SUMMER TRAINING REPORT

FINANCIAL STATEMENT ANALYSIS

FROM
INDIAN SPINAL INJURIES CENTRE
Submitted to

Maharshi Dayanand University, Rohtak

In partial fulfillment of the requirement for the award of the degree of

Bachelor of Business Administration

UNDER SUPERVISION OF: SUBMITTED BY:

MRS. ANU SHARMA SHAGUN PATHANIA

FACULTY OF MANAGEMENT Roll No. 47/BBA/15

Reg. No. 1512200052

Univ. Roll No.

SESSION: 2015-2018

WORLD COLLEGE OF TECHNOLOGY AND MANAGEMENT

GURUGRAM, HARYANA
1
 STUDENTS DECLARATION

I hereby declare that the Training Report conducted at

INDIAN SPINAL INJURT CENTRE

ON

FINANCIAL STATEMENT ANALYSIS

UNDER THE GUIDANCE OF

PROF. ANU SHARMA

Submitted in partial fulfillment of the requirements for the

Degree of

BACHELOR OF BUSINESS ADMINISTRATION

TO

MAHARSHI DAYANAND UNVERSITY, ROHTAK

Is my original work and the same has not been submitted

For the award of any other Degree/Diploma/Fellowship

or other similar titles or prizes.

SHAGUN PATHANIA

2
 ACKNOWLEDGEMENT

I record my thanks to all the employees, ex-employees and faculty of INDIAN

SPINAL INJURIES CENTRE some of whom were frank and forthright and a few
who were slightly apprehensive but nevertheless gave me their full co-
operation. To all those I owe a debt of gratitude.

I am fortunate in having sought and secured valuable guidance, continuous

encouragement and strong support at every stage of my guide and supervisor
MR. DAVESH NARAIN, and am deeply grateful to him.

I am grateful to my faculty guide prof. ANU SHARMA (Faculty of

Management), WCTM for her efforts during my summer training work. I am
also thankful to Dr. Himani Avasthi, HOD, Department of Management,
WCTM and Brig. R.K. Kaushik, Director, WCTM for their thoughtful advice and
useful suggestion carrying our work.

I appreciate the co-ordination extended by my friends and also express my

sincere thankfulness to the entire faculty members of World College of
Technology & Management, Gurugram, giving me the opportunity to do this
project and also assisting me for the same.

SHAGUN PATHANIA

3
 WORLD COLLEGE OF TECHNOLOGY AND MANAGEMENT

CERTIFICATE OF HOD

MR. SHAGUN PATHANIA , Reg. No. 1512200052 a student of Bachelor of

Business Administration, World College of Technology & Management, Guru
gram, an affiliated Institute of Maharshi Dayanand University, Rohtak has
carried out the Summer Training on “FINANCE DEPARTEMENT” in partial
fulfillment of the requirements for the Degree of Bachelor of Business
Administration under my supervision and guidance.

I certify that this project report is a record of the work done by the candidate
herself and that to the best of my knowledge the contents of this project did
not form a basis of award of any previous degree of anybody else.

DR. HIMANI AVASTHI

HOD
Department of Management
WCTM, Gurugram

4
 CERTIFICATE TO GUIDE

This is to certify that as per best of my belief the project entitled

“Financial Statement Analysis” is the bonafide research work
carried out by Shagun Pathania student of BBA, Maharshi
Dayanand University, in partial fulfillment of the requirements for
the Summer Training Project of the Degree of Bachelor of Business
Administration.
She has worked under my guidance.

PROF. ANU SHARMA

Name
Date:

5
 CONTENTS

S No Chapter no. Topic Page No

1 - Certificate (s) -
2 - Acknowledgements -
3 Chapter:1 Introduction 8-12
4 Chapter:2 Company profile with its SWOT analysis 13-28
5 Chapter:3 Literature Review 29-43
6 Chapter:4 Objective of the study & scope of the study 44-45
7 Chapter:5 Research Methodology 46
8 Chapter:6 Data Collection And Data Analysis 47-59
9 Chapter:7 Findings 60
10 Chapter:8 References/Bibliography and findings 61-63
11 - Appendices

6
 EXECUTIVE SUMMARY

Financial statement analysis is defined as the process of identifying financial strengths and
weaknesses of the firm by properly establishing relationship between the items of the balance
sheet and the profit and loss account. There are various methods or techniques that are used
in analyzing financial statements, such as comparative statements, schedule of changes in
working capital, common size percentages, funds analysis, trend analysis, and ratios analysis.

Financial statements are prepared to meet external reporting obligations and also for decision
making purposes. They play a dominant role in setting the framework of managerial
decisions. But the information provided in the financial statements is not an end in itself as no
meaningful conclusions can be drawn from these statements alone. However, the information
provided in the financial statements is of immense use in making decisions through analysis
and interpretation of financial statements.

This research paper based on the pharmaceutical industry and there financial performance to analyze
Indian company i.e. ISIC financial statement through the Dupont analysis , Cross Sectional Analysis,
Ration analysis etc. With the other two company i..e Fortis and Cipla.

7
 CHAPTER - 1
INTRODUCTION

Introduction
Healthcare has become one of India’s largest sectors - both in terms of revenue and
employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing,
telemedicine, medical tourism, health insurance and medical equipment. The Indian
healthcare sector is growing at a brisk pace due to its strengthening coverage, services and
increasing expenditure by public as well private players.

Indian healthcare delivery system is categorized into two major components - public and
private. The Government, i.e. public healthcare system comprises limited secondary and
tertiary care institutions in key cities and focuses on providing basic healthcare facilities in
the form of primary healthcare centres (PHCs) in rural areas. The private sector provides
majority of secondary, tertiary and quaternary care institutions with a major concentration in
metros, tier I and tier II cities.

India's competitive advantage lies in its large pool of well-trained medical professionals.
India is also cost competitive compared to its peers in Asia and Western countries. The cost
of surgery in India is about one-tenth of that in the US or Western Europe.

Market Size
Deloitte Touche Tohmatsu India has predicted that with increased digital adoption, the Indian
healthcare market, which is worth around US$ 100 billion, will likely grow at a CAGR of 23
per cent to US$ 280 billion by 2020.

The revenue of India’s corporate healthcare sector is estimated to grow at 15 per cent in FY
2017-18.*

India is experiencing 22-25 per cent growth in medical tourism and the industry is expected
to double its size from present (April 2017) US$ 3 billion to US$ 6 billion by 2018. Medical
tourist arrivals in India increased more than 50 per cent to 200,000 in 2016 from 130,000 in
2015.
8
The Healthcare Information Technology (IT) market is valued at US$ 1 billion currently
(April 2016) and is expected to grow 1.5 times by 2020. #

Over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immuno
Deficiency Syndrome) are supplied by Indian pharmaceutical firms^.

There is a significant scope for enhancing healthcare services considering that healthcare
spending as a percentage of Gross Domestic Product (GDP) is rising. Rural India, which
accounts for over 70 per cent of the population, is set to emerge as a potential demand source.

A total of 3,598 hospitals and 25,723 dispensaries across the country offer AYUSH
(Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy) treatment, thus ensuring
availability of alternative medicine and treatment to the people.

Investments
The hospital and diagnostic centres attracted Foreign Direct Investment (FDI) worth US$
4.34 billion between April 2000 and March 2017, according to data released by the
Department of Industrial Policy and Promotion (DIPP). Some of the major investments in the
Indian healthcare industry are as follows:

 Kerala Institute of Medical Sciences (KIMS) has raised US$ 200 million from True
North, a private equity fund, for a 40 per cent stake in the company, which will be
utilised towards funding its growth plans.
 Syngene, a subsidiary of Biocon Ltd, has acquired a contract from HerbalLife
Nutrition, a nutrition company, to develop nutrition based products that can be sold by
Herbalife in India.
 CureFit, a healthcare and fitness start-up, has acquired Kristys Kitchen, an online
health-food delivery company, in a cash and stock deal.
 STEER Engineering has announced research collaboration with Merck, a German
healthcare and life sciences firm, for creating a technology useful for processing
special effect pigments for the plastic industry.
 Max Healthcare, a healthcare institute based in New Delhi, has plans to invest Rs 320
crore (US$ 48 million) to build a cancer care hospital in Delhi, being a part of Max's
larger plan to develop its hospital in Saket.
9
  Thyrocare Technologies, a diagnostic laboratory chain, plans to expand its lab centres
from 7 to 25 and franchisees from 1,200 to 5,000 to achieve a target revenue of Rs
1,000 crore (US$ 150 million) by 2020.
 OrbiMed, a healthcare-dedicated investment firm, plans to invest around US$ 40
million in Kolkata-based pathology and radiology services chain Suraksha
Diagnostics for expanding the diagnostics chain's laboratory network across India and
enhancing its equipment technology backbone.
 International Finance Corporation (IFC), the investment arm of World Bank, has
invested around Rs 450 crore (US$ 67.5 million) for a 29 per cent stake in Healthcare
major Apollo Group’s subsidiary Apollo Health and Lifestyle Ltd for funding
Apollo's expansion activities.
 Abraaj Group, a Dubai-based private equity investment firm, is in advanced
discussions to acquire a controlling stake in south India’s leading diagnostics services
provider Medall Healthcare Pvt Ltd, at an enterprise value of around Rs 1,500 crore
(US$ 225 million).
 Practo Technologies Pvt Ltd, a digital healthcare start-up, has raised US$ 55 million
in series D round of funding led by Chinese investment holding company, Tencent
Holdings Ltd, which will be used for expanding its product portfolio.
 Japanese financial services firm Orix Corp. is in talks to buy a minority stake in
Bengaluru-based fertility clinic chain Nova IVI Fertility, from the company’s
promoters and existing private equity investors for Rs 250-300 crore (US$ 37.5-45
million).
 UAE-based Gamma Group has outlined plans of investing around Rs 3,000 crore
(US$ 449.68 million) in the infrastructure, health and education sectors of Kerala,
which is expected to generate around 2,000 indirect and direct jobs in the state.

