aj SMC

Study of Industrial Marketing Plan at Shilpa Medicare Limited

PART-A

1. INDUSTRY PROFILE

The Indian pharmaceutical sector has come a long way, being almost non-existent before

1970 to a prominent provider of healthcare products, meeting almost 95 per cent of the country's

pharmaceuticals needs.

The Industry today is in the front rank of India’s science-based industries with wide ranging

capabilities in the complex field of drug manufacture and technology. It ranks very high in the

third world, in terms of technology, quality and range of medicines manufactured. From simple

headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of

medicine is now made indigenously.

Playing a key role in promoting and sustaining development in the vital field of medicines,

Indian Pharma Industry boasts of quality producers and many units approved by regulatory

authorities in USA and UK. International companies associated with this sector have stimulated,

assisted and spearheaded this dynamic development in the past 53 years and helped to put India

on the pharmaceutical map of the world. The Indian pharmaceutical today is in front rank of

India’s science-based industries with wide ranging capabilities in the complex field of drug

manufacturing and technology. A highly organized sector, the Indian pharma industry is

estimated to be worth $ 4.5 billion, growing at about 8 to 9 present annually. It ranks very high in

the third world, in terms of technology, quality and range of medicines manufactured. From

simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every

type of medicines is now made indigenously.

Sir. M Visvesvaraya Institute Of Technology, 1


The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered

units with severe price competition and government price control. It has expanded drastically in

the last two decades.

There are about 250 large units that control 70 per cent of the market with market leader

holding nearly 7 per cent of the market share and about 8000 Small Scale Units together which

form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units).

These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for

consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and

used for production of pharmaceutical formulations.

Following the de-licensing of the pharmaceutical industry, 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 India has low costs of production, low R&D costs,

innovative scientific manpower, strength of national laboratories and an increasing balance of

trade.

The Indian pharmaceutical sector is highly with more than 20,000 registered units. It has

expanded drastically in the two decades. The leading 250 pharmaceutical companies control 70%

of the market leader holding nearly 7% of the market share. It is an extremely fragmented market

with severe price competition and government price control. The pharmaceutical industry in

India meets around 70% of the country’s demand for bulk drugs, drug intermediates,

pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles.

There are about 250 large units and about 8000 small units, which form the core of the

pharmaceutical industry in India (including 5 central sector units). These units produce the



complete range of pharmaceutical formulation, i.e. medicines ready for consumption by patients

about 350 bulk rugs, i.e. chemicals having therapeutic value and used for production of

pharmaceutical formulations.

Following the de-licensing of the pharmaceutical industry, 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 India 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 regime is well set to take on the international

market.

ADVANTAGE TO INDIA

Competent workforce:

India has a pool of personnel with high managerial and technical competence as also

skilled workforce. It has an educated work force and English is commonly used. Professional

services are easily available.

Cost-effective chemical synthesis:

Its track record of development, particularly in the area of improved cost-beneficial

chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk

drugs and exports sophisticated bulk drugs.

Legal & Financial Framework:

India has a 53 year old democracy and hence has a solid legal framework and strong

financial markets. There is already an established international industry and business community.



Information & Technology:

It has a good network of world-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 continuously growing.

Consolidation: For the first time in many years, 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

India's US$ 3.1 billion 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 accounts for merely 1.3% of the global pharmaceutical sector. Of this, bulk drugs will

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.

Shilpa Medicare Ltd., formerly known as Shilpa Antibiotics was incorporated as a private

limited company in Nov.'87 and has been promoted by Vishnukant C Bhutada and his associates.

The company produces trimethoprim, an anti-biotic bulk drug. It also manufactures the product

for other reputed companies like Eskayef, Bombay Drugs & Parma’s, Bombay Drug House, US

Vitamins, Sandoz India, etc, for their export commitments. Circa 1992, the company installed



production facilities to manufacture sodium methoxide. SAL is the recipient of the World Health

Organization - Good Manufacturing Practices (GMP) certificate. It exports its products to hard-

currency areas. The company manufactures 1-methyl, amino-1-methyl, thio-2-nitro ethane, a

drug intermediate used in the manufacture of ranitidine, an anti-ulcer drug. The company

proposes to embark upon an expansion project which involves the addition of one more bulk

drug to its existing product range -- norfloxacin -- and expand the production capacity of the

existing products of the company -- sodium methoxide and trimethoprim

STEPS TO STRENGTHEN THE INDUSTRY

Indian companies need to attain the right product-mix for sustained future 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 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 order to stay competitive in the future, Indian companies will have

to refocus 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 several regions and distributes risks, its forward and backward

integration capabilities, its R&D, its consolidation through mergers and acquisitions, co-

marketing and licensing agreements.



2. COMPANY PROFILE

Shilpa Medicare Limited (Shilpa Medicare) is a publicly held India-based pharmaceutical

company. The company is principally engaged in producing and exporting active pharmaceutical

ingredients (API's), fine chemicals, herbal products, intermediates and specialty chemical

products by using latest technology. Its product line includes oncology products, general active

pharmaceutical ingredients, nutritional supplements and drug intermediates. The company's

manufacturing facilities are well equipped to manufacture chemicals and API's. It also holds well

equipped facilities for in-house testing and research and development activities.

This comprehensive SWOT profile of Shilpa Medicare Limited provides you an in-depth

strategic analysis of the company's businesses and operations. The profile has been compiled to

bring to you a clear and an unbiased view of the company's key strengths and weaknesses and

the potential opportunities and threats. The profile helps you formulate strategies that augment

your business by enabling you to understand your partners, customers and competitors better.

