Project Title: Cost Analysis and Cost estimations ba

Company: Berger Paints India L

Group Members
Roll No. Section Name
20201036 A PROKRITI MANDAL
20201038 D MANPREET KAUR
20201102 D KUNDAN SINGH
20204410 B NAMAN SETHI
stimations based on Cost behavior
Paints India Ltd

bers
Name
OKRITI MANDAL
NPREET KAUR
NDAN SINGH
MAN SETHI
 Project Objective
1. To study Berger Paint India Ltd's financial statements from its annual reports

2. To differenciate between fixed and variable costs of the company and identify the suitable cost drivers

3. To prepare income statement using contribution method

4. To find the break-even level of sales, margin of safety and operating leverage of the company

5. To predict the sales based on the historic data over the last 4 years.

Methodology Adopted
1. In this project the Income statement is sourced from the annual report of Berger Paints India Ltd.

2. Application of excel is used to show the necessary summations and calculations

3. The cost breakup of all the expences are shown by refering to the notes to accounts from the annual report

4. The cost drivers are identified for all the costs and are classified as variable cost or fixed cost
5. The fixed and variable costs are filtered and copied to the next sheet for the purpose of making Income
statement by contribution method
6. The forecast of sales for the next 4 years is to be done using the compounded annual growth rate
 Berger Paints
Industry Belonging to Berger Paints India Ltd is an Indian paint compan
Years of Operation 1923 (97 years ago)
Founder Lewis Berger
CEO Abhijit Roy

About
Berger Paints had its colourful beginning in 1760, when Lewis Berger, an enterprising young German chem
He had perfected the manufacturing process for Prussian Blue, one of the most important pigments of that
This achievement marked the arrival of Berger Paints as a modern paint manufacturing company.
Today Berger Paints Singapore is part of the Omega Industries Group group servicing consumers across th

Our Businesses
Omega Industries
Australian Paint Company
Hydrotech Ink
Beepee Coatings Private Limited
Berger Rock Paints Private Limited
Berger Rock Paints Private Limited
n Indian paint company
rs ago)
rger
Roy

ing young German chemist had his big breakthrough.

ortant pigments of that period.
ring company.
ing consumers across the Asia Pacific regions

Competitors
Akzo Nobel India
Asian Paints Ltd.
Kansai Nerolac Paints
Shalimar Paints Ltd
Sirca Paints India Ltd
Nippon Paint India Pvt
Jotun India Pvt
British Paints India Ltd
 BERGER PAINTS INDIA LTD.
INCOME STATEMENT (LAST 4 YEARS)

PARTICULARS YEARS
2020
Rs. In Crores
INCOME:
Revenue from operations 5,691.69
Other income 150.82
Total income 5,842.51
Less: Excise duty
Net Income 5,842.51

EXPENSES
I) Cost of materials consumed: 2902.53
II) Purchases of traded goods 481.6
III) Increase/ decrease in inventories of finished goods, work in progress and traded goods -16.81
IV) Employee benefits and expense 342.52
V) Finance costs 32.68
VI) Depreciation and ammortisation expense 170.52
VII) Other expense 1024.05

Total expenses 4,937.09

Profit before exceptional items and tax 905.42

Exceptional items 0
Profit before tax 905.42

Tax expense: 206.37

Current tax 226.47
Deferred tax/(Credit) -20.1

Profit for the year (i) 699.05

Other comprehensive loss for the year, net of tax (ii) -6.52

Total comprehensive income for the year, net of tax (i + ii) 692.53
D.

