GROUP PROJECT ON INTERPRETING AN ANNUAL REPORT

GROUP -2 SECTION – PGDM- [B]

SR NUMBER NAMES OF GROUP MEMBERS ROLL NUMBER

1 NIPUN MAHESHWARI PGFB2137

2 ADARSH JAIN PGFB2104
3 SHIVAM BANSAL PGFB2147
4 DIPANNITA SADHUKHAN PGFB2121
5 MUSKAN MADHWANI PGFB2134

SR NUMBER CONTENT PAGE NUMBER

1 INTRODUCTION OF THE 2
COMPANY [purpose and key
findings]

2 Analysis of important 3-5

figures of Standalone B/S
and assigning them
respective note numbers

3 Notes to accounts for 5-6

Standalone Income
Statement
4 Cash flow analysis 6
5 Management discussions 6-7
6 Chairman Letter 7
7 Independent Auditor Report 8
 1. INTRODUCTION OF THE COMPANY

BERGER PAINTS INDIA LTD.

Berger Paints limited company is an Indian Multinational paint company based in Kolkata,
India. They are indulged in offering customers a variety of innovative painting solutions
decorative or industrial. It is a public company which is listed on Mumbai, Kolkata and
National stock exchange.

ANALYSIS OF FINANCIAL STATEMENTS

PURPOSE - There are three financial statements, that every company irrespective private or
public creates and monitors which are Balance Sheet, Income Statement and Cash Flow
Statements. Company uses these financial statements to manage business operations and to
provide transparency to stakeholders.

 BALANCE SHEET – It is report of company’s financial worth and is broken into three
parts that’s company’s assets, Shareholder equity and liabilities which are further
divided into sub headings. It follows separate legal entity concepts, where business
and owners are considered as separate entities.

 INCOME STATEMENT- It breaks out revenues of the company that are earned
against expenses, involved in business to estimate net profits or losses. Profit
margins helps to show whether company’s cost is low or high and to draw certain
conclusions.

 CASH FLOW STATEMENT – Cash flow statement provides an overview of company’s

cash inflow or outflow from various activities such as operating, investing and
financing.

PROCESS INVOLVED IN KEY FINDINGS

Our key findings under this company’s analysis will be highly focusing on –
 Financial Statements
 Auditor Report
 Notes to Accounts
 Chairman Letter
 Management discussion

PASTING SOME IMPORTANT FIGURES IN RELATION TO BALANCE SHEET OF BERGER PAINTS

NOTE - The below balance sheet only includes relevant amounts which are to be highlighted by the
manager, hence many of the subheads will not be included, resulting to no matching of total column
of equity and liabilities with asset portion.

BALANCE SHEET AS AT 31 MARCH, 2021 Amt in crores

NOTES As at 31 March, 2021 As at 31 March, 2020

[1] EQUITY AND LIABILITIES

Equity share capital 1 97.13 97.12

NON-CURRENT LIABILITIES

Deposits 53.43 25.88

Provisions 3.68 3.41

Deferred tax liabilities 2 26.38 29.14

CURRENT LIABILITIES

BORROWINGS 3 155.44 222.46

TRADE PAYABLES 4 1409.22 1012.62

[2] ASSETS

NON-CURRENT ASSETS

INVESTMENTS 5 585.87 468.63

LOANS AND DEPOSITS 24.76 18.01

CURRENT ASSETS

Inventories 6 1499.00 1167.12

Trade receivables 7 838.61 558.57

Bank Balance 247.87 69.89

Cash and cash eq. 90.68 55.66

NOTES TO ACCOUNTS

Note 1 -ESC [EQ SHARE CAP] – It depicts amount of capital raised through issue of fresh equity
shares by the Berger LTD.

PARTICULARS NO OF SHARES AMOUNT

Equity shares as at 31st march, 971219780 97.12
2020
ADD – Issue of shares during 75257 0.01
the year
TOTAL - 971295037 97.13
As at March, 2021 971295037 97.13

NOTE 2 – DEFERRED TAX LIABILITIES - It arises due to change or difference in accounting method as
per Income tax act, 1961 and Companies Act, 2013. When Book profit is greater than Taxable profit,
it results in DTL. It is calculated by multiplying tax rate with difference in profit. Under Berger Paints
B/S, DTL in year 2021 is lower than year 2020, which indicates a positive image of the company in
relation to tax liabilities.

NOTE 3 – BORROWINGS – These are known as short term debts which are to be paid by the
company within a year. In our analysis, Berger Paints made borrowings from both secured and
unsecured sources. Borrowing under is 2021 is lower than 2020, which indicates less payment
obligations for the company.

