Financial Management & Corporate Finance Case Study

Case Title:

Dr. Reddy’s Laboratories: Financial Forecasting

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