A Global Overview of a Fast Relief Market

A Project Report On A Global Overview Of A spry backing Market Submitted in Partial fulfillment for the requirement of the spirit level of Master of line of work governing body (Inter field of translate Business) from SUS College of engineering and technology,Tangori, Mohali.. Under the centering of Submitted to Mr. SUNIL Mr. ANIL Mr. PANKAJ SIR Submitted By NANCY GOYAL MBA Ac associationment I am very over a great deal thankful to Mr. Karun Narang (MD, east Medikit Ltd. ) and Mr. D.Tyagi (AGM, east Medikit Ltd) who al get-goed me to lowgo summer cooking in their esteemed organization. This report deserves the special mention of few names, Mr. SUNIL PALand Mr. ANIL KUMAR SINGH , who channelise me alone the way and helped me at for each one of the stage. They helped me to gain knowledge virtu eachy the versatile aspects of their organization. They sh ard their professional get downs, which leave behind be very practically useful for me in the coherent run. I would homogeneous to go by 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. Pra ample Dua, Mr.Kunjal Patel, Mr. Ajay Sharma, Miss Piyali Chakraborty and Mr. Ankkur who helped me to improve my look for work. I bear not forget to thank all those spate who directly or indirectly cooperated me during my training period. NANCY GOYAL SUS C. E. T TANGORI MOHALI.. INDEX * Introduction What is warm Relief Medikits steadfast eternal sleep Details Competitors and Their Profile * nerd Analysis pestis Analysis * Competitive analysis * Marketing smorgasbord * Strategies * Costs * Media be east Medikit Ltd Medikit is the Indias bear-sizedst medical device exportation comp all Medikit has 5 manufacturing facilities in and some Gurgaon, covering 125,000 sq. ft with 25,000 sq. ft as clique 10,000 and class 1,00,000 clean rooms. Our organizational strengths argon grow at heart Medikits unique flexibility to evolve and improve yields and processes by deployment of globally sufficient manufacturing practices.Read Chapter 8 Microbial GeneticsWith ongoing in-house development of copyrighted equipment and manufacturing techniques, our look and development activities along with our exclusive cast and development concentrate on ensure that Medikit is customer-driven and stays ahead, al slipway. FAST RELIEF comment Fast relief is a hurt reli of all time harvest-time of medikit ltd. It is a extra unassail fitting pain reliever product. The principal(prenominal) competitors of this is MOOV and HIMANI FAST RELIEF.. The immature launched product fast relief has a unique and ayurvedic com vex elements.. analogous Oil of pyrola 15. 0%Pudina ka phool 5% Tarpin tel 3% Nilgiri tel 2% Base (bees wax) q. s. All these ingredients provides sootthing enthusiasm to relieve pain flash l adenylic acidly.. which is the requirement. Purpose The purpose of this product is ba sically to give relief instantly from the backache pain. It works with its special ingredients to give relief from the backache. Its primary(prenominal) purpose is to give warmth and soothing feeling at the pain celestial sphere and to give quick relief.It works interchangeable a miracle at the pain.. attach tos Product Details MedifinTM FAST RELIEF from MEDIKIT geographical MarketsDELHI , UP, MUMBAI, VARANASI, CHENNAI, BANGLORE, CHANDIGARH, LUCKNOW.. Product Details Benefits Being in topical form it is innocent(p) of all undesireable effects of oral r reveale.. So it helps to maintain the valid effects. finespun and remediation. Gives instant relief. Starts work immediately after application. Complies with precedent and quality norms. prepossessing externalise and coloured packaging. Gives joy quickly.. Gives soothing warmth. To improve the body muscles so that relive remains for to a greater extent magazine. No sideeffects . An ayurvedic cure. Topica l cooking gives therapeutic effects yet at the office of application thats topical anaesthetic relief.. Cheap and economical. Specially for habitual man. food merchandiseing OF THE return.. INTRODUCTION.. MARKETING IS ONE OF THE classical ASPECT OF ANY BUSINESS AND SO WE WOULD ANALYSE VARIOUS MARKETING STRATEGIES MAINLY PEST abridgment AND SWOT ANALYSIS , COMPETITIVE ANALYSIS ARE BEEN DONE AND EXPLAINED IN THERE..MARKET SEGMENTATION AND TARGETING.. DELHI,UP,MUMBAI, VARANASI,BRALIEY,CHENNAI,BANGLORE, CHANDIGARH,LUCKNOW,MP,CALCUTTA. AGE- ABOVE 30 YEARS. GENDER- particularly FOR FEMALES. FAMILY SIZE- FOR BOTH BIG AND NUCLEAR FAMILIES SOCIO ECO CLASS- MIDDLE AND LOWER MIDDLE CLASS. PEST ANALYSIS.. Pest analysis stands for political,economical,social,and,technical analysis of macroenviornmental factors used in the environmental s preserve component of strategic practicement. it is a part of the external analysis when onducting a strategic analysis or doing trade research and gives a sure overview of the different macroenviornmental factors that the smart set has to take into the consideration. It is a useful strategic machine for understanding market development or decline, melodic phrase position, potential,and direction for trading operations.. POLITICAL- Govt represent. , no risk for OTC blemishs. ECONOMIC- It is cheap and economical.. as it is accessible in different-different little packaging. It enhances the GDP growth and liberlisation.SOCIAL- Its is a innovative product suits the demands of the changing preferences of the society. It is equal for the call for and aspirations of the common individual. TECHNOLOGICAL- It is chip in by the use of best technological machines. It has given a quality packaging with double lamination on the outside and inner atomic number 18a of the tube. SWOT ANALYSIS. Swot analysis is a strategic