Financial Performance of Foreign Direct Invested Pharmaceutical Units in India

Abstract

This paper examines the performance of select Foreign Direct Invested (FDI) assisted pharmaceutical units in India for the period from 1st April 1999 to 31st March 2008. The dataset has been retrieved from CMIE Prowess database and Organization of Pharmaceuticals Producers of India (OPPI) for 23 FDI assisted pharmaceutical units and evaluated through the following ratios Capital Structure Ratios, Liquidity Ratios, Profitability Ratios, Du Pont Analysis and Return on Investment. Our findings suggest, that the capital has been efficiently used in gearing profits, but there was a slight decline in return on equity due to over utilization of outsider‟s capital it was the major reason for showing negative effects. But, all the sample units show a galloping trend during the study period. The liquidity position and short-term solvency positions have improved, because of this the sales have increased, the leverage effects was not found favorable for certain units. Finally, our study suggests that the mark of FDI assisted pharmaceutical units for different ratios report a positive direction throughout the study and provoked the strength of Indian economy for the future.