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xIntroduction
xHistory
xProfileof the Company
xProducts
xFinancial Statement Analysis
Œ ÷atio Analysis
ΠIndex Analysis
x SWOT Analysis
x Achievements
x Conclusion
6 J6 
½ Asian Paints was established in 1942.
½ It was formerly known as The Asian Oil & Paint
Company.
½ Asian Paints is India·s leading paint company with
a annual turnover of IN÷ 66.80 billion.
½ In Asia, Asian Paints Holds third position among
other paint companies.
½ It has operation in 17 countries with 23 paint
manufacturing facilities.
½ Its various subsidiaries are around the globe are
BE÷ E÷ INTE÷NATIONAL LTD., APCO
COATIN S, SCIB PAINTS and TAUBMANS.
Ú6 
O In 1942, a partnership was started by 4
entrepreneurs.

O In 1945, the firm was turned into a company.

O In 1957, a plant was setup at Bhandup, Mumbai.

O In 1973, AP became a public ltd. company.

O In 2002, AP was a market leader of Indian


Decorative Paints with market share of 44%.
P÷OFILE OF THE
COMPANY
BOA÷D OF DI÷ECTO÷S
VISION
QUALITY POLICY
BUSINESS
LOCATIONS
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½ Mr. Abhay Vakil
½ Mr. Mahendra Choksi
½ Mr. Amar Vakil
½ Mrs. Ina Dani
½ Ms. Tarjani Vakil
½ Mr. Dipankar Basu
½ Mr. Mahendra Shah
½ Mr. Deepak Satwalekar
½ Mr. ÷ajendra Shah
½ Dr. S. Sivaram
½ Mr. S. ÷amadorai
º

O Asian Paints aims to become one of the
top five Decorative coatings companies
world-wide by leveraging its expertise in
the higher growth emerging markets.

O The company intends to build long term


value in the Industrial coatings business
through alliances with established global
partners.
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O To provide products and services that meet
stated standards on time, every time.
O To continually improve their processes to
understand changing customer needs and
preferences.
O To accept Zero Defect as a quality absolute,
and to design and operate their quality
system accordingly.
O To organize their work practices to do a job
right the first time, every time.
O To be committed to continual improvement
in quality in all business processes.
Ô6
½ Currently South Asia, South East Asia,
South Pacific, Middle East and Caribbean
region are covered through five brands viz.,
Asian Paints, Berger International, SCIB
Paints, APCO Coatings & Taubmans
respectively.

½ Asian paints has two alliances


ΠWith PP Inc., USA for automotive coatings.
Œ With P÷OTECH CHEMICALS to touch the
realm of Powder Coating.
P÷ODUCTS

ANCILLA÷IES
AUTOMOTIVE
INDUST÷IAL
DECO÷ATIVE
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FINANCIAL STATEMENT
ANALYSIS

÷ATIO ANALYSIS
INDEX ANALYSIS
COMMON SIZE STATEMENT ANALYSIS
÷ATIO
ANALYSIS
LIQUIDITY ÷ATIOS
LEVE÷A E ÷ATIOS
TU÷NOVE÷ ÷ATIOS
P÷OFITABILITY ÷ATIOS
   

O Liquidity refers to the ability of a firm to


meet its obligations in the short run,
usually one year

O Liquidity ÷atios are generally based on


the relationship between current assets
and current liabilities.
6366 6 

    

Current 1.08 1.23 1.008 1.07 0.94


÷atio

Quick 0.49 0.57 0.21 0.26 0.18


÷atio
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O A higher Current ÷atio generally indicates greater financial strength
of the company.

O But recently, companies have tried to achieve a zero or negative


working capital position.

O So if Current ÷atio < 1, this implies superior financial management


within the firm.
º 

O Leverage refers to the use of debt


finance.

O Leverage ÷atios help in assessing the risk


arising from the use of debt capital.
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Debt- 0.116 0.069 0.025 0.059 0.042


Equity
÷atio
Debt- 0.056 0.069 0.025 0.0194 0.014
Asset
÷atio
Equity- 0.48 0.47 0.308 0.326 0.337
Asset
÷atio
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O The ratios used i.e. Debt-Equity ÷atio, Asset-Equity ÷atio and Debt-
Asset ÷atio are based on the proportion of debt and equity in the
financial structure of the firm.

O Lesser the Debt-Equity ÷atio, greater is the degree of protection


enjoyed by the creditors.

O Lesser the Debt-Asset ÷atio, lesser is the extent to which


borrowed funds support the firm·s assets.
  º 

O Also referred as Activity ÷atios or Asset


Management ÷atios, measure how
efficiently the assets are employed by the
firm.