planning method used to evaluate the strengths, weaknesses, opportunities and threats involved in a see to it or in a line venture..STRENGTHS- It is an ayurvedic product. It is quick and instant pain reliever than any some opposite relief balm. Its branding is fab and standardized Its channels of distri yetion and dedicated Employees working for its successful promotion. A huge pileus aimment.. WEAKNESS- It is a immature product in the market. It has suffering market component part now. OPPORTUNITIES- thither is a huge market demanding knowledgeability And change.Changing tastes and preferences of consumers. THREATS- The problem of brand loyality and mind sort out of Consumres regarding a specific product and its Quality. Popularity of hawkish brands like moov. The condition of market is in any case a big threat. . location STRATEGY.. The positioning schema is an efficacious and important instrument for a barter venture and for the product as tumefy. As it causes the success of the product.. FAST RELIEF AN AYURVEDIC CURE FOR YOUR PAINThe positioning strategy should be toilsome and powerful enough to make the product strong and popular.. TARGET AUDIENCE The main target audience are middle class family and low midlle class family woman, who works in the offices as tumesce as in homes and pick out no time to go to doctors for their ignorable backaches.. INDUSTRY PROFILE Industry Definition The Indian pharmaceutic patience is a success story providing utilisation for millions and ensuring that essential medicines at affordable prices are available to the vast nation of this sub-continent. Richard GersterThe Indian pharmaceutic connectionceutical Industry to mean solar day is in the front score of Indias science-based industries with wide ranging capabilities in the complex celestial orbit of dose lying and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4. 5 scoreion, growth at rough 8 to 9 percent yearlyly. It ranks very high in the third ground, in harm of technology, quality and spue of medicines comp rising sloped. From simple headache pills to sophisticated antibiotics and complex cardiac multiforms, al more or slight every type of medicine is now made indigenously.Playing a unwrap usage in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units sanctioned by regulatory authorities in USA and UK. planetary companies associated with this sector encounter stimulated, assisted and spearheaded this dynamic development in the past 53 long time and helped to put India on the pharmaceutical map of the public. The Indian Pharmaceutical sector is highly split with more than 20,000 registered units. It has flip ones lided drastically in the terminal two decades.The leading 250 pharmaceutical companies control 70% of the market with market drawing card holding intimately 7% of the market share. It is an extremely fragmented market with severe price competition and governme nt price control. The pharmaceutical constancy in India meets more or less 70% of the countrys demand for bulk medicates, dose intermediates, pharmaceutical facial expressions, chemical substances, tablets, capsules, orals and injectibles. There are about 250 large units and about 8000 lilliputian Scale Units, which form the core of the pharmaceutical industry in India (including 5 rudimentary Public Sector Units).These units produce the complete eye socket of pharmaceutical formulations, i. e. , medicines ready for consumption by longanimouss and about 350 bulk drugs, i. e. , chemicals having therapeutic repute and used for exertion of pharmaceutical formulations. hobby the de-licensing of the pharmaceutical industry, industrial licensing for virtually of the drugs and pharmaceutical products has been through away with. Manufacturers are free to produce any drug duly approved by the medicine Control Authority.Technologically strong and totally self-reliant, the phar maceutical industry in India has low costs of production, low R& group AD costs, innovative scientific manpower, strength of national laboratories and an increasing sense of equilibrium of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, back up by Intellectual Property Protection regime is well set to take on the planetary market. ADVANTAGE IN INDIA Competent men India has a pool of personnel with high managerial and technical competence as overly handy workforce.It has an educated work force and position is commonly used. Professional services are easily available. Cost-effective chemical synthesis Its track introduce of development, particularly in the area of change cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide categorization of bulk drugs and exports sophisticated bulk drugs. Legal & angstrom unit pecuniary simulation India has a 53 course old democracy and hence has a solid legal framework and strong financial markets. There is already an certifyed international industry and line of descent friendship. entropy & Technology It has a superb network of innovation-class educational institutions and established strengths in Information Technology. Globalization The country is committed to a free market economy and globalization. Above all, it has a 70 million middle class market, which is forever growing. Consolidation For the first time in many grades, the international pharmaceutical industry is finding great opportunities in India. The process of consolidation, which has become a generalized phenomenon in the world pharmaceutical industry, has started taking place in India.THE GROWTH SCENARIO Indias US$ 3. 1 one thousand thousand pharmaceutical industry is growing at the rate of 14 percent per division. It is one of the largest and most sophisticated among the ontogenesis 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 stratum 2002, which grudges for merely 1. 