This company report forms part of our 'Profile on Demand' service, covering over 50,000

of the world's leading companies. Once purchased, our highly qualified team of company

analysts will comprehensively research and author a full financial and strategic analysis of Shilpa

Medicare Limited including a detailed SWOT analysis, and deliver this direct to you in pdf

format within two business days (Excluding weekends).



COMPANY LOCATION:

Registered & Corporate office:

Shilpa Medicare Ltd,

No. 10/80, Rajendra Gunj.

Raichur – 584 102

Factory at:

Shilpa Medicare Ltd,

Deosugur Village,

Dist: Raichur - 584102

Ph Nos: - 08532 – 235006, 236328

E-mail: - [email protected]

Web Site: - www.vbshilpa.com

Company information

BOARD OF DIRECTORS:

Omprakash Inani : Chairman

Vishnukant Bhutada : Managing Director

Atim Kabra : Director

Carlton Felix Periera : Director

Pramod Kasat : Independent Director

Venugopal Loya : Independent Director

Rajendra Sunki Reddy : Independent Director

N.P.S. Shinh : Independent Director



Board Committees:

Audit Committee

Venugopal Loya – Chairman

Omprakash Inani – Member

Pramod Kasat – Member

Rajendra Sunki Reddy – Member

Remuneration Committee

Pramod Kasat – Chairman

Venugopal Loya – Member

Omprakash Inani – Member

Investors Grievances Committee

Omprakash Inani – Chairman

Venugopal Loya – Member

Vishnukant Bhutada – Member

Company Secretary – Nagalakshmi Popuri

Auditors

Bohara Bhandari Bung & Associates

Chartered Accountants,

Amar Complex, M.G. Road,

Raichur - 584 101



Registered Office

1st Floor, 10/80, Rajendra Gunj,

Raichur - 584 102. (Karnataka)

Phone: 08532-235006, 235704

Fax: 08532-235876

E-mail: [email protected]

Web: www.vbshilpa.com

Works

Deosugur Industrial Area,

Deosugur - 584 170. (Raichur District)

100 Percent Export Oriented Unit

33-33A, Raichur Industrial Growth Center,

Wadloor Road, Chicksugur Cross,

Chicksugur - 584134. (Raichur District)

Bankers

The Lakshmi Vilas Bank Ltd.

ICICI Bank Ltd, State Bank of India, Axis Bank Ltd.

Registrars & Share Transfer Agent

M/s. Karvy Computershare Pvt. Ltd.

Plot No. 17 to 24, Vithalrao Nagar,

Madhapur, Hyderabad - 500 081, A.P.

Tel: 040-23420815-28

Fax: 040-23420814/23420857

E-mail: [email protected], Website: www.karvycomputershare.com


http://www.karvycomputershare.com/


A. BACKGROUND AND INCEPTION OF COMPANY

Established in 1987, Shilpa Medicare Limited has carved a niche for itself in the

exceedingly competitive and quality-conscious sphere of pharmaceuticals manufacturing. It

produce and export consistently high-quality Active Pharmaceutical Ingredients Fine Chemicals,

intermediates, herbal products and specialty chemical products using sophisticated technology,

meticulously following international specifications.

The company has earned its spurs as a successful and reliable partner within the

pharmaceutical industry. Buyers within the country and from across the borders count on its fast

track integrated process development and finely honed expertise of its skilled and experienced

personnel. The Company is already exporting to USA, Canada, Australia, Japan and European

Countries viz., Germany, Switzerland, Netherlands, Belgium, Spain, Greece, Cyprus, Italy,

United Kingdom etc., South American Countries like Mexico, Brazil, Columbia etc., African

Countries like Kenya, Nigeria and West Indies etc., Asian Countries like Singapore, Taiwan,

China, Malaysia, Thailand and closer to home to Iran, Egypt, Pakistan and Bangladesh.

Shilpa Medicare is synergizing strength through tie-ups for manufacturing products and

co-marketing rights, for it believes in working together and sharing success.

Being proactive in approach, the company continually seeks out enquiries for development of

new products drawing from the extensive knowledge-base of its qualified and experienced

people as well as sophisticated facilities



B. NATURE OF BUSINESS CARRIED

Shilpa Medicare Limited is a pharmaceuticals manufacturing company. Reliable Partner

for API's & Customs Synthesis; recognized by Govt. of India & Export House. It is the largest

Manufacturer and Exporters of Oncology API's from India & Bulk Drugs. Products registered in

Europe, Russia, Korea, Iran, Canada, Japan, Australia, etc. With World class State of the art

facility. WHO GMP Approved Plant. Patents filed for non-infringing manufacturing process.

Highly efficient & cost effective technology & manufacturing process

Shilpa Medicare Limited is an India-based company engaged in pharmaceuticals manufacturing.

The Company produces and exports active pharmaceutical ingredients (API) fine chemicals,

intermediates, herbal products and specialty chemical products. Some of its oncology products

include Anastrozole, Bicalutamide, Carboplatin, Gemcitabine HCl, Irinotecan HCl Trihydrate

and Oxaliplatin. Its general API's include Ambroxol HCl, Ticlopidine HCl and Buflomedil HCl.

Chromium picolinate is its nutritional supplements. The Company's products under development

include Bendamustine, Decitabine, Epirubicin, Fludarabine Phosphate, Paclitaxel and

Lomustine. The Company operates in two segments: bulk drugs and intermediates and power.

The Company's subsidiaries include Zatortia Holdings Ltd, Raichem Lifesciences (P) Ltd and

Loba Feinchemie Gmbh.

