A Global Overview of a Fast Relief Market

A Project Report On A Global Overview Of A close reliever Market Submitted in overt angiotensin-converting enzyme fulfillment for the requirement of the Degree of Master of Business Administ proportionalityn (International Business) from genus Sus College of engineering and technology,Tangori, Mohali.. Under the Guidance of Submitted to Mr. SUNIL Mr. ANIL Mr. PANKAJ SIR Submitted By NANCY GOYAL MBA Acknowledgement I am very some(prenominal) thankful to Mr. Karun Narang (MD, eastern Medikit Ltd. ) and Mr. D.Tyagi (AGM, eastern Medikit Ltd) who eachowed me to sustain summer training in their esteemed organization. This report deserves the additional quotation of few cooks, Mr. SUNIL PALand Mr. ANIL KUMAR SINGH , who guided me staring(a)ly told the way and helped me at apiece of the stage. They helped me to gain knowledge closely the various aspects of their organization. They shargond their professional experiences, which lead be very lots lend oneselfful for me in the vast run. I would bid to give a bunch of thanks to Mr. Bhupendra Singh, Mr. Krishna Sharma, Mr. V. P. Joshi, Mr. Jagmohan Roy, Mr. Pankaj Pandey, Mr. Amit Sharma, Mr. Guru Prasad, Mr. Pradeep Dua, Mr.Kunjal Patel, Mr. Ajay Sharma, Miss Piyali Chakraborty and Mr. Ankkur who helped me to change my investigate puzzle come to the fore. I can non forget to thank all those people who send offly or indirectly cooperated me during my training period. NANCY GOYAL SUS C. E. T TANGORI MOHALI.. INDEX * Introduction What is Fast Relief Medikits fast repose elaborate Competitors and Their Profile * grind analysis PEST Analysis * combative analysis * Marketing mix * Strategies * Costs * Media costs eastern Medikit Ltd Medikit is the Indias bouffantst medical device export fol minuscule Medikit has 5 manufacturing facilities in and some Gurgaon, covering 125,000 sq. ft with 25,000 sq. ft as class 10,000 and class 1,00,000 break up rooms. Our organizational strengths ar roote d inwardly Medikits unique flexibility to train and alter crossways and processes by deployment of castetaryly competent manufacturing practices.Read Chapter 8 microbic GeneticsWith ongoing in-house increment of proprietary equipment and manufacturing techniques, our research and emergence activities a tenacious with our sole(prenominal) design and development centre ensure that Medikit is node-driven and stays a point in time, always. FAST RELIEF Definition Fast relief is a pain reliever product of medikit ltd. It is a extra potent pain reliever product. The main competitors of this is MOOV and HIMANI FAST RELIEF.. The raw launched product fast relief has a unique and ayurvedic paper elements.. worry Oil of wintergreen 15. 0%Pudina ka phool 5% Tarpin tel 3% Nilgiri tel 2% Base (bees wax) q. s. All these ingredients furnishs sootthing warmth to relieve pain instantly.. which is the requirement. Purpose The break up of this product is basically to give relief instantl y from the backache pain. It flora with its special ingredients to give relief from the backache. Its main use is to give warmth and comfort feeling at the pain atomic number 18a and to give quick relief.It works bid a miracle at the pain.. Comp whatevers Product Details MedifinTM FAST RELIEF from MEDIKIT Geographic MarketsDELHI , UP, MUMBAI, VARANASI, CHENNAI, BANGLORE, CHANDIGARH, LUCKNOW.. Product Details Benefits Being in topical form it is devoid of all undesireable effects of oral route.. So it helps to maintain the valid effects. Soft and therapeutic. Gives instant relief. Starts work immediately succeedingly application. Complies with sample and tonus norms. Attractive design and coloured forwarding. Gives satisfaction quickly.. Gives comfort warmth. To remedy the body muscles so that relive remains for to a greater extent while. No sideeffects . An ayurvedic cure. bakshisical preparation gives therapeutic effects precisely at the hardening tle of application thats local relief.. Cheap and economical. Specially for common man. trade OF THE PRODUCT.. INTRODUCTION.. MARKETING IS ONE OF THE IMPORTANT ASPECT OF ANY BUSINESS AND SO WE WOULD ANALYSE VARIOUS MARKETING STRATEGIES MAINLY PEST ANALYSIS AND SWOT ANALYSIS , COMPETITIVE ANALYSIS ARE BEEN DONE AND EXPLAINED IN THERE..MARKET divider AND TARGETING.. DELHI,UP,MUMBAI, VARANASI,BRALIEY,CHENNAI,BANGLORE, CHANDIGARH,LUCKNOW,MP,CALCUTTA. AGE- ABOVE 30 YEARS. GENDER- SPECIALLY FOR FEMALES. FAMILY SIZE- FOR BOTH BIG AND NUCLEAR FAMILIES SOCIO ECO CLASS- heart AND LOWER MIDDLE CLASS. PEST ANALYSIS.. Pest analysis stands for political,economical,social,and,technological analysis of macroenviornmental comp unrivallednts apply in the milieual scanning component of strategic management. it is a get going of the outside analysis when onducting a strategic analysis or doing commercialise research and gives a certain overview of the assorted macroenviornmental factors that the political casey has to take into the consideration. It is a useful strategic tool for understanding food market outgrowth or dec striving, phone line position, potential,and direction for operations.. POLITICAL- Govt support. , no risk for otc shits. ECONOMIC- It is cheap and economical.. as it is unattached in unalike-different downcast packaging. It compounds the GDP growth and liberlisation.SOCIAL- Its is a forward-looking product suits the gets of the changing preferences of the society. It is suitable for the needs and aspirations of the common individual. TECHNOLOGICAL- It is do by the use of best technological machines. It has given a quality packaging with double lamination on the outer and inner plain of the tube. SWOT ANALYSIS. prep atomic number 18 analysis is a strategic planning method utilise to approximate the strengths, weaknesses, opport social unities and threats involved in a couch or in a work venture..STRENGTHS- It is an ayurvedic produc t. It is quick and instant pain reliever than any oppositewise relief balm. Its mailing is fabulous and standardized Its channels of distri justion and utilize Employees working for its successful promotion. A huge great investment.. WEAKNESS- It is a saucily product in the market. It has low market sh atomic number 18 now. OPPORTUNITIES- on that point is a huge market demanding innovation And change.Changing tastes and preferences of consumers. THREATS- The problem of brand loyality and mind doctor of Consumres complimentsing a circumstantial product and its Quality. Popularity of competitive brands like moov. The condition of market is besides a big threat. . POSITIONING STRATEGY.. The positioning outline is an effective and in-chief( put upnominal) instrument for a phone line venture and for the product as hefty. As it causes the success of the product.. FAST RELIEF AN AYURVEDIC CURE FOR YOUR PAINThe positioning strategy should be strong and effective enough to addle the product strong and popular.. TARGET AUDIENCE The main target audience atomic number 18 mettle class family and low midlle class family woman, who works in the authorizations as well as in homes and fox no time to go to doctors for their ignorable backaches.. persistence PROFILE Industry Definition The Indian pharmaceutic application is a success story providing employment for gazillions and ensuring that essential medicines at affordable prices be procurable to the vast population of this sub-continent. Richard GersterThe Indian pharmaceutic confederationceutical Industry today is in the front rank of Indias science-based industries with wide ranging capabilities in the entangled field of medicine manufacture and technology. A exceedingly organized sector, the Indian Pharma Industry is estimated to be worth $ 4. 