Abstract:

This case study is written with an objective to understand the implications of financial forecasting on a company’s long-term

existence. It provides an overview of financial forecasting and its importance in making a contribution to a company’s strategic

growth. With growing business opportunities and increasing competition, strategic planning has attained greater significance for

organisational growth. The more effective the forecasting plan, the more successful a company can probably be.

Focusing on the Indian Pharmaceutical Industry, the case study highlights the financial performance of Dr. Reddy’s Laboratories

and develops the financial forecasting plan – sales forecasting, pro forma statements and external funds requirement.

Pedagogical Objectives:

• To discuss the concept of financial forecasting taking into consideration the nature of the industry and the factors affecting it

• To understand the business of Dr. Reddy’s and analyse its performance from 2002–2008

• To forecast the sales of Dr. Reddy’s for 2009 and analyse the factors that might impact the estimated sales

• To project the income statement and prepare the pro forma balance sheet of Dr. Reddy’s for the year 2009

• To identify the need for external funds in the year 2009 and discuss the relevance of external funds for the growth of the

company.

Keywords : Financial Management, Financial Forecasting, Estimating External Funds requirement, Performa Statements, Sales

Forecast, Cash Flow Statement, Fund Flow Statement, Performa Balance Sheet, Pharmacheutical Industry, Indian Pharmaceutical

Industry, EPS, DPS, Dr. Reddy’s Lab, Dr. Reddy’s Laboratories

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Dr. Reddy's Laboratories Ltd.

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Address:
7-1-27, Ameerpet
Hyderabad, Andhra Pradesh 500 016
India

Telephone: 91-40-373-1946
Fax: 91-40-373-1955
http://www.drreddys.com

Statistics:
Public Company
Incorporated: 1984
Employees: 5,796
Sales: Rs 18.01 billion ($391.8 million) (2003)
Stock Exchanges: Bombay New York
Ticker Symbol: RDY
NAIC: 325412 Pharmaceutical Preparation Manufacturing

Company Perspectives:
Our vision is to become a discovery-led global pharmaceutical company.
We will achieve this vision by building: A workplace that will attract, energise and help retain the finest talent
available. An organisational culture that is relentlessly focused on the speedy translation of scientific discoveries into
innovative products that make a significant difference in people's lives.

Key Dates:
1984: Dr. Anji Reddy founds Dr. Reddy's Laboratories, based on a bulk actives business he had founded in the 1970s,
in order to extend into the production of drug formulations.
1986: Dr. Reddy's goes public on the Bombay stock exchange.
1988: The company acquires Benzex Laboratories in order to expand the bulk actives business.
1992: Dr. Reddy's Research Foundation is founded as part of the strategy to enter drug development.
1994: The company opens a subsidiary in the United States.
1995: The company files its first patent for an in-house developed drug.
1999: The company acquires American Remedies Ltd.
2000: The company acquires Cheminor Drugs Limited and becomes the third largest Indian drug company.
2001: The company lists shares on the New York Stock Exchange; a new research and development facility opens in
Atlanta, Georgia.
2002: The company acquires BMS Laboratories Ltd. and its marketing and distribution subsidiary Meridian Healthcare
Ltd. in the United Kingdom.
2003: The company gains tentative approval to market generic versions of Serzone, developed by Bristol Myers
Squibb.