3% of the global pharmaceutical sector. Of this, bulk drugs forget 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 fighting of the Indian pharmaceutical industry in the revolutionary product plain regime a report by FICCI) RESEARCH AND DEVELOPMENT drug discovery is the process by which potential drugs are discovered or intentional. In the past most drugs render been discovered either by isolating the active ingredient from traditional remedies or by lucky discovery.Modern biotechnology a lot directiones 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 undertaken after a compound is place as a potential drug in establish to establish its suitability as a medication. Objectives of drug development are to determine appropriate Formulation and Dosing, as well as to establish preventive.enquiry in these areas generally includes a combination of in vitro studies, in vivo studies, and clinical trials. The amount of outstanding necessitate for late stage development has made it a historical strength of the larger pharmaceutical companies Often, large transnational corporations exhibit vertical integration, participating in a broad range of drug discovery and development, manufacturing and quality control, marketing, gross revenue, and distribution. Smaller organizations, on the other hand, often nidus on a specific aspect much(prenomi nal) as discovering drug trickdidates or developing formulations.Often, collaborative agreements mingled with research organizations and large pharmaceutical companies are to explore the potential of new drug substances make The cost of innovation Drug discovery and development is very pricey of all compounds investigated for use in humans only a handsome fraction are purgetually approved in most nations by government appointed medical institutions or boards, who deport to approve new drugs before they can be marketed in those countries.Each year, only about 25 truly novel drugs ( sweet chemical entities) are approved for marketing. This approval comes only after heavy investment in pre-clinical development and clinical trials, as well as a shipment to ongoing safety monitor. Drugs which run low part-way through this process often incur large costs, while generating no revenue in think. If the cost of these failed drugs is taken into account, the cost of developing a succe ssful new drug (New chemical entity or NCE), has been estimated at about 1 billion USD.A study by the consulting solid Bain lodge account that the cost for discovering, developing and launching (which factored in marketing and other railway line expenses) a new drug (along with the prospective drugs that fail) rose over a five year period to come alongly $1. 7 billion in 2003. These estimates withal take into account the opportunity cost of investing bang-up many age before revenues are realized (see Time- measure out 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. almost approved drugs, such as those based on re-formulation of an existing active ingredient ( excessively referred to as Line-extensions) are some(prenominal) less expensive to develop. The consumer advocacy group Public Citizen suggests on its web site that the actual cost is under $200 mi llion, about 29% of which is fatigued on FDA-required clinical trials. For me-too-drugs and for generics, the 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 arrive been increasing accusations and findings that clinical trials conducted or funded by pharmaceutical companies are much more probably to report positive results for the preferred medication. In reply to public outcry about specific cases in which unfavorable entropy from pharmaceutical guild-sponsored research was suppressed, the Pharmaceutical Research and Manufacturers of America have promulgated new guidelines urging companies to report all findings and limit the financial social responsibility in drug companies of researchers.As a result of this public outcry and Pharma response the US coitus signed into law a bil l which requires shape II and phase III clinical trials to be registered by the sponsor on the NIH website Drug researchers not directly employed by pharmaceutical companies often look to companies for grants, and companies often look to researchers for studies that result make their products look favorable. Sponsored researchers are rewarded by drug companies, for usage with support for their concourse/symposium costs.Lecture scripts and even journal articles presented by academic researchers may actually be ghost-written by pharmaceutical companies. Some researchers who have tried to reveal estimable issues with clinical trials or who tried to publish papers that show deadly effects of new drugs or cheaper alternatives have been threatened by drug companies with lawsuits. Product approval in the US In the united States, new pharmaceutical products must be approved by the FDA as existence both safe and effective.This process generally involves sub explosive sex of an Inv estigational new drug filing with sufficient pre-clinical info to support proceeding with human trials. Following IND approval, triple phases of progressively larger human clinical trials may be conducted. form 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 prevalence 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 hold in to particular patient groups, and in others the substance is withdrawn from the market completely. Questions keep on to be raised regarding the standard of both the initial approval process, and concomitant changes to product label ing (it may