Government Initiatives
Some of the major initiatives taken by the Government of India to promote Indian healthcare
industry are as follows:

10
 In the Union Budget 2017-18, the overall health budget increased from INR 39,879
crore (US$ 5.96 billion) (1.97% of total Union Budget) to INR 48,878 crore (US$ 7.3
billion) (2.27% of total Union Budget). In addition, the Government of India made
following announcements in the Union Budget 2017-18:
o Harmonise policies and rules for the medical devices industry to encourage
local manufacturing and move towards improving affordability for patients.
o Modify the Drugs and Cosmetics Act to promote generics and reduce the cost
of medicines.
o Set up two new All India Institute of Medical Sciences (AIIMS) in Gujarat
and Jharkhand.
o Convert 1.5 lakh sub centres in Indian villages to health and wellness centres
o Set short and medium term targets for key health indicators and bring down
the Maternal Mortality Rate to 100 by 2018-2020 and Infant Mortality Rate to
28 by 2019.
o Prepare action plans to eliminate Kala Azar and Filariasis by 2017, leprosy by
2018, measles by 2020 and tuberculosis (TB) by 2025.

 The Union Cabinet, Government of India, has approved the National Health Policy
2017, which will provide the policy framework for achieving universal health
coverage and delivering quality health care services to all at an affordable cost.
 The Government of India plans to set up a single window approval system for
innovation in medical research, in order to grant permission/approvals within 30 days
from the date of application to Indian innovation projects who have applied for global
patent.
 Mr Shripad Naik, Minister of State with Independent Charge for AYUSH, has
verified that the AYUSH Ministry is working with various agencies, institutions and
Ayurveda researchers and practitioners across the globe to turn India into a global hub
for knowledge, research, practice and developmental projects on traditional
medicines.
 The Government of Assam has launched the Atal-Amrit Abhiyan health insurance
scheme, which would offer comprehensive coverage for six disease groups to below-
poverty line (BPL) and above-poverty line (APL) families, with annual income below
Rs 500,000 (US$ 7,500).

11
  The Government of India and the Government of the State of Nagaland signed
financing agreement and project agreement respectively with The World Bank, for the
‘Nagaland Health Project’ for US$ 48 million, which aims to improve health services
and increase their utilization by communities in targeted locations in the state.

Road Ahead
India is a land full of opportunities for players in the medical devices industry. The country
has also become one of the leading destinations for high-end diagnostic services with
tremendous capital investment for advanced diagnostic facilities, thus catering to a greater
proportion of population. Besides, Indian medical service consumers have become more
conscious towards their healthcare upkeep.

India's competitive advantage also lies in the increased success rate of Indian companies in
getting Abbreviated New Drug Application (ANDA) approvals. India also offers vast
opportunities in R&D as well as medical tourism. To sum up, there are vast opportunities for
investment in healthcare infrastructure in both urban and rural India.

12
 CHAPTER 2

COMPANY PROFILE

Indian Spinal Injuries Centre is notable for providing the best medical attention for spinal,
orthopedic problems and neuromuscular disorders around the country. ISIC is a non-profit
organization. It is an extremely modern, ultra-efficient hospital. Besides treating disorders of
spine, ISIC is equipped with complete Health Care. The Centre strives to strengthen body and
mind of all patients in need of medical attention. The Centre aims to reach and improve the
quality of life of large numbers of newly spinal injured individuals day in and day out by
rendering quality services and totally accessible to all. The philosophy and guiding principle
of the Centre is not to deprive any one of the medical treatment due to dearth of funds. This is
a hospital with heart and soul—a place that aims to provide world class standards
personalized health care and helps its patients feel “the joy of living through.” Though built
with Italian collaboration, it is really the result of one man’s vision. A soldier, a mountaineer,
a dreamer, an administrator and a tetra-paraplegic – Major H. P. S. Ahluwalia, Chairman,
ISIC, is all this and much more.

The Motivation

One has to look a little back into the mid-sixties to get a feel of the motivation and the driving
force, which has been instrumental; in building this specialty Centre. Major H.P. S.
Ahluwalia is an Everest conqueror, a war hero, Chairman of Rehabilitation Council of India
and is also the Chairman and the prime motivator behind ISIC.

It was a gunshot in 1965 Indo-Pak war that left Major Ahluwalia paralyzed. Since hardly any
facilities existed in India at the time, Major Ahluwalia was sent to U. K. for rehabilitation. He
made up his mind then and there to make his contribution to his motherland by establishing
world standard treatment cum rehabilitation for spinal injuries and other disabilities in
general in India. Thus, started the Indian Spinal Injuries Centre, an idea that blossomed and
has now taken concrete shape.

13
The Indian Spinal Injuries Centre is an Indo-Italian cooperation program. It is poised to be
the largest Centre of its kind in Asia. A collaboration agreement has been signed with Monte
Tabor Association, an Italian non-profit organization managing 1400 bedded hospital in
Milan and 800 bedded hospitals in Brazil, besides various collaborations around the world.
This collaboration has helped in providing international standards for management at ISIC.
Research collaboration with Bio-Medical Scientific Park of hospital San Raffle, Milan has
also been established. This is network of various research agencies and is run by Noble
Laureates.

At present, ISIC has a state-of-the-art Intensive Care Unit apart form the present 145 beds. It
also has 5 operation theaters which allow surgeons to perform even the most complicated
surgeries with ease, ambulance services and 24-hours Emergency Centre. ISIC is spread
across 11.04 acres of land though it should get additional land for which it had already paid to
make it acres in all. The entire covered area as per plans would be 20,000 sq. meters. One of
the unique features of this building is that it is a totally barrier-free environment. Indian
Spinal Injuries Centre has added various fully equipped and well-staffed departments in its
desire to provide comprehensive, general healthcare to all. Some of these departments
include:

 Spine services
 Orthopedics
 Neurology
 Neurosurgery
 General Medicine
 Orthopedic Surgery
 Urology
 Ophthalmology
 Dental and Facio-Maxillary Surgery
 Pain Clinic
 Diagnostics- Imaging services like MRI, CT scan, X- Ray, and Ultrasound.
 Laboratory Services - Hematology, Biochemistry, Pathology and Serology. All types
of specialized tests are conducted here in collaboration with Ranbaxy.
 ECG, EMG and Spirometer.

14
The other supportive departments are as follows;

 ENT
 Gastroenterology
 Plastic Surgery
 Psychiatry
 General Surgery

The Holistic Treatment

Besides conventional methods of treating illness, ISIC also provides alternative and holistic
methods of rehabilitating its patients. Its task is to strengthen every patient’s body, mind and
spirits. Rehabilitation at ISIC is added by technology and speeded by counseling.

Physiotherapy

Physiotherapy is proving to be the mantra in many illnesses. It helps frozen shoulders,

paralysis, neurological strokes and post-fracture complications. It aims at reducing the patient
arthritis, problems in bladder control and above all spondylitis and backaches. It aims at
reducing the patient’s dependency on drugs and increasing his mobility and strength, thereby
making him self-sufficient.

Physiotherapy and Occupational Therapy along with family counseling works wonder for the
entire rehabilitation process, which also increases physical, psychological, occupational and
vocational rehabilitation of the patient.

Hydrotherapy

Hydrotherapy is a method of using the physical aspects of water for medical and relaxation
treatments. ISIC can boost of having one of the largest Hydrotherapy pools in Asia which is
fully run by solar energy. The department is approximately 350 sq. meters in size and aims at
reducing pain, mobilize joints, promote relaxation, strengthen muscles and enhance co-
ordination and balance.

15
Future Goals

The aim of the Centre is to provide world-class facilities for medical management,
comprehensive rehabilitation (including physical, psychosocial, sexual and vocational
rehabilitation) research and training in the field of spinal injuries. The aim is to provide equal
services to the economically deprives sections of the society by offering a high percentage of
free and subsidized services. Since providing spinal cord injury management is most
expensive as compared to any other service and since most of these injuries take place in the
economically deprived sections of the society, the recurring expenditure is all the time needed
for providing quality services at the Centre.

Future goals of ISIC are to strengthen the complimenting specialities anywhere required for
spinal injury management i.e. neurosciences, urology, pulmonology, general surgery,
gastrointestinal surgery and oncology. ISIC would also give equal emphasis to strengthening
its education and research services.

VISION OF ISIC

 To strive to become the first choice as a comprehensive spinal and orthopedic

healthcare provider in North India.
 To reach the lives of thousands of newly spinal injured every year by providing
medical excellence through both scientific expertise and compassionate therapy.
 To foster a culture of education in all of our activities and supporting exemplary
health sciences research and development in an environment which is both ethical and
respectful of others
 Utmost dedication to providing quality, value driven health care to all we serve
through education, outreach, and other innovative services in spine and other spinal
ailments.
 Globally strengthening our relationships through affiliation with renowned institutions
of higher learning; offering technological advances and modern facilities.

16
MISSION OF ISIC

At Indian Spinal Injuries Centre, our aim is to restore hope and joy in the heart of every
patient with unrelenting attention to clinical excellence, patient safety and an unparalleled
dedication to assure exemplary physical, emotional and spiritual care.

QUALITY, ENVIRONMENT AND SAFETY POLICY

INDIAN SPINAL INJURIES CENTRE, are committed to provide reliable and

internationally compatible diagnostic and therapeutic services related to all kinds of spinal
disorders and conventional illnesses and also providing alternative and holistic methods of
rehabilitating our patients in particular and society at large.

We strive for continual improvement in Quality Occupational Health and Safety

Environment, fire prevention and security for all our employees by upgrading systems,
optimizing the use of natural and other resources and employees’ skills and motivation.

We are committed to continually improve the quality of diagnostic services, therapeutic

services and environmental, health & safety performance through up-gradation and
acquisition of environmentally sound & safe technology in order to reduce impact of our
activities on the environment, prevent pollution and comply with all applicable environmental
legislation and regulation.

