The Indian Pharmaceutical Industry is creating substantial assets for its shareholders. This was the inference of the study conducted by research student, Kalpana Bhanawat, who did her research on the subject “Asset Valuation of Shareholders in the Pharmaceutical Industry.”

Kalpana Bhanawat completed her PhD under the guidance of Dr. Dariyav Singh Chundawat on the culmination of which, she received her Doctorate Degree from the Department of Business Management, College of Commerce and Management Studies, Mohan Lal Sukhadia University.

In the research, Kalpana revealed that where Sun Pharmaceuticals Ltd. has created maximum assets for its shareholders, the Pfizer Group has barely provided minimum asset creation for its shareholders; in fact, over the last few years, the asset valuation has depleted.

The valuation of assets was done according to the Concept of Economic Value Added. On an average, the investor has got an economic value addition to the extent of Rs. 11.091 on each Rupee invested. During the period of the research, the investor in the Pharma Industry has got a return of 27.42 percent, as compared to an average 9% return provided by banks.

Kalpana, as a part of her research, has also developed a model wherein the value of shares can be estimated on the basis of just two parameters, Cost of Borrowing and Market Valuation. This model is said to facilitate a potential investor’s assumption on the future possible valuation of a share on the current cost of investment.

This model has passed all statistical tests and has provided credible results as well.

It is to be noted that a majority of organizations do not disclose Shareholders Asset Valuation in their Annual Reports. Accordingly, this suggestion has been made that the process of Economic Value Addition be incorporated in the Annual Reports as well.

Further, it was suggested that the cost to company borne towards key management personnel be also included while calculating the E.V.A, so that their roles in creating and enhancing share valuation can be emphasized.