C. VISION, MISSION AND QUALITY POLICY

VISION:

To become a leading supplier in pharmaceuticals in the world by 2015 with a focus on

Oncology API's and formulations and contract research and manufacturing services.

MISSION:



Shilpa's primary goal is to create CGMP facilities to manufacture Oncology Products that

will enable to obtain approvals from EDQM, UK, MHRA, TGA Australia, Health Canada and

USFDA. By supplying products complying the above regulatory authorities with the

pharmaceutical companies worldwide, Shilpa will provide an optimum return on investment to

our investors, shareholders and our employees. The common people will also enjoy the highest

quality products at an affordable price

Quality policy:

Shilpa Medicare provides consistent quality to the customers. Strict quality assurance is

inherent in every step of our process, from incoming raw materials to shipment of the finished

product. Each of our raw materials is selected by our experienced purchasing department, based

on strict physical and chemical criteria. Upon arrival at Shilpa’s facility, each ingredient lot is

carefully checked and analysed by our quality control personnel.

The Quality Assurance Department ensures that the manufacturing facilities and

procedures are standardized to provide the international quality attributes to the products

consistently for each batch through a well-documented, validated and audited system.

Shilpa Medicare is fully equipped with gas chromatograph, spectrophotometers and other

high-tech apparatus; as also micro-biological facilities to check the quality of raw material, semi-

finished products and finished products following Good Laboratory Practices by qualified and

approved chemists.



The Company follows Quality Standards for the manufacture of Bulk-Drug and

Intermediates. Our business aim is to follow a safety system, and adhere to the responsible care

programme and most of all provide customer satisfaction. For this purpose, the Company has

acquired the required Licenses and Permissions from various Government Agencies to set the

pharmaceutical and industrial standard.

Shilpa''s product quality is second to none and meets the most exacting demands of its

clients. Making this possible are fully fledged Analytical, Instrumentation and Microbiology

laboratories equipped with sophisticated instruments to test raw materials, process water,

packing materials, intermediates and finished products. Impurity Profile, Residual Solvent,

Stability and Microbiological studies are regularly carried out to fully characterize the products.

The Quality Control instruments list as below:

MAJOR QC INSTRUMENTS

Sr. No. Type of Instrument Quantity

01) HPLCs with UV detector 24 No's

02) HPLCs with PDA detector 2 No's

03) GCs with Head Space Samplers 1 No's

04) GCs with auto samplers (Liquid Injections) 4 No

05) FTIR (PerkinElmer) 3 No

06) UV-Vis Spectrometer (PerkinElmer) 2 No's

07) Polarimeter (Autopol V) 2 No's

08) TOC analyzer 2 No's

09) XRD (Bruker) 1 No's



10) DSC (PerkinElmer) 1 No's

11) Particle Size analyzer (Malvern) 1 No's

12) KF Coulometer 1 No

General instruments like pH meters, KF titrators, Auto titrators, Ovens, Muffle furnaces,

Incubators and other Microbial laboratory equipments like LAF, Autoclaves, ETP related

analysis equipments are available

To achieve and sustain market leadership for the products in national & international

market by providing to meet the requirements of customer. This is achieved through the

following quality objectives.

Development of approved vendors and procurement of raw material from approved

sources.

Continuous R&D efforts to improve the process and quality.

Strict systematic QC procedures in establishing the quality of the product.

Education and training of employees to improve the quality.

Adherence to cGMP norms as an integral part of the total quality management system.

Assessment of changing requirements of customer expectation and meeting them.

Develop environmental awareness among employees and adherence to pollution control

norms.

D. PRODUCT PROFILE

Oncology API's*



Name of the API's DMF STATUS

Anastrozole DMF available, USDMF # 23123

Bendamustin HCl DMF available

Bicalutamide DMF available

Bortezomib DMF available

Busulfan Tech. Pack available

Capecitabine DMF available

Carboplatin DMF available, CEP R0-CEP 2006-212 Rev 01

Cisplatin DMF available

Cladribine Tech. Pack available

Decarbazine Under preparation

Docetaxel DMF available

5-Fluoro Uracil Tech. Pack available

Gefitinib Tech. Pack available

Gemcitabine HCl CEP R0-CEP 2006-222 Rev 02, USDMF # 24136

Hydroxy urea Tech. Pack available

Imatinib Mesylate DMF available

Irinotecan HCl Trihydrate DMF available, USDMF # 23562

Lenalidomide Tech. Pack available



Letrozole

Oxaliplatin

Paclitaxel

Pemetrexed Disodium

Temozolomide

Thalidomide

Topotecan HCl

Zoledronic acid

Patented products with valid patents not offered for sale

Non-

Oncology API’s*


Name of the API's DMF STATUS

Abacavir Sulfate Teck. Pack available

Ambroxol HCl DMF available, CEP R1-CEP 2004-201 Rev 02

Acebrophylline DMF available

Buflomedil HCl DMF available, CEP R0-CEP 2006-080 Rev 01

Lamivudine DMF available

Nifedipine DMF available

Phenylephrine HCl Under preparation

Sildenafil Citrate DMF available

Strontium Ranelate Teck. Pack available

Terfenadine DMF available

Ticlopidine HCl DMF available, CEP R0-CEP 2005-004 Rev 02

Ursodeoxycholic acid (from our Italian Principal)

Under Development-Oncology API’st*


PRODUCTS UNDER DEVELOPMENT (Oncology)

Altretamine AzacytidineCladribine Cyclophospamide

Dasatinib Monohydrate Disodium Pamidronate

Cytrabine DecitabineEstramustine Erlotinib HClExemestane Fludarabine PhosphateIfosfamide Lapatinib DistosylateMelphalan MitotaneMethotrexate NilotinibPazopanib Sorafenib TosylateSunitinib Tandutinib

