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Company Information

• Established : 1920

• Manufactures and sell paints and enamels,
  varnishes, oils, pigments, colours.

• Is second largest paint company.

• Market share of 18 percent.

• It has 39 Joint Ventures, subsidiaries and
  licensees around the world and has recorded a
  turnover of over 2 billion USD.
Company Information
• Key executives




• Board Members




• Auditing Committee
Auditor’s Report

• The auditor's report is a formal opinion, or
  disclaimer thereof, issued by either an internal
  auditor or an independent external auditor as a
  result of an internal or external audit or evaluation
  performed.

• This report was conducted in accordance with
  auditing standards generally accepted in India.

• The Balance Sheet as at 31 March 2011, of the
  company was audited.
Continued…

The following key points were included in the report:

• The Company has maintained proper records of fixed
  assets.
• The inventory has been physically verified.
• Dues have been generally regularly deposited during the
  year by the Company with the appropriate authorities.
• The Company does not have any accumulated losses.
• The Company has not defaulted in repayment of dues.
• No money was raised by public issues during the year.
• No material fraud on or by the Company has been noticed
  or reported during the course of our audit.
Financial Statements



• Profit and Loss Account

• Balance Sheet

• Statement of Cash Flows

• Ratios
Profit and Loss Account

                               Mar '11    Mar '10
Sales Turnover                 2,493.19   1,971.71
Excise Duty                     234.48     156.99
Net Sales                      2,258.71   1,814.72
Other Income                     48.5      20.07
Stock Adjustments                70.22     47.32
Total Income                   2,377.43   1,882.11
Raw Materials                  1,478.71   1,122.01
Power & Fuel Cost                33.45     26.16
Other Manufacturing Expenses     22.39     18.35
Selling and Admin Expenses      395.31     341.62
Miscellaneous Expenses           15.35     13.66
Total Expenses                 2,037.85   1,597.85
Operating Profit                291.08     264.19
Continued…
                             Mar’ 11   Mar’ 10
PBDIT                        339.58    284.26
Interest                      1.23      1.64
PBDT                         338.35    282.62
Depreciation                  49.35     44.26
Profit Before Tax             289      238.36
PBT (Post Extra-ord Items)   289.16    239.49
Tax                           83.15     73.96
Reported Net Profit          205.98     165.5
Equity Dividend               53.89     40.42
Corporate Dividend Tax        8.74      6.71
Balance Sheet
       Liabilities       2011        2010          Assets          2011      2010
                        -----Crores-----                           ------Crores------
Total Share Capital       53.89 26.95 Gross Block                   675.28 637.67
Equity Share Capital      53.89 26.95 Less: Depreciation            397.07 348.35
Preference Share Cap.            0        0 Net Block               278.21 289.32
Reserves                862.28 745.87 Capital Work in Prog.         103.57     16.43
Revaluation Reserves             0        0 Investments             371.82 401.54
Net worth               916.17 772.82 Inventories                    354.1 247.44
Secured Loans              8.11 33.53 Sundry Debtors                260.26 232.37
Unsecured Loans           74.37 76.45 Cash and Bank Bal.             39.69     41.08
Total Debt              `82.48       109.98 Total Current Assets    654.05 520.89
Current Liabilities     363.54 305.45 Loans and Advances             63.64     53.74
                                            Provisions              109.11     93.67
                                            Net Current Assets      245.04 175.51
Total Liabilities       998.65 882.8 Total Assets                   998.64     882.8
Statement of Cash Flows

                                        Mar '11     Mar '10
                                        ----- in crores -----
Net Profit Before Tax                   289.13      238.61
Net Cash From Operating Activities       130.57     150.46
Net Cash (used in)/from Investing
Activities                               -56.46     -162.89
Net Cash (used in)/from Financing
Activities                                -75.5      -22.65
Net (decrease)/increase In Cash and Cash
Equivalents                               -1.39      -35.08
Opening Cash & Cash Equivalents          41.08       76.16
Closing Cash & Cash Equivalents          39.69       41.08
Ratio Analysis
Profitability Ratios
Profit Margin Ratio

Profit Margin= Profit after tax/Net sales*100

 Particulars        2011                 2010
 Profit after tax   205.98               165.5
 Net sales          2258.71              1814.72
                    205.98/2258.71*100   165.5/1814.72*100
 PROFIT
 MARGIN=
                    = 9.12 times         = 9.14 times




   It measures overall profitability. In 2011 co.
   profit is reduced by 0.02 times.
Asset turnover ratio

Asset Turnover= Sales/Average total assets
 Particulars     2011             2010
 Net sales       2258.71          1814.72
 Average total   998.64+882.8/2   882.8+998.64/2
 asset           =940.72          =940.72
 ASSET           2258.71/940.72   1814.72/940.72
 TURNOVER=
                 =2.40 times      =1.93 times


There is increase in asset turnover by 0.47 times
that is company has invested more in building its
assets.
Return on Asset