YEARS
2019 2018 2017
Rs. In Crores

5,515.55 4839.37 4723.52

53.63 46.53 48.31
5,569.18 4,885.90 4,771.83
115.58 498.2
5,569.18 4,770.32 4,273.63

3150.03 2470.43 2150.56

432.46 405.57 411.79
-168.67 -87.66 -120.26
311.67 269.84 244.51
34.87 16.2 7.76
165.45 111.92 98
927.42 922.21 876.6

4,853.23 4,108.51 3,668.96

715.95 661.81 604.67

-28.6 0 58.67
687.35 661.81 663.34

251.5 229.97 219.25

249.86 232.08 204.91
1.64 -2.11 14.34

435.85 431.84 444.09

-2.05 1.16 -1.44

433.80 433.00 442.65

 INFO EDGE INDIA LTD.
INCOME STATEMENT (LAST 4 YEARS)
PARTICULARS FY2020
1 Net Revenue 12,726.95
2 Other lncome 876.18
3 Total lncome (1+2) 13,603.13
Expenditure:
a) Network and other charges 234.03
b] Employees Cost 5,395.72
c] Advertising and Promotion Cost 2,044.21
dl Depreciation/Amortization 413.78
el Cost of Material Consumed
f) Other Expenditure 1,025.68
4 Total expenditure 9,113.42
v EBITDAl3-4+3d) 4,903.49
ó. Finance Cost 0.89
7. Profit before tax and exceptional items 4,422.82
(3-4-6)
8. Exceptional ltem 1,232.95
9. Net Profit before tax (7-8) 3,189.87
10. Tax Expense 1,133.22
11. Net Profit after tax (9-10) 2,056.65
12. Share of Profit/(Loss] Joint
Ventures/Associate
13. Share of Minority Interest in the losses of
subsidiary company
14. Other Comprehensive lncome (including
share of profit/(loss] of Joint 148.541
Venture/Associate-Net
of Tax
15. Total Comprehensive lncome 2,008.11
(11•12•13•14)
GE INDIA LTD.
EMENT (LAST 4 YEARS)
FY2019 FY2018 FY2017
10,982.56 9,154.91 8021.06
1,111.52 970.88 625.23
12,094.08 ### 8,646.29

220.58 143.19 172.58

6,586.39 3,930.57 3751.58
1,756.93 1,163.69 880.53
203.80 215,49 240.55

1,005.20 944.31 941.47

7,772.94 6,397.25 5986.71
4,524.94 3,944.03 2900.113
0.84 0.84 1
4,320.30 3,727.70 2658.58

334.08 913.37 39.84

3,986.22 2,814.33 2618.74
1 ,169.19 990,66 574.71
2,817.03 1,823.67 2044.03

(1.58) -4.7
(22.28]

2,794.75 1822.09 2039.33

 BERGER PAINTS INDIA LTD.
DETAILS OF EXPENSES

EXPENDITURE DETAILS COST DRIVERS FIXED/VARIABLE COST

EXPENSES
I) Cost of materials consumed:
1) Raw Materials consumed No. of units Variable
2) Packing Material Consumed No. of units Variable

II) Purchases of traded goods No. of units Variable

III) Increase/ decrease in inventories of finished goods, work in progress
and traded goods No. of units Variable

V) Employee benefits and expense

1) Salaries and wages No. of employees Fixed
2)Contribution to provident and other funds No. of employees Fixed
3)Employee stock option cost No. of shares Fixed
4)Staff welfare expenses No. of employees Fixed

VI) Finance costs

1) Interests
a) Interest on borrowings No. of years Fixed
b) Interest on lease liabilities No. of years Fixed

2)Unwinding of discount on provisions No. of years Fixed

VII) Depreciation and ammortisation expense

1)Depreciation of tangible assets No. of years Fixed
 2)Amortization of intangible assets No. of years Fixed
3) Depreciation of right of use assets No. of years Fixed

VIII) Other expense

1)Freight, octroi and delivery Weight Variable
2)Power and fuel kilo watt hours Variable
3)Consumption of stores No. of stores Fixed
4)Repairs to plant and machinery Area occupied (Square feet) Variable
5)Repairs to building Area occupied (Square feet) Variable
6)Repairs to others Area occupied (Square feet) Variable
7)Rent Area occupied (Square feet) Fixed
8)Rates and Taxes Income Fixed
9)Travelling Distance (kms) Variable
10)Advertisement and Sales Promotion Expenses Mode of advertisement Fixed
11)Insurance No.of years Fixed
12)Processing Charges Loan amount Fixed
13)Directors sitting fees No. of meetings Fixed
14)Foreign Exchange Loss (net) Currency exchange rate Variable
15)Commission to Non-Executive
16)Loss on sale/discard Directors
of Property, plant and equipment and intangible Net Profit Variable
assets Current market rate Variable
17)Audit Fees Size of work Fixed
18) CSR expenditure No. of social projects Fixed
19)Miscellaneous Expenses Fixed

Total expenses
TD.