Under Development- Non Oncology*

E. AREA OF OPERATION


NUTRITIONAL SUPPLEMENTS

Aliskiren Orlistat


Shilpa Medicare Ltd operates across the borders count on its fast track integrated process

development and finely honed expertise of its skilled and experienced personnel. The Company

is already exporting to USA, Canada, Australia, Japan and European Countries viz., Germany,

Switzerland, Netherlands, Belgium, Spain, Greece, Cyprus, Italy, United Kingdom etc., South

American Countries like Mexico, Brazil, Columbia etc., African Countries like Kenya, Nigeria

and West Indies etc., Asian Countries like Singapore, Taiwan, China, Malaysia, Thailand and

closer to home to Iran, Egypt, Pakistan and Bangladesh.

Shilpa Medicare is synergizing strength through tie-ups for manufacturing products and

co-marketing rights, for it believes in working together and sharing success.

Being proactive in approach, the company continually seeks out enquiries for

development of new products drawing from the extensive knowledge-base of its qualified and

experienced people as well as sophisticated facilities.



F. OWNERSHIP PATTERN

Promoters 59.95%

Institutions 3.93%

Public 24.22%

Others 11.90%

Shilpa Medicare Ltd is a privately owned company which is under taken by the following

members:

Omprakash Inani : Chairman

Vishnukant Bhutada : Managing Director

Atim Kabra : Director

Carlton Felix Periera : Director

Pramod Kasat : Independent Director

Venugopal Loya : Independent Director

Rajendra Sunki Reddy : Independent Director

N.P.S. Shinh : Independent Director



G. COMPETIATORS INFORMATION

The major competitors of Shilpa Medicare Limited are as follows with their market

condition and position.

Last price Market Cap.

(Rs.cr.)

SalesTurnover

NetProfit

Total Assets

Sun Pharma 424.25 43,934.56 3,861.55 1,265.29 5,747.47

Dr Reddys Labs 1,496.00 25,316.41 4,553.21 846.08 6,477.80

Cipla 303.95 24,404.79 5,624.91 1,081.49 5,919.16

Ranbaxy Labs 499.95 21,060.51 4,782.76 571.98 7,482.99

GlaxoSmithKline 2,187.00 18,524.55 1,892.96 512.29 1,764.57

Lupin 389.55 17,379.71 3,708.51 648.93 3,437.36

Cadila Health 737.20 15,094.06 1,945.72 265.91 2,216.20

Piramal Health 417.75 8,731.52 2,666.21 443.22 2,161.59

Divis Labs 616.70 8,177.14 1,203.49 421.26 1,574.92

Glenmark 276.05 7,451.58 856.11 217.93 2,527.81

Shilpa 209.20 502.59 234.46 47.50 181.20

H. INFRASTRUCTURAL FACILITIES

The Company has state of the art facilities for the employees. It gives importance to the

environment and takes the utmost care of health of the workers. The company is situated in the

outskirts of the city and is away from the pollution causing due to vehicles. The company has 20

acres. The space is also used for greenery concentrating on the environment that creates a good

working condition for the employees.



Reactor capacities ranging from 63 L to 6000 L capacities for low volume high cost

and high volume-low cost products.

State-of-the-art facilities at Shilpa Medicare are geared to manufacture quality bulk

drugs. They include stainless steel and glass-lined reactors having capacity ranging

from 350-5000 liters. Production processes used at Shilpa Medicare are environment

friendly.

Served by steam, brine, nitrogen and vacuum services.

Range of Temperatures:- 25ºC to +300ºC.

Vacuum: < 1 mm/Hg.

Tray and Air-bed Drier, Centrifuges, Blenders and Jet Mill.

Bulk storage of solvents including fully closed and delivery systems to reactors.

Chemical and biological waste water treatment.

I.ACHIEVEMENTS AND AWARDS:

Govt. of India 'Best Entrepreneur Award'.

Karnataka State Govt. 'Best Entrepreneur Award'.

‘Star Export House’ Status from Ministry of Commerce and Industry, Govt. of India

'cGMP' Certificates from W.H.O. for 20 API's

'Outstanding Industrial Award' from Indian Junior Chamber.

APIs Registered in Taiwan, Russia, Ukraine and Japan.

'Certificate of Suitability' obtained from EDQM for Ambroxol HCl, Ticlopidine HCl,

Buflomedil HCl, Carboplain, Oxaliplatin and Gemcitabine HCl.

An improved process for the preparation of Irinotecan HCl Trihydrate

(WO/2006/016203)



Novel intermediates for the preparation of Camptothecin analogues (WO/2008/035377)

Process and intermediates of 2,2' Difluoronucleosides (WO/2008/026222)

Improved process for high purity Anastrozole (WO/2007/105231)

Process and intermediate of Letrozole (WO/2009/078036)

Design, Synthesis and Intermediates of substituted 1,2,4-Triazole [3,4-B]- 1,3,4-

Thiadiazoles (2313/CHE/2009)

Novel Polymorphic Form of Bortezomib (160/CHE/2010)

Filed ASMF/EDMF of Gemcitabine HCl over 27 EU countries and DMF filed in TGA,

Medsafe, Swissmedic, Health Canada, etc.

Filed ASMF/EDMF of Irinotecan HCl Trihydrate HCl over 27 EU countries and DMF

filed in TGA, Medsafe, Swissmedic, Health Canada, etc.

