Sex Tourism

Gender and the Economy of Sex Tourism In Kenya’s Coast Province Introduction â€Å"Sex tourism requires Third World women to be economically desperate enough to enter into prostitution; once they do so, it becomes difficult to leave. The other side of the equation requires men from affluent societies to imagine that African women are more available and submissive than women in their own countries. Finally, the industry depends on alliance between local governments in search of foreign currency and local foreign business willing to invest in sexualized travel† (Enloe, 2000:36). Otherwise known as sex prostitution, sex tourism is tourism for which the main motivation of the trip is to consummate or engage in commercial sexual relations (Graburn 1983; Hall 1991; Ryan and Hall 2001). The number of men and women travelling to Third World countries seeking sex tourism has increased tremendously (Herold et al. 2001). In the past, notorious sex destinations have been mainly the South East Asian countries, today it has spread to other regions of the world including Kenya, Tunisia, South Africa, Brazil and The Gambia (Ryan and Hall 2001, Enloe2002; Chissim 1996). This paper discusses gender and the political economy of sex tourism on the Kenyan Coast, its health and socio- economic impacts. International Tourism and Sex Tourism in Kenya Tourists visit Kenya because of several reasons including its beautiful landscape, wildlife safari, the humid climatic conditions along the Kenyan Coast and the beautiful Coastal beaches. International tourist arrivals in Kenya have been increasing tremendously from 69 million in 1960 to 160 million in 1970, 458 million in 1990, and 625 million in 1998 (WTO, 1999). This increase has led to massive increase in sex tourism, a condition evidenced by inclusion of Kenya among the world’s leading sex tourism destinations (Vatican 2003; Boston Globe 1995; East African Standard 1995 and Chessim 1996). Although not officially stated, a good percentage of foreign tourists who visit Kenya often indulge in sex tourism during their trip (Chissam 1996; Sindiga 1999). These tourists mainly come from Germany, the UK, Switzerland, Italy and France. Others are from North America, Japan, Australia, New Zealand and European countries such as Spain and Sweden. Many of these countries have been generating sex tourists to some of the world’s renowned sex tourism destinations such as Thailand (Ryan and Hall 2001). Hence we can conclude that they are likely to engage in the same activity while in Kenya. Kenya is a developing country with agriculture contributing 24. 0% of GDP. Overall, Kenya’s economic performance has been declining since early 1990’s. The country’s per capita is about US$ 260 and more than 70% of Kenyan population currently lives below the poverty line; the worst hit are women (CBS 2001). The Economics of Tourism and Sex Industry The main economic activity in Kenya at independence in 1963 was Agriculture whereby the country relied on cash crop exports. After independence, the government tried to diversify the economy by implementing an â€Å"open door† economic policy to attract foreign investment. However, the limitations of agricultural and manufacturing sectors coupled with the appreciation of employment potential forced Kenyan government to turn to tourism as a central industry. Since 1987, tourism industry has been the leading foreign exchange earner, (CBS 2001) surpassing the traditional export crops of coffee and tea (Gakuhu1992; Weaver 1998 and CBS 2001). The industry employs about 1. 5 million Kenyans, approximately 8% of wage earning labor force (Weaver, 1998 and CBS 1999). In addition, Tourism is linked to many domestic industries and it is a potentially useful tool for generating development in neglected areas. The industry also contributes substantially to government revenues through taxes and import duties. Tourism is therefore officially promoted in Kenya as the main foreign exchange earner, source of employment and general development. Its significance on the Kenyan economy has a lot of bearing on tourism policies including those related to sex tourism. Sex Tourism Market on the Kenyan Coast Sex tourism is believed to be increasing at a high rate in Kenya. This is mainly because of the reality that there is a sex tourism market for female and male tourists. Female tourists, mainly from European countries come to Kenya to meet with local beach boys because they imagine that black men (or men of color) are stronger and more active in bed than men in their home countries. On the other hand, male tourists come to Kenya to meet with black women; mainly young girls who are believed to be ‘hot’ in bed. Child prostitution is also emerging in Kenya involving young boys and girls. This is commonly along the Kenyan coast where many children choose not to go to school but instead go to beaches in search for white men and women from European countries who exploit them sexually. The Kenyan Coast located along the Indian Ocean caters for about 66% of Kenyan tourism activities. Sex tourism is a major activity in Kenyan Coast (Sindiga 1999, Migot-Adhola et al 1982; Bechmann 1985). The Kenya coast as a tourism destination has existed since 1920 attracting mainly the white settlers and colonial government officials who sought holiday excitements. Major tourist attractions at the Kenyan coast include the wildlife, white sandy beaches, sun, sea, sex, scene features, diverse cultures, hospitable people, historical sites, national museums, national parks and reserves near the coast and tourism facilities of international standard such as hotels and airport. The presence and availability of Britons, Germans, Italians, Americans and others in Mombasa and other coastal towns in search of rest, fun and recreation has been the main factor attracting Kenyan girls and children to get involved in sex tourism (Sindiga 1999 and Chissim 1996). Different Forms of Sex Tourism Sex tourism sometimes involves production of videos featuring nude dancing in which no direct physical contact occurs; the tourists engage in voyeurism. There are also casual prostitutes or freelancers who move in and out of prostitution depending on their financial needs. In this case, sex tourism may be regarded as incomplete commercialized and the relationship between sex worker and the client may be ridden with ambiguities (Cohen 1982; Ryan and Hall 2001), particularly if the relationship shifts from an economic to a social base. However, some women entering into sex tourism in Kenya are not financially needy but only seeking fun and ‘social class’, whereby the community views women seen socializing with white men with high esteem and associate them with wealth and success in life. Some of these women have jobs in noble professions while others are college students. There is also the more formalized form of prostitution where the workers operate through intermediaries. Since sex tourism is illegal in Kenya, prostitutes use entertainment establishments such as night clubs, bars, beaches and other retail outlets to get customers. The other type of sex tourism is that of bonded prostitutes. This is more of slavery because it is enforced by people such as family members through abductions and kidnapping. Motivation Factors: Why do Tourists Look for Sex Most tourists tend to behave differently while in the countries they are touring. This is because there is an assurance of anonymity, which releases them from the usual restraints, which determine their behavior in their home countries. Tourism allows people â€Å"to lose their identity† and gives them the freedom to escape realities and live their fantasies. They spend more money, relax more, drink more, eat more and get involved in pleasures they would not at home. Men who would never visit brothels in their home countries will end up doing so in a foreign country where there is negligible chance of detection and penalty. For the same reason, women who would never have sex with boys young enough to be their grand children at their home country would do so in a foreign country. Tourists tend to seek commercial sex services in Kenya because the services are readily available and quite cheap compared to what they would pay for such services in their home countries. Such tourists are able to enjoy lifestyles they could never enjoy in their home countries. Furthermore, some of these tourists may hold menial jobs in their industrialized home countries but because of the disparity in salaries and high exchange rates, they may appear comparatively rich when in a poorer country like Kenya. They would therefore tend to spend their money in sexual activities that they associate with the rich and the famous in their home countries. Chissim has illustrated this in his interview with a German tourist visiting Kenya (Chissim 1996:18). â€Å"†¦. Morco said he was in Kenya for a month but within four days, he boasted of already fucking five girls. He said he fucked one girl on the beach but pretended that he had no money, so he got that one for free. Another girl he fucked on the beach for 100/- (about $1) and told her that he had no more money. The others he said he had to pay 200/- (about $3) †¦Ã¢â‚¬  For some of these tourists, Kenya represents Africa where life is perceived as raw and wild and a place where people are uncontrolled, liberal and polygamous. These reasons partly explain why some European women visit Kenya to look for sex from beach boys young enough to be their grandsons. It is estimated that more than 5% of all European women who visit Kenya go in search of sex, especially those from German, Switzerland and Italy (New York Times Feb. 14, 2002). Many Kenyan communities highly value virginity. This motivates tourists to have sex with younger girls; in the anticipation of having sex with a virgin who may be free from HIV/ AIDS. Some tourists engage in sex tourism because they may be fleeing from unhappy relationships at home and, perhaps, from women who may tend to question male domination. Male supremacy is perceived as a natural kind of authority in many cultures and world religions. Cultural values defining traditional male sex roles are power, dominance, strength and supremacy, while those defining female roles are submissiveness, weakness, inferiority and passivity. Women are perceived as property of men and sex as exchange of goods, which further entrenches male supremacy. This notion also teaches men that females are worthless and less deserving and may be treated as objects of men. The mafia- style drugs and sex industry along the Kenyan coast is another motivating factor for sex tourism. People with a lot of money are capable of bribing their way out of trouble if caught Such people are also responsible for organizing sex services for clients outside the country (Sindiga 1999; Chessim 1996). Supply Factors: Why Do Sex Workers Get Involved â€Å"Many times I don’t feel anything during sexual encounters. It is because I need money for myself and my children that I keep doing it. I have learned to do motions mechanically in order to satisfy my clients. If I do it well, they will come back and that means more money. † (Lin Lean Lim 2000:74). This Filipino woman quoted by Lin Lean Lim expresses the reason why many women from Third World countries practice sex tourism and their feelings about sex work. The main reason for sex tourism for many is poverty. Many Kenyan women are economically desperate. With the increasing rate of unemployment and high cost of living, prostitution is left as the only option for them to earn a living and support their children. Such women migrate to coast with hope of finding white tourists who can pay more for the services or even may end up marrying them. Some girls involved in sex tourism come from broken homes or very poor family backgrounds and are never taken to school to attain formal education. They resolve to sex prostitution as a means of supporting themselves economically. In Kenya, women are generally poorer than men because women have limited access to resources such as land, capital, farm equipments and agricultural inputs. Inheritance practices in most Kenyan communities seem to favor men. This means that men can easily have access to other productive resources because they can use land as security to borrow money if needed to purchase other productive resources. This option is normally not available for women. In many Kenyan communities, illiteracy levels in women are higher than those of men. This is because