O These ratios ratios are based on the


relationship between the level of activity,
represented by sales or cost of goods
sold and levels of various assets.
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Inventory 8.003 7.80 7.59 9.22 7.59


Turnover
÷atio(IT÷
Debtors 10.65 9.988 10.63 11.4 11.07
Turnover
÷atio(DT÷
Total Asset 2.167 2.179 1.36 1.505 1.255
Turnover
÷atio
(FAT÷
Fixed Asset 8.49 9.646 7.246 6.402 5.27
Turnover
÷atio
(TAT÷
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O IT÷ measures ho fast the inventory is moving through the firm and
generating sales. So a higher IT÷ reflects more efficient
management of inventories.

O Higher the DT÷, greater is the efficiency of credit management


within the firm.

O Higher FAT÷ represents high degree of efficiency in fixed asset


utilisation.

O TAT÷ is also high, so overall asset utilisation is very good.


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Net Profit 6.6 8.1 9.1 7.1 13.3


Margin
(NPM
Operating 10.99 12.36 13.92 10.89 19.24
Profit ÷atio

÷eturn on 14.4 17.4 12.4 10.8 16.7


Total Assets
(÷OTA

÷eturn on 16.2 19.5 21.3 17.3 25.6


Equity
(÷OE
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O An increasing NPM represents overall efficiency of production,
administration, finance, pricing and tax management.

O A higher FAT÷ implies that return to the shareholders is more than


their contribution.

O ÷OE is increasing, this indicates the profitability of the equity funds


invested in the firm.
INDEX ANALYSIS
ASSETS
    
 
6  100 108.10 142.97 173.36 217.37
Land & building 100 115.71 173.88 242.19 302.38
Plant & machinery 100 137.72 147.37 158.27 151.52
Transport & comm. 100 104.69 83.44 81.88 47.19
equipment/infrastructure
Furniture & other fixed assets 100 32.56 35.12 62.34 67.61
Capital work-in-progress 100 55.87 466.45 563.64 1340.91
Intangible assets 100 108.11 116.78 129.29 164.61
Less: Cumulative depreciation 100 109.39 119.17 118.51 120.24

6  100 106.55 171.43 238.92 333.45
6  100 121.79 154.02 85.51 256.29
Equity shares 100 105.01 107.10 113.49 83.08
Mutual funds 100 185.72 321.39 0 840.57
Less: Provision for dimunition in 100 100 100 117.56 41.78
value of investments
ASSETS
    
roup companies 100 104.22 107.23 116.41 94.10
Non-group companies 100 137.69 197.33 56.04 399.88
Market value of quoted 100 115.65 285.57 112.96 118.03
investments

    100 171.13 194.99 233.18 262.75
J  100 128.19 304.67 355.43 431.87
Cash & bank balance 100 149.66 145.65 451.78 100.74
Inventories 100 124.12 154.11 156.33 218.21
÷eceivables 100 129.10 146.56 168.28 199.18
Expenses paid in advance 100 474.70 59768.07 70275.3 87936.7
Loans & advances 100 85.85 133.07 66.06 45.13
    100 120.41 233.11 259.42 357.51
LIABILITIES
    
  Ú 100 119.57 149.21 175.88 250.24
Authorised capital 100 100 100 100 100
Issued equity capital 100 100 100 100 100
Paid up equity capital (net of 100 100 100 100 100
forfeited capital
÷eserves & surplus 100 123.14 158.18 189.71 277.62
Free ÷eserves 100 123.16 158.23 189.79 277.79
Other free reserves 100 123.16 158.23 189.79 277.79
Specific ÷eserves 100 100 100 100 100
   Ô  6 100 148.25 106.64 89.95 91.33
Bank borrowings 100 266.25 74.23 0 1.81
Short term bank borrowings 100 266.25 74.23 0 1.81
Deferred credit 100 108.53 117.55 120.55 121.47
Other borrowings 100 100 0 0 0
Secured borrowings 100 209.85 115.12 77.13 80.27
LIABILITIES
    
Unsecured borrowings 100 100 100 100 100
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  100
 Ô 119.124 349.6862 379.3868 522.4797
Sundry creditors 100 145.5441 204.5457 195.1712 311.2363
Acceptances 100 139.8949 181.7388 149.4365 248.0468
Deposits & advances from 100
customers & employees 97.67568 93.51351 49.94595 12.43243
Other current liabilities 100 ’  ’ ’ ’ 
Provisions 100  ’ ’  ’

  6 Ô666 100  ’  ’  ’’’’
   6 Ô666 100 ’ ’  ’’ ’ ’
Net worth (net of reval & D÷E 100 ’’ ’  ’  
Contingent liabilities 100 ’ ’’  ’ ’’  
INCOME AND EXPENDITU÷E
    
