AsianPaints Report

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Report on Analysis of Financial statements of

Asian Paints
Working Paper April 2016
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A Report on
Study and Analysis of the Financial statements of
Asian Paints
Submitted by:
Deepesh Sharma 15DM051
Dhyanendra Mohan 15DM052
Harshad Mahajan 15DM060
Himanshu Singh 15DM065
Manish Kumar 15DM081
G. N. HariKrishnaPrudhvi 15DM088
Submitted in the partial fulfilment of the requirement for the award of PGDM (2015-17)
To,
Prof. Ashok KR Malhotra
2015
ACKNOWLEDGEMENT
It is not possible to prepare a project report without the assistance & encouragement of
other people. This one is certainly no exception.
On the very outset of this report, we would like to extend my sincere & heartfelt obligation
towards all the personages who have helped us in this endeavour. Without their active
guidance, help, cooperation & encouragement, we would not have made headway in the
project.
We are extremely thankful and pay our gratitude to our faculty Prof. Ashok KR Malhotra,
for his outstanding teaching, his valuable guidance and his support in completing this
project.
We extend our gratitude to Birla Institute of Management Technology for giving us this
wonderful opportunity to learn about the need for Financial Analysis & complexities in an
investment decision making.
Any omission in this brief acknowledgement does not mean lack of gratitude.
Thank You
INTRODUCTION
Asian Paints Limited is a leading Indian chemicals company headquartered in Mumbai,

India. With a turnover of Rs 140 billion, it is India's largest and Asia's third largest paint
company.
Forbes Global magazine USA ranked Asian Paints among the 200 Best Small Companies in
the World for 2002 and 2003 and presented the 'Best under a Billion' award, to the
company making it the only paint company in the world to receive this recognition. Asian
Paints manufactures and markets industrial and decorative coatings. Along with that the
company also provides home painting services and solutions.
Objectives Achieved
Through this financial accounting project we:
Had a first hand experience of analyzing financial statements.

Critically examined the performance of Asian Paints vis--vis its closest competitor
i.e. Berger Paints.
Observed the level of consistency in the financial performance of Asian Paints.
Understood the roles of the various heads of the accounts which are part of financial
statements of the company.
Analysis methodology
We did Trend analysis, Vertical analysis, and Ratio analysis of both Asian Paints and Berger
Paints and compared each other. We also did the forecasting for Sales and Net Profit of
Asian Paints for the next financial year.
Asian Paints Ltd
Balance Sheet as at 31st March, 2015 & Vertical Analysis

Rupees in Crores
as at as at as at as at as at
Particulars 2011.00 2012 2013 2014
31/03/2011 31/03/2012 31/03/2013 31/03/2014 31/03/2015 2015
I. EQUITY AND LIABILITIES
(1) Shareholders' Funds

(a) Share Capital 95.92 2.49 95.92 1.93 95.92 1.70 95.92 1.43 95.92 1.32
(b) Reserves and Surplus 1879.4 48.75 2391.86 48.03 2926.34 51.81 3505.01 52.16 4,134.34 56.84
Total Shareholders' Fund 1,975.32 51.24 2,487.78 49.96 3,022.26 53.51 3,600.93 53.59 4,230.26 58.16
(3) Non Current Liabilities

(a) Long-term Borrowings 57.71 1.50 52.64 1.06 46.76 0.83 39.51 0.59 32.09 0.44
(b) Deferred Tax Liabilities (Net) 75.5 1.96 80.75 1.62 143.33 2.54 177.07 2.64 167.78 2.31
(d) Other Long Term Liabilities 4.96 0.13 3.62 0.07 0.5 0.01 0.12 0.00
(e) Long-term Provisions 66.43 1.72 65.16 1.31 76.77 1.36 67.12 1.00 85.25 1.17
Total Non Current Liabilities 204.60 5.31 202.17 4.06 267.36 4.73 283.82 4.22 285.12 3.92
(4) Current Liabilities

Short term Borrowings 3.98 0.10 110.51 2.22 0.00 0.00 -
(b) Trade Payables 931.89 24.17 1069.06 21.47 1214.12 21.50 1498.84 22.30 1,313.08 18.05
(c) Other Current Liabilities 464.5 12.05 755.44 15.17 720.99 12.76 785.68 11.69 832.71 11.45
(d) Short-term Provisions 274.75 7.13 355.07 7.13 423.55 7.50 550.6 8.19 612.03 8.41
Total Current Liabilities 1,671.14 43.35 2,179.57 43.77 2,358.66 41.76 2,835.12 42.19 2,757.82 37.92
3855.04 100.00 4980.03 100.00 5648.28 100.00 6719.87 100.00 7273.2 100.00
II. ASSETS
(1) Non Current Assets

(a) Fixed Assets
Tangible Assets 1038.65 26.94 987.79 19.84 2074.91 36.74 1973.21 29.36 1,886.42 25.94
Intangible Assets 18.54 0.48 21.25 0.43 26.98 0.48 38.99 0.58 79.07 1.09
Capital work-in-progress 39.67 1.03 602.84 12.11 52.55 0.93 37.95 0.56 139.54 1.92
Total Net Block 1,096.86 28.45 1,611.88 32.37 2,154.44 38.14 2,050.15 30.51 2,105.03 28.94
(b) Non Current Investments 206.83 5.37 279.22 5.61 359.7 6.37 727.19 10.82 775.72 10.67
(d) Long-term Loan and Advances 97.78 2.54 311.34 6.25 92.88 1.64 94.64 1.41 209.54 2.88
(e) Other Non Current Assets 6.6 0.10 13.64 0.19
Total Non Current Assets 1,401.47 36.35 2,202.44 44.23 2,607.02 46.16 2,878.58 42.84 3,103.93 42.68
(2) Current Assets

(a) Current Investment 341 8.85 263 5.28 90 1.59 943.96 14.05 1,118.06 15.37
(b) Inventories 1071.76 27.80 1264.42 25.39 1480.79 26.22 1665.05 24.78 1,802.18 24.78
(c) Trade Receivables 355.56 9.22 500.24 10.04 633.88 11.22 712.36 10.60 728.87 10.02
(d) Cash and Cash Equivalent 509.01 13.20 500.97 10.06 566.86 10.04 104.12 1.55 61.81 0.85
(e) Short-term Loan and Advances 84.79 2.20 153.69 3.09 164.08 2.90 239.7 3.57 205.43 2.82
(f) Other Current Assets 91.45 2.37 95.27 1.91 105.65 1.87 176.1 2.62 252.92 3.48
Total Current Assets 2,453.57 63.65 2,777.59 55.77 3,041.26 53.84 3,841.29 57.16 4,169.27 57.32
3,855.04 100.00 4,980.03 100.00 5,648.28 100.00 6,719.87 100.00 7,273.20 100.00
Asian Paints
Trend Analysis of BALANCE SHEETS
2011 2012 2013 2014 2015
ASSETS
Cash -1.580 11.365 -79.545 -87.857
Inventories 17.976 38.164 55.357 68.151
Trade Receivables 40.691 78.277 100.349 104.992
Total Current Assets 13.206 23.952 56.559 69.927
Tangible Assets -4.897 99.770 89.978 81.622

Capital Work-in-Progress 1,419.637 32.468 -4.336 251.752
Long term Loans & Advances 218.409 -5.011 -3.211 114.297
Total Non Current Assets 57.152 86.020 105.397 121.477
EQUITIES & LIABILITIES

Share capital
Reserves & Surplus 27.267 55.706 86.496 119.982
Current Liabilities 30.424142 41.14078 69.65185 65.02627

Trade Payables 14.719548 30.28576 60.83873 40.90504
Short Term Borrowings 2676.6332 -100 -100 -100
Total Current Liabilities 29.182317 46.51677 74.31389 88.6673
Asian Paints Ltd
Income Sheet for the year ended 31st March, 2015 & Vertical Analysis Amount in Crores
Particulars 2010-11 2011 2011-12 2012 2012-13 2013

INCOME
Revenue from Sales (Net) 6957.72 100.00 8708.3 100 9990.04 100
Less: Excise Duty 621.64 8.93 783.6 9.00 1068.91 10.70
Revenue from Sales (Net and Excise Duty) 6,336.08 91.07 7,924.70 91.00 8,921.13 89.30
Other Operating Revenue 0 0.00 39.46 0.45 50.57 0.51
Other Income 74.9 1.08 141.49 1.62 126.15 1.26
Total Revenue (I) 6,410.98 92.14 8,105.65 93.08 9,097.85 91.07
EXPENSES
Cost of Material Consumed : 3681.92 52.92 4722.74 54.23 5125.48 51.31
Purchases of Stock-in-trade 105.56 1.52 138.67 1.59 199.56 2.00
Changes in Inventories of Finished Goods, work-in-progress and stock-in-trade -140.61 -2.02 -115.07 -1.32 -136.17 -1.36
Employee benefit Expense 300.45 4.32 341.63 3.92 404.59 4.05
Other Expenses 1231.5 17.70 1524.44 17.51 1830.97 18.33
Total (II) 5178.82 74.43 6612.41 75.93 7424.43 74.32
EBITDA (I) - (II) 1232.16 17.71 1493.24 17.15 1673.42 16.75

