is technique of analysis and interpretations of financial statements.
b. It is the process establishing an interpreting various ratios for helping
in making certain decisions.

1. Marginal costing-
The institute of cost and management accountants London has defined
“the ascertainment of marginal costs and of the effect on profit of
changes in volume or type of input”.

2. Standard costing-
a. A predetermined cost which is calculated from management’s
standards of efficient operation and the relevant necessary expenditure
b. A technique of cost accounting which compares the standard cost of
each product or service with actual cost to determine the efficiency of
the operation so that any remedial action may be taken immediately.

20
 Company financial performance
Celestial Bio labs Ltd. announced unaudited earnings results for the
fourth quarter and full year ended March 31, 2010. For the quarter, the
company reported net profit from ordinary activities after tax of INR
3.68 million or INR 0.31 per diluted share on net sales/income from
operations of INR 51.45 million against net profit from ordinary
activities after tax of INR 14.64 million or INR 1.31 per diluted share on
net sales/income from operations of INR 54.47 million in the same
period of last year. Profit from operations before interest and tax was
INR 4.36 million against INR 15.30 million in the same period of last
year. Profit before tax was INR 4.13 million against INR 14.80 million
in the same period of last year. For the full year ended March 31, 2010,
the company reported net profit from ordinary activities after tax of INR
59.27 million or INR 4.94 per diluted share on net sales/income from
operations of INR 246.21 million against net profit from ordinary
activities after tax of INR 53.10 million or INR 4.74 per diluted share on
net sales/income from operations of INR 192.51 million in the same
period of last year. Profit from operations before interest and tax was
INR 71.37 million against INR 60.53 million in the same period of last
year. Profit before tax was INR 70.98 million against INR 59.87 million
in the same period of last year.

21
 Comparative Balance Sheet
------------------
- in Rs. Cr.
------------------
Balance Sheet -
Celestial Labs Sun Pharma Cipla Dr Reddys Labs Ranbaxy Labs

Mar '09 Mar '09 Mar '09 Mar '09 Dec '09
Sources Of Funds
Total Share Capital 11.19 103.56 155.46 84.20 210.21
Equity Share Capital 11.19 103.56 155.46 84.20 210.21
Share Application Money 0.00 0.00 0.00 0.00 175.85
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 52.48 5,047.86 4,186.32 5,174.90 3,748.54
Revaluation Reserves 0.00 0.00 8.97 0.00 0.00
Networth 63.67 5,151.42 4,350.75 5,259.10 4,134.60
Secured Loans 0.01 23.60 2.79 2.60 175.83
Unsecured Loans 0.75 0.00 937.45 637.70 3,172.55
Total Debt 0.76 23.60 940.24 640.30 3,348.38
Total Liabilities 64.43 5,175.02 5,290.99 5,899.40 7,482.98

Application Of Funds
Gross Block 32.79 1,061.90 2,693.29 2,157.30 2,620.92

Less: Accum. Depreciation 1.96 362.64 700.80 946.50 1,027.52

Net Block 30.83 699.26 1,992.49 1,210.80 1,593.40
Capital Work in Progress 23.43 75.95 366.32 411.20 414.92
Investments 0.00 2,694.59 81.32 1,865.10 3,833.69
Inventories 1.80 486.74 1,398.32 735.10 1,230.48
Sundry Debtors 2.37 680.03 1,837.15 1,419.70 1,534.65
Cash and Bank Balance 0.11 20.17 52.84 84.30 25.56
Total Current Assets 4.28 1,186.94 3,288.31 2,239.10 2,790.69
Loans and Advances 7.06 311.42 1,131.10 1,331.20 1,967.65
Fixed Deposits 0.00 1,245.30 0.16 300.10 728.56
Total CA, Loans &
Advances 11.34 2,743.66 4,419.57 3,870.40 5,486.90
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 1.77 696.34 1,177.00 1,163.30 3,082.89
Provisions 1.38 342.10 391.71 294.80 763.03
Total CL & Provisions 3.15 1,038.44 1,568.71 1,458.10 3,845.92
Net Current Assets 8.19 1,705.22 2,850.86 2,412.30 1,640.98
Miscellaneous Expenses 1.98 0.00 0.00 0.00 0.00
64.43 5,175.02 5,290.99 5,899.40 7,482.99

22
Total Assets
Contingent Liabilities 0.00 85.36 730.75 1,934.80 261.05
Book Value (Rs) 56.88 248.72 55.86 312.17 94.16

According to the available data, the industry rivals like Sun Pharma, Cipla,
Ranbaxy, Dr. Reddy etc. are well established players in the market. On comparison
with Celestial Biolabs, which is a small player in the industry, but highly
diversified in the field of Pharma, Bio-technology, Software etc. shows a
commendable performance in the past years.
One of the point to be noted is that the other rivals have invested substantial
amount in investment compared nil to Celestial Biolabs.
Another major aspect of the analysis would be the comparison of current liabilities
to provisions in different firms. Celestial Biolabs has provided a significant amount
for provisions compared to liabilities when compared to Cipla and Ranbaxy.
On the whole, Celestial Biolabs has a long way to go in the industry and need to
establish strong based to compete with the fellow peer members of the industry.