PARTICULARS As at 31 March, 2021 As at 31 March, 2020

Secured -
From Banks -
Cash Credit 5.44 12.36
Working capital demand loan 210.10
Unsecured -
Commercial Paper 150.00
TOTAL 155.44 222.46

NOTE 4 – TRADE PAYABLES – It aims at obligation to pay for goods or services which Berger Paints
have acquired from its suppliers, during an ordinary course of business operations. However, as per
current analysis we can observe that trade payables for the year 2021 is high as compared to year
2020, which is not a good indication, as it implies a higher payment obligation to company’s
suppliers.

NOTE 5 – INVESTMENTS – Investments under non-current assets implies investment which will yield
income and are held for more than a year by the company. Berger Paints investments have seen rise
in the current year, due to more amount of investment under trade investment, subsidiaries and
joint ventures. There has been a positive rise in investment of the company with a jump from Rs.468
to Rs.585 crores

NOTE 6 - .INVENTORIES – Berger Paints follows LCM approach which is lower of cost or net
realizable value (NRV) . Under Berger Paints ltd –

 Raw Materials, Stores and Spares, Packing Materials are valued at lower of cost or NRV.
 Cost is calculated on weighted average basis. (WAC)
 Finished goods, Work in progress and traded goods are also stated at lower of cost or
estimated net realizable value.

NOTE 7 – TRADE RECEIVABLES – It refers to amount which is being due from the customers in
relation to a credit sale made by Berger Paints. Below is the analysis of trade receivables for Berger
Paints.

PARTICULARS As at March, 2021 As at March, 2020

A] Amortised Cost
Unsecured
Considered Good 838.61 558.57
Credit Impaired 16.88 6.85
LESS - Allowance for credit (16.88) (6.85)
impaired trade rec.
TOTAL 838.61 558.57
  Debts also includes dues from related parties
 CREDIT IMPAIRED implies events having negative impact on future cash flows from financial
asset. Also, Receivables under year 2021 is higher as compared to 2020 that indicates
positive cash inflow for the company.

NOTES TO ACCOUNTS FROM INCOME STATEMENT FOR YEAR ENDED MARCH, 2021

REVENUES
NOTE8 – REVENUE FROM OPERATIONS - Amt- In crores

Particulars Year ended 31 March, 2021 Year ended 31 March, 2020

Revenue from sale 5716 5608
Revenue from combined 227 20
products
Other operating revenue 76 62
TOTAL 6019 5690

Berger ltd generates revenue from sale of paints and allied products and from combined contracts,
where customers are based on either India or outside. However, revenue under year 2021 has seen
a rise from year 2020, which indicates a positive inflow of revenue to company.

NOTE 9 - OTHER INCOME- Berger LTD generates other income from interest income in deposits with
the banks, other income also includes sources such as insurance claim, dividend income, Foreign-
exchange gains and royalty income etc. However, other income flow has seen a low in year 2021 in
context to year 2020. Other income was Rs.150.82 Cr in year 2020, whereas Rs.55.77Cr in year 2020,
that’s 63% decline from year 2020.

EXPENSES

NOTE10 - EMPLOYEE BENEFIT EXPENSES – It include expenses related to salaries, bonus, wages
payment with contribution to Provident funds and other funds. ESOP and staff welfare expenses also
contributed to employee benefit expenses for Berger Paints. However, such expense has seen a
approx. Rs.10 CR rise in year 2021 as with year 2020, which is Rs.342CR in previous year and
Rs.352CR in current year.

NOTE11- DEPRICIATION AND AMMORTIZTION EXPENSES – This note implies depreciation expenses
for Berger Ltd from Plant, Property and equipment and from right use of assets. However,
amortization expenses from intangible assets are also reflected under this head. Such expense has
seen a rise from Rs.170CR in year 2020 to Rs.186CR in year 2021.

NOTE12 - OTHER EXPENSES – There is a huge list of other expenses for Berger Ltd, however a good
chunk of amount is spent on expenses from freight and forwarding charges and advertisement and
sale promotion expenditure. CSR Expenditure and Payment to auditor tax and audit fees also
constitutes towards other expenses for the company. Other expenses had seen a rise in current year
as with previous year. A rise of expenditure is observed from Rs.1024CR in year 2020 to Rs.1133CR in
year 2021, which indicates a higher cash outflow for the company in the current year.
  PROFIT/LOSS ANALYSIS – After comparing income statements for Berger LTD of both the
years, that’s Year 2020 and 2021. The Profit after deducting tax expense in year 2020 was Rs.
699CR and Rs.680CR for current year [2021]. This indicates that profit has seen a downfall in
current year with respect to the previous year. However, this amount is carried to Balance
sheet of the company in Equity and Liabilities head and shown under Reserves and Surplus
column.