Filed ASMF/EDMF of Oxaliplatin HCl over 11 EU countries and also filed DMF in

TGA, Australia

Filed ASMF/EDMF of Temozolomide in EMEA, TGA, Health Canada, Swissmedic and

Medsafe

‘Best District Export Award’ obtained from FKCCI, Bangalore for the year 2005-2010

‘Star Export Excellence Award’ obtained from VITC, Bangalore for the year 2005-2010

Korean FDA Approved for Gemcitabine HCl & Ambroxol HCl

Filed USDMF for Anastrozole, Temozolomide, Oxaliplatin, Irinotecan HCl Trihydrate

and Oxaliplatin

Ambroxol MF Holder and Site Registered with PMDA, Japan

Obtained EU GMP & GMP Certifications from Afssaps, France, BSG, Hamburg,

Infarmed, Portugal, TGA, Australia and Health Canada.



J. WORKFLOW MODEL

Work flow model (End to End):

STAGE: 1

STAGE: II Stage: I


Raw materialRaw material

AdditionsAdditions

Filtration Filtration

Drying Drying

QC Analysis QC Analysis

Addition of Raw materialsAddition of Raw materials


STAGE: III

STAGE: II

Reaction


Filtrations Filtrations

Drying Drying

QC Analysis QC Analysis

Addition Raw materials Addition Raw materials

Filtration Filtration

Drying Drying

Milling Milling


K. FUTURE GROWTH AND PROSPECTS

Success is a direct result of experiences-good and bad. As Shilpa Medicare nears its

silver jubilee, Usha Sharma traces the company's growth

Karnataka-based active pharmaceutical ingredients (APIs) company Shipla Medicare

began its business in 1987. Vishnukant Bhutada, Managing Director of the company highlights

its initial benchmark, "We started commercial manufacturing operations in 1989. Shilpa

Medicare shares listed in Bombay Stock Exchange (BSE) in 1995. We are glad to say that we

were first pharmaceutical company to launch Ambroxol HCl in India in 1998. Presently, we are

the largest manufacturers and exporters of Ambroxol HCl in the world. We started

manufacturing oncology API's in the year 2001."

Global marathon:

At the forefront of this global race, Shilpa Medicare is a science driven technology based

manufacturer and exporter of oncology and non-oncology API's. To give better thrust to its


Shifting Shifting

Packing Packing

Product Export Product Export


export earning, it chalked out its expansion plan of setting up new export oriented unit (EoU).

Bhutada shares, "Keeping in view future demands and growth prospects we have constructed an

EoU plant. We also have three manufacturing facilities located at Raichur, Karnataka, and one

facility in Vienna, Austria."

He continues to say, "Shilpa Medicare is also entering into a joint venture (JV) agreement

with an Italian company, to form Raichem Medicare, to set-up manufacturing facilities for its

products through a special purpose vehicle.

We have also acquired land in the Forma SEZ near Jedcherla in the state of Andhra

Pradesh (AP) to set-up an R&D centre and formulations unit through its 100 percent Raichem

Life sciences.

Sharing company's manpower strength, Bhutada says, "At present we have total

manpower strength of around 250 people and we are going to increase the same by around 450

employees within a short period. We also continue to invest in people processes and skill

development, and provide them with a high performing environment."

Sticking to base:

The company has carved its niche for itself in the exceedingly competitive and quality-

conscious sphere of pharma manufacturing. It produces and exports consistently high-quality

API fine chemicals, intermediates, herbal products and specialty chemical products using

sophisticated technology, meticulously following international specifications. It has earned its

spurs as a successful and reliable partner within the pharma industry. Buyers within the country,

and from across the borders, count on its fast track integrated process development and finely



honed expertise of its skilled and experienced personnel. Shilpa Medicare has active therapeutic

presence in oncology, general API's, nutritional supplements and drug intermediates. Bhutada

avers "Being one of the niche players in oncology products will certainly have good prospects in

the years to come as the demand for these drugs is expected to grow faster than other drugs. The

company will be one of the largest oncology API manufacturers once the 100 percent EoU is

fully operational. We have about 10-15 new products in the pipeline and we are expecting them

to hit the market by 2015."

Long way to go:

Over the next two years, the company would be setting-up it's Contract Research and

Manufacturing Services (CRAMS) operations entering (JV with the Italian Company) and also in

setting-up an R&D centre and formulations unit in the Forma SEZ near Jedcherla (AP). "We are

getting major business from European as well as from our Asian customers. The company has

acquired 99.99 percent stake in Loba Feinchemie, Austria which has APIs, laboratory chemicals

and customs synthesis manufacturing facilities and the strong marketing net-work in European

countries," adds Bhutada. The company is one of the major exporters of API's to various

countries like Japan, Taiwan, Korea, Singapore, Mexico, Europe and USA and we are looking

new opportunities to explore mainly USA and Europe counties. Bhutada shares the company's

future plans, "At present, we are mainly concentrating on the oncology segment. To gain from

future opportunities, the company is planning to expand its operations and production facilities

through various ways."

Shilpa Medicare is expecting to construct Raichem Medicare Pvt Ltd opposite to Shilpa

Medicare ltd



Constructing Raichem Life sciences Pvt Ltd (Formulation Unit).

It has strong determination to expand its plant.

The important plan of the company is to be the leader in the market or to be in the leading

position.

3. McKINSEY’S 7’S FRAMEWORK

Introduction



The 7-S framework of Mckinsey is a management model that describes 7 factors to

organize a company in a holistic and effective way. Together these factors determine the way in

which a corporation operates. Management should take into account all of these factors, to be

sure successful implementation of strategy. Large or small, they are interdependent, so if u fails

to pay proper attention to one of them, this may affect all others as well. On top of that the

relative importance of each factor may vary over time.