take many months for a change set in post-approval surveillance to be reflected in product labeling) and this is an area where congress is active. The FDA provides discipline 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 dis expediencyous, companies that do so are rewarded with tax reductions, fee waivers, and market exclusivity on that drug for a curb time ( 7 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 Europe and North America. The United Stat es accounts for almost half of the global pharmaceutical market, with $289 billion in annual gross revenue followed by the EU and Japan. Emerging markets such as China, Russia, sulfur Korea and Mexico outpaced that market, growing a huge 81 percent. US profit 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 fat of all notees in the U. S. In the annual Fortune 500 survey, the pharmaceutical industry topped the lean of the most profitable industries, with a return of 17% on revenue. Pfizers cholesterol pill Lipitor remains the best-selling(predicate) drug in the world for the fifth year in a row. Its annual bargains 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 Advair, the asthma attack inhaler from GlaxoSmithKline.IMS Healt h publishes an analysis of trends expected in the pharmaceutical industry in 2007, including increasing moolah in most sectors despite injury of some patents, and new blockbuster drugs on the horizon. Teraselective information Magazine predicted that by 2007, $40 billion in U. S. gross 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(ip) products, with 19 blockbuster drugs losing patent. STEPS TO STRENGTHEN THE INDUSTRY Indian companies need to let on the right product-mix for uphold next growth.Core competencies will play an important role in determining the future of many Indian pharmaceutical companies in the post product-patent regime after 2005. Indian companies, in an effort to unify their position, will have to increasingly look at merger and learning options of either companies or products. This would help them to offset loss of new product options, improve their R&D efforts and imp rove distribution to cut through markets. Research and development has always taken the back seat amongst Indian pharmaceutical companies.In order to stay belligerent in the future, Indian companies will have to refocus and invest heavily in R&D. The Indian pharmaceutical industry also of necessity 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 several(prenominal) regions and distributes risks, its prior and regardant(postnominal) integration capabilities, its R&D, its consolidation through mergers and acquisitions, co-marketing and licensing agreements. INTRODUCTION TO eastern MEDIKIT LTDCOMPANY PROFILE A fraternity empowered by one mission to place itself on the world map. An enterp bear propelled by one force-that synergizes its energies to adopt unexplored markets. Organizations fuelled by one dream-to transform competition into opportunity. easterly Medikit Ltd Laboratories Ltd. was integrate in June 1961, in the name of M/S LEPITIT easterly MEDIKIT LTD LABORATORIES LTD and it commenced its business in MARCH 1962, in technical and financial collaboration with an international company named LEPTIT SPA, MILAN, ITALY. east Medikit Ltd Laboratories Pvt. Ltd. merged with Leptit eastern Medikit Ltd Laboratories Pvt. Ltd. in 1962 eastern 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 inherent share hood 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 skillful fledged PUBLIC LIMITED COMPANY.Today, easterly Medikit Ltd has emerged as a tip Pharmaceutical party on the Indian firmament, with the second largest market share and ma ke whoopies an enviable reputation for its high standard of ethics and quality around its core strength of anti-infective, it has produced new brands in emerging therapeutic areas like cardiovascular, central nervous brass and nutritional. supporting this expansion, the company has invested in world class manufacturing infra structure that leverages Indias comparative cost advantage and skilled manpower, while delivering international quality.The companys drive for foreignism is head by the well aforethought(ip) brand strategy that covers some of the world emerging markets like China, cis, cardinal 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 endorsement of its strategic mind. It is clear that for a long time, the dominant share of revenues of the company would continue to come from the ever expanding global generics market.Hence the intent of Eastern Medikit Ltd mission is to progress to a sustained growth rate through the round-the-clock pursuit of innovation phase one trials for pervasion, a compound for treating prosthetic males have been completed. Phase 1 trials with clafrinast, an asthma compound is an important smell towards research based value creation. This company also had success with Ciplofloxacine, an ingenious 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(prenominal) capacity plant designed to furnish 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 meet the stringent standards set by the Food and Drug A dministration (FDA) of U. S. A.This plant has been approved by FDA and this will open up American and other newer markets for Eastern Medikit Ltds products At present Eastern 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, Eastern Medikit Ltd is the second most Indian company engaged in the manufacturing of Pharmaceuticals, Bulk Drugs and lovely chemics. 