YEARS
2020 2019 2018 2017
Rs. In Crores

2902.53 3150.03 2470.43 2150.56

2492.19 2722.99 2108.05 1820.49
410.34 427.04 362.38 330.07

481.6 432.46 405.57 411.79

-16.81 -168.67 -87.66 -120.26

342.52 311.67 269.84 244.51

293.49 267.28 228.73 209.1
18.15 15.76 16.3 13.38
2.02 2.46 2.36 1.6
28.86 26.17 22.45 20.43

32.68 34.87 16.2 7.76

32.43 34.63 15.99 7.56
19.41 20.54 15.99 7.56
13.02 14.09 0 0

0.25 0.24 0.21 0.2

170.52 165.45 111.92 98

122.02 118.43 108.65 93.66
 2.28 3.13 3.27 4.34
46.22 43.89 0 0

1,024.05 927.42 922.21 876.60

367.36 353.65 313.36 299.47
47.71 49.48 40.00 36.86
8.58 9.93 8.23 7.28
20.18 18.05 15.02 14.95
0.37 0.28 0.68 2.54
3.44 3.01 1.80 2.20
4.96 2.20 50.70 46.45
3.89 5.19 7.01 9.33
47.49 48.79 47.88 44.64
236.89 180.01 222.23 216.40
6.78 2.00 1.78 2.29
46.07 49.04 44.12 43.77
0.00 0.00 0.02 0.01
7.47 8.41 1.43 0.00
0.61 0.45 0.45 0.43
0.00 0.00 0.00 0.34
0.65 0.65 0.61 0.59
16.79 13.47 10.43 8.18
204.81 182.81 156.46 140.87

4,937.09 4,853.23 4,108.51 3,668.96

 BERGER PAINTS INDIA LTD.
Income Statement - Based on Contribution Method
PARTICULARS COST DRIVERS FIXED/VARIABLE COST

INCOME:
Revenue from operations
Other income
Total income
Less: Excise duty
Net income

Variable Expenses:
Raw Materials consumed No. of units Variable
Packing Material Consumed No. of units Variable
Purchases of tradedingoods
Increase/ decrease inventories of finished goods, work in progress and No. of units Variable
traded goods No. of units Variable
Freight, octroi and delivery Weight Variable
Power and fuel kilo watt hours Variable
Repairs to plant and machinery Area occupied (Square feet) Variable
Repairs to building Area occupied (Square feet) Variable
Repairs to others Area occupied (Square feet) Variable
Travelling Distance (kms) Variable
Foreign Exchange Loss (net) Currency exchange rate Variable
Commission to Non-Executive Directors Net Profit Variable
Loss on sale/discard of Property, plant and equipment and intangible assets Current market rate Variable

Total Variable Expenses

Contribution
Contribution Margin Ratio

Fixed Expenses:
Salaries and wages No. of employees Fixed
Contribution to provident and other funds No. of employees Fixed
Employee stock option cost No. of shares Fixed
Staff welfare expenses No. of employees Fixed
Interest on borrowings No. of years Fixed
Interest on lease liabilities No. of years Fixed
Unwinding of discount on provisions No. of years Fixed
Processing Charges Loan amount Fixed
Depreciation of tangible assets No. of years Fixed
Amortization of intangible assets No. of years Fixed
Depreciation of right of use assets No. of years Fixed
Consumption of stores No. of stores Fixed
Rent Area occupied (Square feet) Fixed
Rates and Taxes Income Fixed
Advertisement and Sales Promotion Expenses Mode of advertisement Fixed
Insurance No.of years Fixed
Directors sitting fees No. of meetings Fixed
Audit Fees Size of work Fixed
CSR expenditure No. of social projects Fixed
Miscellaneous Expenses Fixed
Total Fixed Expenses
Profit before exceptional items and tax
Less: Exceptional items
Profit before tax

Contribution Margin Ratio

Break even in Crores
Margin of safety(in %)
Operating leverage
D.