parents give priority to boy’s education particularly if resources are limited. Along the coast, education is not valued because people from these areas are used to receiving tokens and money from the tourists. Children of school going age therefore prefer to go to beaches in search for tourists who give them tokens in exchange for sex. Other factors affecting education for girls include unwanted pregnancies and the fact that they are forced to early marriages by their parents for economic gains. Kenyan women are discriminated against in most areas of formal employment and more often left with poorly paid jobs or no jobs at all. This makes prostitution an alternative. The HIV/AIDS scourge in Kenya is estimated to claim 500 lives daily leaving many orphans. The young children left become heads of the families and may often turn to sex tourism and prostitution as a means of earning a living to support their siblings. Impact of Sex Tourism in Kenya Sex tourism can be seen as both a risk and an opportunity. Most women in sex tourism face the risk of material loss because their clients may not pay them for the services (ref. The Marco case). Women are generally helpless against such exploitation and take it as part of their business. Sex workers face the risk of losing their money to thieves and police because they have to bribe their way out if caught as they mostly work at night. Women can sometimes face attacks by dissatisfied customers. These attacks may be in form of rape, cruelty, violence or even murder. â€Å"Monica Njeri was a 32- year old mother of two and a prostitute in Mombasa. She was brutally murdered by Frank Sundstrom a 19 year old USA navy service man who wanted the kind of sex that Monica could not provide. When he was not satisfied with merely sleeping, he woke up and tried to steal back the money he had given to her plus her own money but she woke up and caught him in the act. In ensuing struggle, he broke a beer bottle to make a weapon and repeatedly stabbed her until she died. † (Migot- Adhola 1982:74). Although Sundstrom admitted the offence, his only sentence was to sign a bond of 500/- (equivalent to US$46 at that time) to be of good conduct. Women in sex tourism industry and prostitution are continually exposed to sexually transmitted infections including HIV/AIDS. Many tourists may not accept to use protection such as condoms because they argue that it interrupts the flow of sex and carrying it may imply that one is promiscuous (Clift and Grabowski 1997). Sex workers are also faced with the danger of susceptibility to anal or cervical cancers, additionally, since many women are forced into sex work, many of them only work under influence of drugs and/or alcohol. This may lead to depression or alcohol addiction. Sex tourism has been blamed in Kenyan coast for increasing rate of school drop-out, poverty and illiteracy. This is mainly because children of school going age choose not to school but to follow tourists who lure them to sex tourism. However, some women that have risked sex tourism have been able to build better houses and invested in urban businesses. This is largely because earnings from prostitution are often more than those from other alternative employment opportunities open to women. Sex workers contribute to national economy by boosting profits of many transnational hotels and airlines, taxi drivers, brothel owners and many other intermediaries. The Kenyan police, the state, as well as the local and international enterprises are well aware that sex has a market value even though they proclaim that prostitution is immoral (Ryan and Hall 2001). Sex tourism has also contributed to cultural exchange because many sea workers are forced to learn foreign languages so that they can communicate with their clients. There are occasions when these temporary relationships ave led to marriages hence removing such girls from prostitution. The other positive impact is that health workers are encouraged to go for regular medical checkups because of the nature of their work, hence paying more attention to their health. Bibliography Awanohara 1975. Protesting the sexual imperialists. Far Eastern Economic Review, 87 (21st March) PP 5-6. Bishop, R. and Robinson, L. S. 1998. Night Ma rket: Sexual cultures and the Thai Economic Miracle, London and New York: Routledge. Boston Globe Thursday November 23, 1995 Cater, E. A 1989 â€Å"Tourism in less Developed Countries†. In Annals of Tourism Research Vol. 16 No. 4. Central Bureau of Statistics (CBS), 2001 Economic Survey of Kenya. Central Bureau of Statistics (CBS), 2002 Economic Survey of Kenya. Chissim F. 1996. An exploratory and Descriptive Research on Child Prostitution and Tourism in Kenya. EPAT Report, Nairobi. Clift S and Grabowski, 1997 Tourism and Health: Risks, Research and Responses. Biddles Ltd, Guilford and King’s Lynn Cohen, E 1988. Tourism and AIDS in Thailand. Annals of Tourism Research, 15 (4), PP 467-86 Cohen, E. 1982. Thai Girls and Farang men: The Edge of Ambiguity Annals of tourism Research, 9 (3) PP 403-28 Collins Patricia Hills 2000. The Sexual Politics of Black Womanhood. In Disch Estelle(ed). Reconstructing Gender. A multicultural Anthology. Mayfield publishing East Africa Standard September 12, 1995 Enloe, Cynthia (2000) â€Å"On the Beach; Sexism and Tourism† in Bananas, Beaches and Bases: Making Feminist Sense of the International Politics: University of California press (2nd edition) Pp 19-41 Enloe, Cynthia 2002. The prostitute, the colonel and the Nationalist, in: Enloe, Cynthia: Maneuvers: The international politics of militarising women’s lives: London and Los Angeles: University of California Press (2nd Edition) pp 19-41 Ennew, J 1986. The sexual exploitation of children. Polity press, Cambridge Fish, M. 1984 Controlling Sex Sales to Tourists: Commenting on Graburn and Cohen. Annals of Tourism Research 11(4) 615-617. Gakahu C. G and Goode B. E 1992. Ecotourism and Sustainable Development in Kenya. Wildlife Conservation International. Graburn, N. H 1983. Tourism and prostitution, Annals of Tourism Research, 10:437-56 Hall C. M. 1994. Nature and Implications of Sex tourism in South-East Asia in: V. H. Kinnaird and D. R. Hall (ed) Tourism: A Gender Analysis Chichester, John Wiley PP-142-163 Harrison, David 1992, (ed) Tourism and the Less Developed Countries. Chichester: John Wiley and Sons. Jommo, R. B (1987: Indigenous enterprise in Kenya's tourism industry Geneva: itineraires etudes du development , Institute Universitaire d'Etudes du Development). Lim, Lean Lin 1998. Whither the sex sector? Some policy considerations University of California press, pp 49-108. Migot-Adhola, S. E et al ,1982. Study of Tourism in Kenya with emphasis on the attitudes of the Residents of the Coast. Institute for Development Studies Consultancy Report No. 7, Nairobi University Montgomery Heather 2001. Child Sex Tourism in Thailand: In D. Harrison ed. Tourism and the Less Developed World Issues and Case Studies. Pruitt. D. and Lafont S. 1995 For Love and Money: romance tourism in Jamaica, Annals of Tourism research 22(2); 419 – 440. Richter, L. K. 1995. Exploring the political role of gender in tourism research. In W. F. Theobald (ed. ) Global Tourism in the next decade. Oxford Boston: Butterworth Heinemann. Ryan Chris and Hall C Michael (2001): Sex Tourism: Marginal People and Liminalities Routledge London Ryan Chris (1991) Tourism and Marketing. A symbiotic Relationship? Tourism Management Journal pp 101-109. Butterworth –Heinenmann Ryan. C. and Rachel Kinder (1996). Sex, tourism and sex tourism: fulfilling similar needs? Tourism Management 17(7): 507-518. Elservier Science Ltd . Sindiga Isaac 1999: Tourism and African Development: Change and Challenge of Tourism in Kenya. African Study Centre. Leiden The Nertherlands Truong, Thanh-Dam 1983. The dynamics of sex tourism. The case of South-east Asia. Development and change 14, 533-53. Weaver, D. B. 1998 Ecotourism in less developed world. CAB International World Tourism Organisation,1999. Yearbook of Tourism Statistics. WTO, Madrid, Spain. Young, G. 1973. Tourism: Blessings or Blight? Harmondsworth, Middlesex: Penguin. The Vatican representative to WTO (2003). http://www. cathnews. com/news/304/43. php Sex Tourism Gender and the Economy of Sex Tourism In Kenya’s Coast Province Introduction â€Å"Sex tourism requires Third World women to be economically desperate enough to enter into prostitution; once they do so, it becomes difficult to leave. The other side of the equation requires men from affluent societies to imagine that African women are more available and submissive than women in their own countries. Finally, the industry depends on alliance between local governments in search of foreign currency and local foreign business willing to invest in sexualized travel† (Enloe, 2000:36). Otherwise known as sex prostitution, sex tourism is tourism for which the main motivation of the trip is to consummate or engage in commercial sexual relations (Graburn 1983; Hall 1991; Ryan and Hall 2001). The number of men and women travelling to Third World countries seeking sex tourism has increased tremendously (Herold et al. 2001). In the past, notorious sex destinations have been mainly the South East Asian countries, today it has spread to other regions of the world including Kenya, Tunisia, South Africa, Brazil and The Gambia (Ryan and Hall 2001, Enloe2002; Chissim 1996). This paper discusses gender and the political economy of sex tourism on the Kenyan Coast, its health and socio- economic impacts. International Tourism and Sex Tourism in Kenya Tourists visit Kenya because of several reasons including its beautiful landscape, wildlife safari, the humid climatic conditions along the Kenyan Coast and the beautiful Coastal beaches. International tourist arrivals in Kenya have been increasing tremendously from 69 million in 1960 to 160 million in 1970, 458 million in 1990, and 625 million in 1998 (WTO, 1999). This increase has led to massive increase in sex tourism, a condition evidenced by inclusion of Kenya among the world’s leading sex tourism destinations (Vatican 2003; Boston Globe 1995; East African Standard 1995 and Chessim 1996). Although not officially stated, a good percentage of foreign tourists who visit Kenya often indulge in sex tourism during their trip (Chissam 1996; Sindiga 1999). These tourists mainly come from Germany, the UK, Switzerland, Italy and France. Others are from North America, Japan, Australia, New Zealand and European countries such as Spain and Sweden. Many of these countries have been generating sex tourists to some of the world’s renowned sex tourism destinations such as Thailand (Ryan and Hall 2001). Hence we can conclude that they are likely to engage in the same activity while in Kenya. Kenya is a developing country with agriculture contributing 24. 0% of GDP. Overall, Kenya’s economic performance has been declining since early 1990’s. The country’s per capita is about US$ 260 and more than 70% of Kenyan population currently lives below the poverty line; the worst hit are women (CBS 2001). The Economics of Tourism and Sex Industry The main economic activity in Kenya at independence in 1963 was Agriculture whereby the country relied on cash crop exports. After independence, the government tried to diversify the economy by implementing an â€Å"open door† economic policy to attract foreign investment. However, the limitations of agricultural and manufacturing sectors coupled with the appreciation of employment potential forced Kenyan government to turn to tourism as a central industry. Since 1987, tourism industry has been the leading foreign exchange earner, (CBS 2001) surpassing the traditional export crops of coffee and tea (Gakuhu1992; Weaver 1998 and CBS 2001). The industry employs about 1. 