CORPORATE FINANACE

ASSIGNMENT-
Strides Pharma Science Limited

NAME- Mohit Kumar Choudhary

SRN- PES1PG20MB180
BATCH- A5
Name and Profile:-
Strides Pharma Science Limited, incorporated in 1990, is
a pharmaceutical company headquartered in Bangalore, India. The
company is listed on the Bombay Stock Exchange and National Stock
Exchange of India Limited. Strides is engaged in
the development, manufacture, and marketing of pharmaceutical
products for regulated and emerging markets. It has seven
manufacturing facilities including four US Food and Drug
Administration approved facilities. Strides also has in-
house R&D infrastructure in Bengaluru, India.
Promoters- Mr. Arun Kumar is the Founder and Promoter Director of
the Company and is a Board Member since its inception. Arun
founded Strides in the year 1990 and has since led the Company in
building its global reputation. Post modest beginnings, Arun's
leadership has ensured that Strides remains ahead of the curve in the
business with its differentiated model, high-end infrastructure and
best in class operating practices.
The holdings of promoter and promoter’s groups are 29.62%. Few
prominent names with holding percentage are –
SHAREHOLDERS Total Shares In %
Pronomz Ventures Llp 1.65 18.374%
Arun Kumar Pillai 0.14 1.545%
K R Ravishankar 0.13 1.4%
Karuna Business Solutions Llp 0.12 1.364%
Shasun Leasing And Finance (p) Limited 0.10 1.12%
Devendra Estates Llp 0.08 0.918%
Nitin Kumar V 0.05 0.588%
Ambemata Securities 0.05 0.537%
Jatin V 0.05 0.514%

Vision and Mission-

Vision
To be the leading Indian pharma multinational with a reputation for
the highest quality and integrity.
Mission
With a differentiated B2C portfolio focused on attaining leadership,
they will provide an unparalleled growth opportunity for their people
and value creation opportunity for our stakeholders.
Strategy- Their Strategy has always been to identify difficult-to-
operate niche domains and continue to excel in those spheres. Today
they have more scale, knowledge, global presence and partners.
Priority now is to simplify the operating model, focus more on
innovation and create a diversified global business.

CORPORATE SOCIAL RESPONSIBILITY-

Corporate social responsibility and sustainability is as central to any
business as pharmaceuticals. They pursue both with equal passion,
contributing to the growth and development of communities around
us.
1. Arogyadhama, one of their major initiatives under Health & Hygiene, is
catering to about 12000 populations in surrounding 10 villages of
Suragajakkanahalli. In 2016-17 over 6250 patients have benefitted and they
are proud to state that 140 children were administered Polio drops and 900
children were vaccinated for MMR (Measles and Rubella) in coordination
with the Government. Over 937 students and 933 adults were impacted by
promotive health care initiative through Awareness and Outreach Programs.
Whilst gaining appreciations and positive feedback from the community,
Arogyadhama has made a mark in serving the society.
2. Programmes like LeAPS – Leadership Adoption Program for Schools, Life
skills training and Effective Examination skills are imparted to the students
of Government schools to help them face the competitive examination and
also to facilitate, empower and help them to get future ready. This year over
800 students have been benefitted with these programs.
3. Many health camps were conducted like general check, dental camps. Eye
camps and dermatology camps along with awareness programmes for the
 benefit of the residents of Suragajakkanahalli village panchayat and Kalapet,
Pondicherry.
4. Donation of Blood Component Separation equipments to Indira Gandhi
Medical College and research centre, Pondicherry is yet another significant
achievement for Strides Shasun this year. This will help in saving thousands
of lives. On the same lines, Cuddalore team has formed Blood donors club,
wherein our employees register themselves, to donate blood as and when
required. The contact details of the committee members are displayed on the
notice board of the hospital.
5. Health Drive was organised at our adopted Government schools of Gottigere
and Haragadde, which was aimed at identifying and addressing health
related issues like anaemia, malnutrition, etc., and improve the general health
of children. In these camps, various tests were taken up, such as Cardio
Vascular tests, Respiratory tests, Hook-worm infestation, Muscular Skeletal
test, Skin & Hair test, Learning Abnormalities and Anaemia detection.
6. Strides had responded whole heartedly to our appeal for supporting the
people who were affected by the unprecedented disaster at Uttarakhand due
to Himalayan Tsunami. They were able to mobilise the total corpus Rs.56.60
Lakhs which includes the matching grant from the management.