Depreciation & Amortisation Expense 94.48 1.36 99.49 1.14 126.98 1.27
Finance Costs 15.35 0.22 30.82 0.35 30.56 0.31
PROFIT BEFORE EXCEPTIONAL ITEMS, & TAXES 1122.33 16.13 1362.93 15.65 1515.88 15.17
Exceptional Items
PROFIT BEFORE TAX 1122.33 16.13 1362.93 15.65 1515.88 15.17
Tax expense
(1) Current tax 324.99 4.67 402.76 4.63 406.03 4.06
(2) Excess/Short tax provision for earlier years -4.22 -0.06 -2.38 -0.03 -2.74 -0.03
(3) Deferred tax 26.41 0.38 4.16 0.05 62.59 0.63
Total Tax Expense 347.18 4.99 404.54 4.65 465.88 4.66
PROFIT AFTER TAX 775.15 11.14 958.39 11.01 1050 10.51
Earning per equity share in Rs. Basic & Diluted 80.81 1.16 99.92 1.15 109.47 1.10
(Face Value of 1 Rs. Each)
2013-14 2014 2014-15 2015
11,542.02 100.00 12,878.80 100.00

1,241.80 10.76 1,393.13 10.82
10,300.22 89.24 11,485.67 89.18
118.56 1.03 163.16 1.27
173.66 1.50 186.82 1.45
10,592.44 91.77 11,835.65 91.90
5,758.71 49.89 6,191.72 48.08

256.58 2.22 380.56 2.95
-75.34 -0.65 -132.43 -1.03
482.43 4.18 606.94 4.71
2219.13 19.23 2,591.52 20.12
8641.51 74.87 9638.31 74.84
1950.93 16.90 2197.34 17.06

212.32 1.84 223.11 1.73
26.08 0.23 27.13 0.21
1712.53 14.84 1947.1 15.12
9.96 0.09 13.53 0.11

1702.57 14.75 1933.57 15.01
498.63 4.32 616.42 4.79

1.14 0.01 -0.96 -0.01
33.74 0.29 -9.29 -0.07
533.51 4.62 606.17 4.71
1169.06 10.13 1327.4 10.31
12.19 0.11 13.84 0.11

Asian Paints Ltd
Trend Analysis INCOME STATEMENT
2011 2012 2013 2014 2015
REVENUES
Revenue from sales 25.160 43.582 65.888 85.101
EXPENSES
Cost of Materials Consumed 28.268 39.207 56.405 68.166
Inventory changes -18.164 -3.158 -46.419 -5.818
Employee benefit expense 13.706 34.661 60.569 102.010
Total OPEX 27.682 43.361 66.863 86.110
EBITDA 21.189 35.812 58.334 78.332

Depriciation & Amortization 5.303 34.399 124.725 136.145
Finance Costs 100.782 99.088 69.902 76.743
PBT 21.43755 35.06544 51.69959 72.28177

Taxes 16.52169 34.18976 53.66957 74.59819
Net Income 23.6393 35.45765 50.81726 71.24428

Analysis of Asian Paints: Trend
For the period 2010-15
Inventories, Trade Receivables, Cost of Materials Consumed, Net Sales and Operating
Expenses show a continuous increase over the 5 year period, showing that the companys
strategy is to increase its market share by increasing the scale of its operations. So far the
strategy is working well as there is a continuous rise in the Profit After Tax (PAT) and
Reserves and Surplus as well, showing that the profitability of the business has increased.
Finance Costs have decreased over the 5 year period, along with Short Term Borrowings
which have been paid off entirely during the financial year 2012-13. This signifies a decrease
in the amount of interest payments the company has to make for its borrowings.
Non-Current Investments have risen continuously over the period, while Current
Investments show a decreasing trend in the first 3 years and then a sharp rise during the last
2 years. Cash and Cash Equivalent also show a small decrease during the 2nd year, and
increase in the 3rd year and a sharp fall during the final 2 years. This tells us that while some
of the companys Long Term Investments may have appreciated in value over the years, the
company has also liquidated a few of its Short Term Investments during the initial years and
consolidated them in Long Term Investments. Also a sharp fall in Cash and Cash Equivalent
and a sharp increase in Current Investments during the final 2 years show that the company
has invested in lot during the financial years 2013-14 and 2014-15.
The Loans and Advances of the company, both Long and Short Term have shown an irregular
trend over the period. Short Term Loans and Advances increase continuously during the first
4 years and fall during the final year, while Long Term Loans and Advances increase sharply
during the 2nd year, fall sharply during the 3rd year, show a marginal increase during the 4th
year and increase sharply during 5th year. It implies that the company has a significant
amount of money floating in the market and the company can raise almost Rs, 200 crores of
cash from the market at any point of time. Some of the amounts redeemed from the Short
Term Loans and Advances may also have been consolidated into Investments.
Employee Benefit Expenses have increased continuously over the period, showing that the
company is willing to share the benefits of increased revenues with its employees. This also
sheds light on the HR practices of the company, telling us that the company believes in the
philosophy: Happy employees are productive employees.
Companys Tangible Fixed Assets show an irregular growth during the period and the
Intangible Fixed Assets show a high growth during period. It signifies that the company has
acquired a lot of Patents and Exclusive Rights during the period. It may also signify a sharp
increase in the companys Goodwill, though a Goodwill revaluation looks unlikely. This
increase in assets over the period explains the continuous increase in the Depreciation and
Amortization Expenditure over the 5 year period.
Capital Work-in-Progress show an irregular growth trend, with a very high growth in 2011-
12, a very sharp fall in 2012-13 showing that the company had some assets under
construction during 2011-12, most of which were completed in the year 2012-13. This also
explains the fall in Tangible Fixed Assets in 2011-12 and their sharp rise in the year 2012-13.
Analysis of Asian Paints: Vertical
The Net Revenue from Sales has shown a steady decline when expressed as a percentage of
Sales Revenue, even though the Revenue in absolute terms has increased. This declining
percentage can be directly attributed to an increase in the excise duty over the years. This
implies that the company has increased its scale of operations.
Other Incomes of the company have also increased over the years, albeit irregularly. Much
of this income can be attributed to Interest Income Received from Investments as the
Investments of the company show a similar trend.
The Cost of Materials Consumed, though increased in 2011-12, declined continuously after
that during the period. This implies the company has increased its cost efficiency. It can also
be implied that the inputs cost have decreased.
The companys Purchases of Stock-in-Trade has risen continuously over the years, solidifying
the ground for our assumption that the scale of operations has increased.
The EBITDA, Profit Before Exceptional Items and Taxes, Profit Before Tax and Profit After Tax
as a percentage of sales have continuously decreased over the first 4 years, then increased
in the 5th year. This implies that the input costs have been reduced during the year 2014-15.
The Finance Costs of the company increased during the year 2011-12. This can be directly
attributed to Interest on Short Term Borrowings, which increased almost 35 times during
one year. After that the Finance Costs have declined continuously as a result of continuous
decline in the Long Term Borrowings and Redemption of the Short Term Borrowings.
The companys Earning Per Share (EPS) show growth at a diminishing rate during the first 3
years, then a sharp fall during the 4th year and a marginal increase during the 5th year. This is
due to a change in company policy on August 1, 2013. The face value of the Parent
Companys share has been subdivided from 10 each to 10 (ten) Equity Shares of 1 eachfully
paid-up. In compliance with Accounting Standard 20 Earnings Per Share (EPS), the Parent
Company has given effect to the said sub-division ofshares in computing the earnings per
share for all comparative periods. Thus, if the policy had not been changed and had the
trend continued, the EPS of the company would have continued to increase at a diminishing
rate.
Berger Paints Ltd
Balance Sheet as at 31st March, 2015 & Vertical Analysis

Rupees in Crores
as at
as at as at as at as at
Particulars 2011 31/03/201 2012 2013 2014 2015
31/03/2011 31/03/2013 31/03/2014 31/03/2015
2

(a) Share Capital 69.20 5.68 69.23 4.58 69.26 3.77 69.30 3.21 69.33 3.00
(b) Reserves and Surplus 653.80 53.64 776.37 51.41 915.17 49.77 1062.59 49.17 1223.47 52.96
Total Shareholders' Fund 723.00 59.32 845.60 55.99 984.43 53.54 1131.89 52.38 1292.80 55.96

(a) Long-term Borrowings
(d) Other Long Term Liabilities 7.10 0.58 9.40 0.62 12.47 0.68 15.80 0.73 14.38 0.62
(e) Long-term Provisions