5 reportion, development at slightly 8 to 9 percent social classlyly. It ranks very elevated in the third world, in enclosures of technology, quality and regulate of medicates manufactured. From simple concern pills to sophisticated antibiotics and complex cardiac coalesces, almost every type of medicine is now do indigenously.Playing a attain role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality give risers and many another(prenominal) units approved by regulatory authorities in prescribed army and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 grades and helped to put India on the pharmaceutic act of the world. The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expand drastically in the last deuce decades.The trail 250 pharmaceutical companies overcome 70% of the market with market leader holding about 7% of the market sh ar. It is an extremely fragmented market with severe price emulation and govern ment price control. The pharmaceutical manufacturing in India wreaks around 70% of the countrys demand for muckle do drugss, drug in landmarkediates, pharmaceutical formulations, chemics, tablets, capsules, orals and injectibles. in that respect are some 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical fabrication in India (including 5 Central Public Sector Units).These units produce the complete range of pharmaceutical formulations, i. e. , medicines ready for consumption by long-sufferings and about 350 bulk drugs, i. e. , chemicals having therapeutic value and used for production of pharmaceutical formulations. chase the de-licensing of the pharmaceutical labor, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the drug Control Authority.Technologically strong and totally self-reliant, the pharmaceutical industry in Ind ia has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection government drill is well set to take on the international market. ADVANTAGE IN INDIA Competent workforce India has a pool of personnel with high managerial and skilful competence as in any case skilled workforce.It has an educated work force and English is commonly used. Professional services are slow available. Cost-effective chemical synthesis Its hatch record of development, particularly in the champaign of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It leads a wide variety of bulk drugs and exports sophisticated bulk drugs. Legal & monetary Framework India has a 53 year old democracy and accordingly has a solid legal framework and strong financial ma rkets. There is already an engrafted international industry and business community. info & Technology It has a beloved ne 2rk of world-class educational institutions and established strengths in Information Technology. Globalization The country is perpetrate to a free market delivery and globalization. Above all, it has a 70 million middle class market, which is incessantly growing. Consolidation For the outset time in many days, the international pharmaceutical industry is finding great opportunities in India. The process of consolidation, which has become a commonized phenomenon in the world pharmaceutical industry, has started taking attitude in India.THE GROWTH SCENARIO Indias US$ 3. 1 one million million million pharmaceutical industry is growing at the rate of 14 percent per year. It is one of the largest and most advanced among the developing countries. Over 20,000 registered pharmaceutical manufacturers exist in the country. The domestic pharmaceuticals industry output is expected to exceed Rs260 billion in the financial year 2002, which fliers for merely 1. 3% of the global pharmaceutical sector. Of this, bulk drugs allow account for Rs 54 bn (21%) and formulations, the remaining Rs 210 bn (79%).In financial year 2001, imports were Rs 20 bn while exports were Rs87 bn. The above graph shows the percentage of pharmaceutical products export by various countries. (SOURCE engagement of the Indian pharmaceutical industry in the clean product unvarnished regime a report by FICCI) RESEARCH AND DEVELOPMENT dose discovery is the process by which potential drugs are discovered or designed. In the past most drugs have been discovered either by isolating the active ingredient from traditional remedies or by lucky discovery.Modern biotechnology a great deal focuses on understanding the metabolic pathways related to a disease state or pathogen, and manipulating these pathways using molecular biology or Biochemistry. A great deal of early-stage drug discovery has traditionally been carried out by universities and research institutions. Drug development refers to activities under taken after a compound is set as a potential drug in club to establish its suitability as a medication. Objectives of drug development are to determine attach Formulation and Dosing, as well as to establish pencil eraser.Research in these areas mostly includes a combining of in vitro studies, in vivo studies, and clinical trials. The amount of chapiter infallible for late stage development has made it a historical strength of the larger pharmaceutical companies Often, large international corporations exhibit vertical integration, participating in a broad range of drug discovery and development, manufacturing and quality control, marketing, sales, and distribution. Smaller organizations, on the other hand, often focus on a specific aspect such as discovering drug candidates or developing formulations.Often, collaborative agreements amidst research organizations and large pharmaceutical companies are to explore the potential of sunrise(prenominal) drug substances organize The cost of innovation Drug discovery and development is very pricy of all compounds investigated for use in humans only a small fraction are eventually approved in most nations by government appointed medical institutions or boards, who have to approve new drugs before they can be marketed in those countries.Each year, only about 25 truly novel drugs ( unexampled chemical entities) are approved for marketing. This compliment comes only after heavy investment in pre-clinical development and clinical trials, as well as a commitment to ongoing inviolablety monitoring. Drugs which distribute part-way through this process often incur large costs, while generating no revenue in yield. If the cost of these failed drugs is taken into account, the cost of developing a successful new drug (New chemical entity or NCE), has been estimated at about 1 bil lion USD.A call for by the consulting soused Bain Company account that the cost for discovering, developing and launching (which factored in marketing and other business expenses) a new drug (along with the prospective drugs that fail) rose over a five year period to nearly $1. 