5 million Kenyans, approximately 8% of wage earning labor force (Weaver, 1998 and CBS 1999). In addition, Tourism is linked to many domestic industries and it is a potentially useful tool for generating development in neglected areas. The industry also contributes substantially to government revenues through taxes and import duties. Tourism is therefore officially promoted in Kenya as the main foreign exchange earner, source of employment and general development. Its significance on the Kenyan economy has a lot of bearing on tourism policies including those related to sex tourism. Sex Tourism Market on the Kenyan Coast Sex tourism is believed to be increasing at a high rate in Kenya. This is mainly because of the reality that there is a sex tourism market for female and male tourists. Female tourists, mainly from European countries come to Kenya to meet with local beach boys because they imagine that black men (or men of color) are stronger and more active in bed than men in their home countries. On the other hand, male tourists come to Kenya to meet with black women; mainly young girls who are believed to be ‘hot’ in bed. Child prostitution is also emerging in Kenya involving young boys and girls. This is commonly along the Kenyan coast where many children choose not to go to school but instead go to beaches in search for white men and women from European countries who exploit them sexually. The Kenyan Coast located along the Indian Ocean caters for about 66% of Kenyan tourism activities. Sex tourism is a major activity in Kenyan Coast (Sindiga 1999, Migot-Adhola et al 1982; Bechmann 1985). The Kenya coast as a tourism destination has existed since 1920 attracting mainly the white settlers and colonial government officials who sought holiday excitements. Major tourist attractions at the Kenyan coast include the wildlife, white sandy beaches, sun, sea, sex, scene features, diverse cultures, hospitable people, historical sites, national museums, national parks and reserves near the coast and tourism facilities of international standard such as hotels and airport. The presence and availability of Britons, Germans, Italians, Americans and others in Mombasa and other coastal towns in search of rest, fun and recreation has been the main factor attracting Kenyan girls and children to get involved in sex tourism (Sindiga 1999 and Chissim 1996). Different Forms of Sex Tourism Sex tourism sometimes involves production of videos featuring nude dancing in which no direct physical contact occurs; the tourists engage in voyeurism. There are also casual prostitutes or freelancers who move in and out of prostitution depending on their financial needs. In this case, sex tourism may be regarded as incomplete commercialized and the relationship between sex worker and the client may be ridden with ambiguities (Cohen 1982; Ryan and Hall 2001), particularly if the relationship shifts from an economic to a social base. However, some women entering into sex tourism in Kenya are not financially needy but only seeking fun and ‘social class’, whereby the community views women seen socializing with white men with high esteem and associate them with wealth and success in life. Some of these women have jobs in noble professions while others are college students. There is also the more formalized form of prostitution where the workers operate through intermediaries. Since sex tourism is illegal in Kenya, prostitutes use entertainment establishments such as night clubs, bars, beaches and other retail outlets to get customers. The other type of sex tourism is that of bonded prostitutes. This is more of slavery because it is enforced by people such as family members through abductions and kidnapping. Motivation Factors: Why do Tourists Look for Sex Most tourists tend to behave differently while in the countries they are touring. This is because there is an assurance of anonymity, which releases them from the usual restraints, which determine their behavior in their home countries. Tourism allows people â€Å"to lose their identity† and gives them the freedom to escape realities and live their fantasies. They spend more money, relax more, drink more, eat more and get involved in pleasures they would not at home. Men who would never visit brothels in their home countries will end up doing so in a foreign country where there is negligible chance of detection and penalty. For the same reason, women who would never have sex with boys young enough to be their grand children at their home country would do so in a foreign country. Tourists tend to seek commercial sex services in Kenya because the services are readily available and quite cheap compared to what they would pay for such services in their home countries. Such tourists are able to enjoy lifestyles they could never enjoy in their home countries. Furthermore, some of these tourists may hold menial jobs in their industrialized home countries but because of the disparity in salaries and high exchange rates, they may appear comparatively rich when in a poorer country like Kenya. They would therefore tend to spend their money in sexual activities that they associate with the rich and the famous in their home countries. Chissim has illustrated this in his interview with a German tourist visiting Kenya (Chissim 1996:18). â€Å"†¦. Morco said he was in Kenya for a month but within four days, he boasted of already fucking five girls. He said he fucked one girl on the beach but pretended that he had no money, so he got that one for free. Another girl he fucked on the beach for 100/- (about $1) and told her that he had no more money. The others he said he had to pay 200/- (about $3) †¦Ã¢â‚¬  For some of these tourists, Kenya represents Africa where life is perceived as raw and wild and a place where people are uncontrolled, liberal and polygamous. These reasons partly explain why some European women visit Kenya to look for sex from beach boys young enough to be their grandsons. It is estimated that more than 5% of all European women who visit Kenya go in search of sex, especially those from German, Switzerland and Italy (New York Times Feb. 14, 2002). Many Kenyan communities highly value virginity. This motivates tourists to have sex with younger girls; in the anticipation of having sex with a virgin who may be free from HIV/ AIDS. Some tourists engage in sex tourism because they may be fleeing from unhappy relationships at home and, perhaps, from women who may tend to question male domination. Male supremacy is perceived as a natural kind of authority in many cultures and world religions. Cultural values defining traditional male sex roles are power, dominance, strength and supremacy, while those defining female roles are submissiveness, weakness, inferiority and passivity. Women are perceived as property of men and sex as exchange of goods, which further entrenches male supremacy. This notion also teaches men that females are worthless and less deserving and may be treated as objects of men. The mafia- style drugs and sex industry along the Kenyan coast is another motivating factor for sex tourism. People with a lot of money are capable of bribing their way out of trouble if caught Such people are also responsible for organizing sex services for clients outside the country (Sindiga 1999; Chessim 1996). Supply Factors: Why Do Sex Workers Get Involved â€Å"Many times I don’t feel anything during sexual encounters. It is because I need money for myself and my children that I keep doing it. I have learned to do motions mechanically in order to satisfy my clients. If I do it well, they will come back and that means more money. † (Lin Lean Lim 2000:74). This Filipino woman quoted by Lin Lean Lim expresses the reason why many women from Third World countries practice sex tourism and their feelings about sex work. The main reason for sex tourism for many is poverty. Many Kenyan women are economically desperate. With the increasing rate of unemployment and high cost of living, prostitution is left as the only option for them to earn a living and support their children. Such women migrate to coast with hope of finding white tourists who can pay more for the services or even may end up marrying them. Some girls involved in sex tourism come from broken homes or very poor family backgrounds and are never taken to school to attain formal education. They resolve to sex prostitution as a means of supporting themselves economically. In Kenya, women are generally poorer than men because women have limited access to resources such as land, capital, farm equipments and agricultural inputs. Inheritance practices in most Kenyan communities seem to favor men. This means that men can easily have access to other productive resources because they can use land as security to borrow money if needed to purchase other productive resources. This option is normally not available for women. In many Kenyan communities, illiteracy levels in women are higher than those of men. This is because parents give priority to boy’s education particularly if resources are limited. Along the coast, education is not valued because people from these areas are used to receiving tokens and money from the tourists. Children of school going age therefore prefer to go to beaches in search for tourists who give them tokens in exchange for sex. Other factors affecting education for girls include unwanted pregnancies and the fact that they are forced to early marriages by their parents for economic gains. Kenyan women are discriminated against in most areas of formal employment and more often left with poorly paid jobs or no jobs at all. This makes prostitution an alternative. The HIV/AIDS scourge in Kenya is estimated to claim 500 lives daily leaving many orphans. The young children left become heads of the families and may often turn to sex tourism and prostitution as a means of earning a living to support their siblings. Impact of Sex Tourism in Kenya Sex tourism can be seen as both a risk and an opportunity. Most women in sex tourism face the risk of material loss because their clients may not pay them for the services (ref. The Marco case). Women are generally helpless against such exploitation and take it as part of their business. Sex workers face the risk of losing their money to thieves and police because they have to bribe their way out if caught as they mostly work at night. Women can sometimes face attacks by dissatisfied customers. These attacks may be in form of rape, cruelty, violence or even murder. â€Å"Monica Njeri was a 32- year old mother of two and a prostitute in Mombasa. She was brutally murdered by Frank Sundstrom a 19 year old USA navy service man who wanted the kind of sex that Monica could not provide. When he was not satisfied with merely sleeping, he woke up and tried to steal back the money he had given to her plus her own money but she woke up and caught him in the act. In ensuing struggle, he broke a beer bottle to make a weapon and repeatedly stabbed her until she died. † (Migot- Adhola 1982:74). Although Sundstrom admitted the offence, his only sentence was to sign a bond of 500/- (equivalent to US$46 at that time) to be of good conduct. Women in sex tourism industry and prostitution are continually exposed to sexually transmitted infections including HIV/AIDS. Many tourists may not accept to use protection such as condoms because they argue that it interrupts the flow of sex and carrying it may imply that one is promiscuous (Clift and Grabowski 1997). Sex workers are also faced with the danger of susceptibility to anal or cervical cancers, additionally, since many women are forced into sex work, many of them only work under influence of drugs and/or alcohol. This may lead to depression or alcohol addiction. Sex tourism has been blamed in Kenyan coast for increasing rate of school drop-out, poverty and illiteracy. This is mainly because children of school going age choose not to school but to follow tourists who lure them to sex tourism. However, some women that have risked sex tourism have been able to build better houses and invested in urban businesses. This is largely because earnings from prostitution are often more than those from other alternative employment opportunities open to women. Sex workers contribute to national economy by boosting profits of many transnational hotels and airlines, taxi drivers, brothel owners and many other intermediaries. The Kenyan police, the state, as well as the local and international enterprises are well aware that sex has a market value even though they proclaim that prostitution is immoral (Ryan and Hall 2001). Sex tourism has also contributed to cultural exchange because many sea workers are forced to learn foreign languages so that they can communicate with their clients. There are occasions when these temporary relationships ave led to marriages hence removing such girls from prostitution. The other positive impact is that health workers are encouraged to go for regular medical checkups because of the nature of their work, hence paying more attention to their health. Bibliography Awanohara 1975. Protesting the sexual imperialists. Far Eastern Economic Review, 87 (21st March) PP 5-6. Bishop, R. and Robinson, L. S. 1998. Night Ma rket: Sexual cultures and the Thai Economic Miracle, London and