Short term Borrowings 107.00 8.78 169.85 11.25 303.02 16.48 302.80 14.01 288.49 12.49
(b) Trade Payables 252.00 20.68 328.17 21.73 351.65 19.12 488.47 22.60 509.12 22.04
Total Current Liabilities 479.70 39.36 642.78 42.56 825.29 44.88 987.22 45.69 969.50 41.97
Total 1218.80 100.00 1510.25 100.00 1838.83 100.00 2160.92 100.00 2310.25 100.00
II. ASSETS

(a) Fixed Assets
Tangible Assets 199.50 16.37 268.30 17.77 314.43 17.10 534.80 24.75 635.07 27.49
Total Net Block 281.00 23.06 337.83 22.37 492.91 26.81 680.64 31.50 735.15 31.82
(e) Other Non Current Assets 0.10 0.01 0.11 0.01 0.08 0.00 0.14 0.01
Total Non Current Assets 362.10 29.71 460.10 30.47 635.25 34.55 818.36 37.87 877.22 37.97
(2) Current Assets

(a) Current Investment 52.10 4.27 2.96 0.20 9.82 0.53 90.17 4.17 134.49 5.82
(b) Inventories 403.90 33.14 513.96 34.03 576.91 31.37 618.70 28.63 646.50 27.98
Total Current Assets 856.70 70.29 1050.15 69.53 1203.55 65.45 1342.56 62.13 1433.03 62.03
Total 1,218.80 100.00 1,510.25 100.00 1,838.80 100.00 2,160.92 100.00 2,310.25 100.00
Berger Paints
Trend Analysis of BALANCE SHEETS
2011 2012 2013 2014 2015
ASSETS
Cash 43.559 81.221 32.793 14.943
Inventories 27.249 42.835 53.181 60.064
Trade Receivables 28.057 36.194 60.810 82.295
Total Current Assets 22.581 40.487 56.713 67.273
Fixed Assets
Capital Work-in-Progress -14.232 122.956 72.161 13.945
Long term Loans & Advances
193.871 296.968 161.935 110.774
Total Non Current Assets 27.064 75.435 126.004 142.259
EQUITIES & LIABILITIES

Share capital 0.043 0.087 0.145 0.188
Reserves & Surplus 18.747 39.977 62.525 87.132
Current Liabilities
Trade Payables 30.22619 39.54365 93.8373 102.0317
Short Term Borrowings 58.73832 183.1963 182.9907 169.6168
Total Current Liabilities 33.99625 72.04294 105.7995 102.1055
Berger Paints Ltd
Income Sheet for the year ended 31st March, 2015 & Vertical Analysis RUpees in Crores
Particulars 2010-2011 2011 2011-2012 2012 2012-13 2013 2013-14 2014 2014-15 2015
INCOME:
Revenue from Sales 2299.1 100.00 2901.22 100.00 3330.61 100.00 3,735.35 100.00 4212.94 100.00
Less: Excise Duty -192 -8.35 -239.13 -8.24 -306.4 -9.20 -350.53 -9.38 -406.43 -9.65
Revenue from Sales (Net Sales & Excise Duty) 2107.1 91.65 2662.09 91.76 3024.21 90.80 3384.82 90.62 3806.51 90.35
Other Operating Income - - - - -
Other Income 29.6 1.29 30.62 1.06 30.76 0.92 30.59 0.82 34.19 0.81
Total Revenue 2136.7 92.94 2692.71 92.81 3054.97 91.72 3415.41 91.43 3840.7 91.16
EXPENSES:
Cost of Material Consumed 1276.9 55.54 1614.37 55.64 1677.46 50.36 1772.94 47.46 1,923.23 45.65
Purchases of Stock-in-trade 120.5 5.24 167.04 5.76 235.78 7.08 306.19 8.20 327.64 7.78
Changes in Inventories of Finished Goods, work-in-
progress and stock-in-trade -58.5 -2.54 -73.18 -2.52 -41.49 -1.25 -27.19 -0.73 -24.73 -0.59
Employee benefit Expense 106.7 4.64 122.32 4.22 139.96 4.20 158.74 4.25 178.21 4.23
Other Expense 437.8 19.04 554.06 19.10 676.18 20.30 784.5 21.00 926.76 22.00
Total (II) 1883.4 81.92 2384.61 82.19 2687.89 80.70 2995.18 80.18 3331.11 79.07
EBITDA(I) - (II) 253.3 11.02 308.1 10.62 367.08 11.02 420.23 11.25 509.59 12.10
Depreciation and ammortization expense 30 1.30 37.56 1.29 46.28 1.39 58.27 1.56 78.62 1.87
Finance Cost 12.2 0.53 22.37 0.77 27.67 0.83 34.26 0.92 34.72 0.82
Profit before exceptional and extraordinery items and
tax 211.1 9.18 248.17 8.55 293.13 8.80 327.7 8.77 396.25 9.41
Exceptional Items - - - - -
Profit before Tax 211.1 9.18 248.17 8.55 293.13 8.80 327.7 8.77 396.25 9.41
Tax expense
(1) Current tax 62.8 2.73 67.3 2.32 79.16 2.38 84.08 2.25 121.62 2.89
(2) Excess/short tax proviosion for Earlier Years - - - - -
(3) Deferred tax 0 0.00 3.48 0.12 4.17 0.13 9.37 0.25 8.6 0.20
Total Tax Expense 62.8 2.73 70.78 2.44 83.33 2.50 93.45 2.50 130.22 3.09
Profit After Tax 148.3 6.45 177.39 6.11 209.8 6.30 234.25 6.27 266.03 6.31
Earning per equity share:

(1) Basic 4.29 5.13 6.06 3.38 3.84
(2) Diluted 4.28 5.12 6.05 3.38 3.84
Berger Paints
Trend Analysis INCOME STATEMENT
2011 2012 2013 2014 2015
REVENUES
Revenue from sales 26.189 44.866 62.470 83.243
EXPENSES
Cost of Material Consumed 26.429 31.370 38.847 50.617
Inventory changes 25.094 -29.077 -53.521 -57.726
Employee benefit expense 14.639 27.191 37.182 45.049
Total OPEX 26.612 42.715 59.030 76.867
21.634 36.930 45.475 60.988

EBITDA
Depriciation & Amortization 25.200 43.344 61.085 83.439
Finance Costs 83.361 126.803 180.820 184.590
EBT 17.5604 38.85836 55.23449 87.70725

Taxes 12.70701 32.69108 48.80573 107.3567
Net Income 19.61564 41.46999 57.95684 79.38638

Interpretation of Trend Analysis Berger Paints
1) The company is focusing on expansion of business by increasing its market share. This can be
seen by continuous increase in Operating Expenses, Cost of goods consumed, net sales,
Inventories, Trade receivables over the period of 5 years. They are successful in doing so as
their Profit After Tax(PAT) and Reserves & Surplus has continuously risen.
2) Finance Costs is showing irregular pattern over the 5 year period, along with Short Term
Borrowings. This signifies that the company is payingalmost the same amount of interest
every year for its borrowings
3) Non-Current Investments have risen continuously over the period, while Current
Investments show a sharp decrease in the first 3 years and then a sharp rise during the last 2
years. Cash and Cash Equivalent also show increase for 3 years and then decrease for 2
years. This tells us that while some of the companys Long Term Investments may have
appreciated in value over the years, the company has also liquidated a few of its Short Term
Investments during the initial years and consolidated them in Long Term Investments. Also
cash and cash equivalent increased for first 3 years, this means they liquidated the short
term investments and then there was decrease in Cash & Cash equivalent for next 2 years
which means they put that cash in short term investment .
4) The Short term loans and advances show a continuous rise during the 5 years. The Long term
loans increased till 2013 and then decreased for nest 2 years. That means they have received
cash from long term loans and advances in the last 2 years and they put into short term
loans or investment.
5) Employee Benefit Expenses have increased continuously over the period, showing that the
company is willing to share the benefits of increased revenues with its employees. This also
sheds light on the HR practices of the company, telling us that the company believes in the
philosophy: Happy employees are productive employees.
6) Companys Tangible Fixed Assets show regular growth during the period and the Intangible
Fixed Assets show a dip in 2nd year and then a high growth during the rest of the period. It
signifies that the company has acquired a lot of Patents and Exclusive Rights during the
period. It may also signify a sharp increase in the companys Goodwill, though a Goodwill
revaluation looks unlikely. This increase in assets over the period explains the continuous
increase in the Depreciation and Amortization Expenditure over the 5 year period.
7) Capital Work-in-Progress show an irregular growth trend, with decrease in 2011-12, a very
sharp rise in 2012-13 showing that the company had some assets under construction during
2010-11,part of which were completed in the year 2011-12. This also explains the rise in
Tangible Fixed Assets in 2011-12 and their sharp rise in the year 2012-13.
Analysis of Berger Paints: Vertical
1. The Net Revenue from Sales has shown a steady decline when expressed as a percentage of
Sales Revenue, even though the Revenue in absolute terms has increased. This declining
percentage can be directly attributed to an increase in the excise duty over the years. This
implies that the company has increased its scale of operations.
2. Other Incomes of the company as a percentage have decreased over the years but their
absolute value have shown gradual increase over the years. Much of this income can be
attributed to Interest Income Received from Investments as the Investments of the company
show a pretty much similar trend.
3. The Cost of Materials Consumed, though increased in 2011-12, declined continuously after
that during the period. This implies the company has increased its cost efficiency. It can also
be implied that the inputs cost have decreased.
4. The companys Purchases of Stock-in-Trade has risen continuously over the years till 2014,
solidifying the ground for our assumption that the scale of operations has increased but
there is a sudden fall in 2015 indicating that company have produced less and have
consumed more of the previous finished stock.
5. The EBITDA, Profit Before Exceptional Items and Taxes, Profit Before Tax and Profit After Tax
as a percentage of sales have decreased from 2011 in 2012, then increased in 2013, then
decreased in 2014 and finally increased in 2015 which indicates that the input costs have
been reduced in the years 2013 and 2015.
6. The Finance Costs of the company increased during the year 2011-14. This can be directly
attributed to Interest on Short Term Borrowings. After that the Finance Cost has declined in
the year 2015 as a result of Redemption of the Short Term Borrowings.
7. The companys Earning Per Share (EPS) show growth at a diminishing rate during the first 3
years i.e. 2010-2013, then a sharp fall during the 4th year and a marginal increase during the
5th year. This is due to a change in company policy on August 1, 2013. The face value of the
Parent Companys share has been subdivided from 10 each to 10 (ten) Equity Shares of 1
each fully paid-up. In compliance with Accounting Standard 20 Earnings Per Share (EPS),
the Parent Company has given effect to the said sub-division of shares in computing the
earnings per share for all comparative periods. Thus, if the policy had not been changed and
had the trend continued, the EPS of the company would have continued to increase at a
diminishing rate.
Asian Paints vs Berger Paints Vertical Analysis of Balance Sheets
Particulars A'11 B'11 A'12 B'12 A'13 B'13 A'14 B'14 A'15 B'15