7 billion in 2003. These estimates withal take into account the opportunity cost of investing capital many years before revenues are realized (see Time-value of money). Because of the very long time needed for discovery, development, and approval of pharmaceuticals, these costs can accumulate to nearly half the total expense.Some approved drugs, such as those based on re-formulation of an exist active ingredient ( withal referred to as Line-extensions) are much slight expensive to develop. The consumer advocacy group Public Citizen suggests on its web station that the actual cost is under $200 million, about 29% of which is fagged on FDA-mandatory clinical trials. For me-too-drugs and for generics, t he cost are even less. Calculations and claims in this area are controversial because of the implications for regulation and subsidization of the industry through federally funded research grants.Controversy about drug development and testing There have been increasing accusations and findings that clinical trials conducted or funded by pharmaceutical companies are much more likely to report positive results for the preferred medication. In reply to public outcry about specific cases in which unfavorable data from pharmaceutical family-sponsored research was suppressed, the Pharmaceutical Research and Manufacturers of America have publish new guidelines urging companies to report all findings and limit the financial mesh in drug companies of researchers.As a result of this public outcry and Pharma response the US relation back signed into law a bill which requires phase II and phase III clinical trials to be registered by the sponsor on the NIH website Drug researchers not di rectly employed by pharmaceutical companies often look to companies for grants, and companies often look to researchers for studies that give make their products look favorable. Sponsored researchers are rewarded by drug companies, for example with support for their host/symposium costs.Lecture scripts and even journal articles passed by academic researchers may actually be ghost-written by pharmaceutical companies. Some researchers who have tried to reveal honourable issues with clinical trials or who tried to publish papers that show pestilential effects of new drugs or cheaper alternatives have been threatened by drug companies with lawsuits. Product approval in the US In the unify States, new pharmaceutical products must be approved by the FDA as organism both safe and effective.This process chiefly involves sub kick of an Investigational new drug filing with sufficient pre-clinical data to support proceeding with human trials. interest IND approval, three phases of pro gressively larger human clinical trials may be conducted. material body I generally studies toxicity using wellnessy volunteers. Phase II can include Pharmacokinetics and Dosing in patients, and Phase III is a very large study of efficacy in the intended patient population. A fourth phase of post-approval surveillance is also often required due to the fact that even the largest clinical trials cannot effectively predict the preponderance of rare side-effects.Post-marketing surveillance ensures that after marketing the safety of a drug is monitored closely. In certain instances, its indication may need to be express mail to particular patient groups, and in others the substance is withdrawn from the market completely. Questions stretch out to be increase regarding the standard of both the initial approval process, and subsequent changes to product labeling (it may take many months for a change identified in post-approval surveillance to be reflected in product labeling) and this is an area where congress is active. The FDA provides information about approved drugs at the Orange Book site. In the UK, the British National Formulary is the core guide for pharmacists and clinicians. Orphan drugs There are special rules for certain rare diseases (orphan diseases) involving fewer than 200,000 patients in the United States, or larger populations in certain circumstances. Because medical research and development of drugs to treat such diseases is financially disadvantageous, companies that do so are rewarded with levy reductions, fee waivers, and market exclusivity on that drug for a peculiar(a) time (seven years), regardless of whether the drug is protected by patents.Industry revenues For the first time ever, in 2006, global spending on prescription drugs topped $643 billion, even as growth slowed somewhat in atomic number 63 and North America. The United States accounts for almost half of the global pharmaceutical market, with $289 billion in yearly sales foll owed by the EU and Japan. Emerging markets such as China, Russia, southernmost Korea and Mexico outpaced that market, growing a huge 81 percent. US improvement growth was maintained even whilst other top industries saw slowed or no growth. Despite this, .. he pharmaceutical industry is and has been for years the most lucrative of all businesses in the U. S. In the one-year Fortune 500 survey, the pharmaceutical industry topped the list of the most profitable industries, with a return of 17% on revenue. Pfizers cholesterol pill Lipitor remains the popular drug in the world for the fifth year in a row. Its annual sales were $12. 9 billion, more than twice as much as its closest competitors Plavix, the blood thinner from Bristol-Myers Squibb and Sanofi-Aventis Nexium, the heartburn pill from AstraZeneca and Adv atmospheric state, the asthma inhaler from GlaxoSmithKline.IMS wellness publishes an analysis of trends expected in the pharmaceutical industry in 2007, including increa sing profits in most sectors despite unfreeze of some patents, and new megahit drugs on the horizon. Teradata Magazine predicted that by 2007, $40 billion in U. S. sales could be lost at the top 10 pharma companies as a result of slowdown in R&D innovation and the expiry of patents on major products, with 19 blockbuster drugs losing patent. STEPS TO STRENGTHEN THE INDUSTRY Indian companies need to attain the objurgate product-mix for sustained future growth.Core competencies testament play an primary(prenominal) role in determining the future of many Indian pharmaceutical companies in the post product-patent regime after 2005. Indian companies, in an effort to consolidate their position, will have to increasingly look at merger and acquisition options of either companies or products. This would help them to offset loss of new product options, improve their R&D efforts and improve distribution to penetrate markets. Research and development has always taken the back seat amongst Indian pharmaceutical companies.In dedicate to stay competitive in the future, Indian companies will have to focus and invest heavily in R&D. The Indian pharmaceutical industry also needs to take advantage of the recent advances in biotechnology and information technology. The future of the industry will be determined by how well it markets its products to some(prenominal) regions and distributes risks, its forward and backward integration capabilities, its R&D, its consolidation through mergers and acquisitions, co-marketing and licensing agreements. INTRODUCTION TO eastern MEDIKIT LTDCOMPANY PROFILE A go with sceptered by one commission to place itself on the world map. An green light propelled by one force-that synergizes its energies to charter unexplored markets. Organizations fuelled by one dream-to qualify competition into opportunity. east Medikit Ltd Laboratories Ltd. was in collectived in June 1961, in the name of M/S LEPITIT EASTERN MEDIKIT LTD LABORATORIES LTD and it commenced its business in MARCH 1962, in technical and financial quislingism with an international company named LEPTIT SPA, MILAN, ITALY. east Medikit Ltd Laboratories Pvt. Ltd. merged with Leptit easterly Medikit Ltd Laboratories Pvt. Ltd. in 1962 east Medikit Ltd and company also merged with this company in 1966. The collaboration arrangement with M/S LEPTIT was terminated in 1966 after which Indian nationals acquired the accurate share capital of the company. Therefore the word Leptit was removed from the name of the company. The name is known as EASTERN MEDIKIT LTD LABORATORIES LIMITED. In 1973 the