New York: Routledge. Boston Globe Thursday November 23, 1995 Cater, E. A 1989 â€Å"Tourism in less Developed Countries†. In Annals of Tourism Research Vol. 16 No. 4. Central Bureau of Statistics (CBS), 2001 Economic Survey of Kenya. Central Bureau of Statistics (CBS), 2002 Economic Survey of Kenya. Chissim F. 1996. An exploratory and Descriptive Research on Child Prostitution and Tourism in Kenya. EPAT Report, Nairobi. Clift S and Grabowski, 1997 Tourism and Health: Risks, Research and Responses. Biddles Ltd, Guilford and King’s Lynn Cohen, E 1988. Tourism and AIDS in Thailand. Annals of Tourism Research, 15 (4), PP 467-86 Cohen, E. 1982. Thai Girls and Farang men: The Edge of Ambiguity Annals of tourism Research, 9 (3) PP 403-28 Collins Patricia Hills 2000. The Sexual Politics of Black Womanhood. In Disch Estelle(ed). Reconstructing Gender. A multicultural Anthology. Mayfield publishing East Africa Standard September 12, 1995 Enloe, Cynthia (2000) â€Å"On the Beach; Sexism and Tourism† in Bananas, Beaches and Bases: Making Feminist Sense of the International Politics: University of California press (2nd edition) Pp 19-41 Enloe, Cynthia 2002. The prostitute, the colonel and the Nationalist, in: Enloe, Cynthia: Maneuvers: The international politics of militarising women’s lives: London and Los Angeles: University of California Press (2nd Edition) pp 19-41 Ennew, J 1986. The sexual exploitation of children. Polity press, Cambridge Fish, M. 1984 Controlling Sex Sales to Tourists: Commenting on Graburn and Cohen. Annals of Tourism Research 11(4) 615-617. Gakahu C. G and Goode B. E 1992. Ecotourism and Sustainable Development in Kenya. Wildlife Conservation International. Graburn, N. H 1983. Tourism and prostitution, Annals of Tourism Research, 10:437-56 Hall C. M. 1994. Nature and Implications of Sex tourism in South-East Asia in: V. H. Kinnaird and D. R. Hall (ed) Tourism: A Gender Analysis Chichester, John Wiley PP-142-163 Harrison, David 1992, (ed) Tourism and the Less Developed Countries. Chichester: John Wiley and Sons. Jommo, R. B (1987: Indigenous enterprise in Kenya's tourism industry Geneva: itineraires etudes du development , Institute Universitaire d'Etudes du Development). Lim, Lean Lin 1998. Whither the sex sector? Some policy considerations University of California press, pp 49-108. Migot-Adhola, S. E et al ,1982. Study of Tourism in Kenya with emphasis on the attitudes of the Residents of the Coast. Institute for Development Studies Consultancy Report No. 7, Nairobi University Montgomery Heather 2001. Child Sex Tourism in Thailand: In D. Harrison ed. Tourism and the Less Developed World Issues and Case Studies. Pruitt. D. and Lafont S. 1995 For Love and Money: romance tourism in Jamaica, Annals of Tourism research 22(2); 419 – 440. Richter, L. K. 1995. Exploring the political role of gender in tourism research. In W. F. Theobald (ed. ) Global Tourism in the next decade. Oxford Boston: Butterworth Heinemann. Ryan Chris and Hall C Michael (2001): Sex Tourism: Marginal People and Liminalities Routledge London Ryan Chris (1991) Tourism and Marketing. A symbiotic Relationship? Tourism Management Journal pp 101-109. Butterworth –Heinenmann Ryan. C. and Rachel Kinder (1996). Sex, tourism and sex tourism: fulfilling similar needs? Tourism Management 17(7): 507-518. Elservier Science Ltd . Sindiga Isaac 1999: Tourism and African Development: Change and Challenge of Tourism in Kenya. African Study Centre. Leiden The Nertherlands Truong, Thanh-Dam 1983. The dynamics of sex tourism. The case of South-east Asia. Development and change 14, 533-53. Weaver, D. B. 1998 Ecotourism in less developed world. CAB International World Tourism Organisation,1999. Yearbook of Tourism Statistics. WTO, Madrid, Spain. Young, G. 1973. Tourism: Blessings or Blight? Harmondsworth, Middlesex: Penguin. The Vatican representative to WTO (2003). http://www. cathnews. com/news/304/43. php

Culture and Substance Abuse

The juvenile justice and the adolescent treatment systems have various linkages that can be looked at for long term sustainability. A linkage between various serving agencies is one of the most notable system linkages. As far as system linkages are concerned, building positive relationships is always existent between the two. This has been done for an effective system to ensure that there are positive outcomes based on the correlation that exists (Antai-Otong, 2008, p. 17). There is a lot of appropriate supervision to ensure that juveniles and adolescents are transformed. This has been done by sharing information that can be used as time goes by to turn around both juveniles and adolescents. Cross system coordination has also existed as an important linkage that can be employed for long term sustainability. To ensure that system linkages are effective, there are a lot of community coordination links. Facilities are also a system linkage between the juvenile justice and the adolescent training system. There is no difference between juveniles and adolescents and this means that the system is linked by programs that will involve everybody (Copeman, 2003, p. 6). Another system linkage is research and practice that ensures that the needs of the juvenile justice and the adolescent training system are catered for. The legal system is also linked to ensure that cases are effectively dealt with. Question Two Treatment of substance abuse for juvenile offenders requires a lot of planning for efficiency. This means that there are a lot of clinical and programmati c issues that are involved in planning for treatment. Direct inquiries are made in relation to the treatment that will be offered to ensure that everything is well planned for. Design controlled clinical treatment is another aspect that is done in advance to ensure that juvenile offenders are attended to in specific reference to their problem. Everything needs to be designed from the beginning to ensure that there will be efficiency in treatment for juvenile offenders (Siegel, 2005, p. 19). An upward bound program is designed as far as clinical and programmatic issues are concerned to ensure that there is proper planning. Some of these aspects might include a counseling program that is always effective in ensuring that uveniles who have been abusing drugs are recovering well. Treatment planning is an issue that needs to be put into consideration with an aim of placing good guidelines that will guide the whole process. Before a placement plan is developed, there is need to do a behavioral observation on juveniles. This is because there might be some behavioral problems that might make it impossible to achieve effective treatment (Rang, 2003, p. 34). Juvenile offenders are supposed to be grouped in relation to their substance abuse needs and this is another issue as far as planning for treatment is concerned. Question Three Supportive programs and services are some of the factors that have been used to engage hard to reach adolescent populations. This is because some of these populations are always violent meaning that they are supposed to be approached cautiously. Voluntary counseling is a good approach to reach hard to find adolescent populations (Sullivan, 2001, p. 47). This ensures that they are positively influenced without creating any problem in relation to their general well being and welfare. Identification of specific characteristics in a given population is another factor that has always been used to engage hard to reach adolescents. As a matter of fact, identification of challenges is very important to ensure that a good program is designed for long term sustainability. Conclusion It is undeniable that drugs and substance abuse have become a very important element of youth culture as time goes by. In this case, the abuse of drugs has become a normal trend among the youths thereby forming a culture amongst them. This means that drugs give youths an identity from the rest who do not use drugs. All this withstanding, drugs will continue to play an integral part in youth culture (Copeman, 2003, p. 31). This is because they consider it as a normal thing and aspect of their lives. As a matter of fact, young guys who attend parties consider drugs as a must have. There are youths who are experimenting with drugs to fit in a given group and this could be because of peer pressure. This is what they consider as culture but it has occasionally led to substance abuse in the long run.

Ratio Analysis

Though there are innumerable literatures available on the subject, the most appropriate studies have been reviewed. Dr. Promod Kumar published a book in 1991 â€Å"Analysis of financial statement of Indian Industries† The study covered the 17 private sector, 5 state owned public sector and 1 central public sector companies. He studied analysis of activities, assessment of profitability, return on capital investment, analysis of financial structure, analysis of fixed assets and working capital.In his research he revealed various problems of industries and suggested remedies for the problems. He also suggested for the improvement of profitability and techniques of cost control. 1Ahindra Chakrabati published an articles â€Å"Performance of public sector enterprises a Case study on fertilizers† in â€Å"The Indian journal of public enterprise† in the year 1988-89. He made analysis of consumption and production of fertilizer by public sector; he also made analysis of profit and loss statement. He gave suggestion to improve the overall performance of public enterprise. In the year of 2002, Dr. Sugan C. Jain has written a book on â€Å"Performance appraisal automobile industry† In his study he has analyses the performance of the automobile industry and presented comparative study of some national and international units. The operational efficiency and profitability had been analyzed using the composite index approach. He made several suggestions from the strengthening the financial soundness improving profitability, working capital the performance of fixed assets. 3 Recently in the year 1998 a study was made by S.J. parmar on â€Å"Financial Efficiency-Modern methods, tools & Techniques† for the period from 1998-89 to 1994-95. He had made an attempt to analyze financial strength, liquidity, profitability, cost and sales trend and social welfare trend by using various ratios analysis, common size analysis and value added analysis. He made several suggestions for the improvement of profitability of industry. In his analysis, he indicates various reasons for higher cost, low profitability, and inefficient use of internal resources. Dr Sanjay Bhayani published a book in 2003, â€Å"Practical financial statement analysis† The study covered 16 public limited cement companies in private sector. He made study of analysis of profitability, working capital, capital structure and activity of Indian cement industry. In his research he revealed various problems of cement industries and suggested remedies for the problems. He also suggested for the improvement of profitability and techniques of cost control. Ram Kumar,Kakani Biswatosh saha and V. N. Reddy has written research paper on Determinants of Financial Performance of Indian Corporate Sector in the Post-Liberalization Era: An Exploratory Study. This paper attempts to provide an empirical validation of the widely held existing theories on the determinants of fi rm performance in the Indian context. The study uses financial statement and capital market data of 566 large Indian firms over a time frame of eight years divided into two sub-periods (viz. 1992-96, and 1996-2000) to study Indian firms' financial performance across various dimensions viz. , shareholder value, accounting profitability and its components, growth and risk of the sample firms. It reveals that even on the same data, the determinants of market-based performance measures and accounting-based performance measures differ due to influence of ‘Capital Market Conditions'. We found that size, marketing expenditure, and international diversification had a positive relation with a firm's market valuation.Apart from these firm attributes that reflect either operating parameters of firms or ‘strategic choice' of firm managers, we also found that a firm's ownership composition, particularly the level of equity ownership by Domestic Financial Institutions and Dispersed Pu blic Shareholders, and the leverage of the firm were important factors affecting its financial performance. The different implications of the findings for various stakeholders of a firm are also discussed. 