(a) Share Capital 2.49 5.68 1.93 4.58 1.70 3.77 1.43 3.21 1.32 3.00
(b) Reserves and Surplus 48.75 53.64 48.03 51.41 51.81 49.77 52.16 49.17 56.84 52.96
Total Shareholders' Fund 51.24 59.32 49.96 55.99 53.51 53.54 53.59 52.38 58.16 55.96

(a) Long-term Borrowings 1.50 1.06 0.83 0.59 0.44
(d) Other Long Term Liabilities 0.13 0.58 0.07 0.62 0.01 0.68 0.00 0.73 0.62
(e) Long-term Provisions 1.72 1.31 1.36 1.00 1.17

Short term Borrowings 0.10 8.78 2.22 11.25 0.00 16.48 0.00 14.01 0.00 12.49
(b) Trade Payables 24.17 20.68 21.47 21.73 21.50 19.12 22.30 22.60 18.05 22.04
Total Current Liabilities 43.35 39.36 43.77 42.56 41.76 44.88 42.19 45.69 37.92 41.97
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Particulars A'11 B'11 A'12 B'12 A'13 B'13 A'14 B'14 A'15 B'15
II. ASSETS
(a) Fixed Assets
Tangible Assets 26.94 16.37 19.84 17.77 36.74 17.10 29.36 24.75 25.94 27.49
Total Net Block 28.45 23.06 32.37 22.37 38.14 26.81 30.51 31.50 28.94 31.82
(e) Other Non Current Assets 0.01 0.01 0.00 0.10 0.19 0.01
Total Non Current Assets 36.35 29.71 44.23 30.47 46.16 34.55 42.84 37.87 42.68 37.97
(2) Current Assets

(a) Current Investment 8.85 4.27 5.28 0.20 1.59 0.53 14.05 4.17 15.37 5.82
(b) Inventories 27.80 33.14 25.39 34.03 26.22 31.37 24.78 28.63 24.78 27.98
Total Current Assets 63.65 70.29 55.77 69.53 53.84 65.45 57.16 62.13 57.32 62.03
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Asian Paints vs Berger Paints Vertical Analysis of Income Statements
Particulars A'10-11 B'10-11 A'11-12 B'11-12 A'12-13 B'12-13 A'13-14 B'13-14 A'14-15 B'14-15
INCOME
Revenue from Sales (Net) 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Less: Excise Duty 8.93 -8.35 9.00 -8.24 10.70 -9.20 10.76 -9.38 10.82 -9.65
Revenue from Sales (Net and Excise Duty) 91.07 91.65 91.00 91.76 89.30 90.80 89.24 90.62 89.18 90.35
Other Operating Revenue 0.00 0.45 0.51 1.03 1.27
Other Income 1.08 1.29 1.62 1.06 1.26 0.92 1.50 0.82 1.45 0.81
Total Revenue (I) 92.14 92.94 93.08 92.81 91.07 91.72 91.77 91.43 91.90 91.16
EXPENSES
Cost of Material Consumed : 52.92 55.54 54.23 55.64 51.31 50.36 49.89 47.46 48.08 45.65
Purchases of Stock-in-trade 1.52 5.24 1.59 5.76 2.00 7.08 2.22 8.20 2.95 7.78
Changes in Inventories -2.02 -2.54 -1.32 -2.52 -1.36 -1.25 -0.65 -0.73 -1.03 -0.59
Employee benefit Expense 4.32 4.64 3.92 4.22 4.05 4.20 4.18 4.25 4.71 4.23
Other Expenses 17.70 19.04 17.51 19.10 18.33 20.30 19.23 21.00 20.12 22.00
Total (II) 74.43 81.92 75.93 82.19 74.32 80.70 74.87 80.18 74.84 79.07
EBITDA (I) - (II) 17.71 11.02 17.15 10.62 16.75 11.02 16.90 11.25 17.06 12.10
Depreciation & Amortisation Expense 1.36 1.30 1.14 1.29 1.27 1.39 1.84 1.56 1.73 1.87
Finance Costs 0.22 0.53 0.35 0.77 0.31 0.83 0.23 0.92 0.21 0.82
PROFIT BEFORE EXCEPTIONAL ITEMS, & TAXES 16.13 9.18 15.65 8.55 15.17 8.80 14.84 8.77 15.12 9.41
Exceptional Items 0.09 0.11

PROFIT BEFORE TAX 16.13 9.18 15.65 8.55 15.17 8.80 14.75 8.77 15.01 9.41
Tax expense
(1) Current tax 4.67 2.73 4.63 2.32 4.06 2.38 4.32 2.25 4.79 2.89
(2) Tax provision for earlier years -0.06 -0.03 -0.03 0.01 -0.01
(3) Deferred tax 0.38 0.00 0.05 0.12 0.63 0.13 0.29 0.25 -0.07 0.20
Total Tax Expense 4.99 2.73 4.65 2.44 4.66 2.50 4.62 2.50 4.71 3.09
PROFIT AFTER TAX 11.14 6.45 11.01 6.11 10.51 6.30 10.13 6.27 10.31 6.31
ASIAN PAINTS
Earning per equity share in Rs. 80.81 99.92 109.47 12.19 13.84
BERGER PAINTS
(1) Basic 4.29 5.13 6.06 3.38 3.84
(2) Diluted 4.28 5.12 6.05 3.38 3.84
Asian Paints Ltd
Balance Sheet as at 31st March, 2015

Rupees in Crores
Schedule as at as at as at as at as at
Particulars
No. 31/03/2011 31/03/2012 31/03/2013 31/03/2014 31/03/2015

(a) Share Capital 95.92 95.92 95.92 95.92 95.92
(b) Reserves and Surplus 1879.4 2391.86 2926.34 3505.01 4,134.34
Total Shareholders' Fund 1,975.32 2,487.78 3,022.26 3,600.93 4,230.26

(a) Long-term Borrowings 57.71 52.64 46.76 39.51 32.09
(b) Deferred Tax Liabilities (Net) 75.5 80.75 143.33 177.07 167.78
(d) Other Long Term Liabilities 4.96 3.62 0.5 0.12 -
(e) Long-term Provisions 66.43 65.16 76.77 67.12 85.25
Total Non Current Liabilities 204.60 202.17 267.36 283.82 285.12

Short term Borrowings 3.98 110.51
(b) Trade Payables 931.89 1069.06 1214.12 1498.84 1,313.08
(c) Other Current Liabilities 464.5 755.44 720.99 785.68 832.71
(d) Short-term Provisions 274.75 355.07 423.55 550.6 612.03
Total Current Liabilities 1,671.14 2,179.57 2,358.66 2,835.12 2,757.82
Total 3855.04 4980.03 5648.28 6719.87 7273.2