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 creation using its information horse sense 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 multiracial team.Today, Eastern Medikit Ltd is the largest exporter accounting for 12% of the industry exports pharmaceutical substance and doses 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 coin bank 2012, for sustaining portentous growth consistent with its mission to be an international research based Pharmaceutical Company, under the rubric Vision Garuda, with increasing stress on Novel Drug language Systems Research (DDR).In licensing and out licensing, family with other important pharmaceutical entities, expansion of manufacturing facilities both in India and strategic overseas locations, revamping of organizational structures to cater to the wider and more dispersed span of operations, and streamlining and standardizing the business processes through out the global organ ization, are other areas that receive focus and attention of management on priority. Mission To become a Research based International pharmaceutical company Vision-2012 Achieve significant business in copyrighted prescription products By 2012 With a strong presence in demonstrable markets Aspirations-2012 Aspire to be a$5 billion company wrench a Top 5 global generics imposter 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. Eastern Medikit Ltd acknowledges their inspiring stewardship and unwearying work. * Mr. Tejendra Khanna(Chairman) * Mr. D. S. Brar (CEO $ Managing Director) * Mr. V. K. Kaul (Whole Time Director) * Dr.Brian Tempest (Whole Time Director) * Mr. Surendera Daulet Singh * Mr. Harpal Singh * Mr J. W. Balani * Mr. N. Kampani * Mr. V. Bharat Ram * Mr. Vivek Mehra Mr. Tejendra Khanna Mr. Tejendra Khanna was elected Chairman at a meeting of the Board of Directors of Eastern Medikit Ltd Laboratories bound held at New Delhi, on July 5, 1999. Mr. Khanna, source Commerce Secretary 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 sensual Healthcare & 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 President of the company. Mr. V. K. Kaul Graduated in 1964 (B. Sc. Hons, Physics ) from Ramjas College, University of Delhi, Mr. V. K Kaul conjugate 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 linked Eastern Medikit Ltd as Regional Director- Europe, CIS & Africa in 1995 and subsequently took charge of Eastern Medikit Ltds cosmopolitan 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 riches of global pharmaceutical experience and expertise. He has worked with leading multi-national companies a picky several international markets including USA, Japan, Europe, China and other countries in Africa and Asia-Pacific. His unique combination of experience with both research-based and generic companies will be an asset in brainish the companys growth in times ahead. Dr. Tempest is a Bachelor of wisdom with Honors from Aston University, specializing in Chemistry.He followed it up with a PhD 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 Bank 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 go 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 Pharmaceuticals 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 office saw an encouraging growth despite the prevailing poor market conditions.The discrepancy grew at twice the growth rate recorded in the industry. On the foot of having a vast dome satiated living organism population, the livestock, poultry business and pets business are among the fastest growing sectors in In dia. A vast infrastructure of veterinary colleges, agricultural institutes, technologists and researchers are fortune farmers to source wellnessy, cost effective products. In conjunction with the present scenario, the AHC division of Eastern Medikit Ltd Laboratories Limited has introduced several latest generation 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 transaction enhancing service levels and enriching the product mix with the help of a qualified and competent marketing and sales team Diagnostics The diagnostics division has acutely focused on market expansion activities based on strategy of reliability, quality products and efficient service.Introduction of products in Point of manage markets has expanded market presence and over the next 1 2 years this ingredient will see considerable expansion 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, irrefutable an gateway 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 Bayer 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 capable 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 order to expand and promote global growth, the company opened several new markets during 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 suitablety with the help of IPC, which addresses all matters pertaining to patents. CQA supervises the carrying into action of standard run(a) procedures (SOP) and ensures compliance to unified quality assurance indemnity 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 productivity with pass on scientific and technological tools. VALUES OF EASTERN MEDIKIT LTD LABORATORIES LIMITED 1. Achieving customer satisfaction is fundamental to their business. 2. Pr actice dignity and faithfulness in relationships and provide opportunities for people to realize their full potential. 3. Ensure profitable growth and enhance wealth of shareholders. 4. Foster mutually beneficial relationships with all their business partners. 5. Manage 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 improvement in all spheres. 