6Dutts S. K has written an article on â€Å"Indian tea industry an appraisal† which was published in Management accountant in the year of March 1992.He analyzed the profitability, liquidity and financial efficiency by using various ratios. 7 Objectives of the study  · To evaluate the financial performance of the selected units of Pharmaceutical industry  · To compare the financial results of the Pharmaceutical industry as Dr Reddy's Laboratories Ltd and Lupin Ltd  · To enquire the adequacy or the accounting information desired from the statement in conformity with laid down accounting statements by the institute of Chartered Accountants of India (ICAI).  · To study the growth of the said companies To give suggestion for best financing method and efficient utilizatio n of fixed assets METHODOLOGY OF THE STUDY: Source of the data: â€Å"Comparative Financial statement Analysis & Innovation in Private sector Pharmaceutical Companies in India† has been made by using data from financial statements of all five major players in cement industry, they are – Dr Reddy's Laboratories Ltd. (Dr. RDL), Ambuja Lupin Ltd. (LL), the period of the study was ten years from 2001 to 2010. The data was collected from cpitaline database and from the annual reports of the respective companies.Hypothesis for the study: For the present study tested following null hypotheses are tested-  · Ho1: The Dr Reddy's Laboratories Ltd. did not achieve better profitability than Lupine Ltd.  · Ho2: The Dr Reddy's Laboratories Ltd. did not achieve better liquidity than Lupine Ltd.  · Ho3: The Dr Reddy's Laboratories Ltd. did not achieve better turnover than Lupine Ltd. Scope of the study: the study Comparative Financial statement Analysis & Innovation in Private s ector Pharmaceutical Companies in India.The study therefore includes financial structure performance, working capital performance, and Profitability performance but excludes non-financial areas such as production, marketing, personnel and R& D from its purview. Techniques used for analysis: The data have been analyzed with the help of ratio analysis, trend analysis, common size analysis-T test to test the relation among different ratios of two selected companies. Limitation of the study: In order to facilitate uniformity in data, years have been readjusted and the data have been recast as on 31st March of each year.The figure taken from the annual reports have been rounded off to two decimals of rupees in crores. The data available in financial statements have been translated in to a pre-designed structure format so that a meaningful interpretation could be made through inter-firm and intra firm comparisons. The format in which the data have been classified is selected after careful consideration of the operation Pharmaceutical Companies. Nevertheless, the limitations do in no way act as a deterrent in drawing effective and meaningful inferences from the studyAnalysis of the data: for knowing Comparative Financial statement Analysis & Innovation in Private sector Pharmaceutical Companies in India the commonly used ratio: fixed Gross profit, Net profit, Return on capital employed, Return on Net worth and Earning per share, Current ratio, Debtors Velocity (Days), Creditors Velocity (Days), Debt equity ratio and Interest coverage ratio, Inventory turnover Ratio, Debtors Turnover Ratio and Total Assets Turnover Ratio Analysis and interpretation: Table-1 Profitability Ratios of Dr Reddy's Laboratories Ltd & Lupine Ltd. Gross profit Net profit ROC RON EPS Year Dr. RDL Lupin Ltd. Dr.RDL Lupin Ltd. Dr. RD Lupin Ltd. Dr. RD Lupin Ltd. Dr. RD Lupin Ltd. 2001 22. 16 9. 25 19 6. 65 31. 5 23. 02 29. 23 31. 13 45. 32 201. 66 2002 33. 1 12. 49 32. 39 7. 54 42. 06 16. 64 45. 71 22. 07 59. 56 17. 42 2003 30. 78 12. 2 28. 34 7. 3 26. 44 16. 05 24. 02 20. 3 50. 6 17. 44 2004 21. 55 19. 07 20. 4 12. 48 15. 61 27. 1 14. 7 36. 14 36. 37 23. 76 2005 7. 9 9. 77 9. 19 6. 96 2. 19 12. 75 2. 77 17. 79 7. 85 20. 09 2006 16. 27 16. 29 14. 12 11 9. 24 20. 86 8. 57 31. 93 26. 82 44. 61 2007 37. 06 16. 27 32. 39 10. 53 35. 94 19. 39 35. 47 27. 89 69. 45 36. 75 2008 21. 63 19. 27 18. 47 13. 53 12. 01 23. 85 10. 35 32. 02 27. 2 52. 31 2009 21. 77 18. 28 17. 8 14. 17 13. 55 22. 29 11. 14 30. 97 32. 25 48. 22 2010 28. 77 21. 56 23. 52 17. 7 17. 79 25. 6 15. 14 33. 23 48. 25 70. 7 Total 240. 99 154. 45 215. 62 107. 86 206. 33 207. 55 197. 1 283. 47 404. 09 532. 96 Average 24. 099 15. 445 21. 562 10. 786 20. 633 20. 755 19. 71 28. 347 40. 409 53. 296 Min 7. 9 9. 25 9. 19 6. 65 2. 19 12. 75 2. 77 17. 79 7. 85 17. 42 Max 37. 06 21. 56 32. 39 17. 7 42. 06 27. 1 45. 71 36. 14 69. 45 201. 66 Sources: Data has been taken from annual reports The gross profit ratio of Dr. RDL was 22 . 16 % in 2001 which went down in to 7. 9% in 2005 but it rose up to 28. 7% in last years of the study period. The ratio ranged between 7. 9% in 2005 to 37. 06% in 2007. The ratio showed highly fluctuated trend during the study period. The average gross profit ratio was 24. 09% indicated. The gross profit ratio of Lupin Ltd. showed highly fluctuated trend during the study period with an average of 15. 45%. The ratio was the highest in the year of 2010 and very lowest 2001. T-test T-Test: Calculated value of gross profit ratio is 2. 86 Tabulated value at 5% significant value=1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. The Net profit ratio of Dr.RDL was 19% in the year of 2001 and increased to 32. 39% in the year of 2002. The ratio went down to 28. 34% in year of 2003. The ratio was very low of 9. 19% during the year of 2005 and very highest during the year of 2002. The average ratio was 21. 56% with fluctuated trend. The Net profit r atio of Lupin Ltd. was 6. 65 % in 2001 which went down in to 6. 96% in 2005 but it rose up to 17. 7% in last years of the study period. The ratio ranged between 6. 65% in 2001 to 17. 7% in 2010. The ratio showed highly fluctuated trend during the study period. The average gross profit ratio was 10. 78% indicated. T-testCalculated value of net profit ratio is 4. 01 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. The return on capital employed ratio was 31. 5% in 2001 which went down to 9. 24 % in the year of 2006 and also went down to 13. 55% and 17. 79 during the years of 2009 and 2010 respectively. The ratio ranged between 2. 19% in year of 2005to 42. 06% in the year of 2002. The ratio showed down ward trend with an average of 20. 63%. The return on capital employed of Lupin Ltd was showing much fluctuated trend during the year study period.The average ratio was 20. 76 in the Lupin Ltd which sho wed fluctuated trend during the study period. The ratio was 23. 02% in year of 2001 and 20. 86% in year of 2006 and 25. 6% during the last year of study period. The ratio has gone down due to decreased in volume of sales. The sales have gone down since price rise took place in market. T-test Calculated value of return on capital employed ratio is 0. 028 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. The Return on net worth ratio of Dr. RDL was 29. 3% in 2001 which went down in to 8. 57% in 2006 but it rose up to 15. 14% in last years of the study period. The ratio ranged between 2. 77% in 2005 to 45. 71% in 2002. The ratio showed highly fluctuated trend during the study period. The average gross profit ratio was indicated19. 71%. The Return on net worth ratio of Lupin Ltd. showed highly fluctuated trend during the study period with an average of 28. 347%. The ratio ranged between 17. 79% in 2005 to 36. 14% in 2004. T-test Calculated value of Return on net worth ratio is 1. 84 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance cal ; t tab Hence hypothesis is rejected. Earnings per share of Dr. RDL were Rs. 45. 32 in the year of 2001 and Rs 59. 56 in the year of 59. 56. The EPS went down to 50. 6 in the year of 2003 and Rs 36. 37 in the year 2004 and Rs. 7. 85 in the year of 2005. The EPS rose to 69. 45 in the year 2007and again went down to 27. 62 in 2008. The EPS Rs. 48. 25 during the last year of study period. The average ESP was 40. 41 with downward trend during the study period. The EPS was 201. 66 in Lupin Ltd. and went down to 20. 09 in the year of 2005 and reached down to 70. 7 during the last year of study period.The EPS showed lower level of EPS due to less utilization of financial leverage. T-test Calculated value of Earnings per share is 0. 70 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of s ignificance t cal ; t tab Hence hypothesis is accepted. Table-2 Liquidity ratio of Dr. RDL and Lupin Ltd. Current ratio Debtors Velocity (Days) Creditors Velocity (Days) Year Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. 2001 1. 69 1. 82 48 47 76 27 2002 3. 09 1. 74 54 61 79 35 2003 4. 86 1. 58 60 62 82 36 2004 3. 73 1. 34 60 66 85 38 2005 2. 49 1. 1 60 56 90 34 2006 1. 5 1. 38 59 57 94 35 2007 2. 21 1. 68 66 63 105 38 2008 3. 05 1. 53 85 69 109 42 2009 3. 15 1. 24 79 77 110 45 2010 2. 44 1. 27 100 81 120 52 Total 28. 56 14. 68 671 639 950 382 Average 2. 856 1. 468 63 62 92 37 Min 1. 69 1. 1 48 47 76 27 Max 4. 86 1. 82 100 81 120 52 Sources: Data has been taken from annual reports In year 2001 Dr. RDL has 1. 69 as its current ratio and after that it continuously increased from 3. 09 to 4. 86 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negative changes but it moves from 2. 21 to 3. 05 in year 2007 and 2008 respectively.In the yea r 2009 and 2010 it shows again little fluctuated with an average of 2. 85. In year 2001 Lupin Ltd has 1. 82 as its current ratio and after that it continuously decreased from 1. 74 to 1. 58 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negative changes but it moves down from 1. 68 to 1. 53 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuated with an average of 1. 46. T-test Calculated value of current ratio is 4. 50 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance cal ; t tab Hence hypothesis is rejected. In year 2001 Dr. RDL has 48 days as its Debtors Velocity (Days) and after that it continuously increased from 54 (Days) to 60 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negative changes but it moves down from 66 days to 85 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctua tions with an average of 63 days. In year 2001 Lupin Ltd. has 47 days as its Debtors Velocity (Days) and after that it continuously increased from 61 (Days) to 62 in the year of 2002 and 2003 respectively.But in year 2004, 2005 & 2006 it also showed negative changes but it moves up from 63 days to 69 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 62 days. T-test Calculated value of Debtors Velocity (Days) is 0. 3 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. In year 2001 Dr. RDL 76 days as its Creditors Velocity (Days) and after that it continuously increased from 79 (Days) to 82 in the year of 2002 and 2003 respectively.But in year 2004, 2005 & 2006 it also showed negative changes but it moves down from 105 days to 109 days in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with a n average of 92 days. In year 2001 Lupin Ltd. 27 days as its Creditors Velocity (Days) and after that it continuously increased from 35 (Days) to 36 days in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed positives changes but it moves down from 38 days to 42 days in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 37 days.T-test Calculated value of Creditors Velocity (Days) is 10. 83 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Leverage Ratios of Dr. RDL & Lupin Ltd. Table-3 Leverage Ratios of Dr. RDL & Lupin Ltd. Debt equity ratio Interest coverage ratio Year Dr. RDL Lupin Ltd. Dr. RD Lupin Ltd. 2001 0. 56 1. 79 5. 05 2. 09 2002 0. 19 1. 88 34. 27 2. 55 2003 0. 01 1. 77 72. 27 2. 53 2004 0. 02 1. 24 72. 71 4. 89 2005 0. 08 0. 86 3. 82 4. 12 2006 0. 28 1. 18 10. 39 8. 6 2007 0. 19 1. 16 27. 29 8. 65 2008 0. 09 0. 83 40. 74 13. 99 2009 0. 11 0. 71 27. 62 2. 35 2010 0. 11 0. 47 68. 8 25. 97 Total 1. 64 11. 89 362. 96 85. 74 Average 0. 16 1. 19 36. 30 8. 57 Min 0. 01 0. 47 3. 82 2. 09 Max 0. 56 1. 88 72. 71 25. 97 Sources: Data has been taken from annual reports The Debt equity ratio of Dr. RDL was 0. 56 in 2001 which went down in to 0. 28 in 2006 but it went down to 0. 11 in last years of the study period. The ratio ranged between 0. 01 in 2003 to 0. 56 in 2001. The ratio showed highly fluctuated trend during the study period. The average Debt equity ratio was indicated 0. 16. In year 2001 Lupin Ltd. 1. 79 as its Debt equity ratio and after that it continuously decreased from 1. 8 to 1. 