We shall continuously review our performance to ensure services provisioning in humane and
congenial environment by motivating, training and involving employees at all levels to do
things right first time, every time and with empathy

17
3.2 BOARD OF GOVERNORS

1) Major HPS Ahluwalia – Chairman, Major HPS Ahluwalia's recognition following his
climb to Mt Everest in the first Indian team in 1965, has helped the Center form ties with
important national and international dignitaries which has further helped ISIC develop on a
global level. The Chairman has also authored 15 books, including his autobiography "Higher
than Everest" and various others focusing on mountaineering and the Himalayan range's flora
and fauna. This credit led him to become the President of the Indian Mountaineering
Foundation for two consecutive tenures. ISIC is the only hospital in India that is completely
barrier-free since the architects had a unique insight into the possible impediments that a
spinal injured patient can face, therefore endowing a homely and easier to relate to
atmosphere. His perspective as a patient and clear understanding on importance of
rehabilitation and disability were well evident during his tenure as Chairperson,
Rehabilitation Council of India where he promoted conquering disability throughout India
through workshops and conferences.

2) Dr Kalyan Sachdev - Medical Administrative and Purchase. He has vast experience in

running a hospital (Private hospital) and Nursing home (Private Klinik). He was trained in
Austria. He heads the Committee for Medical Purchase and gives valuable and practical
advice during Board meeting.

3) Air Marshal A S Chahal - Medical Administration and Spinal Injury Management. He

has vast experience and could be called the "Father of Spinal Injuries" in India. He was
trained by non other than Sir George Bedbrook, who revolutionized Spinal Injury
management. His experience of setting up countries' first spinal injury set up in Pune brought
great value. Besides his vast experience in administration as Director General Medical
Services (Indian Air Force) Marshall helped him administer very effectively during his tenure
as Director General. He is the Director General Emeritus of ISIC.

18
4) Dr A K Mukherjee – He has been working for the welfare of the disabled for more than
four decades. He was a Member of the Board of Directors of All India Institute of Medical
Sciences, PGI Chandigarh, PGI Lucknow, National Academy of Medical Sciences, National
Board of Examinations and NIMANS Bangalore. He worked as an Advisor in WHO. He was
elected as Vice Chairman and also worked as acting Chairman of WHO South East Asia
Regional Organizations, New Delhi. He has published more than 200 articles in various
journals and was invited by the United Nation to be the Ad hoc committee member for
drafting International Convention on Rights for Persons with Disabilities in 2006. In the year
2016 he was elected as a Member Executive Board and also he is holding Chair of Health and
Function Commission of Rehab International (RI) with its headquarter in New York. He is
the Health Committee Member of Federation of India Chambers of Commerce and Industry
and Confederation of Indian Industry.

5) Mr Vikram Kapur – Financial and Administrative Control. He has vast experience in this
field by virtue of his position as President of Atlas Cycles. His nominee Mr M M Mehra,
Vice President, Atlas Cycles is a member of the Finance Committee and adds a lot of value.

6) Dr H.S. Chhabra – Secretary, Chief of Spine Services and Medical Director, Indian
Spinal Injuries Centre obtained his Masters in Orthopaedics from Safdarjung Hospital, New
Delhi. He is a member of Education Committee and Nomination Committee of International

Spinal Cord Society (ISCoS), Member Secretary of Spinal Cord Society (Indian Chapter),
Executive Member of Asian Spinal Cord Networking (ASCoN) and Governing Body
Member of Indian Spinal Injuries Centre (Secretary) and Regional Spinal Injuries Centres of
Punjab, UP and Cuttack. He is also a faculty and guide for DNB Fellowship in Spine Surgery
accredited by National Board of Examination, Ministry of Health, Government of India.

7) Sh Gautam Khaitan – Core competency – Legal Advise. His vast experience as an

advocate has brought in the much needed back up of legal advice. He is also holding
directorships in various companies of leading corporate houses other than holding
memberships of International Bar Association, FICCI, Delhi High Court Bar Association etc.

19
8) Mrs Veena Chopra - Ms Veena Chopra – Core competency – Medical Administration.
She has been actively involved in setting up Children's Hospital. She brings in her experience
of setting another hospital.

9) Mrs Bholi Ahluwalia - Administration, Social Welfare, Interior designing. Having been
involved with Major Ahluwalia in all aspects of planning and administration of the hospital
and various projects like Central Asia Cultural expedition, she brings in competencies of
administration. Her benevolent values make her ideally suited for the post of Chairmanship of
Welfare Committee. Her penchant for interior design, sharpened after extensive travel, helps
her ably guide all designing for the hospital.

10) Mr Alok Swaroop - Administrative control. He is young and dynamic entrepreneur with
keen interest in the cause of social issues. This prompted his commitment to ISIC.

11) Lt Gen. Bhopinder Singh - Administrative Control. He has vast experience in this field
especially during his tenure as DG Assam Rifles from May 2004 to 1st July 2006. He chairs
the Technical Committee which looks after civil construction project activities. He also
coordinates the Marketing Activities of the centre.

12) Lt. Gen. Jaswant Singh Ahluwalia - Lt Gen J. S. Ahluwalia, PVSM (retd) is President
of the ‘Institute of Directors’ and of the ‘World Environment Foundation’ (WEF). Lt
Ahluwalia is also a Chartered Engineer and Fellow Member of a large number of foreign and
Indian professional engineering and management institutions. He was chairman of the
‘Institution of Engineers (INDIA)’, President of ‘Delhi Management Association’. He has
also been on the Board of Governors of ‘Engineering staff College of India’, ‘Quality
Council of India’ (QCI), ‘All India Management’ (AIMA), and many other quality and
environment certification bodies.

13) Mr. Javed Akhtar - Mr. Javed Akhtar is a noted poet, lyricist and script writer. He is not
only famous for his work and recipient of various awards like Sahitya Akademi Award
20
(second highest literary honored in India), Padma Shri, Padma Bhushan etc. but also hails
from a family of freedom fighters.

14) Air Vice Marshal (Retd) VS Rawat VSM - Air Vice Marshal V S Rawat retired after a
very distinguish career in the Armed Forces on 31 Dec 94. On instructions from Hon Lt Gov
Delhi Sh Tejendra Khanna ,Air Vice Marshal Vinod Rawat founder Working With Nature is
assisting DDA in restoration of SV where in last one year more than 50,000 native Aravali
trees have been grown.

15) Archbishop Anil Joseph Thomas Couto- was born on Sept. 22, 1954 in Goa
archdiocese. He was ordained a priest for Delhi archdiocese on Feb. 8, 1981. Appointed
Auxiliary Bishop of Delhi on Jan. 17, 2001, he was ordained bishop on March 11, 2001. He
was transferred as Bishop of Jalandhar on Feb. 24, 2015 and he took charge of it on April 15,
2015. Prior to his appointment as the Auxiliary Bishop, he served as the rector of the Delhi
archdiocesan minor seminary.

He was appointed the Archbishop of Delhi on Dec. 2, 2012 replacing Archbishop Vincent
Concessao, who passed the canonical retirement age of 75 last year.

Presently, he serves as the chairman of the Conference of the Catholic Bishops' of India
(CCBI - of the Latin Rite) for Ecumenism. He also serves as a member of the Commission
for Inter Religious Dialogue of the Catholic Bishops' Conference of India (CBCI).

16) Dr. Shernaz Cama - Dr. Shernaz Cama is an academician teaching students at Delhi’s
prestigious Lady Shri Ram College and also the Honorary Director of the UNESCO initiated
PARZOR project. In addition to undergraduate and postgraduate teaching, she has been a
Resource Person for the Centre for Professional Development in Higher Education which
organizes continuing education programmes for Universities across India. A regular
contributor to academic journals, she has several publications to her credit. She has authored
Zoroastrianism and the Five Basic Human Values: Religion of the World Series, Sai
International Centre Publications,2006 and co authored a book Blake, Wordsworth and
Coleridge, Worldview Publications.

21
MARKET FEASIBILITY

Defined market: The ISIC focuses on its primary catchment area i.e Delhi and NCR, followed by
secondary catchment area i.e. Northern India and finally the Tertiary catchment area i.e the south east
Asia and the Middle eastern countries.

Our competitors serving in the same market: The hospital chains like Fortis, Max healthcare,
Wockhart, Apollo group of hospitals, and stand alone entities like BLK super speciality, Medanta the
Medicity etc who are running their units successfully will pose a competition to the project.

Current market research: The health care market is going through the phase of expansion and
breakthrough innovation with focus on lean management and reducing the cost of treatment for faster
break even. The supporting facts are as follows:

 The health ministry is working towards a target doctor-patient ratio of 1:1,000 by 2021, which at
present is 1:2,000.
 India plans to establish some 200 new medical colleges in the next 10 years to meet the projected
huge shortage of 600,000 doctors.
 India has 0.7 bed per 1000 population
 The incidence of spinal injuries is around 20 per million population. At this rate there would be
around 20000 fresh cases of spinal injury in a year. Currently in India the total number of beds
equipped to handle such cases are very few.
 In India, the requirement is 1 cancer care unit per 100,000 population and the incidence rate is 7
lakh per annum
Means to reach the target market: The word of mouth publicity is considered as the best due to its
high impact factor and nil cost. However the applicable promotion channels like use of mass
communication, web site, tie ups with RWAs, Camps, concessions on OPD and IPD etc will be
explored.