Source: moneycontrol.com
23
 Celestial Biolabs Limited Balance Sheet 2005-09

Celestial Labs 200903

200503
CL05
balance

------------------- in
Rs. Cr.
Balance Sheet -------------------

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 5.69 6.19 6.19 11.19 11.19

Equity Share Capital 5.69 6.19 6.19 11.19 11.19

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 5.92 8.37 14.63 47.82 52.48

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Networth 11.61 14.56 20.82 59.01 63.67

Secured Loans 0.00 0.04 1.28 0.12 0.01

Unsecured Loans 0.00 0.30 0.60 0.70 0.75

Total Debt 0.00 0.34 1.88 0.82 0.76

Total Liabilities 11.61 14.90 22.70 59.83 64.43

Application Of Funds

Gross Block 6.16 7.03 7.68 12.51 32.79

Less: Accum. Depreciation 0.86 1.12 1.42 1.68 1.96

Net Block 5.30 5.91 6.26 10.83 30.83

24
Capital Work in Progress 0.00 0.00 0.00 12.10 23.43

Investments 0.00 0.00 0.00 0.00 0.00

Inventories 0.00 0.00 0.00 0.00 1.80

Sundry Debtors 2.99 3.89 4.69 8.12 2.37

Cash and Bank Balance 0.31 0.55 0.54 0.89 0.11

Total Current Assets 3.30 4.44 5.23 9.01 4.28

Loans and Advances 0.58 0.90 4.24 27.14 7.06

Fixed Deposits 0.00 0.00 0.00 0.00 0.00

Total CA, Loans &

Advances 3.88 5.34 9.47 36.15 11.34

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 0.35 1.49 1.53 1.84 1.77

Provisions 0.00 0.01 0.00 1.34 1.38

Total CL & Provisions 0.35 1.50 1.53 3.18 3.15

Net Current Assets 3.53 3.84 7.94 32.97 8.19

Miscellaneous Expenses 2.78 5.16 8.51 3.94 1.98

Total Assets 11.61 14.91 22.71 59.84 64.43

Contingent Liabilities 0.00 0.00 0.00 0.00 0.00

Book Value (Rs) 20.42 23.52 33.63 52.72 56.88

According to the comparative Balance sheet analysis for the Y-o-Y 2008-
2009, one can observe that the reserves has increased by 9.7% upto Rs 52.48
crores.

25
Adding to this positive growth of the firm is a significant change in the networth
by 7.89% with a slight decrease in the total debt by 7.3% upto Rs 76 lakhs.
On the asset side, there is a tremendous growth in the net block by 184.6%.
Supporting the above change is Capital Work in Progress, increasing by 93.6%. On
the contrary there is marginal decrease in Sundry Debtors, Cash and Bank Balance,
Total Current Assets, Loans and Advances.
Net Current Assets have also decreased by 75.15%. An addition of
inventories in the year 2009 shows an inclination of the firm towards a strategic
position in the market.

In all, the Book Value of Celestial Labs from the past five years shows a
steady increase hence, provides an excellent long term investment opportunity.

200903
200503
CL05
keyfinratio
------------------
- in Rs. Cr.
------------------
Key Financial Ratios -