77 days in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed positives changes but it moves down from 1. 16 to 0. 83 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 1. 19 days. T-test Calc ulated value of Debt equity ratio is 6. 28 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Interest coverage ratio of Dr. RDL was 5. 05 in the year of 2001 and Rs 3. 82 in the year of 2006. The Interest coverage ratio went up to 72. 7 in the year of 2003 and 72. 71 in the year 2004 and 3. 82 in the year of 2005. The Interest coverage ratio rose to 27. 29 in the year 2007and again went up to 40. 74in 2008. The Interest coverage ratio was 68. 8 during the last year of study period. The average Interest coverage ratio was 36. 30 with upward trend during the study period. In year 2001 Lupin Ltd. 2. 09 as its Debt equity ratio and after that it continuously decreased from 2. 55 to 2. 53 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negatives changes but it moves down from 8. 65 to 13. 99 in year 2007 and 2008 respectively.In the year 2009 and 2010 it shows aga in little fluctuations with an average of 8. 57. T-test Calculated value of Interest coverage ratio is 3. 13 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Table-4 Turnover ratio of Dr. RDL and Lupin Ltd. Inventory Turnover Ratio Debtors Turnover Ratio Total Assets Turnover Ratio Year Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. 2001 8. 65 11. 3 4. 76 5. 39 1. 03 1. 6 2002 9. 01 6. 61 4. 29 3. 06 0. 99 1. 32 2003 7. 44 7. 02 3. 64 2. 75 0. 92 1. 29 2004 6. 99 6. 74 3. 97 3. 89 0. 88 1. 7 2005 5. 79 5. 23 3. 78 5. 37 0. 85 1. 31 2006 5. 64 5. 95 4. 21 5. 69 0. 82 1. 28 2007 8. 69 5. 7 4. 94 4. 9 0. 75 1. 14 2008 6. 11 5. 08 3. 53 4. 7 0. 65 1. 09 2009 6. 16 4. 39 3. 66 4. 39 0. 64 0. 99 2010 5. 57 5. 13 3. 66 4. 51 0. 59 0. 94 Total 70. 05 63. 15 40. 44 44. 65 8. 12 12. 23 Average 7. 005 6. 315 4. 044 4. 465 0. 812 1. 223 Min 5. 57 4. 39 3. 53 2. 75 0. 59 0. 94 Max 9. 01 11. 3 4. 94 5 . 69 1. 03 1. 6 Sources: Data has been taken from annual reports In year 2001 Dr. RDL 8. 65 as its Inventory Turnover Ratio and after that it continuously decreased from 9. 01 to 7. 44 in the year of 2002 and 2003 respectively.But in year 2004, 2005 & 2006 it also showed negatives changes but it moves down from 8. 69 to 6. 11 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 7. 01. In year 2001 Lupin Ltd. 11. 3 as its Inventory Turnover Ratio and after that it continuously increased from 6. 61 to 7. 02 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with ups and downs but it moves down from 5. 7 to 5. 08 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 6. 2. Calculated value of Inventory Turnover Ratio is 0. 72 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. In year 2001 Dr. RDL. 4. 76 as its Debtors Turnover Ratio and after that it continuously decreased from 4. 29 to 3. 64 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 4. 94 to 3. 53 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 4. 04.In year 2001 Lupin Ltd. 5. 39 as its Debtors Turnover Ratio and after that it continuously decreased from 3. 06 to 2. 75 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 4. 9 to 4. 73 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 4. 47. Calculated value of Debtors Turnover Ratio is 1. 21 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hy pothesis is accepted. In year 2001 Dr. RDL. 1. 3 as its Total Assets Turnover Ratio and after that it continuously decreased from 0. 99 to 0. 92 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with downward movements but it moves down from 0. 75 to 0. 65 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 0. 81. In year 2001 Lupin Ltd. 1. 6 as its Total Assets Turnover Ratio and after that it continuously decreased from 1. 32 to 1. 29 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 1. 4 to 1. 09 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 1. 22. Calculated value of Total Assets Turnover Ratio is 5. 34 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hyp othesis is rejected. Summary findings and Conclusion The liquidity ratio of Lupin Ltd is highly threatening when compared with Dr. RDL. Thus Lupin Ltd has to control the current liabilities or to increase the current assets so that they can cover all the current liabilities and be in safer position.Thus slightly fluctuations in sales in that situation can not affect the paying capacity of the concern and thus maintain the credibility. The profitability ratio of Dr. RDL is better when it is compared with Lupin Ltd. It can be inferred from the result that Lupin Ltd can expand the business or can move further in newer directions as it is experiencing continuously growth in the profitability. Lupin Ltd has to give a fairer thought to reduce cost in providing services and increasing the turnover so that sustained growth in profitability can be seenReturn on Net Capital Employed is the best test of overall profitability and efficiency of the business firm. A company with high rate of retu rn on capital employed would be in a position to capitalize; e. g. it can take advantage of all favorable market opportunities. The study shows that returns on capital employed in selected units in India had marked a fluctuated trend. The average was 17. 79 and 25. 6 percent in units in India respectively. This ratio was satisfactory. On the whole Dr. DRL had the highest return net on capital employed of As compared to the Lupin ltd.In the light of the above discussion it is suggested that Lupin ltd should undertake cost control measure so that increase net profit before interest and taxes of the company might enhance the return on net capital employed. The solvency ratio also reveals the same track record of an upper hand over Lupin ltd. This position depicts the financial soundness or good financial health of the DR. RDL. In this sector Lupin ltd. has to work hard for providing the financial health in terms of capital also. The turnover ratio of Lupin Ltd. is showing better positi on when compared to DR. RDL. This fact proves that the market size in Lupin Ltd. s far more better than the DR. RDL which in turn is gearing its growth in all the stream. Thus DR. RDL has to work for increasing the market size and customer base so that it can achieve the trend of continuous growth. It can be inferred from the overall financial analysis that Lupin Ltd ltd. has to rethink and device the strategies so that it can lead towards positive way and become the major players. Innovation though financial statement analysis can be seen though mergers and acquisitions and launching of new products and schemes so that enterprise can be proud of being major market players and setter newer and newer goals in the future.Cost accounting and cost audit should be made mandatory for this units and cost sheet along with annual financing statement should be prepared. The policy of borrowed financing in selected Parma group of companies under study was not proper. So the companies should us e widely the borrowed funds and should try to reduce the fixed charges burden gradually by decreasing borrowed funds and by enhancing the owner’s fund. For this purpose companies should enlarge their equity share capital by issuing new equity shares. There has been too much of government interference in policy and day-to-day working and decisions.This leads to delays in decision-making. This should be abolished. There is no incentive to the employees to perform better. Also there is no accountability because no one is held responsible for a failure in achieving targets for this kind of problem responsibility centre should be created. Improper planning and delays in implementation of projects lead to rise in their cost. So properly planning should be made. To regularize and optimize the use of cash balance proper techniques may be adopted for planning and control of cash. The investments in inventories should be reduced and need to introduce a system of prompt collection of de bts.Selected pharma companies should try to use properly their operating assets and should try to minimize their non-operating expenses. To conclude the study, it can be said that the adoption of above measures will doubtlessly help the selected companies to improve their overall performance in the management. With the efficient management of long term fund, selected companies can utilized their capacity optimally and accelerate economic growth of India by increasing the production of pharma product at reasonable cost. References. 1. Dr. Promod Kumar. â€Å"Analysis of financial statement of Indian Industries†Saujaniya Publication Ltd. 1992 2. Ahindra Chakrabati: â€Å"Performance of public sector enterprises a Case study on fertilizers† The Indian journal of public enterprise. 1988-89 3. Dr. Sugan C. Jain: â€Å"Performance appraisal automobile industry† Raj Publishing House, c2002. Jaipur, India 4. Parmar S. J. :â€Å"Financial Efficiency-Modern methods, tool s & Techniques† Raj publication year of publication-2001 5. Dr Sanjay Bhayani: â€Å"Practical financial statement analysis† Raj publication,2003 6. Kakani, Ram Kumar, Saha, Biswatosh and Reddy, V. N.Nagi, Determinants of Financial Performance of Indian Corporate Sector in the Post-Liberalization Era: An Exploratory Study (November 2001). National Stock Exchange of India Limited, NSE Research Initiative Paper No. 5. 7. Dutts S. K has: â€Å"Indian tea industry an appraisal† Management accountant, March-1992 8. Brigham, Eugene. F and Joel F. Houston. â€Å"Fundamentals of Financial Management, Ninth Edition, Harcourt College Publishers, Fort Worth, 2001. 9. Review of Business Research, 2007 by Tarun K. Mukherjee, Prakash Deo. 10. Gitman, L. J. , â€Å"Principles of Management finance,† New York: Harper & Row publishers,1982,p. 81 11. Paton & Paton. , â€Å"Corporation Accounts and statements†, New York: Macmillan Company, 1964, p. 362. 12. Kulshresh tha, N. K. , â€Å"Analysis of Financial statements of Indian Paper industry†, Aligarh: Navman Publishing House, 1972, p. 133. 13. Kulshreshtha, N. K. , Op. cit. , p. 134. 14. Hunt W. and Donaldson, G. , â€Å"Business Finance-text and cases†, Illinois: Richard D. Irwin, 1965, Pp. 114-115. 15. Roy Chowdhar, A. B. , â€Å"Analysis and Interpretation of Financial statements†, New Delhi Orient Longmans, 1970, p. 24. 16. Bogen, J. J. , â€Å"Financial Handbook† New Delhi: The Ronald press, 1957,p. 53. 17. Weston, J. F. and Brigham, E. F. , â€Å"Management finance†, New York: Holt, Rinehart and Winton, Inc, . 1972, p. 88. 18. Hingorani, N. L. and Raman than, A. R. , â€Å"Management Accounting†, New Delhi: Sultan Chand & Sons, 1977,p. 115. 19. Srivastava, R. M. , â€Å"Financial Management†, Meerut India: Pragati Prakasjan, 1979, p. 476. 20. Westiwick, C. A. , â€Å"Management: How to use ratios†, Epping Essex: Grower Press Ltd. 19 73,p. 5 21. Bogen, J. J. , Op. cit. Pp. 751-752. 22. Mohsin, M. , â€Å"Financial Planning and Control†; NewDelhi: Vikas publishing House Pvt. Ltd. , 1980, p. 174. 23.Kulshrestha, N. K. Op. cit. , 139. 24. HENDERSON, G. V. , Gurry, J. R. Trnnep Oh. , James E. Wirt. , â€Å"An Introduction to financial Management†, California: Addition-Wesley publishing company, 1984, p. 122. 25. Anthony, R. N. and Reece, J. S. , Op. , cit. , p. 198. 26. Information obtained through unstructured interviews from financial managers of the sample units though telephone. 27. Annual reports of selected cement company from 2003-04 to 2008-09 28. Kennedy, R. D. and Mcmullen, S. Y. , â€Å"Financial statements: Forms analysis and interpretation†, Illnois: Richard D. Irwin inc. 1964, p. 404. Information about this Article Peer-review ratings (from 2 reviews, where a score of 100 represents the ‘average’ level): Originality = 175. 00, importance = 162. 50, overall quality = 16 2. 50 This Article was published on 14th March, 2012 at 18:41:24 and has been viewed 2635 times. This work is licensed under a Creative Commons Attribution 2. 5 License. The full citation for this Article is: Kakkad, R. (2012). Comparative Financial statement Analysis & Innovation in Private sector Pharmaceutical Companies in India-An empirical Analysis. PHILICA. COM Article number 318. Ratio Analysis Though there are innumerable literatures available on the subject, the most appropriate studies have been reviewed. Dr. Promod Kumar published a book in 1991 â€Å"Analysis of financial statement of Indian Industries† The study covered the 17 private sector, 5 state owned public sector and 1 central public sector companies. He studied analysis of activities, assessment of profitability, return on capital investment, analysis of financial structure, analysis of fixed assets and working capital.In his research he revealed various problems of industries and suggested remedies for the problems. He also suggested for the improvement of profitability and techniques of cost control. 