The 7-S framework was first mentioned in “The art of Japanese Management” by

Richard Pascale and Anthony Athos in 1981. They had been investigating how Japanese industry

had been so successful. At around the same time that Tom Peters and Robert Waterman were

exploring what made a company excellent. The 7-S model was born at a meeting of these four

authors in 1978. It appeared also in “In search of Excellence” by Peters and Waterman, and was

taken up as a basic tool by the global management consultancy company Mckinsey. Since then it

is known as their 7-S Model.

According to Waterman, organization change is not simply a matter of structure, although

structure is significant variable in the management of change. Again it is also not a simple

relationship between strategy and structure, although strategy is also a critical aspect. In their

view effective organizational change may be understood to be a complex relationship between

strategy, structure, system, style, skills & shared values. The first three elements-strategy,

structure &system are considered the “hardware” of success. The next four – style skills, staff,

and shared values are called the “software”. The complex relationship is diagrammatically

presented below;



Let’s look at each of the elements specifically:

Strategy: The plan devised to maintain and build competitive advantage over the competition.

Structure: The way the organization is structured and who reports to whom.

Systems: The daily activities and procedures that staff members engage in to get the job done.

Shared Values: Called “Super Ordinate Goals” when the model was first developed these are

the core values of the company that are evidenced in the corporate culture and the general work

ethic.

Style: The style of leadership adopted.

Staff: The employees and their general capabilities.

Skills: The actual skills and competencies of the employees working for the company.

A. STRATEGY:



Strategic planning is about asking questions, more than attempting to answer them.

Strategy formulation entails a search for a different frame of reference. It is the quest for a new

business paradigm. There are two types of paradigms that apply to management, namely the

business and the organizational or managerial paradigms. The business paradigms define a

company’s position in the market place with respect to customers, technology and products.

To maintain and build competitive advantage over the competition. Shilpa Medicare

follows competitive strategy. As the company wants to expand their business by providing good

quality and to create good work environment in the organization.

Strategy is a choice of direction and action; the company adopts to achieve its objectives

in a competitive situation. Any statements on overall of functional strategy that the company

may wish to share are:

Improvement in the existing products:

Their future plans include launching of new products which are under development.

To perform beyond customer expectation and to create a long term relationship with

customers.

The cost control exercise is in consolidation.

To provide products and services of high quality.

B. STRUCTURE:



Organization structure gives concrete shape to the organization. The structure specifies

division of work activities and shows how different functions or activities are linked. It also

indicates the organization’s hierarchy and authority structure, and shows its reporting

relationship. It provides the stability and continuity that allow the organization to survive the

comings and goings of individuals and to coordinate its dealings with the environment.

The way the organization is structured and who reports to who is all included in the

structure of the organization. The design of the organization structure is critical task of the

management of an organization. It is the skeleton of the whole organization. The organization

structure refers to relatively more durable organizational arrangements and relations. Shilpa

Medicare Pvt ltd has implemented and successfully working with “FUNCTIONAL

ORGANIZATION STRUCTURE”.

An organization structure can be viewed as accomplishing four distinct functions:

Dividing work into manageable segments.

Recombining work in a logical and efficient manner.

Distributing power to direct or coordinating work.

Establishing channels of communication and the directive or non-directive nature of

information flow.

ORGANISATION CHART



Production Department



Production is the basic activity of all industrial units. All other activities revolve around

this activity. The end product of the production activity is the creation of goods and services for

the satisfaction of the human wants. The production activity is nothing but the step-by-step

conversion of one form of material into another either chemically or mechanically. This is done

in factories which house manufacturing processes. The basic input of the production processes is

men, machines, plants, services and methods

World-class production facilities



Reactor capacities ranging from 63 L to 6000 L capacities for low volume-high cost and

high volume-low cost products.

State-of-the-art facilities at Shilpa Medicare are geared to manufacture quality bulk

drugs. They include stainless steel and glass-lined reactors having capacity ranging from

350-5000 liters. Production processes used at Shilpa Medicare are environment friendly.

Served by steam, brine, nitrogen and vacuum services.

Range of Temperatures: - 25ºC to +300ºC.

Vacuum: < 1 mm/Hg.

Tray and Air-bed Drier, Centrifuges, Blenders and Jet Mill.

Bulk storage of solvents including fully closed and delivery systems to reactors.

Chemical and biological waste water treatment.

Research and Development Department

Shilpa Medicare is a fast growing pharmaceutical active ingredient manufacturing

company engaged in manufacturing of world class pharmaceutical bulk drugs, under WHO-GMP

guide lines. Our manufacturing plant is equipped to manufacture API’S and chemicals and

having all the facilities of in house testing and R & D.

Shilpa Medicare is fully focused on R&D as a means to offer quality products at

competitive price and also for development of new products. We undertake innovation of new

products as per customers' requirement. The production technologies of all existing products

have been developed in-house and the R&D efforts are aimed at developing highly efficient and

cost-effective technologies and manufacturing process



Quality Assurance Department

Shilpa Medicare provides consistent quality to the customers. Strict quality assurance is

inherent in every step of our process, from incoming raw materials to shipment of the finished

product. Each of our raw materials is selected by our experienced purchasing department, based

on strict physical and chemical criteria. Upon arrival at shilpa’s facility, each ingredient lot is

carefully checked and analyzed by our quality control personnel.

The Quality Assurance Department ensures that the manufacturing facilities and

procedures are standardized to provide the international quality attributes to the products

consistently for each batch through a well-documented, validated and audited system.