26
 Mar
Mar '05 Mar '06 Mar '07 Mar '08 '09

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share -- -- -- 1 0.5
Operating Profit Per Share
(Rs) 5.54 7.19 10.8 9.75 6.68
Net Operating Profit Per
Share (Rs) 14.16 16.5 22.81 18.06 17.2
Free Reserves Per Share
(Rs) 5.53 5.18 9.89 39.2 45.11
Bonus in Equity Capital -- -- -- -- --
Profitability Ratios
Operating Profit Margin(%) -- 43.55 47.36 53.98 38.84
Profit Before Interest And
Tax Margin(%) -- 41.06 45.18 52.69 37.42
Gross Profit Margin(%) -- 43.54 47.34 52.69 37.42
Cash Profit Margin(%) -- 34.6 38.58 51.04 34.52
Adjusted Cash Margin(%) 39.19 43.08 46.86 51.04 34.52
Net Profit Margin(%) 33.2 32.11 36.41 44.2 27.58
Adjusted Net Profit
Margin(%) -- 32.11 36.41 44.2 27.58
Return On Capital
Employed(%) -- 22.33 22.96 15.92 9.53
Return On Net Worth(%) 23.08 22.53 24.7 16.22 8.6
Adjusted Return on Net
Worth(%) 30.34 34.9 41.76 16.22 8.6
Return on Assets Excluding
Revaluations 22.4 19.99 21.22 14.18 7.86
Return on Assets Including
Revaluations 22.4 19.99 21.22 14.18 7.86
Return on Long Term
Funds(%) 23.14 22.33 22.96 15.92 9.53
Liquidity And Solvency Ratios
Current Ratio 11.03 3.55 6.19 11.37 3.61
Quick Ratio 11.03 3.55 6.19 11.37 3.04
Debt Equity Ratio -- 0.02 0.09 0.01 0.01
Long Term Debt Equity Ratio -- 0.02 0.09 0.01 0.01
Debt Coverage Ratios
Interest Cover -- 2,106.13 1,692.52 2,076.78 93.45
Total Debt to Owners Fund -- 0.02 0.09 0.01 0.01
Financial Charges Coverage
Ratio 412.62 461.36 559.6 141.96 48.3

27
Financial Charges Coverage
Ratio Post Tax 412.62 457.38 554.69 135.22 43.93
Management Efficiency Ratios
Inventory Turnover Ratio -- -- -- -- 10.69
Debtors Turnover Ratio 3.35 2.97 3.29 3.15 3.67
Investments Turnover Ratio -- -- -- -- 10.69
Fixed Assets Turnover Ratio 1.76 3.59 4.25 -- 0.79
Total Assets Turnover Ratio -- 0.84 0.71 0.34 0.34
Asset Turnover Ratio 2.37 2.39 2.87 1.62 0.79
Average Raw Material
Holding -- -- -- -- --
Average Finished Goods
Held -- -- -- -- --
Number of Days In Working
Capital 157.85 135.1 202.39 587.23 153.42

Profit & Loss Account Ratios

Material Cost Composition -- -- -- -- --

Imported Composition of
Raw Materials Consumed -- -- -- -- --
Selling Distribution Cost
Composition 6.31 7.7 6.69 5.34 5.62
Expenses as Composition of
Total Sales 80.99 88.97 93.61 90.99 69.61
Cash Flow Indicator Ratios
Dividend Payout Ratio Net
Profit -- -- -- 14.65 12.33
Dividend Payout Ratio Cash
Profit -- -- -- 12.69 9.85
Earning Retention Ratio 100 100 100 85.35 87.67
Cash Earning Retention
Ratio 100 100 100 87.31 90.15
Adjusted Cash Flow Times -- 0.08 0.28 0.08 0.11
Earnings Per Share 4.71 5.3 8.3 7.98 4.74
Book Value 20.42 23.52 33.63 52.72 56.88

The net operating profit of the company was continuously increasing till
2007 and it started decreasing from then. The Net Profit Margin has
been steadily increased to till 44.2 in 2008 and started decreasing.
Return on capital employed was slightly increased from 2006 to 2007
and then started decreasing with rapid rate. Return on net worth was
28
fluctuating between the years 2005-07 but there was rapid fall in the
period 2007-09.current ratio had a tremendous fall in 2006 and there was
a slight increase in 2006_09 and again it decreased to 3.61 in 2009.
Quick ratio also had an same impact as current ratio had .

Operating Profit Margin %

29
The graph of operating profit margin depicts that the margin has
drastically decreased after March’08. The above decrease in the profit
margin may signify that management policies are enforced for necessary
maintenance and depreciation.
The above mentioned assumption is if regarded to be right, then this
proves company’s long term perspective in the business. But on the
other hand, it also proves that the company is high financial risk. In
order to increase the profit margin, company may have to cut on wages
or comprise on other factors of production, else it will be a difficult call
on its growth.

Gross Profit Margin %

Similar to operating profit margin, the gross profit margin has also
decreased drastically after 2008. This shoes inability of a firm for
effectively utilizing its resources. Hence, in this case of Celestial
Biolabs, it shows inefficiency to utilize its resources like intellectual
capital, technology and other variables to provide a good quality service.
In pharmaceutical industry it is very necessary for a firm to provide
superior quality services in order to mild survive. Hence, it is doubtful
about company’s future client prospect.
30
Net Profit Margin %

The net profit margin also shows a similar trend as the above two ratios.
The relatively lower profit margin shows a lower safety of margin. This
may lead to decline in sales and erase in profits.
The company needs to increase the net profit margin for better pricing
policies in such a competitive industry.