company issued shares to the general public and became a full fledged PUBLIC LIMITED COMPANY.Today, eastern Medikit Ltd has emerged as a Leading Pharmaceutical Company on the Indian firmament, with the second largest market share and enjoys an enviable reputation for its high standard of ethics and quality around its core strength of anti-infective, it has produced new b rands in emerging therapeutic areas like cardiovascular, central nervous clay and nutritional. accompaniment this enlargement, the company has invested in world class manufacturing infra construction that supplements Indias comparative cost advantage and skilled manpower, while delivering international quality.The companys drive for Internationalism is guided by the well planned brand strategy that covers some of the world emerging markets like China, cis, Central Europe and Latin America . Its position today is in league of the Top Ten Pharmaceutical companies of three world an decent ranking as the eleventh largest company in the international generics space is the resounding second of its strategic mind. It is clear that for a long time, the dominant share of revenues of the company would offer to come from the ever expanding global generics market.Hence the intent of east Medikit Ltd mission is to achieve a sustained growth rate through the invariable pursuit of innovat ion phase one trials for pervasion, a compound for treating prosthetic males have been completed. Phase 1 trials with clafrinast, an asthma compound is an substantial feeling towards research based value mental hospital. This company also had success with Ciplofloxacine, an cunning form, created through the novel drug delivery systems research.As the demand of the bulk drugs inside the country and abroad was increasingly rapidly a new, plant was set up at Toansa near Ropar in 1987. This was a high dexterity plant designed to cater to the present and future needs, initially antibiotics like Ampicillin, Trihydrate and Doxycycline were manufactured. Later, on the other drugs like Cephalexin monohydrate and Ranitidine were also prepared. The plant at Toansa was designed to bring the stringent standards set by the Food and Drug Administration (FDA) of U. S. A.This plant has been approved by FDA and this will open up American and other newer markets for easterly Medikit Ltds produc ts At present east Medikit Ltd have four plants for the manufacture of bulk drugs two at Mohali, one at Dewas (M. P) AND Another at Toansa near ROPAR. At present, easterly Medikit Ltd is the second most Indian company engaged in the manufacturing of Pharmaceuticals, Bulk Drugs and Fine Chemicals. EASTERN MEDIKIT LTDs vast range of highly pure laboratory reagent and chemicals enjoy a place of pride in the market.IT trends, has rebuilt As a step towards leveraging information for value launching using its information backbone around an ERP application, along the focus on reengineering several business processes around the internet and has putting place business solutions that challenge existing ways of doing Business. The undying spirit of the companys human assets and their intensive competitive and entrepreneurial energy has played a great part in transforming the company into a multicultural and racial team.Today, eastern Medikit Ltd is the largest exporter accounting for 12% o f the industry exports pharmaceutical substance and dosages forms to over 50 countries with the internationals sales comprising of 45% of the total turnover. VISION GARUDA During the year 2002, the company has evolved a 10-year vision till 2012, for sustaining significant growth consistent with its mission to be an international research based Pharmaceutical Company, under the rubify Vision Garuda, with increasing emphasis on Novel Drug tar Systems Research (DDR).In licensing and out licensing, relationship with other important pharmaceutical entities, expansion of manufacturing facilities both in India and strategic overseas locations, revamping of organizational social constructions to cater to the wider and more dispersed span of operations, and streamlining and standardizing the business processes through out the global organization, are other areas that receive focus and attention of management on priority. relegating To become a Research based International pharmaceutica l company Vision-2012 Achieve significant business inProprietary prescription products By 2012 With a strong presence in developed markets Aspirations-2012 Aspire to be a$5 billion company Become a Top 5 global generics player Significant income from Proprietary products BOARD OF DIRECTORS At the helm entire operations is the experience and able direction of the people who make it all happen. easterly Medikit Ltd acknowledges their inspiring stewardship and indefatigable work. * Mr. Tejendra Khanna(Chairman) * Mr. D. S. Brar (CEO $ Managing Director) * Mr. V. K. Kaul (Whole Time Director) * Dr.Brian agitation (Whole Time Director) * Mr. Surendera Daulet Singh * Mr. Harpal Singh * Mr J. W. Balani * Mr. N. Kampani * Mr. V. Bharat push * Mr. Vivek Mehra Mr. Tejendra Khanna Mr. Tejendra Khanna was elected Chairman at a meeting of the Board of Directors of easterly Medikit Ltd Laboratories particular(a) held at New Delhi, on July 5, 1999. Mr. Khanna, former Commerce secretarial assis tant to the Government of India, and a former Lieutenant Governor of Delhi is widely regarded as an expert in International Trade and Public Administration. Mr. D. S. BrarHe was instrumental in developing the Pharmaceutical exports business of the company in early 80s, which later became synonymous with major growth and expansion of companys portfolio. In addition to the International business, he looked after the Animal wellnesscare & OTC businesses of the company. In 1986, he took over the Pharma business in India along with Chemical Manufacturing Operations. In early 90s he led the companys expansion into overseas markets creating joint ventures, affiliates and subsidiaries in major countries like China, Russia, U. K. , South Africa and the USA.In 1996, he took over as the prexy of the company. Mr. V. K. Kaul potassium alumd in 1964 (B. Sc. Hons, Physics) from Ramjas College, University of Delhi, Mr. V. K Kaul joined the Institute of Chartered Accountants of India F. C. A. He is recognised in the industry for his vast experience and variegated knowledge. Dr Brian W. Tempest Dr Tempest joined east Medikit Ltd as Regional Director- Europe, CIS & Africa in 1995 and after took charge of eastern Medikit Ltds worldwide pharmaceuticals business as President-Pharmaceuticals in the year 2000. In July 2001 he was appointed on the Board of Directors of Eastern Medikit Ltd.Dr. Tempest, 54, has worked in the Pharmaceutical Industry for 28 years, bringing in a wealth of global pharmaceutical experience and expertise. He has worked with leading multi-national companies crossways several international markets including USA, Japan, Europe, China and other countries in Africa and Asia- peace-loving. His unique combination of experience with both research-based and generic companies will be an asset in driving the companys growth in times ahead. Dr. Tempest is a bachelor of Science with Honors from Aston University, specializing in Chemistry.He followed it up with a Ph D in Polymer Chemistry from Lancaster University. Mr. Malvinder Mohan Singh Mr. Malvinder Mohan Singh is an Honors Graduate in Economics from Delhi University followed by a Masters Degree in Business Administration from Duke University, USA. He started his career