CASH FLOW ANALYSIS

Standalone cash flow statement of Berger Ltd shows cash inflow as well as outflow from three types
of activities which are –

 Operating activities
 Investing activities
 Financing activities

Particulars 2020-21 [Amt in CR] 2019-20 [Amt in CR]

A] Net cash flow from 676.72 792.78
operating activities

B] Net cash flow used in (458.63) (234.01)

investing activities

C] Net cash flow used in (183.07) (530.35)

financing activities

 As per above table, cash flow/used in various activities is highlighted for Respective year
2020-21 and 2019-20 for Berger Ltd. There is a cash inflow from operating activities in both
the years, but year 2019-20 has a higher cash inflow with respect to 2020-21. Whereas, both
investing and financing activities shows cash outflow with respective years. However, cash
outflow under investing activities is higher in 2020-21 as compared to 2019-20 and lower
under financing activities for the 2020-21 with respect to 2019-20.

MANAGEMENT DISCUSSIONS

The year 2020-21 stressed on stringent nationwide lockdowns resulted to permanent job
losses, the construction activities were kept on a pause due to pandemic. The overall
economic conditions were depressed, however paint industry contributed significant under
quarter 4 after having a bad quarter 1.
Urbanization and nuclearization among Indian families growing demand for affordable
housing projects which results to key drivers to Paint industry as demand for premium
products have also increased. Berger’s primary focus is on innovating the products and
services with rapid incline towards digitization and adopting a consumer-friendly approach.
 Proper transfer of funds to painters were made within fifteen days of commencement of
lockdown.
The Demand, bounced back post lockdown and company have been seen ready with its
resources. Company has launched paint kit, repair kit, aerosol spray etc in order to curb
problems faced by consumer during pandemic, such products were made available online
through e-commerce site of the company. Variety of accessories and diversification among
various segments have also been noticed during FY 2020-21. The R&D activities are also
been well in line with company’s growth.
Vaccination drives in India during last quarter worked as a positive measure for the
company and throughout the world. The company follows strict protocols and their
products are also in line with home hygiene segments. Demand for coatings and water
proofing solutions have also been risen up. Therefore, company caters the needs of
consumers and industry with utmost focus on cost cutting, digitization, product innovation
and with effective marketing strategies and by proper distribution network supported by
adequate internal controls and with proper compliances as well.

CHAIRMAN MESSAGE FOR YEAR 2020-21

Dear Shareholders, During the year 2020-21 company has performed beyond its expectations.
Consolidated revenue registered an increase of 7.1% in FY 2020-21. Consolidated Net profit have
seen a growth of 9.7% over last financial year. Board has recommended dividend of Rs.2.8 per
equity share of Rs.1 during FY ending 31 March, 2021.The market capitalisation of the Company
stood at Rs 74,304 crore as on 31st March, 2021 as 31st March, 2020 which was Rs.48,366 crore
depicting an increase of more than 53.62% in one year. The company is ensuring increase in
customer network throughout country. Contributors. behind company’s growth during FY 2020-21
were Weather coat long life range and ‘home shield’. Innovative offerings in the company had
maintained its leadership in India and diversified to newer segments internationally. Company’s
subsidiaries and joint venture plus R&D capabilities, marketing team and sales helped company to
achieve great numbers. Covid-19 Pandemic resulted to national wide lockdown and uncertainties,
hence suitable efforts were made to protect employees and their families, dealers, distributors and
painter community at large. Company provided Benefit of Rs.50000 for COVID protection and
insurance coverage to more than 40000 painters. Company’s CSR initiative which includes oxygen
generation plants and distribution systems were donated during second wave of pandemic. The
pandemic has taught us that we cannot predict ways of the nature. However, company is confident
of making rapid changes under guidance of Board of Directors, management team and work force of
the company to overcome many challenges with all your support. With this, I hope and pray that
each one of you and your family and friends stay safe and secure in these testing times.

Thanking You,

Kuldip Singh Dhingra

Chairman

INDEPENDENT AUDITOR’S REPORT

To the Members of BERGER INDIA Ltd.

Auditor’s report on the standalone financial statements of the company -

OPINION – The auditor had audited accompanying standalone financial statements of Berger Paints
India Ltd. Which comprises Balance Sheet, statement of Profit and Loss with cash flow statement for
the year ended, and notes to standalone financial statements, including summary of significant
accounting policies.

BASIS OF OPINION – Auditor concluded audit of standalone financial statements in accordance with
Standards on Auditing (SA’s) under section 143(10) And have fulfilled ethical responsibilities in
accordance with code of ethics. Auditor believe that audit evidence obtained is sufficient and
appropriate to provide a basis for opinion.

KEY AUDIT MATTERS – Key audit matters are those matters which holds utmost importance in audit
of standalone financial statements. These matters were addressed in the context of the audit and
auditor do not provide a separate opinion on these matters. Auditor have determined matters that
belong to the key matters and are to be communicated in the report. Accordingly, audit included
procedures designed to assess risk of material misstatements.
Key audit matters highlighted by the auditor are –

 Recognition of Revenue
 Impairment assessment of investment in subsidiaries and joint ventures

INFORMATION OTHER THAN FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON

The company’s Board of Director’s are responsible for other information. Auditor’s opinion on
standalone financial statements does not cover the other information and he do not express any
form of assurance thereon.