5. DESCRIPTION OF THE DEPARTMENTS: PHASE WISE

5.1 PLAN FOR EXPANSION OF NEUROSCIENCES DEPARTMENT

22
Scope of services

Departments:

1. Neurology
2. Neurosurgery
3. Neuropsychiatry
4. Neuroradiology & Neurointerventionist
5. Neuropathology
6. Neuro rehabilitation
7. Neuro-electrophysiology

Superspeciality Neuro-clinics:
 STROKE CLINIC
 MULTIPLE SCLEROSIS CLINIC
 MOVEMENT DISORDER/PARKINSON CLINIC
 EPILEPSY CLINIC
 HEADACHE & VERTIGO CLINIC
 ATAXIA CLINIC
 SPASTICITY & BOTOX CLINIC
 MUSCULAR DISORDER CLINIC
 NEUROPATHY CLINIC
 DEMENTIA CLINIC
 SLEEP DISORDER CLINIC

Infrastructure:
Neurosciences Centre/Tower with
 OPD block
 IPD block
 Neuro-OT with Brain Suit
 Neuro-ICU & Neurosurgery ICU
 Neuro-HDU
 Neuro-Cath LAB
23
  Electrophysiology LAB & Sleep LAB
 Neuroradiology block
 Neuro-rehab wing
 Neuropathology unit
 Research Wing
 Academic Block with seminar/Conference/class rooms with Library

Equipment:
a. Brain suit

b. Neuro-endoscope

c. Operating Microscope

d. CUSA

e. Sterotaxic Frame

f. Trans cranial Doppler -1channel, 2chanel

g. LTM (long term intra operative monitoring)

h. Digital recorder for microscope & endoscope.

i. Microdrill dedicated to neurosurgery-

j. Neuro-microinstruments

k. Mayo filed head clamp with attachments

l. Support for DBS (Deep Brain stimulation)

m. Support for epilepsy Surgery (Electrocorticography,GRID Electrodes) -

electrocorticography, grid electrode comes with stainless steel and platinum starts

For Neuro-ICU

 ICP Monitor
 EEG Monitor
 Plasmapharesis machine
 Ventilators
 Vitals Monitors
24
  All ICU equipments including ECG - 12 channel, Defibrillator- ABG machine

Neuro-cath LAB. For DSA & coiling/embolisation etc & Neuro-navigation

QST machine

Equipments for Autonomic function Lab.

For Electrophysiology LAB.

Video-EEG
EMG-NCV-Evoked potential machine
TCD machine
r-TMS
Polysomnography machine
QST machine

Equipments for Autonomic function Lab.

For Neuroradiology dept.
128 multi slice CT machine
3 tesla MRI machine with functional MRI
Nuclear medicine facility for SPECT
PET Brain

25
 Phase wise expansion plan for Neurosurgery and Neurology department

Basic facilities of Phase-I

 Dedicated paramedical staff for Neurosciences i.e. inward, in OT, in ICU, in OPD may be one
in each to start with.
 Availability of a dedicated SR (general surgery) *4
 Availability of upgraded CT scan machine
 CUSA, Neuro Endoscope
 DSA  Optimal
 15 Bed: 8 Bed ward, 4 ICU and 3 HDU

Equipments:-

 Neuro-endoscope 25 lac
 CUSA-27 lacs
 Neuro-micro instruments- 15-20 lacs
 Mayo filed head clamp with attachments-yet to come
 Plasmapharesis machine- 22 lacs
 Vitals Monitors - 1 lac
 Neuro-cath LAB. For DSA & coiling/embolisation etc & Neuro-navigation- 3 crores
 128 multi slice CT machine-4 Cr
Total: 7.95 Cr

Phase-II

 DSA Machine (Cath Lab)

 Intervention Neurologist-can go in Phase-I considering the potential of profitability.
 Junior consultant preferably M.ch pass: Min 1 & Max 2 in Number
 Neuro Oncologist
 15 beds for ward, 8 bed for ICU & 7 bed for HDU
 Dedicated OT equipment & separate OT for emergency & routine Neurosurgical cases
 Deep brain stimulation programme & Comprehensive Epilepsy surgery programme to be
started.

26
Equipment:-

 Operating Microscope - 45 lac

 Trans cranial Doppler -1channel - 12 lac, 2chanel- 21 lacs
 Micro drill dedicated to neurosurgery- 12 lacs
 Support for DBS (Deep Brain stimulation)-yet to come
 ICP Monitor - 4 lacs
 EEG Monitor - 8 lac
 Ventilators - 7 lac

Phase- III

 Stereotactic frame
 Induction of more number of trained staff (paramedical staff)
 Induction of max no of professionals
 Increase in number of beds-45
 25 beds in ward 20 each for ICU & HDU

Equipment:-

 Sterotaxic Frame- 12 Lacs

 QST machine - 25 lac
 Equipments for Autonomic function Lab. 1.5 Crores
 3 tesla MRI machine with functional MRI-11 Cr. (Outsourced)
 Nuclear medicine facility for SPECT- 2 Cr (Outsourced)
 PET Brain-9 Cr (Outsourced)

27
 SWOT ANALYSIS

Strengths: State of the art centre with international standards of care focusing on the core
specialities (Orthopaedic, Spine, Neurosurgery, Uro-gynae specialities) in the field of
Orthopaedics and Spine. ISIC is already positioned as the apex institution for management of
Spine, Orthopaedic and Nuerosurgical ailments therefore the diversification into specialities
to make the service basket more comprehensive.

Weakness: Plan to integrate all the cost intensive speciality (very high cost of manpower,
machines and equipment). To attract and retain the patients with the existing market position
of ISIC will be a task. Both these factors may lead to difficulty in attracting the consultants
and senior doctors, under utilisation of the facility, longer period for breaking even.

Opportunities: There are 2.19 crore persons with disabilities in India comprising 2.13
percent of the total population, out of which 28% are of locomotor disability type. The
incidence of spinal injury is roughly around 20 per million population. These patients require
comprehensive care under one roof , therefore ISIC can even venture into this entire gamut
of core as well as supportive specialities for meeting the unmet needs of the spinal cord
injured.

Threat: The contemporary hospitals with state of the art infrastructure with similar
specialities in the primary and secondary catchment area like Fortis, ILBS, BLKMH, Max
Hospital Medanta etc .

Changing trend in health care industry (government is focusing on preventive aspect for
chronic and life style diseases followed by provision for primary care). Public sector is investing
in superspeciality at large scale.

28
 CHAPTER 3
LITRATURE REVIEW

Given the uncertainty inherent in project forecasting and valuation, analysts will wish to
assess the sensitivity of project NPV to the various inputs (i.e. assumptions) to the DCF
model. In a typical sensitivity analysis the analyst will vary one key factor while holding all
other inputs constant, ceteris paribus. The sensitivity of NPV to a change in that factor is then
observed (calculated as Δ NPV / Δ factor). For example, the analyst will set annual revenue
growth rates at 5% for "Worst Case", 10% for "Likely Case" and 25% for "Best Case" - and
produce three corresponding NPVs.

Using a related technique, analysts may also run scenario based forecasts so as to observe the
value of the project under various outcomes. Under this technique, a scenario comprises a
particular outcome for economy-wide, "global" factors (exchange rates, commodity prices,
etc...) as well as for company-specific factors (revenue growth rates, unit costs, etc...). Here,
extending the example above, key inputs in addition to growth are also adjusted, and NPV is
calculated for the various scenarios. Analysts then plot these results to produce a "value-
surface" (or even a "value-space"), where NPV is a function of several variables. Another
application of this methodology is to determine an "unbiased NPV", where management
determines a (subjective) probability for each scenario - the NPV for the project is then the
probability-weighted average of the various scenarios. Note that for scenario based analysis,
the various combinations of inputs must be internally consistent, whereas for the sensitivity
approach these need not be so.

A further advancement is to construct stochastic or probabilistic financial models - as

opposed to the traditional static and deterministic models as above. For this purpose, the most
common method is to use Monte Carlo simulation to analyze the project’s NPV. This method
was introduced to finance by David B. Hertz in 1964, although has only recently become
29
common; today analysts are even able to run simulations in spreadsheet based DCF models,
typically using an add-in, such as Crystal Ball.

Using simulation, the cash flow components that are (heavily) impacted by uncertainty are
simulated, mathematically reflecting their "random characteristics". The simulation produces
several thousand trials (in contrast to the scenario approach above) and outputs a histogram of
project NPV. The average NPV of the potential investment - as well as its volatility and other
sensitivities - is then observed. This histogram provides information not visible from the
static DCF: for example, it allows for an estimate of the probability that a project has a net
present value greater than zero (or any other value). See: Monte Carlo Simulation versus
“What If” Scenarios.

Here, continuing the above example, instead of assigning three discrete values to revenue
growth, the analyst would assign an appropriate probability distribution (commonly
triangular or beta). This distribution - and that of the other sources of uncertainty - would
then be "sampled" repeatedly so as to generate the several thousand realistic (but random)
scenarios, and the output is a realistic, representative set of valuations. The resultant statistics
(average NPV and standard deviation of NPV) will be a more accurate mirror of the project's
"randomness" than the variance observed under the traditional scenario based approach.

The financing decision

Achieving the goals of corporate finance requires that any corporate investment be financed
appropriately. As above, since both hurdle rate and cash flows (and hence the riskiness of the
firm) will be affected, the financing mix can impact the valuation. Management must
therefore identify the "optimal mix" of financing—the capital structure that results in
maximum value. (See Balance sheet, WACC, Fisher separation theorem; but, see also the
Modigliani-Miller theorem.)

30
The sources of financing will, generically, comprise some combination of debt and equity.
Financing a project through debt results in a liability that must be serviced—and hence there
are cash flow implications regardless of the project's success. Equity financing is less risky in
the sense of cash flow commitments, but results in a dilution of ownership and earnings. The
cost of equity is also typically higher than the cost of debt (see CAPM and WACC), and so
equity financing may result in an increased hurdle rate which may offset any reduction in
cash flow risk.

Management must also attempt to match the financing mix to the asset being financed as
closely as possible, in terms of both timing and cash flows.

One of the main theories of how firms make their financing decisions is the Pecking Order
Theory, which suggests that firms avoid external financing while they have internal financing
available and avoid new equity financing while they can engage in new debt financing at
reasonably low interest rates. Another major theory is the Trade-Off Theory in which firms
are assumed to trade-off the tax benefits of debt with the bankruptcy costs of debt when
making their decisions. An emerging area in finance theory is right-financing whereby
investment banks and corporations can enhance investment return and company value over
time by determining the right investment objectives, policy framework, institutional structure,
source of financing (debt or equity) and expenditure framework within a given economy and
under given market conditions. One last theory about this decision is the Market timing
hypothesis which states that firms look for the cheaper type of financing regardless of their
current levels of internal resources, debt and equity.