Shilpa Medicare is fully equipped with gas chromatograph, spectrophotometers and other

high-tech apparatus; as also micro-biological facilities to check the quality of raw material, semi-



finished products and finished products following Good Laboratory Practices by qualified and

approved chemists.

C. SYSTEM:

The Shilpa Medicare limited uses the complete systemized processes in all fields like

quality control systems, performance measurement systems, the date and time analysis systems,

manufacturing processes, information systems. The company also uses the database systems for

the day to day activities.

Shilpa Medicare Pvt Ltd. uses the complete systematic processes in all the fields liquality

control systems, standardized Operating Procedure (SOP), and the date and time analysis

Systems for manufacturing processes.

Wages and salary system

The employees get adequate and equitable remuneration for the work done by them. In

Shilpa Medicare Pvt. Ltd., the jobs are evaluated and based on this salary to be paid is

determined. Salary is paid to the employees in the first week of the every month.



Employee attendance

Attendance is one of the most important tools of evaluation of an employee. In Shilpa

Medicare Pvt. Ltd., the employee attendance is maintained manually in a register. Whenever the

employee enters the organization, he needs to enter the name, date, time of entrance, signature

etc in a register that is maintained at the office as well as punch card machine is used where

employees need to punch the card while incoming and outgoing from the organization. At the

end of every month the number of days attended by the employee will be assessed and the salary

is calculated accordingly.

D. STYLE:

Decision-making is centralized with the head office. Authority is given to unit in-charge

to take decision in day-to-day minor matters & other urgent matters.

Decision-making depends on the authority & responsibility conferred on each individual

& thus it’s distributed based on designation & position held.

In important matters, meetings are held to seek opinions of top management & various

department manager & the decisions are taken & implemented.

Decision-making is co-ordinate & done with wide consultations of top management of

department manager’s consultation which gives best possible gains.

E. STAFF:

The employees and their general capabilities which are necessary to accomplish the job

which leads to achieve organization goals effectively and efficiently. Staff refers to the number

of employees and types of employees in an organization. Staff is responsible for the development



of the organization. Shilpa Medicare consists of skilled, semiskilled and unskilled employees.

The Strength (size) is 190 on role (permanent employees), 60 contractors all together 250

employees.

Shilpa Medicare PVT LTD staff

* Office Staff -80

* Skilled employees -60

* Semi – Skilled -30

* Unskilled -20

As an employer, Shilpa Medicare limited follows ethical employment standards wherever it

operates with a goal in mind company guarantees.

To fulfill its entire legal obligation in terms of employment payments and benefits practices.

Adequate and timely training for every one for the job for which they are employed.

Career advancement related to performance and experience.

F. SKILLS:

The term “skills” includes those characteristics, which people use to describe a company.

Organization have strengths in a number of area but their key strengths are dominant skills are

few. These are developed over a period of time of the result of the interaction of a number of

factors performing certain tasks successfully over a period of time, the kind of people in the

organization, the top management style, structure, the management systems, the external

environmental influence etc. Hence when organization makes a strategic shift it becomes

necessary to consciously build new skills.



Skilled:The actual skills and competencies of the employees working for the company. Skills of

the work force are technically qualified like ITI’s, chemical technology (practical knowledge),

Engineers or any specified courses completed.

Semi killed:Semi skilled employees will be having basic knowledge about the work, they will not be

holding any technical education Semiskilled employees qualifications like 8th or 10th pass out.

Unskilled:No qualification is required, employees like Helper (loading and unloading the material,

movement of materials from one place to another), Office Boys.

G. SHARED VALUES:

Values:

Values refer to the institutional standards of behavior that strengthen commitment to the

vision, and guide strategy formulation and purposive action. The core values are shaped around

the belief that enterprises exist to serve society.

In terms of this belief, profit is a means rather than an end in itself a compensation to

owners of capital linked to the effectiveness of contribution to society and the essential

ingredient to sustain such enlarged societal contribution.

Such as: Customer satisfaction, Committed to total quality, Cost and time-consciousness,

Innovation and creativity, Trust and team spirit, Respect for individuals, Integrity health and

ethics.



4. SWOT ANALYSIS

Introduction:

SWOT Analysis is a strategic planning method used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It

involves specifying the objective of the business venture or project and identifying the internal

and external factors that are favorable and unfavorable to achieving that objective.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT

analysis may be incorporated into the strategic planning model. Strategic Planning, including

SWOT and Strategic Creative Analysis SCAN analysis, has been the subject of much research.

Strengths: attributes of the person or company that is helpful to achieving the objective.

Weaknesses: attributes of the person or company that is harmful to achieving the objective.

Opportunities: external conditions that is helpful to achieving the objective.

Threats: external conditions which could do damage to the business's performance.

Identification of SWOTs is essential because subsequent steps in the process of planning

for achievement of the selected objective may be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given the

SWOTs. If the objective is NOT attainable a different objective must be selected and the process

repeated.

The SWOT analysis is often used in academia to highlight and identify strengths,

weaknesses, opportunities and threats. It is particularly helpful in identifying areas for

development.



SWOT Analysis of Shilpa Medicare Limited:

STRENGTH:

1. Shilpa Medicare Limited produces and exports consistently high-quality Pharmaceutical

Products.

2. Good quality of pharmaceuticals products, which is one of the major strength to face

competition in global environment.

3. Plant is running from past 22 yrs. There is no major break down because of close

supervision and maintenance.

4. Provides employees various benefit viz. medical facility, subsidized facilities in canteen,

traveling facility to increase the morale of employees.

5. Various measures are taken to prevent the environmental hazard by the organization to

maintain ecological balance.