with the American Express rely and joined Eastern Medikit Ltd in May 1998. After holding several positions in the Company, has been appointed as President Pharmaceuticals and Whole-time Director, Eastern Medikit Ltd Laboratories Limited effective January 1, 2004OPERATING JOINT VENTURES AND SUBSIDIARIES BRAZILEastern Medikit Ltd S. P. Medicamentos Ltd. CHINAEastern Medikit Ltd (Guangzhou China) Ltd. EGYPTEastern Medikit Ltd Egypt Ltd. GERMANY Basics Gmb H. HONG KONGEastern Medikit Ltd (Hong Kong) Ltd. INDIARexcel pharmaceuticals Ltd. , Solus pharmaceuticals Ltd. , Vidyut Travel Services ltd. IRELANDEastern Medikit Ltd Ireland Ltd. MALAYSIAEastern Medikit Ltd (Malaysia) Sdn. Bhd. NETHERLANDSEastern Medikit Ltd Pharmaceutical s B. V. NIGERIAEastern Medikit Ltd Nigeria Ltd. PANAMAEastern Medikit Ltd Panama SA.POLANDEastern Medikit Ltd Poland Sp. Zo. SOUTH AFRICAEastern Medikit Ltd (SA) (Pty. ) Ltd. THAILANDUnichem pharmaceuticals LTD. , Unichem Distributors Ltd. Part, Eastern Medikit Ltd Unichem CO. Ltd. U. KEastern Medikit Ltd (UK) Ltd USA Eastern Medikit Ltd pharmaceuticals Inc. Ohm Laboratories Inc. , Eastern Medikit Ltd Schein Pharma, LLC VIETNAM Eastern Medikit Ltd Vietnam Company Ltd. ALLIED BUSINESSES Eastern Medikit Ltd Animal Health The Animal Health variableness saw an encouraging growth despite the prevailing shortsighted market conditions.The division grew at twice the growth rate reach in the industry. On the basis of having a vast dome take in animal population, the livestock, poultry business and pets business are among the fastest growing sectors in India. A vast infra social organisation of veterinary colleges, agricultural institutes, technologists and researchers are helping farmer s to source healthy, cost effective products. In conjunction with the present scenario, the AHC division of Eastern Medikit Ltd Laboratories Limited has introduced several latest extension products. Eastern Medikit Ltd Fine Chemicals Limited (RFCL)The division ranked 4th in the industry and captured 11% market share. RANKEM is established as a powerful brand, RFCLs brand for its range of Reagents is now synonymous with excellence in reagents and fine chemicals in the country. The focus of business remains on developing extensive customer relations enhancing service takes and enriching the product mix with the help of a adapted and competent marketing and sales team Diagnostics The diagnostics division has aggressively focused on market expansion activities based on strategy of reliability, quality products and efficient service.Introduction of products in even out of mission markets has expand market presence and over the next 1 2 years this segment will see considerable exp ansion in line with world trends. The Dade Behring segment has increased its installation base by 60% in leading hospitals and laboratories. Plans are afoot for the introduction of more parameters for the Point of Care market and the launch of Special Chemistries, a range of drug assays, plus an entry into automated microbiology in both the Base and Dade Behring business areas. The company has also witnessed significant milestones in the area of Novel Drug Delivery Systems (NDDS).The company has entered into strategic business arrangements with companies such as acetylsalicylic acid AG, Glaxo-Wellcome, Eli-Lilly etc. for production and co-marketing operations. Many innovative developments have been taking place in recent times. The companys research team is open of developing one NDDS product every 12 to 18 months. Also, two new products Roletra-D and Altiva-D, will soon be launched in India. In assign to expand and promote global growth, the company opened several new markets du ring the year, notably in Brazil, where 25 filings were undertaken in a span of 2-3 months.The company has planned to build and protect intellectual fitty with the help of IPC, which addresses all matters pertaining to patents. CQA supervises the implementation of standard operational procedures (SOP) and ensures compliance to corporate quality assertion policy in all technological operations of the organization. The company is committed to invest 6% of the sales in R and D by 2003, of which 7% of the expenditure will be earmarked for research on New Drug Discovery and Novel Drug Delivery Systems.There will be continuous emphasis on augmenting R and D performance and productiveness with advanced scientific and technological tools. VALUES OF EASTERN MEDIKIT LTD LABORATORIES LIMITED 1. Achieving customer satisfaction is fundamental to their business. 2. Practice dignity and equity in relationships and provide opportunities for people to realize their full potential. 3. Ensure prof itable growth and enhance wealth of shareholders. 4. Foster mutually beneficial relationships with all their business partners. 5. fill out their operations with concern for safety and environment. 6.Be a responsible corporate citizen. OBJECTIVES OF EASTERN MEDIKIT LTD LABORATORIES LTD. 1. To be a leader in the Pharmaceutical industry. 2. To be a profitable company with a steady growth in earnings. 3. To set an example as a socially responsible company. 4. To diversify in health care related areas. 5. To strive for excellence and continuous amelioration in all spheres. 6. To improve the quality of life of people by providing better services and quality products. environs, Health and Safety EHS Caring for the Environment is a core corporate value and as a part of this commitment.The Company enunciated its EHS policy in 1993. The Companys EHS policy provides for the creation of a safe and healthy workplace and a clean environment for employees and the community. It aims at higher(p renominal) international standards in plant design, equipment selection, maintenance and operations. The policy seeks to manufacture products safely and in an environmentally responsible manner. The implementation of the EHS policy is ensured by institutionalizing a robust EHS Management system, adequately supported by well defined organizational structure.As a part of EHS processes at the corporate level, besides laying down guidelines on systems, policy and training, the corporate EHS office monitors compliance, maintains and disseminates information on laws and regulations. EHS performance review meetings are held on rule-governed basis to monitor the progress against agreed EHS improvement plans. Close cooperation between all units and individuals is the discover to maintaining high standards of environment protection and safety in all the plants.The key processes at location level comprise of even safety surveillance, inspections & audits, Permit to work system for operatio nal / maintenance safety, waken prevention & protection activities, operation of the ETP/Incinerator, disposal activities related to hazardous wastes, regular monitoring of the environment internally and also through approved laboratories. periodical reports address EHS initiatives, compliance & various records under the statutory requirement, training of employees including melt off employees on EHS cognisance, interaction with the residential associations/nearby community etc. rejoicing of National safety day, fire day, Environment day etc. for EHS awareness among employees. The manufacturing facilities for bulk drugs and dosage forms accompany with the stringent requirements of Good Manufacturing Practices (GMP) and Good laboratory Practices (GLP) and are approved by International health and regulatory Agencies like FDA USA, MCA UK, WHO etc. These practices and approvals