The dividend decision

The dividend is calculated mainly on the basis of the company's unappropriated profit and its
business prospects for the coming year. If there are no NPV positive opportunities, i.e. where
returns exceed the hurdle rate, then management must return excess cash to investors. These
free cash flows comprise cash remaining after all business expenses have been met. This is

31
the general case, however there are exceptions. For example, investors in a "Growth stock",
expect that the company will, almost by definition, retain earnings so as to fund growth
internally. In other cases, even though an opportunity is currently NPV negative,
management may consider “investment flexibility” / potential payoffs and decide to retain
cash flows; see above and Real options. Management must also decide on the form of the
distribution, generally as cash dividends or via a share buyback. There are various
considerations: where shareholders pay tax on dividends, companies may elect to retain
earnings, or to perform a stock buyback, in both cases increasing the value of shares
outstanding; some companies will pay "dividends" from stock rather than in cash; see
Corporate action. Today, it is generally accepted that dividend policy is value neutral (see
Modigliani-Miller theorem).

Working capital management

Decisions relating to working capital and short term financing are referred to as working
capital management. These involve managing the relationship between a firm's short-term
assets and its short-term liabilities.

As above, the goal of Corporate Finance is the maximization of firm value. In the context of
long term, capital Financial Managements, firm value is enhanced through appropriately
selecting and funding NPV positive investments. These investments, in turn, have
implications in terms of cash flow and cost of capital. The goal of Working capital
management is therefore to ensure that the firm is able to operate, and that it has sufficient
cash flow to service long term debt, and to satisfy both maturing short-term debt and
upcoming operational expenses. In so doing, firm value is enhanced when, and if, the return
on capital exceeds the cost of capital; See Economic value added (EVA).

Decision criteria

Working capital is the amount of capital which is readily available to an Metlife Tours &
Power s anization. That is, working capital is the difference between resources in cash or
32
readily convertible into cash (Current Assets), and cash requirements (Current Liabilities). As
a result, the decisions relating to working capital are always current decisions, i.e., short term
decisions. In addition to time horizon, working capital decisions differ from capital Financial
Managements in terms of discounting considerations and liquidity; they are also "reversible"
to some extent. (Considerations as to Risk appetite and return targets remain identical). These
decisions are therefore not taken on the same basis as long term decisions, and different
criteria are applied here: the main considerations are cash flow and profitability; cashflow is
probably the more important of the two. The most widely used measure of cash flow is the
net operating cycle, or cash conversion cycle. This represents the time difference between
cash payment for raw materials and cash collection for sales. The cash conversion cycle
indicates the firm's ability to convert its resources into cash. Because this number effectively
corresponds to the time that the firm's cash is tied up in operations and unavailable for other
activities, management generally aims at a low net count. (Another measure is gross
operating cycle which is the same as net operating cycle except that it does not take into
account the creditors deferral period.)

In this context, the most useful measure of profitability is Return on capital (ROC). The result
is shown as a percentage, determined by dividing relevant income for the 12 months by
capital employed; Return on equity (ROE) shows this result for the firm's shareholders. As
above, firm value is enhanced when, and if, the return on capital, exceeds the cost of capital.
ROC measures are therefore useful as a management tool, in that they link short-term policy
with long-term decision making.

Management of working capital

Guided by the above criteria, management will use a combination of policies and techniques
for the management of working capital. These policies aim at managing the current assets
(generally cash and cash equivalents, inventories and debtors) and the short term financing,
such that cash flows and returns are acceptable. Cash management. Identify the cash balance
which allows for the business to meet day to day expenses, but reduces cash holding costs.
Inventory management. Identify the level of inventory which allows for uninterrupted

33
production but reduces the investment in raw materials - and minimizes reordering costs - and
hence increases cash flow; see Supply chain management; Just In Time (JIT); Economic
order quantity (EOQ); Economic production quantity (EPQ). Debtors management. Identify
the appropriate credit policy, i.e. credit terms which will attract customers, such that any
impact on cash flows and the cash conversion cycle will be offset by increased revenue and
hence Return on Capital (or vice versa); see Discounts and allowances. Short term financing.
Identify the appropriate source of financing, given the cash conversion cycle: the inventory is
ideally financed by credit granted by the supplier; however, it may be necessary to utilize a
bank loan (or overdraft), or to "convert debtors to cash" through "factoring".

Financial risk management

Risk management is the process of measuring risk and then developing and implementing
strategies to manage that risk. Financial risk management focuses on risks that can be
managed ("hedged") using traded financial instruments (typically changes in commodity
prices, interest rates, foreign exchange rates and stock prices). Financial risk management
will also play an important role in cash management. This area is related to corporate finance
in two ways. Firstly, firm exposure to business risk is a direct result of previous Investment
and Financing decisions. Secondly, both disciplines share the goal of creating, or enhancing,
firm value. All large corporations have risk management teams, and small firms practice
informal, if not formal, risk management. Derivatives are the instruments most commonly
used in Financial risk management. Because unique derivative contracts tend to be costly to
create and monitor, the most cost-effective financial risk management methods usually
involve derivatives that trade on well-established financial markets. These standard derivative
instruments include options, futures contracts, forward contracts, and swaps.

34
Investment banking

Use of the term “corporate finance” varies considerably across the world. In the United States
it is used, as above, to describe activities, decisions and techniques that deal with many
aspects of a company’s finances and capital. In the United Kingdom and Commonwealth
countries, the terms “corporate finance” and “corporate financier” tend to be associated with
investment banking - i.e. with transactions in which capital is raised for the corporation

Personal and public finance

Corporate finance utilizes tools from almost all areas of finance. Some of the tools developed
by and for corporations have broad application to entities other than corporations, for
example, to partnerships, sole proprietorships, not-for-profit Indian Spinal Injuries Centre ,
governments, mutual funds, and personal wealth management. But in other cases their
application is very limited outside of the corporate finance arena. Because corporations deal
in quantities of money much greater than individuals, the analysis has developed into a
discipline of its own. It can be differentiated from personal finance and public finance.

INVESTMENT CONCEPTS

“Investment” or “Investing”, like value is a word of many meanings. Evolution of new

investment concepts would result a dramatically change of the whole investment scene
over next few years. Basically, there are three concepts of investment:

1. Economic investment i.e. an economists’ definition of investment.

2. Investment in a more general or extended sense, which is used by “the man on the
street”
3. Financial investment, the sense in which we are going to be very much interested.
35
1. Economic Investment includes net additions to the capital stock of society. “Capital
stock of society” means those goods, which are used in the production of other goods.
In society there are a number of goods (such as building, machineries etc.), which are
used to produce other goods. These means of production are considered as the capital
stock of society. Thus, investment in the capital stock means an increase in buildings,
machineries or inventories over the amount of equivalent goods that existed, say, one
year ago at the same time.

2. The everyday usage of the term investment can mean a variety of things, but to the
common man on the street it usually refers to a money commitment of some sort. For
example, a common man as an investment will perceive buying a new house or a new
car. But these are in very general or extended sense of word as neither there is any
rate of return involved or any financial return or capital growth is expected.

3. Financial investment means an exchange of financial claims such as securities, real

estate mortgages etc. Investors to differentiate between the pseudo-investment
concept of the consumer and the real investment of the businessman often use the
term financial investments. For example, there is a difference between an investment
in a ticket on a horse and a construction of a new plant or between pawning of a watch
and planting of a field of corn. Here, investment in a ticket on a horse or pawning of a
watch is instances of pseudo-investment whereas construction of a new plant or a
field of corn is the cases of real investments. Some investments are simply
transactions among people while others involve nature. The latter are “real”
investments; the former are “financial” investments.

36
WHY IS INVESTMENT IMPORTANT

Why is investment important or why do people invest? The simple answer to this question is
to ‘make money’. This can be explained by following story.

Donald and Mildred Other of New York lived quiet, unpretentious lives. Donald, who died in
1995, was a professor of chemical engineering at Brooklyn Polytechnic University. Mildred,
a former teacher, died in 1998. When they died, they both were in there nineties. What came,
as a shock to friends was that the others left a combined estate worth about $800 million, the
bulk of which was left to a variety of non-profit Indian Spinal Injuries Centre . How did they
accumulate such an impressive amount of wealth? Simply put, the Othmers, like many other
Americans, got rich by investing their money sensibly, leaving it invested for a long period,
and living modestly. In the early 1960s, the Othmers turned over their life savings, then fifty
thousand dollars, to famed investor Warren Buffeti, an old family friend. In the early 1970s,
the Othmers received shares of Buffets new company; Berksheie Hathaway invests in other
companies such as American Express, Coca-Cola and Gillette. When the Othmers received
their Berkshire shares, the price was $42 per share; at the time of Mildred’s death the price
has risen to $77,000 per share. Although, the Othmers were smart, or perhaps just lucky to
pick Buffet to manage their money, a similar investment, made at the same time, in the
overall stock market would have grown to more than $100 million by the middle of 1998.