YEARS
2020 2019 2018 2017
Rs. In Crores

5,691.69 5,515.55 4,839.37 4,723.52

150.82 53.63 46.53 48.31
5,842.51 5,569.18 4,885.90 4,771.83
115.58 498.2
5,842.51 5,569.18 4,770.32 4,273.63

2492.19 2722.99 2108.05 1820.49

410.34 427.04 362.38 330.07
481.6 432.46 405.57 411.79
-16.81 -168.67 -87.66 -120.26
367.36 353.65 313.36 299.47
47.71 49.48 40.00 36.86
20.18 18.05 15.02 14.95
0.37 0.28 0.68 2.54
3.44 3.01 1.80 2.20
47.49 48.79 47.88 44.64
7.47 8.41 1.43 0.00
0.61 0.45 0.45 0.43
0.00 0.00 0.00 0.34

3,861.95 3,895.94 3,208.96 2,843.52

1,980.56 1,673.24 1,561.36 1,430.11

0.34 0.30 0.33 0.33

293.49 267.28 228.73 209.1

18.15 15.76 16.3 13.38
2.02 2.46 2.36 1.6
28.86 26.17 22.45 20.43
 19.41 20.54 15.99 7.56
13.02 14.09 0 0
0.25 0.24 0.21 0.2
46.07 49.04 44.12 43.77
122.02 118.43 108.65 93.66
2.28 3.13 3.27 4.34
46.22 43.89 0 0
8.58 9.93 8.23 7.28
4.96 2.20 50.70 46.45
3.89 5.19 7.01 9.33
236.89 180.01 222.23 216.40
6.78 2.00 1.78 2.29
0.00 0.00 0.02 0.01
0.65 0.65 0.61 0.59
16.79 13.47 10.43 8.18
204.81 182.81 156.46 140.87
1,075.14 957.29 899.55 825.44
905.42 715.95 661.81 604.67
0.00 -28.60 0.00 58.67
905.42 687.35 661.81 663.34

0.34 0.30 0.33 0.33

3171.59 3186.23 2748.34 2466.68
45.72% 42.79% 42.39% 42.28%
2.19 2.43 2.36 2.16
 BERGER PAINTS INDIA LTD.
Income Statement
ACTUALS (LAST 4 YEARS)
PARTICULARS 2019-2020 2018-2019 2017-2018
% of sales In Crores % of sales In Crores % of sales
INCOME:
Revenue from operations 5,691.69 5,515.55
Other income 150.82 53.63
Total income 5,842.51 5,569.18
Less: Excise duty
Net income 100% 5,842.51 5,569.18
Year on year growth rate of sales 4.91% 16.75% 11.62%
Variable Expenses:
Raw Materials consumed 42.66% 2492.19 48.89% 2722.99 44.19%
Packing Material Consumed 7.02% 410.34 7.67% 427.04 7.60%
Purchasesdecrease
Increase/ of tradedingoods
inventories of finished goods, 8.24% 481.60 7.77% 432.46 8.50%
work in progress and traded goods -0.29% -16.81 -3.03% -168.67 -1.84%
Freight, octroi and delivery 6.29% 367.36 6.35% 353.65 6.57%
Power and fuel 0.82% 47.71 0.89% 49.48 0.84%
Repairs to plant and machinery 0.35% 20.18 0.32% 18.05 0.31%
Repairs to building 0.01% 0.37 0.01% 0.28 0.01%
Repairs to others 0.06% 3.44 0.05% 3.01 0.04%
Travelling 0.81% 47.49 0.88% 48.79 1.00%
Foreign Exchange Loss (net) 0.13% 7.47 0.15% 8.41 0.03%
Commission
Loss to Non-Executive
on sale/discard Directors
of Property, plant and 0.01% 0.61 0.01% 0.45 0.01%
equipment and intangible assets 0.00% 0.00 0.00% 0.00 0.00%