ensure that an effective framework is always in place, not only for manufacture of high quality produ cts, but also for effective use of resources and reduction of wastes as well as high safety & hygiene standards.Eastern Medikit Ltd has made significant improvements in process safety of the existing manufacturing facilities by providing extensive instrumented safety protection systems. The intended safety features are incorporated in the basic design of the new projects. Investments have been made on process improvements as well as effluent give-and-take plant up-gradation using the latest membrane based technology, multi-effect thermal dehydration system and state-of-the-art Incinerator. These investments have helped to reduce discharges of contaminants into the environment.With the facilities installed at Toansa for recycling of the inured effluent, the site has achieved the status of zero discharge site. The Company also engages with the implicated authorities and industry in devising responsible laws, regulations and standards and olibanum making safety, occupational healt h & environmental information and expertise available to its employees and the community at large. Eastern Medikit Ltd has made EHS concerns and practices a necessary factor in appraising its employee performance.The Company also accords a very high priority to hygiene monitoring at work place and health assessment of all employees at site. The plant and processes are continuously upgraded to improve hygiene and health standards. Necessary training is imparted to the employees to enhance their awareness towards health related matters. Safety knowledge of the employees is constantly updated through various external and in-house training programs, including special training programs by overseas experts & consultants.Moving up the value chain, the company identified Consumer Healthcare as its new business area in the year 2001. Eastern Medikit Ltd Global Consumer Healthcare (RGCH) was launched in October 2002 with a portfolio of 4 switch brands Revital, Pepfiz, Gesdyp & Garlic Pearls. Since these brands were already popular amongst consumers and represented the leading common ailment categories like VMS (Vitamins & Minerals Supplement), this portfolio was carefully created for the introduction of RGCH to the Indian market.Subsequently in 2004, RGCH launched its first herbal range of products through New Age Herbals (NAH) with products oblation remedy in categories of Cough & Cold (Olesan Oil & Cough Syrups) and thirst Stimulant (Eat Ease). VARIOUS DIVISIONS OF EASTERN MEDIKIT LTD LABORATORIES LTD. 1. Chemical section 2. Diagnostic ingredient 3. Stan care Division 4. Curradia Division 5. International Division 6. Pharmaceutical Division 7. Technical Division 8. Corporate Division 9. Animal Health Care Division DIVISIONS IN VARIOUS GEOGRAPHICAL AREAS 1. India and Middle East 2. Europe, CIS and Africa 3.Asia Pacific and Latin America 4. North America JOINT VENTURE OF THE COMPANY. 2000Eastern Medikit Ltd files IND finish for Asthma Molecule- RBx4638, after succe ssful bound of pre-clinical studies. Eastern Medikit Ltd acquires Bayers Generics business (trading under the Name of Basics) in Germany. Eastern Medikit Ltd forays into Brazil, the largest pharmaceutical market in South America and achieves global sales of U. S. $ 2. 5 million in this market. 2001Eastern Medikit Ltd took a significant step forward in Vietnam by initiating the Setting up of a new manufacturing facility with an investment of U.S. $ 10 million. Eastern Medikit Ltd achieved a turnover of U. S. $ 502 million for the year 2002 and moved close set(predicate) to achieving a target of 1 billion dollar by 2004. 2002Receives approval from FDA to market Midazolam Hydrochloride Syrup 2 Mg base/ ml. Eastern Medikit Ltd receives and approval from FDA to manufacture and market Cefpodoxime Proxetil for Oral Suspension, Lisinopril + Hydrochlorothiazide Tablets Us, terazosin Hydrochloride Capsules and Amoxcillin Oral suspension USP. Heralding the companys entry into the Indian OTC market. 003Eastern Medikit Ltd received the economic times award for corporate excellence-for the company for year. Eastern Medikit Ltd signed an agreement toacquire RPG(aventis) SA along with its fully owned subsidiary,OPIH SARL,in france 2004 Eastern Medikit Ltd launched its first range of herbal projects. 2005 Acquisition of additional stake in Eastern Medikit Ltd Farmaceutica Ltda. , Brazil Eastern Medikit Ltd announced the acquisition of Be-Tabs Pharmaceuticals (Pty) Limited 2008Acquired by the Nipponese giant, the $9. 62 billion Daiichi Sankyo, ranked No. in Japan shortened INTRO OF EASTERN MEDIKIT LTD PLANTS IN INDIA In the chemical division, various bulk drugs are manufactured. The chemical division had three units in Punjab. One is regain at Toansa, two are located at Mohali and one unit is located at Dewas near Indore in Madhya Pradesh, where Ciprofloxacine is manufactured. In the plant of the chemical division, various drugs like Antibiotics, Anti-malarial, Antibacteri al and Anti-ulcer are manufactured. One of the older plants of Eastern Medikit Ltd was closed after the accident in June 2003. he second one is still working The 1991, the Toansa plant started surgery in 1992 and the Dewas plant started functioning in 1999. Various plant heads independently manage all these plants. In each unit, separate facilities with respect to the manufacture of drugs, along with their manufacturing areas have been provided. This is required to reduce the chances of any cross contamination under the drug laws and to comply with good manufacturing practices. At Mohali plant, separate blocks have been provided for the preparation of each drug .The Toansa, Mohali and Dewas plants are planned in such a way that their system, facilities, manufacturing practices and standards meet the requirements of FDA. Mohali appoint also in the main in the manufacturing of Active Pharmaceutical Ingredients (API). The Plant is divided into two plant areas A8 and A9 THE VARIOUS DE PARTMENTS Human Resource subdivision The basic function of the human resource discussion section in the recent corporate world is knowledge management. The HR department strives to maintain coherency among employees. It also ensures interdepartmental cooperation in achieving targets.The appraisal system is also taken care by this department. The HR department delves deep into the employees genius to analyze the positives and negatives of each employee, so that a proper system of committee and / or empowerment can be evolved. Finance Department The pay department takes care of the regular financial needs of the company it ensures proper allocation of specie and takes care of the working capital requirements. It verifies capital raised by different departments and sends them for approval to the higher authorities. Stores DepartmentThe function of this department is to provide adequate and proper storage and preservation of various items to meet the demand of various other depa rtments by proper issues and maintaining accounts of consumption. It also keeps a track of stock accumulation and abnormal consumption. Erection and Fabrication Department As the name suggests, this department identifies new projects and helps in erecting them. This department also undertakes major modifications of equipment. ERP Department ERP department helps to integrate the entire enterprise scratch line from the supplier to the customer, covering financial and human resources.This will enable the enterprise to increase productivity by reducing costs. It also ensures a unity solution to the information needs of the whole organization. Production Department As a part of their on going commitment to produce high-tech quality drugs and pharmaceuticals that take care of the specific needs of markets around the world, Eastern Medikit Ltd Laboratories Limited has increased the investment in the production department. It is the most important department of the company and has the fol lowing objectives 1. Improving volume of production. 