To be more precise, people invest to improve their welfare or to increase their monetary
wealth, both current and future. By holding cash you forego the opportunity to earn the rate
on that cash. Investors are, usually, interested only in monetary benefits to be obtained from
investors. By foregoing consumption today and invest in the savings, Investors expect to
enhance their future consumption possibilities by increasing their wealth. Investors also seek
to manage their wealth effectively, obtaining the most from it while protecting it from
inflation, taxes and other factors. To accomplish both the objectives, people invest. People

37
also invest in order to meet personal goals such as buying a home or providing better
education to children. As far as a firm is concerned, investment provides not only the most
important decision, which an investor (business proprietor) has to make, but also with one of
the toughest. The decision will affect the operating environment of the firm throughout the
entire life of the investment. The quality of such decisions will largely determine the future
prosperity and health of the firm. Investment generates by increasing capital per worker and
is itself stimulated by growth, as rapid growth produces buoyant expectations in a self-
sustaining process. However, it must be noted that investment alone, does not guarantee
economic or social growth. Profitable opportunities must be identified and exploited. From
the foregoing discussion, it can be concluded that investment is both important and useful in
the context of present day situations due to the following set of factors:

1. Longer Life Expectancy

Investment decisions are important today because people living longer. Life expectancies are
rising in most countries, both developed and developing. A 65 Yr. old in sound health can be
expected to live for at least another twenty years. The main effect of longer life expectancies
is an increase in the duration of a person’s average retirement period. Thus, they will need
more money when they retire accumulating funds for retirement is one major reason why
people invest. Further, the increasing cost of health care will require setting aside greater
reserves in order to maintain same standard of living. Therefore, earnings from employment
should be calculated in such a manner that a portion should be put away as savings. Savings
by themselves do not increase do not increase wealth, but must be invested in such a way that
the principal and the return will be adequate enough for a longer retirement period. In other
words, the Financial Management made during one’s working life will be responsible for a
financially secured retirement.

2. Growth in Personal Income

Investment results in general increase in the employment opportunities, which gave, rise to
both male and female workforce. However, one should not merely rely on increasing

38
personal income to improve one’s future standard of living. The key to improving a future
standard of living is careful investment.

3. Changing Labor Market

Now a days, the old ideal of working in a company and being there until retirement is an
exception. Even IBM, which once had a reputation of virtually guaranteeing lifetime
employment, has reduced its workforce by more than 100,000 in the past few years. People
will have to rely more on their own resources and less on corporate paternalism to meet their
financial goals. Everyone should accumulate a larger cushion of resources to survive an
unexpected fall because you never know when your employer is going to downsize your job
out of existence.

4. Increasing Rates of Taxation

Increasing Rates of Taxation introduces an element of compulsion in a person’s savings.

These are various forms of saving outlets in the form of investments that help in bringing
down the tax-rates. For example, investments in UTI certificates, LIC, NSC, Post –office
Cumulative Deposit Schemes etc. Hence, besides safety of principal and high rates of
interest, an investor should always bear in mind the taxation angle. An investment should
such that the interest earned is compensated by an increase in tax rates.

5. Inflation

Inflation has become a continuous problem since the last two decades. High rates of inflation
bring a relatively rapid decline in purchasing power. Thus, in an inflationary environment, the
purchasing power of cash diminishes. This results in fall of standard of living and many other
problems. An investor should search an outlet, which gives him a high rate of return in the
form of interest to cover any decrease due to inflation.

39
 OBJECTIVES OF INVESTMENT
Investment is the sacrifice of certain present value for uncertain future reward. All investment
choices are made at points of time in accordance with the personal investment ends and in
contemplation of an uncertain future. Since investments in securities are revocable,
investment ends are transient and the investment environment is fluid. As one conceives of
the distant future, the reliable bases for reasoned expectations become more and more vague.
Investors in securities should, therefore, reappraise and re-evaluate their various investment
commitments from time to time, in the light of new information and changed expectations.

Investment helps in arriving at numerous decisions that are not only continuous but rational
too. Investment decisions are found to be the outcome of three different but related classes of
factors:

1. Informational or Factual premises:

The investor is provided with many streams of data that are taken together and
represent the observable environment as well as the features of the securities and
firms in which he may invest.

2. Expectational Premises:
Various environmental and financial facts are made available to the investors that
spark a light of expectations relating to the outcomes of alternative investments
though they are subjective and hypothetical. This not only limits the range of
investments, which may be undertaken but also the expectations of outcomes that may
legitimately be entertained.

40
 3. Valuational Premises:
These comprise the structure of subjective preferences for the size and consistency of
the income to be received and for the safety and negotiability of various investments
as these are appraised from time to tim

1.6 SAVINGS AND INVESTMENT

Investment may be regarded as utilization of the savings of a country for further creation of
wealth. Investment plays a central role in the process of economic development. The level of
saving largely effects investment. All the people in an economy do not save for production.
Their savings have to be mobilized for productive purposes. Then only it will lead to capital
formation, which is the very core of economic growth. Saving is the excess of income over
consumption. Thus, something out of current consumption is kept aside for the creation of
capital or wealth. Investment is the process of applying such saving to the creation of specific
forms of capital.

SAVINGS INVESTMENT CAPITAL FORMATION

For example, if a person having a deposit of Rs. 1 crore in his bank account, devotes himself
to the construction of a power house, and thereafter sells the power so generated, he has used
his one crore rupees in the creation of capital, and that capital yields services in the form of
“power”, which can be sold and reconverted into “money”. This process may be described as
“investment”. In developing countries like India where the process of economic development
is quiet slow, it is very necessary to step up the rate of investment so that the country
accumulates a large capital stock to accelerate production. As compared to other countries,
the rate of saving and investment in India are extremely low. Saving and investment are two
independent activities. With the increase in one, the other is also increased.

41
5. Portfolio construction and execution

After securities have been evaluated, the next step is construction and execution of the
portfolio. This is the phase that is concerned with the implementation of portfolio strategy.
This involves identification of the specific assets in which the investor should invest and
determination of the proportions of investors wealth to be invested in each of the assets. An
investor makes two types of decisions while constructing portfolios – the asset allocation
decision and the security selection decision. The asset allocation decision is the choice
among broad asset classes, while the security selection decision is the choice of particular
securities to be held within each asset classes. Accordingly there are two approaches to
portfolio construction – top down and bottom up. Top down portfolio construction starts
with asset allocation and only after that, the investor decides on the particular securities to be
held. On the other hand, in the bottom up approach, the portfolio is constructed from the
securities that appear to be attractively priced without concerning about asset allocation.
Thus, the main features of portfolio construction and execution are – determination of
diversification level, consideration of investment timing, selection of investment assets and
allocation of invest-able wealth to investment assets.

6. Portfolio Revision

Having built a portfolio, an investor must consider when and how to revise it. Portfolio
revision involves the periodic repetition of the above steps. The investment objectives of an
investor may change over time and the current portfolio may no longer be optimal for him.
So the investor may form a new portfolio by selling certain securities and purchasing others
that are not held in the current portfolio. Moreover, the value of a portfolio as well as its
composition (i.e. the relative proportions of stock and bond components) may change over
time as stocks and bonds tend to fluctuate. As a result, some securities that were not attractive
initially may become attractive and vice- versa. In response to such changes, the investors
may like to revise and rebalance his existing portfolio.

42
7. Performance Evaluation

The final step in the investment process is the performance evaluation of the portfolio.
Investments are always made under conditions of uncertainty and it is necessary to evaluate
periodically how the investment (portfolio) performed so that, if necessary, the investor may
consider switching over to alternate proposals. The performance of evaluation of a portfolio
is done in terms of risk and return. The key issue is whether the portfolio return is
commensurate with its risk exposure. This may provide useful feedback to improve the
quality of the portfolio management process.

43
 CHAPTER 4
OBJECTIVE OF THE STUDY & SCOPE OF THE STUDY

4.1 OBJECTIVE OF THE STUDY

1. Analysis Of Financial Management AT Indian Spinal Injuries Centre

2. To assess the nature of joint venture, investment pattern, entry strategies and product
of various other factor of Indian Spinal Injuries Centre financial analysis;
3. To analyze the comparative financial strategies of Indian Spinal Injuries Centre .

4.2 SCOPE OF THE STUDY

Financial Appraisal is of special importance in industries and Indian Spinal Injuries

Centre of India is one of such industry. From the point of view of the socio-economic
development of the country, Electric utility is significant enough in terms of
investment and employment. The sales and profitability function in Indian Spinal
Injuries Centre of India differs from that of other industries.

a) The study will be helpful in understanding the pattern and the structure of
financial variables of selected company apart from identifying the financial
relationship with other major Hospital in India.

b) The study will be helpful in checking current performance against predetermined

standards contained in the plans and will be helpful in evaluation of standards.

c) The study will be helpful in forming the policies of the management within the
scheduled time and approve cost.

d) The study will be helpful in ensuring maximum economy in expenditure.

44
e) The study will be helpful to the management, the financiers the investors and the
government at large, to take valuable decisions on their own.

f) The study will be helpful to shareholders, investors and investment analysts to

identify the determinants of financial appraisal of selected Indian Spinal Injuries
Centre of India.

g) The study will also be helpful to academic researchers, researchers in securities,

industries and companies by providing different perspectives.

45
 CHAPTER 5

RESEARCH METHODOLOGY

5.1 Sources of data

It involves use of secondary and primary sources such as web and other research articles
printed by various companies and other journals and magazine.

Secondary data.
It was collected to add the value to the primary data. Data regarding IMRB, International
(Indian Marketing Research Bureau) history, its profile and other necessary records and
information was collected by referring to website, magazines, annual reports, reference
books, daily newspapers, etc.

5.2 Tools and techniques of analysis E.g Ratio Analysis

Basic analytical tools, which include Tabular Analysis, Graphical Analysis, Percentage
Analysis.

46
 CHAPTER 6
DATA ANALYSIS

CROSS SECTIONAL ANALYSIS

Compares different firms’ financial ratios at the same time

Coverage ratios
ISIC Max Fortis
Adjusted cash flow time total debt 0.78 0.81 0.01
Financial charges coverage ratio 36.78 25.56 2,170.75
Fin. charges cov.ratio (post tax) 29.26 18.78 1,445.42

CHART TITLE
Adjusted cash flow time total debt Financial charges coverage ratio
Fin. charges cov.ratio (post tax) 2,170.75

1,445.42
36.78

29.26

25.56

18.78
0.78

0.81

0.01

ISIC MAX FORTIS

Coverage ration consist of three main factor to be analyze i.e. Adjusted cash flow which significantly
low in terms of ISIC i.e. 0.78 adding to this Max has 0.81 and the Fortis has 0.01 which means the
ISIC is more efficient here to match the debt obligation adding to this financial charges coverage
Ration will tell us the A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as
interest and leases. It is calculated as the following:

47
In Here Fortis has the maximum i..e 2170.75 which suggested that this is one of the strength area of
the firm but out of Max and ISIC , ISIC has more strength in terms of the Financial charges because it
is cash reach company i.e. 36.78% and Max is only 25.56.