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100 120.689 146.1504 179.4277 209.8252
Sales 100 121.0402 146.2842 180.1234 206.9836
Industrial sales 100 120.9692 146.1875 179.8993 206.7605
Income from non-financial services 100 138.3072 169.808 234.6422 261.2565
Income from financial services 100 98.44021 174.87 119.5841 702.3108
Interest 100 100.6993 259.4406 219.5804 271.3287
Dividends 100 173.2895 329.0789 222.7632 308.1579
Treasury operations 100 200 274.2857 28.57143 26828.57
Other income 100 88.81988 119.9379 96.64596 139.0683
Prior period income &
extraordinary income 100 100.241 37.83133 280.9639 346.747
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100 -4993.15 -2321.92 -41.7808 -8870.55
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100 121.7475 143.6514 178.5217 200.3851
÷aw material expenses 100 128.7943 149.0886 198.1012 220.7569
Packaging expenses 100 124.3294 145.6032 183.8247 211.5961
INCOME AND EXPENDITU÷E
    
Purchase of finished goods 100 106.8312 107.2713 145.5798 176.3299
Power, fuel & water charges 100 121.9414 131.3553 167.6923 172.2711
Compensation to employees 100 120.3848 149.0717 182.0033 198.2183
Indirect taxes 100 120.4078 135.3003 145.3436 119.9235
Lease rent & other rent 100 115.4976 139.6411 188.3632 197.0092
÷epairs & maintenance 100 116.2338 134.4746 155.7261 165.4664
Insurance premium paid 100 115.1125 116.7203 109.9678 125.0804
Outsourced mfg. jobs (incl. job
works, etc. 100 133.9088 172.8591 180.8011 243.7155
Outsourced professional jobs 100 100.2496 120.5491 124.1265 167.2213
Directors' fees 100 925 1212.5 1275 2612.5
Selling & distribution expenses 100 120.0873 152.5853 183.915 221.9091
Travel expenses 100 128.3217 149.1841 165.2098 170.8625
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100 105.3812 134.6786 163.0045 165.6951
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100 111.8327 138.2266 186.5955 212.4555
INCOME AND EXPENDITU÷E
    
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SWOT ANALYSIS

ST÷EN TH
WEAKNESS
OPPO÷TUNITIES
TH÷EATS
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O Market leaders with 44% market shares.
O Strong in inventory control.
O The pricing strategy is oriented to middle
and lower end customers.
O Widest product range in terms of products,
shapes and pack sizes.
O Comprehensive nation wide coverage of the
market.
O For the first time in paints industry TEFLON
COATIN has been introduced by AP.
 
O Seasonal demand and hence in off seasons it
can lead to cash flow problems.

O In industrial sector, it covers only 15% of the


market share.

O Widening products puts strain production


distribution and inventory management.

O It has no tie-up with any foreign


manufacturer.
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O With rapid increase in lobal
Urbanization , the opportunities for the
paint industry are increasing.
O Also with the improvement in the lifestyle
of people, its products like ASIAN
PAINTS ÷OYALE are coming into picture.
O The use of its Automobile products is also
increasing with the increased use of
automobiles in day to day life.
Ú 
O According to Mr. P.M. Murty, CEO of the
company, FAKE LABELS has been the
biggest threat to company.
O Introduction of the more competitors in
the market has been a constant threat to
the company.
O Domination of foreign countries in
international market.
ACHIEVEMENTS
JÚ6 
O AP was awarded the ´SWO÷D OF
HONOU÷ by the British Council.

O Forbes lobal Magazine, USA ranked AP


amongst the ´Best Small Companies of the
World in 2002 & 2003 and amongst the top
200 ´Under a Billion Firms  of Asia in 2005.

O ÷anked 24th amongst the top paint


companies in the world by Coatings World-
Top Companies ÷eport 2006.
JÚ6 
O The Asset- one of Asia·s leading Financial
magazine ranked Asian Paints amongst the
leading companies in Corporate
overnance in 2002 and 2005.

O ÷eceived the Ernst & Young


´Entrepreneur of the year-
Manufacturing award in 2003.
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To sum up the entire financial analysis, we can say that ²
½ The Liquidity ÷atios are good. So we can infer that the company is
able to meet all its short term obligations very well.

½ The Leverage ÷atios are also beneficial. The assets and the equity,
both are not dependent on debt finance.

½ The Turnover ÷atios are high. This implies that the firm is converting
all its inventory, its accounts receivables and its assets into cash very
quickly.
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O The Profitability ÷atios are also very good, reflecting a higher profit
margin and the effective running of the firm

O So in totality, we can say that ASIAN PAINTS is a firm which is


using its resources efficiently and is generating a significant amount
of profits. Also the long term assets are well utilized, so the firm is
headed for a successful future in the coming years also.