6. To improve the quality of life of people by providing kick downstairs services and quality products. Environment, 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 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, anyhow 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 regular basis to monitor the progress against agreed EHS improvement plans. Close cooperation betwixt all units and individuals is the key to maintaining high standards of environment security measures and safety in all the plants.The key processes at location level comprise of regular safety surveillance, inspections & audits, Permit to work system for operational / maintenance safety, flak 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. Monthly reports address EHS initiatives, compliance & various records under the statutory requirement, training of employees including contract employees on EHS awareness, interaction with the residential associations/nearby community etc. celebration of National safety day, fire day, Environment day etc. for EHS awareness among employees. The manufacturing facilities for bulk drugs and dosage forms comply with the stringent requirements of computable 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 products, 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 treatment plant up-gradation using the latest tissue layer based technology, multi-effect thermal evaporation system and state-of-the-art Incinerator. These investments have helped to fasten leave outs of contaminants into the environment.With the facilities installed at Toansa for recycling of the treated effluent, the site has achieved the status of zero discharge site. The Company also engages with the have -to doe with authorities and industry in devising responsible laws, regulations and standards and thus making safety, occupational health & 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. inevitable 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 chastise 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 crack remedy in categories of Cough & Cold (Olesan Oil & Cough Syrups) and Appetite Stimulant (Eat Ease). VARIOUS DIVISIONS OF EASTERN MEDIKIT LTD LABORATORIES LTD. 1. Chemical discrepancy 2. Diagnostic air division 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 position East 2. Europe, CIS and Afri ca 3.Asia Pacific and Latin America 4. North America JOINT VENTURE OF THE COMPANY. 2000Eastern Medikit Ltd files IND Application for Asthma Molecule- RBx4638, after successful completion 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 closer to achieving a target of 1 billion dollar bill 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 Suspensio n, 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 game in Eastern Medikit Ltd Farmaceutica Ltda. , Brazil Eastern Medikit Ltd announced the acquisition of Be-Tabs Pharmaceuticals (Pty) Limited 2008Acquired by the Japanese giant, the $9. 62 billion Daiichi Sankyo, ranked No. in Japan BRIEF 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. unrivalled is located at Toansa, two are located at Mohali and one unit is located at Dewa s near Indore in Madhya Pradesh, where Ciprofloxacine is manufactured. In the plant of the chemical division, various drugs like Antibiotics, Anti-malarial, Antibacterial 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 functioning 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 technical 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 requirem ents of FDA. Mohali Plant also mainly in the manufacturing of ready Pharmaceutical Ingredients (API). The Plant is divided into two plant areas A8 and A9 THE VARIOUS DEPARTMENTS clement Resource Department The basic function of the human resource division in the modern corporate world is knowledge management. The HR division strives to maintain cohesiveness among employees. It also ensures inter divisional cooperation in achieving targets.The appraisal system is also taken care by this department. The HR department delves deep into the employees psyche to analyze the positives and negatives of each employee, so that a proper system of delegation and / or empowerment can be evolved. pay Department The finance department takes care of the regular financial needs of the company it ensures proper allocation of funds and takes care of the working slap-up requirements. It verifies seat of government raised by different departments and sends them for approval to the higher authoriti es. 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 departments by proper issues and maintaining accounts of consumption. It also keeps a track of stock accumulation and abnormal consumption. Erection and fable Department As the name suggests, this department identifies new projects and helps in put up them. This department also undertakes major modifications of equipment. ERP Department ERP department helps to integrate the entire enterprise starting 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 single solution to the information needs of the whole organization. output Department As a part of their on going commitment to produce hi-tech quality drugs and pharmaceuticals that take care of the specific needs of markets around the world, Eastern Medik it Ltd Laboratories Limited has increased the investment in the production department. It is the most important department of the company and has the pursuance objectives 1. Improving slew of production. 2.Reducing rejection rate. 3. Maintaining rework rate. Engineering 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 factory without which the wheels of machines cannot move.The various functions performed by this department include Securing good vendor performance, including prompt deliveries of supplies of acceptable qualities. 1. To develop satisfactory sources of supply and ma intaining good relationships with the suppliers. 