Total Variable Expenses 66.10% 3861.95 69.96% 3895.94 67.27%

Contribution 33.90% 1980.56 30.04% 1673.24 32.73%

Contribution Margin Ratio 0.01% 0.34 0.01% 0.30 0.01%

Fixed Expenses:
Salaries and wages 5.02% 293.49 4.80% 267.28 4.79%
Contribution to provident and other funds 0.31% 18.15 0.28% 15.76 0.34%
Employee stock option cost 0.03% 2.02 0.04% 2.46 0.05%
Staff welfare expenses 0.49% 28.86 0.47% 26.17 0.47%
Interest on borrowings 0.33% 19.41 0.37% 20.54 0.34%
Interest on lease liabilities 0.22% 13.02 0.25% 14.09 0.00%
Unwinding of discount on provisions 0.00% 0.25 0.00% 0.24 0.00%
Processing Charges 0.79% 46.07 0.88% 49.04 0.92%
Depreciation of tangible assets 2.09% 122.02 2.13% 118.43 2.28%
Amortization of intangible assets 0.04% 2.28 0.06% 3.13 0.07%
Depreciation of right of use assets 0.79% 46.22 0.79% 43.89 0.00%
Consumption of stores 0.15% 8.58 0.18% 9.93 0.17%
Rent 0.08% 4.96 0.04% 2.20 1.06%
Rates and Taxes 0.07% 3.89 0.09% 5.19 0.15%
Advertisement and Sales Promotion Expenses 4.05% 236.89 3.23% 180.01 4.66%
Insurance 0.12% 6.78 0.04% 2.00 0.04%
Directors sitting fees 0.00% 0.00 0.00% 0.00 0.00%
Audit Fees 0.01% 0.65 0.01% 0.65 0.01%
CSR expenditure 0.29% 16.79 0.24% 13.47 0.22%
Miscellaneous Expenses 3.51% 204.81 3.28% 182.81 3.28%
Total Fixed Expenses 18.40% 1075.14 17.19% 957.29 18.86%

Profit before exceptional items and tax 15.50% 905.42 12.86% 715.95 13.87%
Less: Exceptional items 0.00% 0.00 -0.51% -28.60 0.00%
Profit before tax 15.50% 905.42 12.34% 687.35 13.87%

Contribution Margin Ratio 0.01% 0.34 0.01% 0.30 0.01%

Break even in Crores 54.28% 3171.59 57.21% 3186.23 57.61%
Margin of safety(in %) 0.01% 45.72% 0.01% 42.79% 0.01%
Operating leverage 0.04% 2.19 0.04% 2.43 0.05%
DIA LTD.

T 4 YEARS) CAGR FORECAST

2017-2018 2016-2017 2020-2021
In Crores % of sales In Crores % of sales In Crores

4,839.37 4,723.52
46.53 48.31 8.13%
4,885.90 4,771.83
115.58 498.20
4,770.32 4,273.63 100% 6317.57
11.62% - 8.13%

2108.05 42.60% 1820.49 44.86% 2833.81

362.38 7.72% 330.07 7.49% 473.19
405.57 9.64% 411.79 8.52% 537.98
-87.66 -2.81% -120.26 -2.58% -163.03
313.36 7.01% 299.47 6.53% 412.66
40.00 0.86% 36.86 0.85% 53.81
15.02 0.35% 14.95 0.33% 21.10
0.68 0.06% 2.54 0.04% 2.68
1.80 0.05% 2.20 0.05% 3.30
47.88 1.04% 44.64 0.93% 58.90
1.43 0.00% 0.00 0.13% 8.28
0.45 0.01% 0.43 0.01% 0.60
0.00 0.01% 0.34 0.01% 0.50