II. ASSETS

(a) Fixed Assets
Tangible Assets 1038.65 987.79 2074.91 1973.21 1,886.42
Intangible Assets 18.54 21.25 26.98 38.99 79.07
Capital work-in-progress 39.67 602.84 52.55 37.95 139.54
Total Net Block 1,096.86 1,611.88 2,154.44 2,050.15 2,105.03
(b) Non Current Investments 206.83 279.22 359.7 727.19 775.72
(d) Long-term Loan and Advances 97.78 311.34 92.88 94.64 209.54
(e) Other Non Current Assets 6.6 13.64
Total Non Current Assets 1,401.47 2,202.44 2,607.02 2,878.58 3,103.93
(2) Current Assets

(a) Current Investment 341 263 90 943.96 1,118.06
(b) Inventories 1071.76 1264.42 1480.79 1665.05 1,802.18
(c) Trade Receivables 355.56 500.24 633.88 712.36 728.87
(d) Cash and Cash Equivalent 509.01 500.97 566.86 104.12 61.81
(e) Short-term Loan and Advances 84.79 153.69 164.08 239.7 205.43
(f) Other Current Assets 91.45 95.27 105.65 176.1 252.92
Total Current Assets 2,453.57 2,777.59 3,041.26 3,841.29 4,169.27
Total 3,855.04 4,980.03 5,648.28 6,719.87 7,273.20

Asian Paints Ltd
Rupees in Crores
Income Sheet for the year ended 31st March, 2015
Particulars 2010-11 2011-12 2012-13 2013-14 2014-15
INCOME
Revenue from Sales (Net) 6957.72 8708.3 9990.04 11,542.02 12,878.80
Less: Excise Duty 621.64 783.6 1068.91 1,241.80 1,393.13
Revenue from Sales (Net and Excise Duty) 6,336.08 7,924.70 8,921.13 10,300.22 11,485.67
Other Operating Revenue 0 39.46 50.57 118.56 163.16
Other Income 74.9 141.49 126.15 173.66 186.82
Total Revenue (I) 6,410.98 8,105.65 9,097.85 10,592.44 11,835.65
EXPENSES
Cost of Material Consumed : 3681.92 4722.74 5125.48 5,758.71 6,191.72
Purchases of Stock-in-trade 105.56 138.67 199.56 256.58 380.56
Changes in Inventories -140.61 -115.07 -136.17 -75.34 -132.43
Employee benefit Expense 300.45 341.63 404.59 482.43 606.94
Other Expenses 1231.5 1524.44 1830.97 2219.13 2,591.52
Total (II) 5178.82 6612.41 7424.43 8641.51 9638.31
EBITDA (I) - (II) 1232.16 1493.24 1673.42 1950.93 2197.34
Depreciation & Amortisation Expense 94.48 99.49 126.98 212.32 223.11
Finance Costs 15.35 30.82 30.56 26.08 27.13
PROFIT BEFORE EXCEPTIONAL ITEMS, & TAXES 1122.33 1362.93 1515.88 1712.53 1947.1
Exceptional Items 9.96 13.53
PROFIT BEFORE TAX 1122.33 1362.93 1515.88 1702.57 1933.57
Tax expense
(1) Current tax 324.99 402.76 406.03 498.63 616.42
(2) Excess/Short tax provision for earlier years -4.22 -2.38 -2.74 1.14 -0.96
(3) Deferred tax 26.41 4.16 62.59 33.74 -9.29
Total Tax Expense 347.18 404.54 465.88 533.51 606.17
PROFIT AFTER TAX 775.15 958.39 1050 1169.06 1327.4
Earning per equity share in Rs. Basic & Diluted 80.81 99.92 109.47 12.19 13.84
Ratio Analysis of Asian Paints 2010-15
2011 2012 2013 2014 2015

Liquidity Ratios
Current Ratio 1.468201 1.274375 1.289402 1.354895 1.511799
Quick Ratio 0.826867 0.694252 0.661592 0.767601 0.858319
Working Capital 782.43 598.02 682.6 1006.17 1411.45
Leverage Ratios
Debt to equity Ratio 0.949588 0.957376 0.868893 0.866148 0.719327
Debt to assets ratio 0.486568 0.478258 0.464924 0.464137 0.418377
Interest Coverage Ratio 74.11596 45.22226 50.6034 66.66449 72.76926
Profitability Ratios
Operating Margin 17.71332 17.19851 16.99202 16.62615 16.95243
Net Profit Margin 12.2339 12.09371 11.76981 11.34985 11.55701
ROA 20.10744 19.24466 18.58973 17.39706 18.25056
ROE 808.1214 999.1555 1094.662 1218.786 1383.862
Earnings Per Share 80.81 99.92 109.47 12.19 13.84
Efficiency Ratios
Inventory Turnover 6.25 6.78 6.50 6.55 6.63
Total Receivable Turnover 20.25 20.35 18.72 17.15 17.87
Avg Collection Period 0.000154 0.000173 0.000195 0.000189 0.000174
Days in Inventory 91.84 89.85 96.53 96.67 98.28
Total Asset Turnover 2.52 1.97 1.88 1.87 1.84
Ratio Analysis of Asian Paints
Working Capital:
Generally, companies that maintain a comfortable amount of working capital are more
attractive to conservative investors. A companys ability to meet obligations, expand volume
and take advantage of opportunities is often determined by its working capital. Year-to-year
increases in working capital are a positive sign of a companys growth and health.
In the case of Asian Paints, we observed that barring 2012, it consistently increased its
working capital and in fact almost doubled it in 2011-15. This underlined the improved
financial health of Asian paints.
Analysing Liquidity of Asian Paints:

Current Ratio:
What is a comfortable amount of workingcapital? We use several methods to judge whether

a company has adequate working capital. To interpret the current position of a company
being considered as a possible investment, the current ratio may be more useful than just
the figure of working capital.
Generally, companies that have a small inventory and accounts receivable that are quickly
collectible can operate safely with a lower current ratio than companies having a greater
proportion of their current assets in inventory and that sell their products on longer credit
period. So, in this case though the value of current ratio is less than the rule of thumb, we
concluded that 1.5 is good level considering its low trade receivable account.
Quick Ratio (aka Acid Test Ratio):
In addition to working capital and the current ratio, another way to test the adequacy
of working capital is to look at quick assets.
Quick assets are those currentassets that are quickly convertible into cash. They excludes
merchandise inventories,because such inventories have yet to besold and are not quickly
convertible intocash.
It is very important for an investor to find out the ability of the company to pay the
upcoming bills.
The quick ratio of Asian paints in 2015 is 0.85:1. Some conclude that a quick ratio less than
1:1 is of poor quality but considering the very fact that higher quick ratio is mainly necessary
for those companies which face difficulty in borrowing, and not for the companies like Asian
paints, who consistently perform well, we conclude that this .15 difference from the
benchmark is not a highly damaging point.
Analysing Debt of Asian Paints:

Debt ratios show the extent to which a firm is relying on debt to finance its investments and
operations, and how well it can manage the debt obligation. If the company does not manage its
debt properly, it may bankrupt like in the case of Kingfisher Airlines. On the other hand, if it uses
borrowings efficiently it can build business by exploring and expanding to new frontiers. There are
various ratios which test the debt repaying ability. They are:
Debt to Equity Ratio:

A certain level of debt is acceptable and necessary, but too much is a sign for investors to be
cautious. Debt to Equity ratio shows exactly that part.
The Debt to Equity ratio explains us how much the company is dependent on the borrowings
for its financing.
In the case of Asian paints, the company showed an outstanding progress by reducing its
debt to equity ratio from 0.95 in 2011 to .72 in 2015. Most interesting observation is it has
consistently reduced the ratio.
It is a brilliant sign of managing finances because in an industry that is highly dependent on
real estate and construction sector, and maintaining high debt is not advisable.
In fact, it is the real estate sector that bought the 2008 subprime crisis and key reason is it
exponentially high debt to equity ratio and high debt to asset ratio.
Debt to Assets Ratio:
Higher the total debt to total assets ratio, the higher the degree of leverage, and
consequently, financial risk.
Conversely lower the ratio more is the financial flexibility of the company.
While other liabilities such as accounts payable and long-term leases can be negotiated to
some extent, there is very little wiggle room with debt covenants.
Therefore, a company with a high degree of leverage may find it more difficult during a
recession than one with low leverage. More particularly for a company like Asian Paints
whose market is always at risk, should be more careful in maintaining this ratio.
The debt to asset ratio decreased from 0.486 to 0.418, which shows that its financial help
improved over time.
More noticeable than the amount of change is the consistency with which Asian paints tried
to reduce the ratio.
By observing both the Debt to Equity ratio and Debt to Asset ratio, we concluded that the
management is very serious about improving the financial health of the company, despite
recession. Further, the management also did not underutilize debt as it still maintained at a
decent 0.4 0.5 level.
Any investor should note this commitment in to consideration.
Interest Coverage (or Times Interest Earned) Ratio:
This ratio shows the firms ability to pay the fixed interest charges (on both short-term and
long-term debt) with current earnings.
Higher is the ratio, more is the capacity of the firm to meet the interest payments.
In the case of Asian Paints this ratio varied as 74, 45, 50, 66, and 72 (as on 31st march, 2015).
Generally if the ratio is above 1.5 it is considered to be able to pay its interest.
Analysing Profitability:
Operating Margin:
Operating margin is used to measure company's pricing strategy and operating efficiency. It
gives an idea of how much a company makes (before interest and taxes) on each rupee of
sales.
In the case of Asian Paints, it is decreased from 17.7 in 2010-11 to 16.95, in 2014-15.
The decrease in sales can be attributed to the inflationary environment during that period.
In fact, its competitors and other sectors operating margin decreased much more and this
shows the general trend in the economy.
Net Profit Margin:
Net Profit Margin ratio has along-term significance because it provideuseful information
about the companys fundamental economic condition.
In the case of Asian Paints with an exception of 2013-14, the net profit margin has decreased
from 12.23 in 2010-11 to 11.557 in 2014-15.
The increase in excise duty, employee benefit expenses, and other expenses disproportional
to the net sales income impacted the PAT and are the reasons for the reduction in Net Profit
Margin.
However, the industry average is Net Profit Margin is much lower than Asian Paints, from
which we concluded that its performance is better compared to its peers.
Return on Assets:
Return on Assets ratio gives an idea of how efficient management is at using its assets to
generate profit.
Any rational investor will be interested only in those companies which are efficient in this
aspect.
Here, the ROA reduced from 20.1% to 18.25% and it has been consistent in decrease.
However, it is unfair to interpret that the PAT decreased. The main reason for the decrease
in the value of the ratio is the spike in the tangible assets, which lead to the increase in the
total assets and it is throughout the 5 year period.This increase reduced the ROA of Asian
Paints.
Return on Equity:
The main objective of any business is to deliver the returns to the investors for the capital
they invested.
Return on equity measures a companys profitability by revealing how much profit a
company generates with the money shareholders have invested.
The ROE consistently increased from 808% in 2011 to 1383% in 2015.
This shows the management is efficiently using the share capital and is delivering
progressive results day by day.
Earnings per share:
EPS is generally considered to be the single most important variable in determining a share's
price.
It shows the efficiency with which a company generates income per share.
EPS of Asian Paints increased spectacularly in 2010-15. The most important point to note is
that Asian Paints changed the par value of the share in 2013-14. However, its performance is
more than satisfactory.
Analysing Efficiency of Asian Paints:
Inventory Turnover Ratio:
Inventory Turnover Ratio measures company's efficiency in turning its inventory into sales.
Its purpose is to measure the liquidity of the inventory.
The increase in inventory can be attributed to the efficient forecasting and planning of the
organization.
Asian Paints Inventory Turnover Ratio increased from 6.25, in 2010-11 to 6.63, in 2014-15.
This value shows that the efficiency improved in a good way, though its best was in 2011-12,
when this ratio was 6.78.
Days in Inventory:
Days in Inventory measures the average number of days it takes a company to turn its
inventory into sales.
Days in Inventory estimates also the number of days the average inventory balance will be
sufficient.
It is the symbol of efficiency and effectiveness of market intelligence, planning, and
forecasting.
This value increased year by year for Asian Paints. However, by very nature of this value,
increasing is not a good sign and that too increase of 10% in a span of 5 years shows the
rough waters in the market. Now is the time to improve this value.
Total Asset Turnover Ratio:
The value of a companys sales generated relative to the value of itsassets is total Asset
Turnover Ratio.
The Asset Turnover ratio can often be used as an indicator of the efficiency with which a
company is deploying its assets in generating revenue. So a higher ratio is always more
favourable. Higher turnover ratios mean the company is using its assets more efficiently.
This ratio of Asian Paints reduced from 2.52, in 2010-11 to 1.84, in 2014-15. Unfortunately it
is not a very good thing.
This shows that though they have increased the assets hugely, there is a further scope for
improvement as far as sales is concerned. Asian Paints can utilize their resources more
efficiently. The reduced ROA also underlined the same signal.
Having said the above, it may not be fair on our part if we dont consider the very fact that
the market slowdown may have interrupted their investment plans and the demand in the
market, than they expected.
Berger Paints Ltd
Balance Sheet as at 31st March, 2015
Rupees in Crores
as at as at as at as at as at
Particulars
31/03/2011 31/03/2012 31/03/2013 31/03/2014 31/03/2015

(a) Share Capital 69.2 69.23 69.26 69.3 69.33
(b) Reserves and Surplus 653.8 776.37 915.17 1062.59 1,223.47
Total Shareholders' Fund 723.00 845.60 984.43 1,131.89 1,292.80

(a) Long-term Borrowings
(b) Deferred Tax Liabilities (Net) 9 12.47 16.64 26.01 33.57
(d) Other Long Term Liabilities 7.1 9.4 12.47 15.8 14.38
(e) Long-term Provisions
Total Non Current Liabilities 16.10 21.87 29.11 41.81 47.95

Short term Borrowings 107 169.85 303.02 302.8 288.49
(b) Trade Payables 252 328.17 351.65 488.47 509.12
(c) Other Current Liabilities 76.8 80.76 89.15 96.81 106.4
(d) Short-term Provisions 43.9 64 81.47 99.14 65.49
Total Current Liabilities 479.70 642.78 825.29 987.22 969.50
Total Equity & Liabilities 1218.8 1510.25 1838.83 2160.92 2310.25

II. ASSETS

(a) Fixed Assets
Tangible Assets 199.5 268.3 314.43 534.8 635.07
Intangible Assets 4.7 3.66 7.25 13.62 12.57
Capital work-in-progress 76.8 65.87 171.23 132.22 87.51
Total Net Block 281.00 337.83 492.91 680.64 735.15
(b) Non Current Investments 65.5 76.61 80.73 97.12 109.26
(d) Long-term Loan and Advances 15.5 45.55 61.53 40.6 32.67
(e) Other Non Current Assets 0.1 0.11 0.08 0.14
Total Non Current Assets 362.10 460.10 635.25 818.36 877.22
(2) Current Assets

(a) Current Investment 52.1 2.96 9.82 90.17 134.49
(b) Inventories 403.9 513.96 576.91 618.7 646.50
(c) Trade Receivables 238.3 305.16 324.55 383.21 434.41
(d) Cash and Cash Equivalent 122.8 176.29 222.54 163.07 141.15
(e) Short-term Loan and Advances 36.3 45.37 58.9 76.26 66.10
(f) Other Current Assets 3.3 6.41 10.83 11.15 10.38
Total Current Assets 856.70 1,050.15 1,203.55 1,342.56 1,433.03
Total Assets 1,218.80 1,510.25 1,838.80 2,160.92 2,310.25

Berger Paints Ltd
Income Sheet for the year ended 31st March, 2015 Rupees in Crores
Particulars 2010-11 2011-12 2012-13 2013-14 2014-15

INCOME:
Revenue from Sales 2299.1 2901.22 3330.61 3,735.35 4212.94
Less: Excise Duty -192 -239.13 -306.4 -350.53 -406.43
Revenue from Sales (Net Sales & Excise Duty) 2107.1 2662.09 3024.21 3384.82 3806.51
Other Operating Income - - - - -
Other Income 29.6 30.62 30.76 30.59 34.19
Total Revenue 2136.7 2692.71 3054.97 3415.41 3840.7
EXPENSES:
Cost of Material Consumed 1276.9 1614.37 1677.46 1772.94 1,923.23
Purchases of Stock-in-trade 120.5 167.04 235.78 306.19 327.64
Changes in Inventories of Finished Goods, work-in-
progress and stock-in-trade -58.5 -73.18 -41.49 -27.19 -24.73
Employee benefit Expense 106.7 122.32 139.96 158.74 178.21
Other Expense 437.8 554.06 676.18 784.5 926.76
Total (II) 1883.4 2384.61 2687.89 2995.18 3331.11
EBITDA(I) - (II) 253.3 308.1 367.08 420.23 509.59

Depreciation and ammortization expense 30 37.56 46.28 58.27 78.62
Finance Cost 12.2 22.37 27.67 34.26 34.72
Profit before exceptional and extraordinery
items and tax 211.1 248.17 293.13 327.7 396.25
Exceptional Items - - - - -
Profit before Tax 211.1 248.17 293.13 327.7 396.25
Tax expense
(1) Current tax 62.8 67.3 79.16 84.08 121.62
(2) Excess/short tax proviosion for Earlier Years - - - - -
(3) Deferred tax 0 3.48 4.17 9.37 8.6
Total Tax Expense 62.8 70.78 83.33 93.45 130.22
Profit After Tax 148.3 177.39 209.8 234.25 266.03