2. To pay reasonably low prices. Quality Control/Quality sureness Department The purpose of QC & QA departments 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 check 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. While anti-infective contribute 56% of the total sales, Eastern Medikit Ltds other brands like Simvotin and Storvas in the cardiovascular segment, Serlift in systema nervosum centrale and Revital and Riconia in Nutritionals, are on their way to success in duplex markets. During Jan Dec 2000, amongst the top products of Eastern Medikit Ltd, Spor idex (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 mob 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, currently being marketed in 15 countries. victimisation of Ciprofloxacin once a day has been an important landmark achieved by Eastern Medikit Ltd.The product has been licensed 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 diffe rent dosage forms including capsules, dry powder for suspension, redimix, dispersible tablets, paediatric 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 selling 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 furled 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, a nd will be trilled out to 13 different countries in the near future. Cardiovasculars Cardiovascular is intercommunicate to be the second-best category for Eastern Medikit Ltd. Statins have been the key drivers for this segment. The sale of Simvastatin has grown substantially 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 reducer segment. Another leading brand in this category is Storvas (Atorvastatin).Storvas has been one of the fastest-ever to enter the top-300 brands list of the Indian pharma industry. otherwise 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. Gastrointestina l 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 cyclooxygenase-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 lea ding brand in India and has through 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 organize THEORY AND ANALYSIS This is a Report on the not bad(p) complex body part and Capital Expenditure of Eastern Medikit Ltd Laboratories Ltd. . The purpose and scope of the project can be listed as * Understanding 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 chapiter 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, examination and evaluation of the procedures relating to great(p) structure and capital expenditure. * Collection of relevant 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 collected for the report on the project work has been through the primary and secondary sources. The primary data is collected by vari ous approaches so as to give a precise, complete, realistic and relevant data.The main terminal in the mind while gathering primary data was investigation and placard. The ends were thus achieved 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 reasonable 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 amend 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 backing decisions involve raising funds for the firm. It is concerned with formulation and designing of capital structure or leverage. The most crucial 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 profitability and also maximising the value of the firm. The capital structure decision of a firm is concerned with the determination of debt candour 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 left hand side of the balance sheet minus current liabilities.In other words capital may be expressed as follows Capital = Total Assets Current Liabilities. Further, capital of a com pany 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 track 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. tho 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 acceptance 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 adverse 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 affect the goodwill of the company in the credit market and so 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 involves 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 heavy 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 = weighted 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 Leverages The term leverage refers to the ability of a firm in e mploying long term funds having a quick-frozen 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 post obligation irrespective of the level of activities deliver the goods or the level of operate 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 bespeak prudent financial management, as the firm might be subject 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 Leve rage = Contribution EBIT Contribution = Sales variable star Costs EBIT = Earnings Before Interest and Taxes. Disadvantages of Operating Leverages * The reliability of operating ratios rests to a large extent on the correctness of the fixed costs identified with a product. Faulty apportionment would distort the usefulness of the ratio. The make accounts does not give details of the fixed cost incurred and the contribution from each product and for an outsider it is difficult to calculate the firms operating leverage. Firms cost structure and nature of the firms business affects operating leverage. A degree change in sales volume results in more than proportionate 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 c alculated with the following * Earnings before hobby and tax / Earnings after interest The higher the ratio, the lower the cushion for paying interest on borrowings. A low ratio indicates a low interest outflow and consequently lower borrowings. A high ratio is risky and constitutes a product line 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