OPPORTUNITIES:1. Shilpa Medicare Limited is having a better opportunity to setup a new plant in abroad

since the export market for Shilpa Medicare Products is very well established.

2. Shilpa Medicare Limited can establish a new oral liquid plant at Raichur.

3. Being the lowest cost producer combined with FDA approved plants, SHILPA

MEDICARE LIMITED can become a global outsourcing hub for pharmaceutical

products.

4. Large number of drugs going off-patent in Europe and in the US between 2007 to 2011

offers a big opportunity for the Indian companies, like SHILPA MEDICARE LIMITED

to capture this market.



WEAKNESS:1. Transportation costs are high.

2. Low level of strategic planning for future and also for technology forecasting.

3. Company not getting quality man power available in this region.

4. Workers absenteeism

5. Modern machines and equipments are not installed in the company.

The strategic planning required for the pharmaceuticals co is very high and as of now the

Shilpa Medicare Ltd is behind it. The technology forecasting is to be taken over by the company

so as to improve its market share and future expansion.

THREATS:1. The production comes under Hazardous activity. So much emphasis is to be laid on the

prevention of such events which is not a cost effective activity.

2. Competitors are updating latest technology, globally and Indian companies like Shilpa

Medicare is being heavily affected by it.

3. Threats from other low cost countries like China and Israel exist.

However, on the quality front, India is better placed relative to China. So, differentiation in

the contract manufacturing side may wane.



5. ANALYSIS OF FINANCIAL STATEMENT

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2012

Particulars Current year (31st March, 2012)

Previous year(31st March, 2011)

INCOME

Sales Turnover 263.37 240.67

Excise Duty 5.82 5.43

NET SALES 257.54 235.24

Other Income 0.00 0.00

TOTAL INCOME 261.30 235.44

EXPENDITURE:

Manufacturing Expense 7.79 6.67

Material Consumed 154.26 128.36

Personal Expenses 17.59 12.12

Selling Expenses 3.89 5.56

Administrative Expenses 4.23 4.33

Expenses Capitalised 0.00 0.00

Provisions Made 0.00 0.00

TOTAL EXPENDITURE 187.76 157.05

Operating Profit 69.79 78.19

EBITDA 73.54 78.40

Depreciation 10.42 9.76

Other Write-offs 0.00 0.00



EBIT 63.12 68.63

Interest 2.27 5.49

EBT 60.85 63.14

Taxes 14.91 21.23

Profit and Loss for the Year 45.94 41.91

Non Recurring Items 4.86 3.96

Other Non Cash Adjustments 0.09 0.24

Other Adjustments 0.04 -01

REPORTED PAT 50.93 46.01

KEY ITEMS

Preference Dividend 0.00 0.00

Equity Dividend 1.92 1.54

Equity Dividend (% 40.00 35.00

Shares in Issue (Lakhs) 240.24 220.24

EPS - Annualised (Rs) 21.20 20.89



Balance Sheet as at 31st March 2012

Particulars Current year

(31st March, 2012)

Previous year

(31st March, 2011)

Liabilities

Share Capital 9.18 4.40

Reserves & Surplus 226.03 107.79

Net Worth 235.21 112.19

Secured Loans 50.97 67.47

Unsecured Loans 0.00 0.00

T OTAL LIABILITIES 286.18 181.19

Assets

Gross Block 163.00 155.96

(-) Acc. Depreciation 35.90 28.02

Net Block 127.09 127.94

Capital Work in Progress 3.01 3.69

Investments 28.08 3.69

Inventories 37.44 43.65

Sundry Debtors 33.63 31.49

Cash And Bank 83.75 2.09

Loans And Advances 32.09 42.23

Total Current Assets 186.91 120.45

Current Liabilities 41.05 52.02

Provisions 17.87 21.93

Total Current Liabilities 58.91 73.95

NET CURRENT ASSETS 128.00 46.50

Misc. Expenses 0.00 0.00

TOTAL ASSETS (A+B+C+D+E) 286.18 181.19



Analysis of financial statement:

Calculation of working capital: Current asset-Current liability

2010= 119.46 – 45.53 =73.93

2011= 186.91 – 128 =58.91

Calculation of current ratio: Current asset/Current liability

2010= 119.46 / 73.95 = 1.6154

2011= 186.91 / 58.91 = 3.1729

Calculation of quick Ratio: Current Asset – Inventory/Current liability

2010= 19.46 – 43.65 =1.0251

73.95

2011= 186.91 – 37.44 =2.5372

58.91

Calculation of cost benefit ratio =Profit/Capital

2010= 46.01=10.4569

4.40

2011= 50.93=39.8692

9.18

Profit margin increased in the year 2011 compared to 2010.



6. LEARNING EXPERIENCE

The ‘In plant-Training’ is all about studying the industry profile, company profile,

McKINSEY’S 7S model, SWOT analysis and annual report with reference to organization. So,

various aspects of an organization like strategy, system, staff, shared values, style and skill were

studied which are of immense importance to us.

In my ‘In-Plant’ training program I had an opportunity to get exposed to a Company

called “Shilpa Medicare Limited”. I had an opportunity to go through the Industry profile,

company profile, and information with reference to McKINSEY’S 7S model of the company. I

observed what are the strategies, what kind of structure they follow, what systems they are using,

which leadership styles they use, how staff works, what are the skills required by the staff in

“Shilpa Medicare Limited”.

The very first day in our project duration I moved around the company and had a brief

introduction and a general glance about the organization. My external guide in the company

guided me and from the next day gradually I went into the depth study about particular

departments. My external guide used to take me to all departments. Where I got the full co-

operation from the concerned staff.


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