TANCET 2020 Solved Papers

Question Numbers: 1-10PART IDirections : This section comprises two passages. After each passage questions consisting of items relating to the preceding passage are given. Evaluate each item separately in terms of the respective passage and choose your answer as per the following guidelines:a. If the item is a MAJOR OBJECTIVE in making the decision; that is, the outcome or result sought by the decision maker.b. If the item is a MAJOR FACTOR in arriving at the decision; that is basic in determining the decision.c. If the item is a MINOR FACTOR in making the decision; a less important element bearing the decision.d. If the item is a MAJOR ASSUMPTION made deliberately; that is a supposition or projection made by the decision maker before considering the factors and alternatives.PASSAGE - IThe year of 2003, commenced with the swirled rumours that Mangalesh Kumar , who was then 60 , was to sell off Getwell Hospitals ,widely held homegrown drug maker he owned, to focus on Getwell Hospitals a budding chain of corporate Hospitals. Given the time and resources the latter would command, it was argued. Mangalesh Kumar narrow his bets. But the Group Chairman scotched all such rumours, Six years on, a crisis might force a rethink. In a double whammy, both the businesses are in need of substantial cash injections at a time when the market is in no mood to oblige. The INR.2,653 Crore, Getwell needs to raise nearly INR. 1,000 Crore (at todays rate of INR. 49.2 to the dollar) in the next few months to pay up debt owned to Foreign Currency Convertible Bond (FCCB) holders and banks, say analysts. This is a toll order; Getwell's market capitalisation on 13 February was INR. 1,048 Crore, down 71 percent from a year ago. At INR. 95 a share it now trading nowhere near the INR. 486 trigger for the conversion of debt into equity.Closely held INR. 360-crore Getwell Hospitals is struggling to find investors to bankroll its growth after a failed attempt at raising INR. 800 crore through an Initial Public Offering (IPO), withdrawn in February 2008. A Getwell spokesperson in Mumbai turned down BW'S request for an interview with Mangalesh Kumar.Clearly, Mangalesh Kumar is stretched. Last week, he admitted to having pledged 43 percent of his 73.6 percent stake in group flaghship Getwell with financial institutions to raise little over INR. 300 Crore for Get well Hospitals.Getwell Towers, its swank corporate headquarters in Mumbai, has been pawned. The search for suitors for Getwell's two European drug Companies - in a desperate bid to raise funds- has met with little luck. "While the issue is primarily financial restructuring, it does raise strategic questions for the promoter as well". says Manish Kaul, Managing director of private equity firm Chrys Capital in New Delhi, and an old pharma industry hand. One news report last week suggested that Mangalesh Kumar was looking for a "strategic sale" of Getwell. This could not be independently confirmed. In January, Getwell took shareholders' approval to raise INR. 500 crore through a preference share issue to pay back FCCB holders.COSTLY HUBRIS ?Getwell's current problems have their origin in rapid expansion on borrowed funds in the days of easy mondey. Getwell spend roughly INR. 1700 Crore on buying the two European companies , now said to be on sale- France's Negma Lerads, and Ireland's Pinewood Labs - in 2006-2007 at high valuations. Historically. Getwell's generics exports have lagged behind rivals such as Ranbaxy and Dr.Reddy's in performance and profile. These acquisitions were Mangalesh Kumar's moves to catch up. But the expansion has indebted the company to the tune of INR. 3,900 crore.Getwell in now the largest Indian Generic pharmaceutical Company in Europe as a result of those acquisitions. "But his obsession with the market share has compromised its risk profile, "says on deal maker on condition of anonymity. Getwell's debt-to-equity ratio stands at roughly 2:2:1. Ballooning interest payments on foreign debt have impacted the bottom line. In the quarter ended September 2008,EBITDA rose 17 percent, yet net profile fell by 43 percent.Yet, when the market turned, Mangalesh Kumar's actions did not keep pace, feel some industry watchers. A source says late last year Mangalesh Kumar expected to recover most of what he paid for Negma and Pinewood, but buyers would not bite. "Those assets were acquired at peak value", says Mallika Baheti, pharma analyst at brokerage ShareKhan. "In today's scenario, these investments are unlikely to fetch the same valuations."In a similar vein, even after Getwell Hospitals' failed IPO, Mangalesh Kumar did not climb down in his pricing negotiations with private equity (PE) players such as General Atlantic Partners. This is one reason why no deal has been struck, some say. Even now, Mangalesh Kumar-who is still talking to PE out fits-appears keen on extracting "the last pound of flesh." says one investment banker familiar with the negotiations, on condition of anonymity.WHAT NEXT ?Some industry watchers say that the groups immediate problems can be overcome if Mangalesh Kumar plays down his demands. Getwell Hospitals , says Kaul, "a robust and sustainable "business model, and getting in financial investors is "a question of valuation". Mangalesh Kumar , could still be in control, he says. As for Getwell, even if it were able to raise cash by selling off the two European companies, and a few other smaller assets such as its veterinary business, it will continue to make great demands on Mangalesh Kumar. For one, the company will be strategically weaker. Europe is Getwell's largest market, at 54 percent of 2007 sales. They will have to rework all their projections". Says Baheti.In parallel, sales from the US. world's largest pharma market, will need a continuous investment in off-patient products to keep growing. Getwell's Biotech business - once touted as the future growth engine- has underperformed, some say, because, the firm has focused on the global generics market. "They were early entrants in biotech and fairly active," says a manager in Getwell rival in Hyderabad with biotech interests" ,but the business seems to be suffering from a lack of attention rather than capability. "Getwell was the first Indian firm to launch home-grown genetically engineered human insulin in the country in 2003. But even now, biotech is barely 3 percent of total revenues.One more concern is what the current crisis could do to the employee morale. At the best of the times. Mangalesh Kumar , seen to have an autocratic management style, has had a problem retaining professionals. Getwell does not have a clear succession plan either. Given these facts, should Mangalesh Kumar pick his bets and exit his pharma business like the promoters of Gurgaon's Ranbaxy Labs. Last year the Singh family of New Delhi sold their stake to Japan's Daiichi Sankyo for INR. 10,000 crore to focus on hospitals and financial services.With their blockbusters facing patent expiry, multinational pharmaceutical companies are keen on buying out generics firms. "While there is cause to sell the business, it is foolish to attempt that in such a market," says the banker. "From a timing perspective he should first extract himself from the current hole". Others believe that Mangalesh Kumar can stay in pharma business only by sharpening focus. Kaul, for instance, suggests a separation of the domestic formulations business and merging it into another strong player in the Indian market. In exchange, Mangalesh Kumar could hold stake in this combined entity, he says. That will allow him to focus Getwell's resources on the exports story, he feels."He has to make choices, says " Mumbai-based consultant who has worked closely with the firm. "The group is in too many diverse areas, with too little capital and too much leverage". For 40 years, Mangalesh Kumar - who eschewed his family's bakery and retail businesses to strike out in health care has run his companies on his own terms. Will he now be forced to sell on someone else's?