3208.96 66.54% 2843.52 67.17% 4243.80

1561.36 33.46% 1430.11 32.83% 2073.77

0.33 0.01% 0.33 0.01% 0.33

228.73 4.89% 209.10 3.95% 249.65

 16.30 0.31% 13.38 0.25% 15.90
2.36 0.04% 1.60 0.03% 2.11
22.45 0.48% 20.43 0.39% 24.48
15.99 0.18% 7.56 0.25% 15.88
0.00 0.00% 0.00 0.11% 6.78
0.21 0.00% 0.20 0.00% 0.23
44.12 1.02% 43.77 0.72% 45.75
108.65 2.19% 93.66 1.75% 110.69
3.27 0.10% 4.34 0.05% 3.26
0.00 0.00% 0.00 0.36% 22.53
8.23 0.17% 7.28 0.13% 8.51
50.70 1.09% 46.45 0.41% 26.08
7.01 0.22% 9.33 0.10% 6.36
222.23 5.06% 216.40 3.39% 213.88
1.78 0.05% 2.29 0.05% 3.21
0.02 0.00% 0.01 0.00% 0.01
0.61 0.01% 0.59 0.01% 0.63
10.43 0.19% 8.18 0.19% 12.22
156.46 3.30% 140.87 2.71% 171.24
899.55 19.31% 825.44 14.87% 939.36

661.81 14.15% 604.67 17.96% 1134.41

0.00 1.37% 58.67 0.12% 7.52
661.81 15.52% 663.34 18.08% 1141.93

0.33 0.01% 0.33 0.01% 0.33

2748.34 57.72% 2466.68 45.30% 2861.67
42.39% 0.01% 42.28% 0.01% 54.70%
2.36 0.05% 2.16 0.03% 1.82
 INTERPRETATIONS AND ANALYSIS
1. There has been a progressive increase in the total income of berger paints in the year 2020 from 4771.8

2. Berger paints has been been able to increase their total income in 2020 mainly due to an increase in the
more than double the amount they earned in 2019, which is 53.63 and 150.82 in 2020.

3. Despite the variable expenses increasing over the past 4 years, the contribution can be seen increasing
increased over the past 4 years with a year on year growth of 11.62% in 2018, 16.75% in 2019 and 4.91%
observed in the forecast year with an expected growth rate of 5.19%

4. The total variable expense has increased by very small margin from 3895.94 to 3861.95 in 2020, this ca
income in 2020 has not been through direct operations.

5. The total fixed expense has also gone up but not by a very high margin. Berger paints has invested mor
as compared to 2019, the expense has increased from 180.01 to 236.89.

6. In 2021, the fixed expenses are expected to reduce from 18.40% to 14.87%. Reduction in fixed cost will
Leverage which will avoid higher fluctuations in the Profit before tax.

7. The break even level of sales have been decreasing over the last 4 years with 54.28% in 2020. This me
is being recovered and hence the margin of safety is (100-54.28)% which is equal to 45.72%

8. Lower the break even levels of sales, better it is for the company. The break even level has successfully
been a decrease in the variable costs which has inturn given a rise to contribution.

9. The opearting leverage for all the 4 years is close to the value of 2. This can be said to be highly volatile
the sales level will lead to a higher degree of fluctuations in the company's profit levels.

LEARNING
1. By making the contribution statement, we were able to classify the costs as variable or fixed costs from
India Ltd.
2. After being able to classify the costs as fixed or variable, we learnt to identify suitable cost drivers for ea
behavior.
3.Variable costs should not be greater than the sales levels or else it would result in a negative contribution
Also, the fixed cost should be lesser than the contribution or else it will also result into losses for the compa
4. We could conclude that lesser the break even sales of the company, the better it is. And the greater the
profits of the company.
5. A company should not have a very high operating leverage because higher the operating leverage, the h
the profit margins of the company.
6. Learnt how to predict the future costs and revenue for the company based on the historic data. This fore
identify the trend for the coming year and they can make changes in their costs if needed, by refering to th
7. By working on this project as a group we learnt how to coordinate effectively among ourselves and to giv
to the ideas, opinions and interpreations of each group member.

OK. Accepted as final submission