1Ahindra Chakrabati published an articles â€Å"Performance of public sector enterprises a Case study on fertilizers† in â€Å"The Indian journal of public enterprise† in the year 1988-89. He made analysis of consumption and production of fertilizer by public sector; he also made analysis of profit and loss statement. He gave suggestion to improve the overall performance of public enterprise. In the year of 2002, Dr. Sugan C. Jain has written a book on â€Å"Performance appraisal automobile industry† In his study he has analyses the performance of the automobile industry and presented comparative study of some national and international units. The operational efficiency and profitability had been analyzed using the composite index approach. He made several suggestions from the strengthening the financial soundness improving profitability, working capital the performance of fixed assets. 3 Recently in the year 1998 a study was made by S.J. parmar on â€Å"Financial Efficiency-Modern methods, tools & Techniques† for the period from 1998-89 to 1994-95. He had made an attempt to analyze financial strength, liquidity, profitability, cost and sales trend and social welfare trend by using various ratios analysis, common size analysis and value added analysis. He made several suggestions for the improvement of profitability of industry. In his analysis, he indicates various reasons for higher cost, low profitability, and inefficient use of internal resources. Dr Sanjay Bhayani published a book in 2003, â€Å"Practical financial statement analysis† The study covered 16 public limited cement companies in private sector. He made study of analysis of profitability, working capital, capital structure and activity of Indian cement industry. In his research he revealed various problems of cement industries and suggested remedies for the problems. He also suggested for the improvement of profitability and techniques of cost control. Ram Kumar,Kakani Biswatosh saha and V. N. Reddy has written research paper on Determinants of Financial Performance of Indian Corporate Sector in the Post-Liberalization Era: An Exploratory Study. This paper attempts to provide an empirical validation of the widely held existing theories on the determinants of fi rm performance in the Indian context. The study uses financial statement and capital market data of 566 large Indian firms over a time frame of eight years divided into two sub-periods (viz. 1992-96, and 1996-2000) to study Indian firms' financial performance across various dimensions viz. , shareholder value, accounting profitability and its components, growth and risk of the sample firms. It reveals that even on the same data, the determinants of market-based performance measures and accounting-based performance measures differ due to influence of ‘Capital Market Conditions'. We found that size, marketing expenditure, and international diversification had a positive relation with a firm's market valuation.Apart from these firm attributes that reflect either operating parameters of firms or ‘strategic choice' of firm managers, we also found that a firm's ownership composition, particularly the level of equity ownership by Domestic Financial Institutions and Dispersed Pu blic Shareholders, and the leverage of the firm were important factors affecting its financial performance. The different implications of the findings for various stakeholders of a firm are also discussed. 6Dutts S. K has written an article on â€Å"Indian tea industry an appraisal† which was published in Management accountant in the year of March 1992.He analyzed the profitability, liquidity and financial efficiency by using various ratios. 7 Objectives of the study  · To evaluate the financial performance of the selected units of Pharmaceutical industry  · To compare the financial results of the Pharmaceutical industry as Dr Reddy's Laboratories Ltd and Lupin Ltd  · To enquire the adequacy or the accounting information desired from the statement in conformity with laid down accounting statements by the institute of Chartered Accountants of India (ICAI).  · To study the growth of the said companies To give suggestion for best financing method and efficient utilizatio n of fixed assets METHODOLOGY OF THE STUDY: Source of the data: â€Å"Comparative Financial statement Analysis & Innovation in Private sector Pharmaceutical Companies in India† has been made by using data from financial statements of all five major players in cement industry, they are – Dr Reddy's Laboratories Ltd. (Dr. RDL), Ambuja Lupin Ltd. (LL), the period of the study was ten years from 2001 to 2010. The data was collected from cpitaline database and from the annual reports of the respective companies.Hypothesis for the study: For the present study tested following null hypotheses are tested-  · Ho1: The Dr Reddy's Laboratories Ltd. did not achieve better profitability than Lupine Ltd.  · Ho2: The Dr Reddy's Laboratories Ltd. did not achieve better liquidity than Lupine Ltd.  · Ho3: The Dr Reddy's Laboratories Ltd. did not achieve better turnover than Lupine Ltd. Scope of the study: the study Comparative Financial statement Analysis & Innovation in Private s ector Pharmaceutical Companies in India.The study therefore includes financial structure performance, working capital performance, and Profitability performance but excludes non-financial areas such as production, marketing, personnel and R& D from its purview. Techniques used for analysis: The data have been analyzed with the help of ratio analysis, trend analysis, common size analysis-T test to test the relation among different ratios of two selected companies. Limitation of the study: In order to facilitate uniformity in data, years have been readjusted and the data have been recast as on 31st March of each year.The figure taken from the annual reports have been rounded off to two decimals of rupees in crores. The data available in financial statements have been translated in to a pre-designed structure format so that a meaningful interpretation could be made through inter-firm and intra firm comparisons. The format in which the data have been classified is selected after careful consideration of the operation Pharmaceutical Companies. Nevertheless, the limitations do in no way act as a deterrent in drawing effective and meaningful inferences from the studyAnalysis of the data: for knowing Comparative Financial statement Analysis & Innovation in Private sector Pharmaceutical Companies in India the commonly used ratio: fixed Gross profit, Net profit, Return on capital employed, Return on Net worth and Earning per share, Current ratio, Debtors Velocity (Days), Creditors Velocity (Days), Debt equity ratio and Interest coverage ratio, Inventory turnover Ratio, Debtors Turnover Ratio and Total Assets Turnover Ratio Analysis and interpretation: Table-1 Profitability Ratios of Dr Reddy's Laboratories Ltd & Lupine Ltd. Gross profit Net profit ROC RON EPS Year Dr. RDL Lupin Ltd. Dr.RDL Lupin Ltd. Dr. RD Lupin Ltd. Dr. RD Lupin Ltd. Dr. RD Lupin Ltd. 2001 22. 16 9. 25 19 6. 65 31. 5 23. 02 29. 23 31. 13 45. 32 201. 66 2002 33. 1 12. 49 32. 39 7. 54 42. 06 16. 64 45. 71 22. 07 59. 56 17. 42 2003 30. 78 12. 2 28. 34 7. 3 26. 44 16. 05 24. 02 20. 3 50. 6 17. 44 2004 21. 55 19. 07 20. 4 12. 48 15. 61 27. 1 14. 7 36. 14 36. 37 23. 76 2005 7. 9 9. 77 9. 19 6. 96 2. 19 12. 75 2. 77 17. 79 7. 85 20. 09 2006 16. 27 16. 29 14. 12 11 9. 24 20. 86 8. 57 31. 93 26. 82 44. 61 2007 37. 06 16. 27 32. 39 10. 53 35. 94 19. 39 35. 47 27. 89 69. 45 36. 75 2008 21. 63 19. 27 18. 47 13. 53 12. 01 23. 85 10. 35 32. 02 27. 2 52. 31 2009 21. 77 18. 28 17. 8 14. 17 13. 55 22. 29 11. 14 30. 97 32. 25 48. 22 2010 28. 77 21. 56 23. 52 17. 7 17. 79 25. 6 15. 14 33. 23 48. 25 70. 7 Total 240. 99 154. 45 215. 62 107. 86 206. 33 207. 55 197. 1 283. 47 404. 09 532. 96 Average 24. 099 15. 445 21. 562 10. 786 20. 633 20. 755 19. 71 28. 347 40. 409 53. 296 Min 7. 9 9. 25 9. 19 6. 65 2. 19 12. 75 2. 77 17. 79 7. 85 17. 42 Max 37. 06 21. 56 32. 39 17. 7 42. 06 27. 1 45. 71 36. 14 69. 45 201. 66 Sources: Data has been taken from annual reports The gross profit ratio of Dr. RDL was 22 . 16 % in 2001 which went down in to 7. 9% in 2005 but it rose up to 28. 7% in last years of the study period. The ratio ranged between 7. 9% in 2005 to 37. 06% in 2007. The ratio showed highly fluctuated trend during the study period. The average gross profit ratio was 24. 09% indicated. The gross profit ratio of Lupin Ltd. showed highly fluctuated trend during the study period with an average of 15. 45%. The ratio was the highest in the year of 2010 and very lowest 2001. T-test T-Test: Calculated value of gross profit ratio is 2. 86 Tabulated value at 5% significant value=1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. The Net profit ratio of Dr.RDL was 19% in the year of 2001 and increased to 32. 39% in the year of 2002. The ratio went down to 28. 34% in year of 2003. The ratio was very low of 9. 19% during the year of 2005 and very highest during the year of 2002. The average ratio was 21. 56% with fluctuated trend. The Net profit r atio of Lupin Ltd. was 6. 65 % in 2001 which went down in to 6. 96% in 2005 but it rose up to 17. 7% in last years of the study period. The ratio ranged between 6. 65% in 2001 to 17. 7% in 2010. The ratio showed highly fluctuated trend during the study period. The average gross profit ratio was 10. 78% indicated. T-testCalculated value of net profit ratio is 4. 01 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. The return on capital employed ratio was 31. 5% in 2001 which went down to 9. 24 % in the year of 2006 and also went down to 13. 55% and 17. 79 during the years of 2009 and 2010 respectively. The ratio ranged between 2. 19% in year of 2005to 42. 06% in the year of 2002. The ratio showed down ward trend with an average of 20. 63%. The return on capital employed of Lupin Ltd was showing much fluctuated trend during the year study period.The average ratio was 20. 76 in the Lupin Ltd which sho wed fluctuated trend during the study period. The ratio was 23. 02% in year of 2001 and 20. 86% in year of 2006 and 25. 6% during the last year of study period. The ratio has gone down due to decreased in volume of sales. The sales have gone down since price rise took place in market. T-test Calculated value of return on capital employed ratio is 0. 028 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. The Return on net worth ratio of Dr. RDL was 29. 3% in 2001 which went down in to 8. 57% in 2006 but it rose up to 15. 14% in last years of the study period. The ratio ranged between 2. 77% in 2005 to 45. 71% in 2002. The ratio showed highly fluctuated trend during the study period. The average gross profit ratio was indicated19. 71%. The Return on net worth ratio of Lupin Ltd. showed highly fluctuated trend during the study period with an average of 28. 347%. The ratio ranged between 17. 79% in 2005 to 36. 14% in 2004. T-test Calculated value of Return on net worth ratio is 1. 84 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance cal ; t tab Hence hypothesis is rejected. Earnings per share of Dr. RDL were Rs. 45. 32 in the year of 2001 and Rs 59. 56 in the year of 59. 56. The EPS went down to 50. 6 in the year of 2003 and Rs 36. 37 in the year 2004 and Rs. 7. 85 in the year of 2005. The EPS rose to 69. 45 in the year 2007and again went down to 27. 62 in 2008. The EPS Rs. 48. 25 during the last year of study period. The average ESP was 40. 41 with downward trend during the study period. The EPS was 201. 66 in Lupin Ltd. and went down to 20. 09 in the year of 2005 and reached down to 70. 7 during the last year of study period.The EPS showed lower level of EPS due to less utilization of financial leverage. T-test Calculated value of Earnings per share is 0. 70 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of s ignificance t cal ; t tab Hence hypothesis is accepted. Table-2 Liquidity ratio of Dr. RDL and Lupin Ltd. Current ratio Debtors Velocity (Days) Creditors Velocity (Days) Year Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. 2001 1. 69 1. 82 48 47 76 27 2002 3. 09 1. 74 54 61 79 35 2003 4. 86 1. 58 60 62 82 36 2004 3. 73 1. 34 60 66 85 38 2005 2. 49 1. 