Component ratios
ISIC Max Fortis
Material cost component (% earnings) 38.35 48.01 38.67
Selling cost Component 11.21 7.17 6.95
Exports as percent of total sales 78.09 56.55 6.48
Import comp. in raw mat. Consumed 38.75 42.63 29.86
Long term assets / total Assets 0.46 0.35 0.12
Bonus component in equity capital (%) 66.34 97.55 48.03

CHART TITLE
Component ratios ISIC Component ratios Max Component ratios Fortis
97.55
78.09

66.34
56.55
48.01

48.03
42.63
38.75
38.67
38.35

29.86
11.21
7.17
6.95

6.48

0.46
0.35
0.12

MATERIAL SELLING EXPORTS AS IMPORT LONG TERM BONUS

COST COST PERCENT OF COMP. IN ASSETS / COMPONENT
COMPONENT COMPONENT TOTAL SALES RAW MAT. TOTAL IN EQUITY
(% CONSUMED ASSETS CAPITAL (%)
EARNINGS)

As this is the cross sectional study part of the and from the Component ratio we got to know that
Material cost of component out of earning is higher of Max and which is 48.01% and the ISIC
maintaining this area would be by 38.35% which is kind of great significance to the Study it is one of
reason that ISIC always looking for good inventory and supply chain management. But one of the
disappointment of ISIC has is Selling cost component which is higher than the Max and Fortis i.e.
48
11.21 which is not good sign for the company this is also because the expansion strategy opted by the
company.

TIME SERIES ANALYSIS OF ISIC

Balance sheet

Mar ‘ 17 Mar ‘ 16 Mar ‘ 15 Mar ‘ 14 Mar ‘ 13

Sources of funds

Owner's fund
Equity share capital 84.2 84.09 83.96 38.35 38.26
Share application money - - - - -
Preference share capital - - - - -
Reserves & surplus 5,174.90 4,727.72 4,289.40 2,223.79 2,035.82
Loan funds

Secured loans 2.6 3.4 1.92 145.13 3.27

Unsecured loans 637.7 458.91 327.98 778.74 269.96
Total 5,899.40 5,274.11 4,703.26 3,186.01 2,347.32
Uses of funds

Fixed assets
Gross block 2,157.30 1,750.21 1,291.19 1,052.90 1,004.22
Less : revaluation reserve - - - - -
Less : accumulated depreciation 946.5 762.8 609.15 491.08 441.68
Net block 1,210.80 987.42 682.04 561.82 562.54
Capital work-in-progress 411.2 245.71 280.61 112.92 60.13
Investments 1,865.10 2,080.71 966.99 911.36 358.46
Net current assets

Current assets, loans & advances 3,870.40 3,348.01 4,028.55 2,398.87 2,000.88
Less : current liabilities & provisions 1,458.10 1,387.74 1,254.93 798.95 634.68
Total net current assets 2,412.30 1,960.27 2,773.62 1,599.92 1,366.20
Miscellaneous expenses not written - - - - -
Total 5,899.40 5,274.11 4,703.26 3,186.01 2,347.32
Notes:

Book value of unquoted investments 1,864.80 2,080.41 966.68 911.05 413.63

Market value of quoted investments 53 1.92 1.2 1.16 31.88
Contingent liabilities 1,934.80 1,892.55 1,896.92 2,409.27 189.19
Number of equity sharesoutstanding
(Lacs) 1684.69 1681.73 1679.12 766.95 765.19
49
Profit loss account

Mar ‘ 17 Mar ‘ 16 Mar ‘ 15 Mar ‘ 14 Mar ‘ 13

Income

Operating income 3,999.50 3,343.89 3,783.26 2,003.25 1,548.76

Expenses

Material consumed 1,469.90 1,253.46 1,121.59 756.15 544.43

Manufacturing expenses 195.9 207.46 213.46 123.18 90.64
Personnel expenses 412.5 366.28 299.04 205.85 178.66
Selling expenses 448.7 375.37 323.4 243.15 182.12
Adminstrative expenses 714.5 558.6 498.42 357.86 389.71
Expenses capitalised - - - - -
Cost of sales 3,241.50 2,761.19 2,455.91 1,686.19 1,385.56
Operating profit 758 582.7 1,327.35 317.06 163.19
Other recurring income 249.7 156.64 272.74 91.21 59.86
Adjusted PBDIT 1,007.70 739.35 1,600.08 408.27 223.05
Financial expenses 27.4 14.69 51.96 24.63 12.73
Depreciation 193.6 161.99 133.5 111.33 92.46
Other write offs 19.7 20.71 18.16 13.31 5.23
Adjusted PBT 767 541.96 1,396.47 259 112.62
Tax charges 168.6 108.88 188.99 52.64 -21.1
Adjusted PAT 598.4 433.08 1,207.48 206.36 133.73
Non recurring items -37.5 40.65 -38.79 4.77 -68.27
Other non cash adjustments -0.1 -0.06 -0.02 -0.01 -
Reported net profit 560.8 473.67 1,168.66 211.11 65.46
Earnigs before appropriation 2,218.30 1,778.80 1,496.49 392.66 231.77
Equity dividend 105.3 63.06 62.97 38.35 38.26
Preference dividend - - - - -
Dividend tax 17.8 10.72 10.7 5.38 5.37
Retained earnings 2,095.20 1,705.02 1,422.82 348.93 188.15
TIME SERIES ANALYSIS Mar ‘ 17 Mar ‘ 16 Mar ‘ 15 Mar ‘ 14 Mar ‘ 13
Operating income 2,408.33 2,093.63 1,745.14 1,345.50 1,231.10
Net Current Assets 877.17 545.01 422.73 468.35 386.54
PBT 425 365.18 284.22 214.36 165.02

50
 Mar ‘ 17 Mar ‘ 16 Mar ‘ 15 Mar ‘ 14 Mar ‘ 13
Investments 1,865.10 2,080.71 966.99 911.36 358.46
Net current Assets 5,899.40 5,274.11 4,703.26 3,186.01 2,347.32
Operating Income 3,999.50 3,343.89 3,783.26 2,003.25 1,548.76
Operating profit 758 582.7 1,327.35 317.06 163.19

CHART TITLE
Investments Net current Assets Operating Income Operating profit
5,899.40

5,274.11

4,703.26
3,999.50

3,783.26
3,343.89

3,186.01

2,347.32
2,080.71

2,003.25
1,865.10

1,548.76
1,327.35
966.99

911.36
582.7

358.46
317.06
758

163.19

MAR ‘ 17 MAR ‘ 16 MAR ‘ 15 MAR ‘ 14 MAR ‘ 13

As the time series data suggested for the ISIC is significantly low year than 13 because of the global
meltdown and its impact over the pharmaceutical company. In march 08 Investment made by the
company was 2013 which reduce to 1865 in year 2017. Adding to this Operating income is slightly
increase due to the different cost saving campaign launched by the ISIC which was in 2016 is Rs.
3343 and grown over the period to reach out at Rs. 3999.50. After acquiring the small houses
operating profile also has been increase by the several percent to the ISIC in spite of Max.

51
 COMMON SIZE STATEMENT ANALYSIS OF ISIC

COMMON SIZE STATEMENT

Income Statement Common-Size
Income Statement
Revenue 3,999.50 100%

Cost of Goods Sold 3,241.50 81.04%

Gross Profit 758 18.95%

SG&A Expense 1771.6 44.29%

Operating Income 1,007 25.17%

Provision for Taxes 168.68 0.42%

Common Size Balance Sheet

ASSETS Balance Sheet Common-Size
Balance Sheet

Cash 6,986 17.90%

Accounts Receivable 14,592 37.40%
Inventory 13,226 33.90%
Total Current Assets 26,553 68.61%
Property, Plant, & Equipment 2,862 6.10%
Total Assets 39,010.00 100%

LIABILITIES AND SHAREHOLDERS'

EQUITY
Current Liabilities 1,458.10 3.60%
Long-Term Debt 13,633 34.94%
Total Liabilities 15,091 38.20%
Shareholders' Equity 42,405 -0.87%

52
 COMMON SIZE RATIO ANALYSIS BETWEEN DIFFERENT COMPANIES.

COMPARISION OF EPS

Earning Per share Calculation

ISIC Max Fortis
Reported cash EPS (Rs) 45.96 11.95 62.41
Dividend per share 6.25 2 30
Operating profit per share (Rs) 44.99 16.02 81.28
Net operating income per share (Rs) 237.4 67.34 222.44

CHART TITLE
237.4

Earning Per share Calculation ISIC Earning Per share Calculation Max
222.44

Earning Per share Calculation Fortis

81.28

67.34
62.41
45.96

44.99

16.02
11.95

30
6.25

REPORTED CASH DIVIDEND PER OPERATING PROFIT NET OPERATING

EPS (RS) SHARE PER SHARE (RS) INCOME PER SHARE
(RS)

As per the data suggested by all the reported three companies Highest EPS made by the Fortis i.e.
62.41 and then the ISIC is 45.96 which is good The basic earnings per share (“EPS”) is computed by

53
dividing the net profit after tax for the year by the weighted average number of equity shares
outstanding during the year.