Return on Net Worth %

31
Return on net worth, shows a tremendous decrease from 24.7% to 8.6%
in the last three years. A decrease in shareholders equity is not a positive
sign, but it also provides an entry point for fresh investors and may base
out at the current level.

The decrease in the owner’s equity that the current investors will stay
with the company till it reaches the desired level and also allows fresh
investments to flow in.

Current Ratio

The zig-zag graph of current ration signifies a dynamic cash flow, a

positive sign for the company. The company is in a better position
financially on this matter but not when compared to previous year.
Hence, it shows a probability to grow to higher levels.

32
Quick Ratio

A quick ratio of 1:1 is considered to be favorable but in the case of

Celestial Biolabs, it is much more. For every rupee in liability there is
minimum a rupee in quick assets.

Interest Coverage Ratio

33
The interest coverage ratio has fallen to very low levels in March’09.
It shows firms lower ability to pay interest on long term borrowings and
give dividends on preference shares. Presently, the firm has a lower
ability to meet interest obligations.

Debtors Turnover Ratio

This is the only ratio which has shown an upside, but unfortunately its
higher value has a negative correlation on their ability to pay.
Ideal ratio is 2.1, and the lowest it has touched is 2.97, hence the
company’s ability to pay is in a very bad condition.

34
Fixed Assets Turnover Ratio

Such a lower value of the ratio, which stands at 0.79 shows lower
efficiency of the firm to use its assets in generating sales. Hence, the
company needs to take serious steps in utilizing it s resources and other
factors of production in order to generate better sales.

35
Earnings per share/ Book Value

Earnings per share shows a formation of a corrective base. It has given

presumably decent earnings to shareholders. It might be lower in current
times, but a base formation provides strong support level.
A significant increase in the book value depicts increase in company’s
assets and better future growth. This kind of rise in book value clears all
the doubts on the other financial ratios and explain for not so impressive
nature of its financial performance.

FINDINGS

Celestial Bio lab has shown credible performance in the past. At

present the company shows potential for a higher performance.
The company has to work on its pricing policies and competitive
strategies to stand out of the herd.

36
The most impressive aspect about Celestial Biolabs is its strength to
withstand the global financial turmoil. Even in the times of credit crunch
and global crisis, Celestial Biolabs performed extremely well on
financial aspects.
• According to the, operating profit margin, the firm shows a slightly
higher financial risk in the short term.
• The gross profit margin also depicts that in the recent times there
has not been effective utilization of resources.
• The net profit margin shows a lower safety of margin, resulting in
challenging pricing policy during the short term.
• Even return on net worth gives a graph of lower shareholder
equity, hence opening opportunity for fresh equity investments.
• The current ratio provides a very positive sign for the firm. It not
only confirms dynamic cash flow but also an opportunity to grow
in the longer term.
• Quick ratio is higher than the standards and hence is favorable in
nature.
• Interest Coverage ratio, depicts a lower ability to pay interest on
long term borrowings and dividends on preference shares.
• As of now there is a lower ability to generate sales in the shorter
run, but has a growth option in future, according to fixed assets
turnover ratio.
SUGGESTIONS
Celestial Biolabs has established itself as an effective player in the
market. In order to maintain the present status and increase its financial
performance, it should concentrate on generating more sales by
enforcing competitive pricing, which is only possible with a higher fixed
asstes.
As for now, company need not worry about its payment of interest on
long term borrowings and dividend payments as it has a bright future
and a strong financial base.
37
 CONCLUSION
Celestial Biolabs is established by renowned scientist from ICRISAT,
Dr. A.N. Singh, and can be valued very high on its intellectual capital.
The company’s share price movements shows a corrective formation
which is also supported by Earnings per share value. As EPS has formed
a base and has provided strong support for the company.
There is a constant increase in the book value which depicts a constant
growth in company’s financials.

38
The final conclusion would state that Celestial Biolabs, is an attractive
investment opportunity for long term, but investors should be cautious in
investing with a short term objective.

BIBILOGRAPHY

http://www.celestialbiolabs.com/
http://www.celestiallabs.com/service_port.html
http://www.asiahealthcareblog.com/2009/06/12/new-elephant-on-the-block/
http://moneycontrol.com
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