2.Reducing rejection rate. 3. Maintaining rework rate. applied science Department This department undertakes building, construction and maintenance. Maintaining service facilities such as water, gas, heating, ventilation, air conditioning, painting and plumbing are some of the other areas dealt by this department. This department also helps in maintaining electrical equipments such as generators, transformers, telephone system and electrical installation. Purchase Department The purchase department provides material to the manufactory without which the wheels of machines cannot move.The various functions performed by this department include Securing good vendor performance, including go deliveries of supplies of acceptable qualities. 1. To develop satisfactory sources of supply and maintaining good relationships with the suppliers. 2. To pay fair low prices. Quality Control/Quality Assurance Department The purpose of QC & QA d epartments is to ensure that the desired quality standard is achieved. It also ensures that the processing or fabrication of material conforms to the specific characteristics selected, to assure that the resulting product will in fact perform its intended function. PRODUCT REVIEWEastern Medikit Ltds therapeutic width covers five of the top six categories including Anti-infective, Gastrointestinal, Nutritionals, Cardiovascular, Central Nervous System, Respiratory, Dermatological and others. plot anti-infective contribute 56% of the total sales, Eastern Medikit Ltds other brands like Simvotin and Storvas in the cardiovascular segment, Serlift in CNS and Revital and Riconia in Nutritionals, are on their way to success in multiple markets. During Jan Dec 2000, amongst the top products of Eastern Medikit Ltd, Sporidex (Cephalexin) was the Number 1 brand, closely followed by Cifran (Ciprofloxacin).Anti Infectives Anti- infective has been the main driver of Eastern Medikit Ltds sales. The important brands in this household are Cifran (Ciprofloxacin), Sporidex (Ciphalexin), Enhancin (Amoxyclav), Crixan (Clarithromycin), Vercef (Cefaclor), Oframax (Ceftriaxone), Cepodem (Cefpodoxime Proxetil), Zanocin (Ofloxacin), Ceroxim (Cefuroxime Axetil), and Loxof (Levofloxacin). Cifran (Ciprofloxacin) is the key brand in the anti- infective portfolio, with estimated sales of US $ 32 Mn, shortly being marketed in 15 countries. Development of Ciprofloxacin once a day has been an important landmark achieved by Eastern Medikit Ltd.The product has been license to Bayer. Cifran continues to be a dominant player in the quinolones market in India, China and Russia. Sporidex is another leading brand in Eastern Medikit Ltds product portfolio with worldwide annual sales of US $ 35 Mn. It is available in eight different dosage forms including capsules, dry powder for suspension, redimix, dispersible tablets, pediatric drops, soft gelatin capsules, sachet and advanced formulation for twice-daily administration. It is currently marketed in 15 countries. In India, Sporidex is the leading brand with a market share of 36% of the Cephalexin segment.Keflor is available in seven different dosage forms and is the third-largest merchandising brand for Eastern Medikit Ltd worldwide. The dosage forms list includes capsules, dry syrup, modified release tablets, dispersible tablets, drops and redimix. Enhancin is expected to be the leading product in Eastern Medikit Ltds product portfolio with estimated sales of US $ 45 Mn by the year 2005. The product will be rolled out to about 20 important markets during this period. Zanocin, with approximate sales of US $ 10 Mn, is the seventh-largest contributor to Eastern Medikit Ltds total sales.Cepodem is currently available in three different countries outside India, and will be rolled out to 13 different countries in the near future. Cardiovasculars Cardiovascular is projected to be the second-best fellowship for Eastern Medikit L td. Statins have been the key drivers for this segment. The sale of Simvastatin has grown intimately in the past few years, a trend that is likely to continue in the future. In India, Simvotin (Simvastatin) is the market leader in the cholesterol reductant segment. Another leading brand in this fellowship is Storvas (Atorvastatin).Storvas has been one of the fastest-ever to enter the top-300 brands list of the Indian pharma industry. Other global cardiovascular brands are Covance (Losartan) and Caslot (Carvedilol). Central Nervous System The Central Nervous Segment is one of the important focus areas identified by Eastern Medikit Ltd, with Serlift being the key brand. In India, Serlift is number 1 amongst Sertraline brands. New product introductions will be drivers of growth in this category. Gastrointestinal Currently, gastrointestinal drugs are the second-largest category for Eastern Medikit Ltd.The key brands in this category include Histac and Romesac. The current annual sales of Ranitidine are estimated to be around US $ 16 Mn and the product is marketed in more than 20 countries. Rheumatologicals The first generation Cox-2 inhibitors principally drive worldwide growth in rheumatology. This category is estimated to grow exponentially for Eastern Medikit Ltd, with brands like celecoxib. This year, Rofibax (Rofecoxib) introduced in India, has established itself as a leader in the Cox-2 inhibitor category and has overtaken all Celecoxib brands. It has been identified as a key Global brand for the future.Nutritonals Nutritionals have been a major contributor to Eastern Medikit Ltds sales. Two of the important products in this category are Revital and Riconia. With annual sales estimated at about US $ 10 Mn, Revital contributes a significant share of total sales. It is a leading brand in India and has done exceedingly well in some parts of the world as an OTC product. Dermatologicals The dermatology category is mainly driven by India region and is likely to show a good growth pattern in the future. Some of the key brands doing well in this segment are Mobizox, Silverex, Moisturex, etc.INTRODUCTION TO CAPITAL STRUCTURE THEORY AND ANALYSIS This is a Report on the with child(p) Structure and Capital Expenditure of Eastern Medikit Ltd Laboratories Ltd. . The purpose and oscilloscope of the project can be listed as * intellectual the organizational structure and functioning of Eastern Medikit Ltd Laboratories Ltd. * Analysing and comparing the financial health of the firms in the Indian Pharma Industry. * Identifying and analysing the capital structure of Eastern Medikit Ltd. * Conducting a Review of the Capital Expenditure done at Eastern Medikit Ltd Laboratories Ltd. Identifying loopholes in the functioning and in the area of study and recommending the suggestions for the same. Following are the limitations of the study * Balance sheets of only 3 years have been studied but the company is in operation for so many years. * Only specific tools (i. e. ratio analysis) have been used for data analysis, while so many other tools are also there. * Organizational rules & regulations. * Availability of data. Financial figures for 2008 of Eastern Medikit Ltd were not available. * Limitations of the financial tools used. MethodologyThe methodology adopted for the study was as follows * Familiarization, interrogatory and evaluation of the procedures relating to capital structure and capital expenditure. * Collection of pertinent data form company records and cross checking of this data. * Calculations of financial ratios, parameter and norms, as also their financial implications. Broadly the data were roll up for the report on the project work has been through the primary and secondary sources. The primary data is collected by various approaches so as to give a precise, accurate, lifelike and relevant data.The main goal in the mind while convocation primary data was investigation and observation. The ends were thus achi eved by a direct approach and personal observation from the officials of the company. The other staff members and the employees were interviewed for the sake of maintaining commonsense standard of accuracy. The secondary data as it has always been important for the completion of any report provides a reliable, suitable equate and specific knowledge. The annual reports, the resolute asset register and the Capex register provided the knowledge and information regarding the relevant subjects.The valuable cooperation and continued support extended by all associated personnels, head of the department, division and staff members contributed a lot to fulfil the requirement in the collection of data in order to present a complete report on the project work. Capital Structure Theory and Analysis Capital Structure Financing decisions involve raising funds for the firm. It is concerned with formulation and designing of capital structure or leverage. The most life-and-death decision of any company is involved in the formulation of its appropriate capital structure.The best design or structure of the capital of a company helps the management to achieve its ultimate objectives of minimising overall cost of capital, maximizing favourableness and also maximising the value of the firm. The capital structure decision of a firm is concerned with the determination of debt equity composition. Capital structure ordinarily implies the proportion of debt and equity in the total capital of a company. The term capital may be defined as the long term funds of the firm. Capital is the aggregation of the items appearing on the go away hand side of the balance sheet minus current liabilities.In other address capital may be expressed as follows Capital = Total Assets Current Liabilities. Further, capital of a company may broadly be categorised into equity and debt. The total capital structure of a firm is represented in the following figure Established companies generally have trac k record of their profit earning capacity, which helps them to create their creditworthiness. The lenders feel safe to invest their funds in such companies. Thus, there is ample scope for this type of companies to collect debt. But a company cannot freely i. e. without having any limit.The company must have to chalk out a plan to collect a debt in such a way that the word sense of debt becomes beneficial for the company in terms of increase in EPS, profitability and value of the firm. If the cost of capital is greater than the return, it will have an obstinate effect on companys profitability, value of the firm and its EPS. Similarly, if company is unable to repay the debt within the scheduled period it will bear upon the goodwill of the company in the credit market and consequently may create problems in future for collecting further debt.Other factors remaining constant, the company should select its appropriate capital structure with due consideration. Capital structure involv es a choice between risk and expected return. The optimal capital structure strikes the balance between these risks and returns and thus examines the price of the stock. Significant variations with regard to capital structure can easily be noticed among industries and firms within the same industry. So it is difficult to generate the model capital structure for all business undertakings.The following is an attempt to consolidate the literature on various methods to suggested by researchers in arriving at optimal capital structure. Notations used * V = value of firm * FCF = free cash flow * WACC = dull average cost of capital * rs and rd are costs of stock and debt * re and wd are percentages of the firm that are financed with stock and debt. Operating and Financial supplements The term leverage refers to the ability of a firm in employing long term funds having a frozen(p) cost, to enhance returns to the owners. In other words everage is the employment of fixed assets or funds for which a firm has to meet fixed costs or fixed rate of interest tariff irrespective of the level of activities attained or the level of operating profit earned. Higher the leverage, higher the profits and vice versa. But a higher leverage obviously implies higher outside borrowings and hence riskier if the business activity of the firm suddenly takes a dip. But a low leverage does not necessarily indicate prudent financial management, as the firm might be incurring an opportunity cost for not having borrowed funds at a fixed cost to earn higher profits.Operating Leverage Operating leverage is concerned with the operation of any firm. The cost structure of any firm gives rise to operating leverage because of the existence of fixed nature of costs. This leverage relates to the sales and profit variations. Operating Leverage = share EBIT Contribution = Sales Variable Costs EBIT = wages Before rice beer and Taxes. Disadvantages of Operating Leverages * The reliability of opera ting ratios rests to a large extent on the correctness of the fixed costs identified with a product. Faulty allocation would distort the usefulness of the ratio. The published accounts does not give details of the fixed cost incurred and the contribution from each product and for an outsider it is difficult to draw a bead on the firms operating leverage. Firms cost structure and nature of the firms business affects operating leverage. A compass point change in sales volume results in more than proportionable change (+/-) in operating (or loss) can be observed by use of operating leverage. Financial Leverage This ratio indicates the effects on earnings by rise of fixed cost funds. It refers to use the use of debt in the capital structure.Financial leverage arises when a firm deploys debt funds with fixed charge. The ratio is calculated with the following * Earnings before interest and tax / Earnings after interest The higher the ratio, the lower the cushion for paid interest on borrowings. A low ratio indicates a low interest outflow and consequently lower borrowings. A high ratio is risky and constitutes a strain on profits. This ratio is considered along with the operating ratio, gives a fairly and accurate idea about the firms earnings, its fixed costs and the interest expenses on long term borrowings. Earnings per Share Higher financial leverage leads to higher EBIT resulting in higher EPS, if other things remain constant. Financial leverage affects the variability and expected level of EPS. The more debt the firm employs the higher its financial leverage. Financial leverage generally raises expected EPS, but it also increases the riskiness of securities as the debt / asset ratio rises. Financial Leverage = EBIT EBT EBIT Ea