R&D- Strides is led and driven by its expertise in Research and

Development, visible through its success in creating niche and
differentiated products portfolio. Our Global Formulation R&D center
at Bangalore drives high value product delivery via latest technology
platforms. Strides R&D is imbibed with continuous learning and
innovation and is actively engaged in the development of a wide
range of dosage forms with special emphasis on novel drug delivery
systems for solid orals (modified release tablets and capsules) and soft
gelatin capsules for both Regulated and Emerging markets. Our
product selection for development is mainly focussed on niche
products characterized by complex formulations across diverse
therapeutic segments.
Ranking- Strides pharma ranked 367 in the year 2020 in Fortune 500
list.
Capitalisation- Capitalisation of Strides Pharma is 8417 cr.
Their performance FY 2020-21
 Revenue- 33,308 Million Increase of 21%
  EBITDA 6,497 Million Increase of 19.5%
 Operating cash generation- 4,814 Million
It is based on year by year growth.
Environmental Health & Safety- A safe and healthy environment is
actively promoted through management systems designed to create
and sustain a 'safety culture' so that safety becomes an integral part of
all activities at Strides.
 Continuous training and education for all employees so as to
improve awareness and ensure implementation of environment,
health and safety policies and objectives
 Employee involvement through the concept of Safety Committees
 Highlighting and celebrating Special Days that reinforce a
commitment to Environmental Health & Safety like Earth Day,
Safety Week, World Health Day and so on.

Name and Profile of the Industry-

Strides Pharma Science Limited is a pharmaceutical company with a
major focus on development and manufacture of IP-led niche finished
dosage formulations. It is also among the world's largest
manufacturers of soft gelatin capsules.
The Company has two business verticals, viz., Regulated Markets and
Emerging Markets. Strides has a global manufacturing footprint with
eight manufacturing facilities spread across four continents, including
five US FDA approved facilities and two facilities for the rest of
world markets. The Company has a dedicated R&D facility in India
with global filing capabilities and a strong footprint across 100
countries. Their core competence is in the development and
manufacture of wide range of niche and technically complex
pharmaceutical products

Indian Pharmaceutical Industry-

 India is the largest provider of generic drugs globally. Indian
pharmaceutical sector supplies over 50% of global demand for
various vaccines, 40% of generic demand in the US and 25% of all
medicine in the UK. Globally, India ranks 3rd in terms of
pharmaceutical production by volume and 14th by value. The
domestic pharmaceutical industry includes a network of 3,000 drug
companies and ~10,500 manufacturing units.
India enjoys an important position in the global pharmaceuticals
sector. The country also has a large pool of scientists and engineers
with a potential to steer the industry ahead to greater heights.
Presently, over 80% of the antiretroviral drugs used globally to
combat AIDS (Acquired Immune Deficiency Syndrome) are supplied
by Indian pharmaceutical firms.
According to the Indian Economic Survey 2021, the domestic market
is expected to grow 3x in the next decade. India’s domestic
pharmaceutical market is estimated at US$ 42 billion in 2021 and
likely to reach US$ 65 billion by 2024 and further expand to reach
~US$ 120-130 billion by 2030.
India's biotechnology industry comprising biopharmaceuticals, bio-
services, bio-agriculture, bio-industry, and bioinformatics. The Indian
biotechnology industry was valued at US$ 64 billion in 2019 and is
expected to reach US$ 150 billion by 2025.
India’s drugs and pharmaceuticals exports stood at US$ 24.44 billion
in FY21.
Medicine spending in India is projected to grow 9-12% over the next
five years, leading India to become one of the top 10 countries in
terms of medicine spending.
Contribution of Industry to GDP: The Indian pharmaceutical
industry is a strategic industry for the nation, with the advantage of
scale (at $37 billion in 2019-20, it contributed 1.5 per cent to the GDP
directly, with another 3 per cent coming indirectly).
Financial Highlights:
Years Sales EBIT Total Fixed Current Current Net Mkt. Cap.
Assets Assets Assets Liabilities Working (No. of
Capital equity
shares
outstanding)