COMPARISION OF PROFITABILITY RATIO

Profitability Ratio
ISIC Max Fortis
Operating margin (%) 18.95 23.78 36.54
Gross profit margin (%) 14.11 20.88 35.67
Net profit margin (%) 13.2 14.58 25.74
Return on long term funds (%) 15.08 26.79 44.09
Reported return on net worth (%) 10.66 17.89 29.12

CHART TITLE
Profitability Ratio ISIC Profitability Ratio Max Profitability Ratio Fortis
44.09
36.54

35.67

29.12
26.79
25.74
23.78

20.88
18.95

17.89
15.08
14.58
14.11

13.2

10.66

OPERATING GROSS PROFIT NET PROFIT RETURN ON REPORTED

MARGIN (%) MARGIN (%) MARGIN (%) LONG TERM RETURN ON
FUNDS (%) NET WORTH
(%)

As per the study focus the comparative study between the ISIC’s performance with the Max
and Fortis operating margin of Fortis is significantly high i.e. 36.54%

54
LEVERAGE RATIOS

Leverage Ratio
ISIC Max Fortis
Long term debt / Equity 0.01
Total debt/equity 0.12 0.15
Fixed assets turnover ratio 1.91 1.94 6.52

CHART TITLE
Long term debt / Equity Total debt/equity Fixed assets turnover ratio

6.52
1.94
1.91

0.15
0.12

0.01

ISIC MAX FORTIS

LEVERAGE RATIO

ISIC’s ratio of total debt-tostockholders’ equity increased to 0.46 as on 31 March 2017 from
0.41 on 31 March 2016. Al though ISIC’s leverage ration of Fixed asset turnover ration is the
1.91 where an Max has 1.94 and the Fortis is the maximum i.e. 6.52.

55
 LIQUIDITY RATIO

Liquidity Ratio
ISIC Max Fortis
Current ratio 2.65 2.82 3.06
Current ratio (inc. st loans) 1.85 1.81 3.06
Quick ratio 2.13 1.93 2.63
Inventory turnover ratio 6.09 3.79 7.71

CHART TITLE
Liquidity Ratio ISIC Liquidity Ratio Max Liquidity Ratio Fortis

7.71
6.09

3.79
3.06

3.06
2.82
2.65

2.63
2.13

1.93
1.85

1.81

CURRENT RATIO CURRENT RATIO QUICK RATIO INVENTORY

(INC. ST LOANS) TURNOVER RATIO

The current ratio can give a sense of the efficiency of a company's operating cycle or its
ability to turn its product into cash. Companies that have trouble getting paid on their
receivables or have long inventory turnover can run into liquidity problems because they are
unable to alleviate their obligations. Because business operations differ in each industry, it is
always more useful to compare companies within the same industry. As per the finding of
these three companies 2.65 current ratio has the ISIC and the 2.82 has the Max which means
the current ratio Max has better current ration than the ISIC this is because of the operation
revamp done by the company . Quick Ratio is more conservative than the current ratio, a
more well-known liquidity measure, because it excludes inventory from current assets.
Inventory is excluded because some companies have difficulty turning their inventory into
cash. In the event that short-term obligations need to be paid off immediately, there are
situations in which the current ratio would overestimate a company's short-term financial
strength. In the Quick ration ISIC has 2.13 which is better than the Max.

56
 PAYOUT RATIO

Payout Ratio
ISIC Max Fortis
Dividend payout ratio (net profit) 21.94 23.41 57.43
Dividend payout ratio (cash profit) 15.9 19.58 55.65
Earning retention ratio 79.43 81.93 43.87
Cash earnings retention ratio 84.84 84.3 45.57

CHART TITLE
Payout Ratio ISIC Payout Ratio Max Payout Ratio Fortis

84.84
81.93

84.3
79.43
57.43

55.65

45.57
43.87
23.41
21.94

19.58
15.9

DIVIDEND PAYOUT DIVIDEND PAYOUT EARNING CASH EARNINGS

RATIO (NET RATIO (CASH RETENTION RATIO RETENTION RATIO
PROFIT) PROFIT)

Which is significance to the payout ratio because if the company will not pay the dividend on
right time it might create the problem. As we can analyse that Fortis is the number one player
in the market has highest pay out ratio and low earning retention ration which means for
company like ISIC may payout more because conservative approach might create some
problem in near future.

57
 DU PONT ANALYSIS OF ISIC

ISIC

17-Mar 16-Mar 15-Mar 14-Mar

PBIDT/Sales(%) 22.42 22.06 38.35 18.99
Sales/Net Assets 0.72 0.65 0.86 0.66
PBDIT/Net Assets 0.16 0.14 0.33 0.13
PAT/PBIDT(%) 59.01 62.47 75.86 52.82
Net Assets/Net Worth 1.12 1.1 1.08 1.41
ROE(%) 11.14 10.35 35.47 8.57

MAX

17-Mar 16-Mar 15-Mar 14-Mar

PBIDT/Sales(%) 22.01 23.78 26.11 26.69
Sales/Net Assets 0.95 0.95 1.05 1.23
PBDIT/Net Assets 0.21 0.23 0.27 0.33
PAT/PBIDT(%) 70.28 72.15 72.41 75.38

Net Assets/Net Worth 1.22 1.15 1.04 1.24

ROE(%) 19.21 20.12 25.69 34.55

DU PONT ANALYSIS
ISIC Max
PBIDT/Sales(%) 22.42 22.01
Sales/Net Assets 0.72 0.95
PBDIT/Net Assets 0.16 0.21
PAT/PBIDT(%) 59.01 70.28
Net Assets/Net Worth 1.12 1.22
ROE(%) 11.14 19.21

58
 DUPONT ANALYSIS
70.28
59.01

22.42 22.01 19.21

11.14
0.72 0.95 0.16 0.21 1.12 1.22

PBIDT/Sales(%) Sales/Net Assets PBDIT/Net PAT/PBIDT(%) Net Assets/Net ROE(%)

Assets Worth

As per the Dupont analysis suggested that ISIC has lesser ROE, i.e. 11.14% than then the
Max because of the reason that ISIC has lesser PAT this year to increase this ISIC need to
focus towards OTC drugs market to capture more revenue and to the improve ROE.

ROE = Profit Margin (Profit/Sales) * Total Asset Turnover (Sales/Assets) * Equity

Multiplier (Assets/Equity)

59
 CHAPTER :6

Findings

In march 08 Investment made by the company was 2080 which reduce to 1865 in year 2017

the ISIC maintaining low material cost by 38.35% which is kind of great significance to the
Study it is one of reason that ISIC always looking for good inventory and supply chain
management.

The company provide loan and advances to its customers

The other assets loan and advances have increased

. Quick Ratio is more conservative than the current ratio, a more well-known
liquidity measure, because it excludes inventory from current assets.

The ROE- 11.14% is than then the Max because ISIC has lesser PAT this year to
increase this ISIC need to focus towards OTC drugs market to capture more revenue
and to the improve ROE

These three companies (ISIC, MAX, FORTIS )2.65 current ratio has the ISIC and
the 2.82 has the Max which means the current ratio Max has better current ration than
the ISIC this is because of the operation revamp done by the company . Quick Ratio
is more conservative than the current ratio, a more well-known liquidity measure,
because it excludes inventory from current assets.

The fixed assets increased from 2013-2017 as, 1004.22- 2,157.30 respectively.

60
 CHAPTER-7

CONCLUSIONS , SUGGESTIONS

RECOMMENDATION

ISIC, plans to issue bonus debentures, popularized by consumer goods maker Hindustan
Unilever Ltd, to return capital to shareholders. The issue signals ISIC’s confidence in its
performance and ability to sustain cash flows as well as its desire to improve its return ratios.
Firms seek to return capital to shareholders when they have surplus cash. Bonus debentures
serve a few other purposes too.

There is no immediate cash outflow as money simply changes character, through a book
entry, from reserves to debt. This is unlike buy-backs or dividends where the outflow is
immediate. Moreover, there is no uncertainty about the success of the issue unlike a buy-
back. Bonus debentures have the immediate effect of improving a company’s return on net
worth, lowering its weighted average cost of capital and, after redemption, improving its
return on capital employed, too.

Profitability ratios such as return on net worth (RONW) and return on capital employed
(ROCE) are computed by dividing the profit (return) by the capital (net worth/capital
employed) in the denominator. One way of improving these ratios is to increase profits.
Bonus debentures offer an alternative. As a portion of the net worth is converted into
debentures, RONW will increase simply because the denominator reduces. When the
debentures mature and capital employed falls as a result, ROCE will improve too.
Shareholders benefit as these debentures are tax-free and can be sold before redemption.

The issue is a sign of ISIC’s confidence in its business plans. Not only is it committing itself
to a cash outflow three years hence, but it will also pay interest on these debentures for this
period. Assuming an interest rate of about 8%, its annual outflow will be in excess of Rs40

61
crore. ISIC’s performance in fiscal 2017 has seen its net profit get affected by impairment
provisions, resulting in a net loss of Rs60 crore for the nine months ended December. But its
actual operating performance was good and its cash flow improved too, up at Rs1,142 crore
compared with a negative Rs68 crore a year ago. This level of cash flow will suffice to meet
its capital expenditure needs. Handing cash back to shareholders is also a signal that the
company is not planning any big-ticket acquisition.

What ISIC gets in return for its munificence is an improvement in its RONW; at Rs520 crore
the issue will take away about 13% of its net worth as of 31 December. When these
debentures will be redeemed after three years in fiscal 2014, its ROCE, too, will get a boost.
ISIC has a target of achieving 25% ROCE by fiscal 2013. These debentures will do their bit
to help maintain this ratio afterwards too.

RECOMMENDATION

 Company can provided proper dividend than the retaining maximum revenue.
 ISIC can reduce there Inventory cycle i.e. 135 days currently.
 ISIC need to diversify there business.

62
Bibliography, Glossary

Books:
 Annual report of ISIC.s

 Organizations magazines

 Financial Management: I.M.Pandey, M.Y.Khan &P.K.Jain

Websites:

1. http://www.moneycontrol.com/
2. http://www.equitymaster.com/detail.asp?date=5/19/2000&story=6
3. http://www.business-standard.com/india/news/
4. http://businesstoday.intoday.in/index.php?option=com_content&task=view&id=9077

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