The present invention is directed to a medicinal composition for treating skin inflammations, fungalftacterial skin infections and related wounds, and also other skin wounds including those caused by burns. The cream also causes skin rejuvenation through an epithelisatiofl process. The cream comprises Chitosan. Clobetasol Propionate, Miconazole Nitrate and Fusidic acid. The invention also discloses a process to make the medicinal cream containing Fusidic Acid which is formed in situ from Sodium Fusidate as the starting raw material, wherein Sodium Fusidate is converted into Fusidic Acid under oxygen-free environment created using inert gas, preferably nitrogen, and Chitosan. The cream produced by the process of the present invention has greater shelf-life stability and the finer particle size of the API than the conventional creams containing Fusidic Acid. The cream produced by the process of the present invention contains Fusidic Acid as the API that has been formed in situ from Sodium Fusidate, Clobetasol Propionate and Miconazole Nitrate in a cream base comprising a preservative, an acid, a co-solvent, an emulsifier and a waxy material along with water, preferably purified water.