(1) Basic 4.29 5.13 6.06 3.38 3.84
(2) Diluted 4.28 5.12 6.05 3.38 3.84
Ratio Analysis for Berger Paints
2011 2012 2013 2014 2015
Liquidity Ratios
Current Ratio 1.785908 1.633763 1.458336 1.35994 1.478112
Quick Ratio 0.943923 0.834173 0.759297 0.733231 0.811274
Working Capital 452.8 536.19 626.64 723.86 786.53
Leverage Ratios
Debt to equity Ratio 0.685754 0.78601 0.867913 0.909125 0.787013
Debt to assets ratio 0.406794 0.440093 0.464651 0.4762 0.440407
Interest Coverage Ratio 18.30328 12.09388 11.59378 10.56509 12.41273
Operating Margin 10.01851 9.322375 9.692779 9.68146 10.4098
Net Profit Margin 7.038109 6.663561 6.937349 6.920604 6.988817
ROA 12.16771 11.74574 11.40961 10.84029 11.5152
ROE 214.3064 256.2328 302.9165 338.0231 383.7156
Earnings Per Share 21.43064 25.62328 30.29165 3.380231 3.837156
Efficiency Ratios
Inventory Turnover 3.63 3.52 3.08 2.97 3.04
Total Receivable Turnover 10.38 10.68 10.58 10.56 10.31
Avg Collection Period 0.00031 0.000314 0.000294 0.00031 0.000313
Days in Inventory 95.85 98.06 105.36 106.37 103.72
Total Asset Turnover 2.09 1.95 1.81 1.69 1.70
Ratio Analysis of Berger Paints
Working Capital
A companys ability to meet obligations, expand volume and take advantage of

opportunities is often determined by its working capital. Increasing working capital is a sign
of a company being able to attract more investments.
In case of Berger Paints, we see that the working capital each year is almost increasing at the
same rate, but in spite of that it is nowhere close to its competitor.
Analysing Liquidity of Berger Paints:

Current Ratio:
Current ratio is the measure of the currents assets to the current liabilities of a company
and it interpret the current position of a company as a possible investment.
For the current period the current assets of the company lie in the range of 1.35 to 1.78. It
suggests that the business has enough cash to be able to pay its debts, but not too much
finance tied up in current assets which could be reinvested or distributed to shareholders.
Quick Ratio (aka Acid Test Ratio):
This ratio is used to gauge a companys liquidity and it differs from the current ratio in a way
that some of the assets are not included in current assets, the most important of them being
inventory.
The quick ratio of the company starts from 0.94 which means that in 2011 the company was
had the capability to pay around 94% of its borrowings. In 2013-2014 the ratio decreases to
as low as .74 hence decreasing the companys to convert its assets into liquid cash in a short
interval of time.
Analyzing Debt of Berger Paints:

Debt ratios measure the extent of a companys leverage. Debt ratios vary widely across industries,
with capital intensive such as utilities having much higher debt ratios than other industries like
technology. A company with a higher debt ratio relative to its peers would probably find it expensive
to borrow.
Debt to Equity Ratio:
This is a financial ratio that compares a companys total debt to its total equity. It generally
measures the riskiness of a companys financial structure .A lower number indicates a
company less dependent on borrowings for its operations.
The company suffered a major downfall from 2011 2014 when its debt to equity ratio rose
to as high as 0.90 thus indicating huge debts. In 2015 it has managed to lower down this
value by a significant amount but still it is major concern for the company.
Debt to Assets Ratio:
This ratio indicates the percentage of a companys assets that are provided via debt. This
ratio is very similar to debt to equity ratio. A ratio of less than 1 means that the majority of
the assets are financed through equity, above 1 means they are financed more by debt. A
high ratio means a highly debt leveraged company.
We see that apart from 2015 during all the years its debt to asset ratio shows an increase in
its value thus showing the increasing debt of the company.
Its ratio consistently increases from 2011 to 2014 and that too by a considerable amount
which shows indicates the degrading financial situation of the company.
Interest Coverage (or Times Interest Earned) Ratio:
It is calculated by dividing a companys earnings before interest and taxes during a given
period by the amount a company must pay in interest on its debts during the same period.
Higher is the ratio, more is the capacity of the firm to meet the interest payments.
The interest coverage ratio of the company during the given period is fairly consistent,
indicating the companys ability to pay its debts easily.
Analysing Profitability:
Operating Margin:
Operating margin is used to measure company's pricing strategy and operating efficiency. It
gives an idea of how much a company makes (before interest and taxes) on each rupee of
sales.
In the case of berger Paints, it is increased from 10.02 in 2010-11 to 10.41, in 2014-15.
Though there has been an increase in the operating margin from 2010-11 to 2014-15, it has
not been consistent
Net Profit Margin:
Net Profit Margin ratio has along-term significance because it provides useful information
about the companys fundamental economic condition.
In the case of Berger Paints the net profit margin has decreased from 7.04 in 2010-11 to
6.99 in 2014-15, although the decrease has not been consistent.
The increase in excise duty, employee benefit expenses, and other expenses disproportional
to the net sales income impacted the PAT and are the reasons for the reduction in Net Profit
Margin.
Return on Assets:
Return on Assets ratio gives an idea of how efficient management is at using its assets to
generate profit.
Any rational investor will be interested only in those companies which are efficient in this
aspect.
Here, the ROA reduced from 12.17% to 11.52% and it has been consistent in decrease with
an exception of 2014-15.
The main reason for the decrease in the value of the ratio is the spike in the tangible assets,
which lead to the increase in the total assets . This increase reduced the ROA of Asian Paints.
Return on Equity:
The main objective of any business is to deliver the returns to the investors for the capital
they invested.
Return on equity measures a companys profitability by revealing how much profit a
company generates with the money shareholders have invested.
The ROE consistently increased from 214.31% in 2011 to 383.72% in 2015.
This shows the management is efficiently using the share capital and is delivering
progressive results day by day.
Earnings per share:
EPS is generally considered to be the single most important variable in determining a share's
price.
It shows the efficiency with which a company generates income per share.
EPS of Berger Paints increased spectacularly in 2010-15. The most important point to note is
that Berger Paints changed the par value of the share in 2013-14. However, its performance
is more than satisfactory.
Analysing Efficiency of Berger Paints:

Inventory Turnover Ratio:
Inventory Turnover Ratio measures company's efficiency in turning its inventory into sales.
Its purpose is to measure the liquidity of the inventory.
Asian Paints Inventory Turnover Ratio decreased from 3.63, in 2010-11 to 3.04, in 2014-15.
This value shows that the efficiency reduced.
Days in Inventory:
Days in Inventory measures the average number of days it takes a company to turn its
inventory into sales.
Days in Inventory estimates also the number of days the average inventory balance will be
sufficient.
It is the symbol of efficiency and effectiveness of market intelligence, planning, and
forecasting.
This value increased year by year for Berger Paints. However, by very nature of this value,
increasing is not a good sign and that too increase of around 8% in a span of 5 years shows
the rough waters in the market.
Total Asset Turnover Ratio:
The value of a companys sales generated relative to the value of its assets is total Asset
Turnover Ratio.
The Asset Turnover ratio can often be used as an indicator of the efficiency with which a
company is deploying its assets in generating revenue. So a higher ratio is always more
favourable. Higher turnover ratios mean the company is using its assets more efficiently.
This ratio of Berger Paints reduced from 2.09, in 2010-11 to 1.70, in 2014-15. It is not a very
good thing.
This shows that though they have increased the assets hugely, there is a further scope for
improvement as far as sales is concerned. Berger Paints can utilize their resources more
efficiently. The reduced ROA also underlined the same signal.
Graphs for different Ratios for Asian Paints and Berger Paints
2.00
1.80 1.79
1.60 1.63
1.47 1.46 1.51
1.48
1.40 1.36
1.35
1.27 1.29
1.20
1.00 Asian Paints
0.80
Berger
0.60
0.40
0.20
0.00
2011 2012 2013 2014 2015
Graph- Current ratio
1.00
0.94
0.90
0.83 0.83 0.86
0.80 0.81
0.76 0.77
0.73
0.70 0.69 0.66
0.60
0.50 Asian paint
0.40
Berger
0.30
0.20
0.10
0.00
2011 2012 2013 2014 2015
Graph- Quick ratio
1600.00
1400.00 1411.45
1200.00
1000.00 1006.17
800.00 782.43 786.53 Asian Paints
682.60 723.86
600.00 598.02 626.64 Berger
536.19
400.00 452.80
200.00
0.00
2011 2012 2013 2014 2015
Graph-Working Capital
1.20
1.00
0.95 0.96
0.87 0.91
0.87
0.80 0.79 0.79
0.69 0.72
0.60 Asian Paints
0.40 Berger
0.20
0.00
2011 2012 2013 2014 2015
Graph- Debt to equity Ratio
0.50
0.49
0.48 0.48 0.48
0.46 0.46 0.46
0.44 0.44 0.44