1 60 56 90 34 2006 1. 5 1. 38 59 57 94 35 2007 2. 21 1. 68 66 63 105 38 2008 3. 05 1. 53 85 69 109 42 2009 3. 15 1. 24 79 77 110 45 2010 2. 44 1. 27 100 81 120 52 Total 28. 56 14. 68 671 639 950 382 Average 2. 856 1. 468 63 62 92 37 Min 1. 69 1. 1 48 47 76 27 Max 4. 86 1. 82 100 81 120 52 Sources: Data has been taken from annual reports In year 2001 Dr. RDL has 1. 69 as its current ratio and after that it continuously increased from 3. 09 to 4. 86 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negative changes but it moves from 2. 21 to 3. 05 in year 2007 and 2008 respectively.In the yea r 2009 and 2010 it shows again little fluctuated with an average of 2. 85. In year 2001 Lupin Ltd has 1. 82 as its current ratio and after that it continuously decreased from 1. 74 to 1. 58 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negative changes but it moves down from 1. 68 to 1. 53 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuated with an average of 1. 46. T-test Calculated value of current ratio is 4. 50 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance cal ; t tab Hence hypothesis is rejected. In year 2001 Dr. RDL has 48 days as its Debtors Velocity (Days) and after that it continuously increased from 54 (Days) to 60 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negative changes but it moves down from 66 days to 85 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctua tions with an average of 63 days. In year 2001 Lupin Ltd. has 47 days as its Debtors Velocity (Days) and after that it continuously increased from 61 (Days) to 62 in the year of 2002 and 2003 respectively.But in year 2004, 2005 & 2006 it also showed negative changes but it moves up from 63 days to 69 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 62 days. T-test Calculated value of Debtors Velocity (Days) is 0. 3 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. In year 2001 Dr. RDL 76 days as its Creditors Velocity (Days) and after that it continuously increased from 79 (Days) to 82 in the year of 2002 and 2003 respectively.But in year 2004, 2005 & 2006 it also showed negative changes but it moves down from 105 days to 109 days in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with a n average of 92 days. In year 2001 Lupin Ltd. 27 days as its Creditors Velocity (Days) and after that it continuously increased from 35 (Days) to 36 days in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed positives changes but it moves down from 38 days to 42 days in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 37 days.T-test Calculated value of Creditors Velocity (Days) is 10. 83 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Leverage Ratios of Dr. RDL & Lupin Ltd. Table-3 Leverage Ratios of Dr. RDL & Lupin Ltd. Debt equity ratio Interest coverage ratio Year Dr. RDL Lupin Ltd. Dr. RD Lupin Ltd. 2001 0. 56 1. 79 5. 05 2. 09 2002 0. 19 1. 88 34. 27 2. 55 2003 0. 01 1. 77 72. 27 2. 53 2004 0. 02 1. 24 72. 71 4. 89 2005 0. 08 0. 86 3. 82 4. 12 2006 0. 28 1. 18 10. 39 8. 6 2007 0. 19 1. 16 27. 29 8. 65 2008 0. 09 0. 83 40. 74 13. 99 2009 0. 11 0. 71 27. 62 2. 35 2010 0. 11 0. 47 68. 8 25. 97 Total 1. 64 11. 89 362. 96 85. 74 Average 0. 16 1. 19 36. 30 8. 57 Min 0. 01 0. 47 3. 82 2. 09 Max 0. 56 1. 88 72. 71 25. 97 Sources: Data has been taken from annual reports The Debt equity ratio of Dr. RDL was 0. 56 in 2001 which went down in to 0. 28 in 2006 but it went down to 0. 11 in last years of the study period. The ratio ranged between 0. 01 in 2003 to 0. 56 in 2001. The ratio showed highly fluctuated trend during the study period. The average Debt equity ratio was indicated 0. 16. In year 2001 Lupin Ltd. 1. 79 as its Debt equity ratio and after that it continuously decreased from 1. 8 to 1. 77 days in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed positives changes but it moves down from 1. 16 to 0. 83 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 1. 19 days. T-test Calc ulated value of Debt equity ratio is 6. 28 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Interest coverage ratio of Dr. RDL was 5. 05 in the year of 2001 and Rs 3. 82 in the year of 2006. The Interest coverage ratio went up to 72. 7 in the year of 2003 and 72. 71 in the year 2004 and 3. 82 in the year of 2005. The Interest coverage ratio rose to 27. 29 in the year 2007and again went up to 40. 74in 2008. The Interest coverage ratio was 68. 8 during the last year of study period. The average Interest coverage ratio was 36. 30 with upward trend during the study period. In year 2001 Lupin Ltd. 2. 09 as its Debt equity ratio and after that it continuously decreased from 2. 55 to 2. 53 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed negatives changes but it moves down from 8. 65 to 13. 99 in year 2007 and 2008 respectively.In the year 2009 and 2010 it shows aga in little fluctuations with an average of 8. 57. T-test Calculated value of Interest coverage ratio is 3. 13 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is rejected. Table-4 Turnover ratio of Dr. RDL and Lupin Ltd. Inventory Turnover Ratio Debtors Turnover Ratio Total Assets Turnover Ratio Year Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. Dr. RDL Lupin Ltd. 2001 8. 65 11. 3 4. 76 5. 39 1. 03 1. 6 2002 9. 01 6. 61 4. 29 3. 06 0. 99 1. 32 2003 7. 44 7. 02 3. 64 2. 75 0. 92 1. 29 2004 6. 99 6. 74 3. 97 3. 89 0. 88 1. 7 2005 5. 79 5. 23 3. 78 5. 37 0. 85 1. 31 2006 5. 64 5. 95 4. 21 5. 69 0. 82 1. 28 2007 8. 69 5. 7 4. 94 4. 9 0. 75 1. 14 2008 6. 11 5. 08 3. 53 4. 7 0. 65 1. 09 2009 6. 16 4. 39 3. 66 4. 39 0. 64 0. 99 2010 5. 57 5. 13 3. 66 4. 51 0. 59 0. 94 Total 70. 05 63. 15 40. 44 44. 65 8. 12 12. 23 Average 7. 005 6. 315 4. 044 4. 465 0. 812 1. 223 Min 5. 57 4. 39 3. 53 2. 75 0. 59 0. 94 Max 9. 01 11. 3 4. 94 5 . 69 1. 03 1. 6 Sources: Data has been taken from annual reports In year 2001 Dr. RDL 8. 65 as its Inventory Turnover Ratio and after that it continuously decreased from 9. 01 to 7. 44 in the year of 2002 and 2003 respectively.But in year 2004, 2005 & 2006 it also showed negatives changes but it moves down from 8. 69 to 6. 11 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 7. 01. In year 2001 Lupin Ltd. 11. 3 as its Inventory Turnover Ratio and after that it continuously increased from 6. 61 to 7. 02 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with ups and downs but it moves down from 5. 7 to 5. 08 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 6. 2. Calculated value of Inventory Turnover Ratio is 0. 72 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hypothesis is accepted. In year 2001 Dr. RDL. 4. 76 as its Debtors Turnover Ratio and after that it continuously decreased from 4. 29 to 3. 64 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 4. 94 to 3. 53 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 4. 04.In year 2001 Lupin Ltd. 5. 39 as its Debtors Turnover Ratio and after that it continuously decreased from 3. 06 to 2. 75 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 4. 9 to 4. 73 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 4. 47. Calculated value of Debtors Turnover Ratio is 1. 21 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hy pothesis is accepted. In year 2001 Dr. RDL. 1. 3 as its Total Assets Turnover Ratio and after that it continuously decreased from 0. 99 to 0. 92 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with downward movements but it moves down from 0. 75 to 0. 65 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 0. 81. In year 2001 Lupin Ltd. 1. 6 as its Total Assets Turnover Ratio and after that it continuously decreased from 1. 32 to 1. 29 in the year of 2002 and 2003 respectively. But in year 2004, 2005 & 2006 it also showed trend with upward movements but it moves down from 1. 4 to 1. 09 in year 2007 and 2008 respectively. In the year 2009 and 2010 it shows again little fluctuations with an average of 1. 22. Calculated value of Total Assets Turnover Ratio is 5. 34 Tabulated value at 5% significant value= 1. 73 d. e. f. = 18 at 5% of level of significance t cal ; t tab Hence hyp othesis is rejected. Summary findings and Conclusion The liquidity ratio of Lupin Ltd is highly threatening when compared with Dr. RDL. Thus Lupin Ltd has to control the current liabilities or to increase the current assets so that they can cover all the current liabilities and be in safer position.Thus slightly fluctuations in sales in that situation can not affect the paying capacity of the concern and thus maintain the credibility. The profitability ratio of Dr. RDL is better when it is compared with Lupin Ltd. It can be inferred from the result that Lupin Ltd can expand the business or can move further in newer directions as it is experiencing continuously growth in the profitability. Lupin Ltd has to give a fairer thought to reduce cost in providing services and increasing the turnover so that sustained growth in profitability can be seenReturn on Net Capital Employed is the best test of overall profitability and efficiency of the business firm. A company with high rate of retu rn on capital employed would be in a position to capitalize; e. g. it can take advantage of all favorable market opportunities. The study shows that returns on capital employed in selected units in India had marked a fluctuated trend. The average was 17. 79 and 25. 6 percent in units in India respectively. This ratio was satisfactory. On the whole Dr. DRL had the highest return net on capital employed of As compared to the Lupin ltd.In the light of the above discussion it is suggested that Lupin ltd should undertake cost control measure so that increase net profit before interest and taxes of the company might enhance the return on net capital employed. The solvency ratio also reveals the same track record of an upper hand over Lupin ltd. This position depicts the financial soundness or good financial health of the DR. RDL. In this sector Lupin ltd. has to work hard for providing the financial health in terms of capital also. The turnover ratio of Lupin Ltd. is showing better positi on when compared to DR. RDL. This fact proves that the market size in Lupin Ltd. s far more better than the DR. RDL which in turn is gearing its growth in all the stream. Thus DR. RDL has to work for increasing the market size and customer base so that it can achieve the trend of continuous growth. It can be inferred from the overall financial analysis that Lupin Ltd ltd. has to rethink and device the strategies so that it can lead towards positive way and become the major players. Innovation though financial statement analysis can be seen though mergers and acquisitions and launching of new products and schemes so that enterprise can be proud of being major market players and setter newer and newer goals in the future.Cost accounting and cost audit should be made mandatory for this units and cost sheet along with annual financing statement should be prepared. The policy of borrowed financing in selected Parma group of companies under study was not proper. So the companies should us e widely the borrowed funds and should try to reduce the fixed charges burden gradually by decreasing borrowed funds and by enhancing the owner’s fund. For this purpose companies should enlarge their equity share capital by issuing new equity shares. There has been too much of government interference in policy and day-to-day working and decisions.This leads to delays in decision-making. This should be abolished. There is no incentive to the employees to perform better. Also there is no accountability because no one is held responsible for a failure in achieving targets for this kind of problem responsibility centre should be created. Improper planning and delays in implementation of projects lead to rise in their cost. So properly planning should be made. To regularize and optimize the use of cash balance proper techniques may be adopted for planning and control of cash. 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Information about this Article Peer-review ratings (from 2 reviews, where a score of 100 represents the ‘average’ level): Originality = 175. 00, importance = 162. 50, overall quality = 16 2. 50 This Article was published on 14th March, 2012 at 18:41:24 and has been viewed 2635 times. This work is licensed under a Creative Commons Attribution 2. 5 License. The full citation for this Article is: Kakkad, R. (2012). Comparative Financial statement Analysis & Innovation in Private sector Pharmaceutical Companies in India-An empirical Analysis. PHILICA. COM Article number 318.