2015-16 2163.84 247.53 4646.59 904.92 1508.11 686.65 969.73 9725.31

2016-17 1381.82 211.21 4649.42 1007.56 1299.62 760.85 723.38 9808.36

2017-18 1469.61 981.25 3785.85 585.40 1151.01 472.47 741.24 6015.30

2018-19 1537.44 163.08 4082.61 594.04 1509.30 558.89 1011.52 4223.60

2019-20 1691.93 203.29 4084.82 690.15 1394.03 572.51 904.08 2888.93

CAGR -4.80 -3.86 -2.54 -5.27 -1.56 -3.57 -1.39 -21.55

Interpretation: The compound annual growth of last five years has been
negative. The company needs to revise strategies to increase sales thus in return
it will increase capitalisation and revenue of the company.

Shareholding pattern for last year (quarterly wise)

Shareholder’s First Quarter Second Third Quarter Fourth Quarter
(%) Quarter (%) (%) (%)

Promoters 29.62 29.67 29.69 29.69

holding
FII s 25.82 24.84 25.18 26.98
DIIs 14.59 16.05 16.63 15.26
Retail Investors 29.97 29.44 28.50 28.07

Total 100 100 100 100

Interpretation: The shareholding pattern have more or less remained

constant across last five years with minimal changes in Promoters holding of the
company. The maximum holding has been throughout the years have been
acquired by the promoters.
Capital structure pattern for the last five years
 Year Equity Share Debt Shareholder’s fund
Capital
2015-16 89.35 1544.66 3157.63

2016-17 89.42 1608.03 3232.52

2017-18 89.50 606.16 3162.01

2018-19 89.55 811.24 3256.80

2019-20 89.57 901.57 3158.79

Interpretation: The equity share capital of the firm has been constant
throughout the year there is no significant changes in equity share capital which
remained in the region 89.57-89.35. Also the debt has been constantly
decreasing thus in terms increasing the working capital of the company.

Interest Coverage Ratio (ICR)of the company for last five years.

Year EBIT Interest ICR (In times)

2015-16 247.53 102.62 1.95

2016-17 211.21 71.96 2.94

2017-18 981.25 81.97 11.97

2018-19 163.08 54.09 3.01

2019-20 203.29 66.84 3.04

Interpretation: The interest coverage ratio measures how many times a

company can cover its current interest payment with its available earnings. In
other words, it measures the margin of safety a company has for paying interest
on its debt during a given period. The lower the ratio, the more the company is
burdened by debt expense. As we see the interest cover of last few years have
been low barring the year 2017-18. The company is burdened with debt in the
upcoming years.
 Calculation and comment on the financial leverage of the
company for last five years

Year EBIT EBT Financial Leverage

(In times)

2015-16 247.53 144.91 1.71

2016-17 211.21 139.25 1.52

2017-18 981.25 899.28 1.10

2018-19 163.08 108.99 1.50

2019-20 203.29 136.45 1.49

Interpretation: The degree of financial leverage (DFL) measures the

percentage change in EPS for a unit change in operating income, also known as
earnings before interest and taxes (EBIT). In other words, the financial leverage
ratios measure the overall debt load of a company and compare it with the assets
or equity. This shows how much of the company assets belong to the
shareholders rather than creditors. When shareholders own a majority of the
assets, the company is said to be less leveraged. With low Financial leverage it
shows that company is running risk free.

Working Capital Estimation-operating cycle for 5 years

(Operating Cycle Concept= RCP+WIP+FGCP+RCP-CPP)

Year RWCP WIP FGCP RCP TOCP CPP NOCP

(days) (days) (days) (days ) (days ) (days ) (days)

2015-16 134.95 17.74 9.039 2403.36 25.54 1.02 0.142

2016-17 104.74 19.43 23.36 181.04 31.65 1.01 1.11

2017-18 93.13 7.35 9.94 538.69 24.98 1.00 0.56

2018-19 0 12.88 15.27 120.18 31.21 1.01 2.477

2019-20 142.36 12.85 14.31 407.47 27.34 1.03 0.63

Interpretation: Working capital is calculated by using the current

ratio, which is current assets divided by current liabilities. A ratio
above 1 means current assets exceed liabilities, and, generally, the
higher the ratio, the better. Operating cycle refers to number of days
a company takes in converting its inventories to cash. It equals the
time taken in selling inventories (days inventories outstanding) plus
the time taken in recovering cash from trade receivables (days sales
outstanding).