Asian Paints
0.42 0.42
0.41 Berger
0.40
0.38
0.36
2011 2012 2013 2014 2015
Graph- Debt to asset ratio
80.00
74.12 72.77
70.00
66.66
60.00
50.00 50.60
45.22
40.00 Asian Paints
30.00 Berger
20.00 18.30
10.00 12.09 11.59 10.57 12.41
0.00
2011 2012 2013 2014 2015
Graph- Interest coverage ratio

14.00
12.00 12.23 12.09 11.77 11.35 11.56

10.00
8.00
7.04 6.66 6.94 6.92 6.99 Asian Paints
6.00
Berger
4.00
2.00
0.00
2011 2012 2013 2014 2015
Graph- Net profit Margin
25.00
20.00 20.11
19.24 18.59 18.25
17.40
15.00
12.17 11.75 11.52 Asian Paints
11.41 10.84
10.00 Berger
5.00
0.00
2011 2012 2013 2014 2015
Graph- ROA
1600.00
1400.00 1383.86
1200.00 1218.79
1094.66
1000.00 999.16
800.00 808.12 Asian Paints
600.00 Berger
400.00 383.72
302.92 338.02
200.00 214.31 256.23
0.00
2011 2012 2013 2014 2015
Graph- ROE
Graph- Earning Per Share
Graph- Inventory Turnover Ratio
Graph- Total Asset Turnover

Ratio Analysis Asian Paints vs Berger Paints
Pref. Asian'11 Berger'11 Asian'12 Berger'12 Asian'13 Berger'13 Asian'14 Berger'14 Asian'15 Berger'15 Pref. Stock
Liquidity Ratios
Current Ratio High 1.47 1.79 1.27 1.63 1.29 1.46 1.35 1.36 1.51 1.48 Asian
Quick Ratio High 0.83 0.94 0.69 0.83 0.66 0.76 0.77 0.73 0.86 0.81 Asian
Working Capital High 782.43 452.80 598.02 536.19 682.60 626.64 1006.17 723.86 1411.45 786.53 Asian
Leverage Ratios
Debt to equity Ratio Low 0.95 0.69 0.96 0.79 0.87 0.87 0.87 0.91 0.72 0.79 Asian
Debt to assets ratio Low 0.49 0.41 0.48 0.44 0.46 0.46 0.46 0.48 0.42 0.44 Asian
Interest Coverage Ratio High 74.12 18.30 45.22 12.09 50.60 11.59 66.66 10.57 72.77 12.41 Asian
Operating Margin High 17.71 10.02 17.20 9.32 16.99 9.69 16.63 9.68 16.95 10.41 Asian
Net Profit Margin High 12.23 7.04 12.09 6.66 11.77 6.94 11.35 6.92 11.56 6.99 Asian
ROA High 20.11 12.17 19.24 11.75 18.59 11.41 17.40 10.84 18.25 11.52 Asian
ROE High 808.12 214.31 999.16 256.23 1094.66 302.92 1218.79 338.02 1383.86 383.72 Asian
Earnings Per Share* High 80.81 21.43 99.92 25.62 109.47 30.29 12.19 3.38 13.84 3.84 Asian
Efficiency Ratios
Inventory Turnover High 6.25 3.63 6.78 3.52 6.50 3.08 6.55 2.97 6.63 3.04 Asian
Total Receivable Turnover High 20.25 10.38 20.35 10.68 18.72 10.58 17.15 10.56 17.87 10.31 Asian
Avg Collection Period Low 0.00015 0.00031 0.00017 0.000314 0.00019 0.000294 0.00019 0.00031 0.00017 0.000313 Asian
Days in Inventory Low 91.84 95.85 89.85 98.06 96.53 105.36 96.67 106.37 98.28 103.72 Asian
Total Asset Turnover High 2.52 2.09 1.97 1.95 1.88 1.81 1.87 1.69 1.84 1.70 Asian
* Asian Paints & Berger Paints reduced the denominations of their shares from Rs. 10 to 10 shares of Rs. 1 each, resulting in the fall of EPS.
Sales forecast for Asian Paints
4000
3500
3000
2500
2000
sales
1500 CM4
forecast
1000
500
0
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2011 2012 2013 2014 2015 2016

Forecast for Netprofit of Asian Paints
500
450
400
350
300
250
net profit
200 CM4
150 forecast
100
50
0
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2010 2011 2012 2013 2014 2015 2016

Conclusion:
According to the Trend, Vertical, and Ratio analysis we did for the Asian Paints and its
competitor, Berger Paints, we conclude that Asian Paints managed their business better
compared to the Berger Paints.
The analysis included comparision of different financial parameters like Working Capital,
Liquidity Ratios, Leverage Ratios, Profitability Ratios, and Efficiency Ratios of both the
companies, for 2010-15. In our analysis we found that both the companies tried their level
best to improve their financial performances and in a way succeeded. Having said that, it
would be injustice if we do not appreciate Asian paints for its spectacular performance
despite poor macro economic conditions.
Any investor will expect a comparatively a better choice among the given options. He/She may
choose the company if that company performs better in majority of the crucial 16 parameters
those are analysed. What if a company clean sweeps all the 16 parameters? Asian Paints did
the same. Though its latest performance in some parameters like Interest Coverage Ratio,
Operating Margin, Net Profit Margin, and ROA decreased compared to the previous years, it
did well in comparision to its peers.
We understood that subprime crisis, economic downturn, high inflation, real estate bubbles,
and slow construction sector are some of the reasons for the reduced performance.
Despite all the hurdles it faced, Asian Paints performed fairly well and that is the reason for
increase in its share price by 3 times, in a short span of 5 years, while Berger Paints share
increased only 2.2 times.
In a nutshell, Asian Paints deserves its first place in the market and should be the first invest-
ment option for any investor, who is interested in Paint industry.
References:
www.e145.stanford.edu/upload/Merrill_Lynch.pdf
http://www.investopedia.com/
Financial Accounting, A managerial perspective R. Narayanawamy.
Financial Accounting Jerry J. Weygandt
www.asianpaints.com
www.bergerpaints.com
news.google.com
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Dhyanendra Mohan 15DM052

Harshad Mahajan 15DM060

Himanshu Singh 15DM065

Manish Kumar 15DM081

Prof. Ashok KR Malhotra

Asian Paints Limited is a leading Indian chemicals company headquartered in Mumbai,

Through this financial accounting project we:

Had a first hand experience of analyzing financial statements.

Balance Sheet as at 31st March, 2015 & Vertical Analysis

I. EQUITY AND LIABILITIES

(1) Shareholders' Funds

(3) Non Current Liabilities

(4) Current Liabilities

(1) Non Current Assets

(2) Current Assets

Tangible Assets -4.897 99.770 89.978 81.622

EQUITIES & LIABILITIES

Current Liabilities 30.424142 41.14078 69.65185 65.02627

Particulars 2010-11 2011 2011-12 2012 2012-13 2013

EBITDA (I) - (II) 1232.16 17.71 1493.24 17.15 1673.42 16.75

11,542.02 100.00 12,878.80 100.00

5,758.71 49.89 6,191.72 48.08

1950.93 16.90 2197.34 17.06

9.96 0.09 13.53 0.11

498.63 4.32 616.42 4.79

12.19 0.11 13.84 0.11

EBITDA 21.189 35.812 58.334 78.332

PBT 21.43755 35.06544 51.69959 72.28177

Net Income 23.6393 35.45765 50.81726 71.24428

For the period 2010-15

For the period 2010-15

Balance Sheet as at 31st March, 2015 & Vertical Analysis

I. EQUITY AND LIABILITIES

(1) Shareholders' Funds

(3) Non Current Liabilities

(4) Current Liabilities

(1) Non Current Assets

(2) Current Assets

EQUITIES & LIABILITIES

Earning per equity share:

21.634 36.930 45.475 60.988

EBT 17.5604 38.85836 55.23449 87.70725

Net Income 19.61564 41.46999 57.95684 79.38638

For the period 2010-15

I. EQUITY AND LIABILITIES

(3) Non Current Liabilities

(4) Current Liabilities

(2) Current Assets

Exceptional Items 0.09 0.11

Balance Sheet as at 31st March, 2015

I. EQUITY AND LIABILITIES

(1) Shareholders' Funds

(3) Non Current Liabilities

(4) Current Liabilities

Total 3855.04 4980.03 5648.28 6719.87 7273.2

(1) Non Current Assets

(2) Current Assets

Total 3,855.04 4,980.03 5,648.28 6,719.87 7,273.20

2011 2012 2013 2014 2015

Working Capital 782.43 598.02 682.6 1006.17 1411.45