 Return On Asset =              Profit after tax__ *100
                              Average total asset
  Particulars        2011              2010
  Profit after tax   205.98            165.5
  Average total      998.64+882.8/2    882.8+998.64/2
  asset              =940.72           =940.72
  RETURN ON          205.98/940.72*100 165.5/940.72*100
  ASSET=
                     =21.89%           17.59%
The return on assets ratio measures how efficiently
profits are being generated from the assets employed.
As compare to the previous year co. is able to
generate the more profit on assets.
Return on Equity

Return On Equity= Profit after tax *100
             Average shareholder’s equity
 Particulars        2011            2010
 Profit after tax   205.98          165.5
 Average            53.89+26.95/2   26.95+53.89/2
 shareholder’s      =40.02          =40.02
 equity
 RETURN ON          205.98/40.02    165.5/441.4
 EQUITY=
                    =5.12 times     4.13 times
The higher this percentage, the higher the absolute
return to shareholders. In 2011 co. is giving more
return on investment to their shareholder’s as
compare to the previous year.
Earning per Share

Earning Per Share= Profit after tax__
                 No. of shares outstanding
 Particulars        2011           2010
 Profit after tax   205.98         165.5
  No. of shares     5.39 crores    2.69 crores
 EARNING PER        205.98/5.39    165.5/2.69
 SHARE=
                    =Rs38.21       =Rs61.52


EPS indicates the quantum of net profit of the year that
would be ranking for dividend for each share of the
company being held by the equity share holders. That is
decreased by 23.31 in 2011
Liquidity Ratios
Current ratio

      Current Ratio= Current asset
                   Current liabilities
  Particulars           2011            2010
  Current asset         654.05          520.89
  Current liabilities   363.54          305.45
  CURRENT               654.05/363.54   520.89/305.45
  RATIO=
                        =1.79:1         1.70:1


Current Ratio measures short term liquidity of the
concern and its ability to meet its short term
obligations within a time span of a year. Co. is having
more current asset to meet its current liability.
Quick ratio

    Quick Ratio=                Quick Assets___
                               Current liabilities
Particulars           2011                    2010
Quick asset           =current asset-stock-   =current asset-stock-
                      cash/bank               cash/bank
                      =654.05-354.1-36.39     =520.89-247.44-41.08
                      =263.56                 =232.28
Current liabilities   363.54                  305.45
QUICK RATIO=          263.56/363.54           232.28/305.45
                      =0.72:1                 0.76:1

The higher the quick ratio, the better the position
of the company. In this case company’s quick ratio
is decreased by 0.04.
Solvency Ratios
Debtors turnover ratio

Debtors Turnover Ratio= Sales/Avg debtors
   Particulars       2011              2010
   Net sales         2258.71           1814.72
   Average debtors   262.26+232.37/2   882.8+998.64/2
                     =246.31           =246.31
   DEBTORS           2258.71/246.31    1814.72/246.31
   TURNOVER=

                     =9.17 times       =7.37 times


The higher debtor turnover in 2011 indicates better
management of receivable as compare to the
previous year.
Stock turnover ratio

Stock Turnover Ratio= Cost of goods sold
                        Average Stock
    Particulars       2011              2010
    Cost of goods     =Sales-Profit     =Sales-Profit
    sold              =2258.71-205.98   =1814.72-165.5
                      =2052.73          =1649.22
    Average debtors   262.26+232.37/2   882.8+998.64/2
                      =246.31           =246.31
    DEBTORS           2052.73/246.31    1649.22/246.31
    TURNOVER=
                      =6.82 times       =5.48 times

The higher stock turnover in 2011 points to better
stock management.
Debt to Equity ratio

Debt To Equity Ratio=Secured+Unsecured loan
                       Shareholders Equity
  Particulars            2011               2010
  Secured loans          8.11               33.53
  Unsecured loans        74.37              76.45
  Shareholder’s equity   53.89              26.95
  DEBT EQUITY            8.11+74.37/53.89   33.53+76.45/26.95
  RATIO=
                         =1.53 times        = 4.08 times


 In 2010 co. had aggressively using the leverage but
 in 2011 company making little use of leverage as
 compared to previous year.
Liability to Equity ratio



 Particulars            2011              2010
 Total Debt             82.48             109.98
 Current liabilities    74.37             76.45
 Shareholder’s equity   53.89             26.95
 LIABILITY TO           8.11+363.54/53.89 109.98+305.45/26.95
 EQUITY RATIO=
                        =8.28 times       = 15.41 times

It showing that in 2011 company is having less
liability towards the outsiders as compared to the
previous year (2010).
Interest coverage ratio

Interest Coverage Ratio=
Profit before interest & tax/ Interest Expenses
 Particulars         2011            2010
 Profit before tax   339.58          284.26
 Interest Expenses   1.23            1.64
 INTEREST            339.58/1.23     284.26/1.64
 COVERAGE
 RATIO=
                     =276.08 times   =173.32 times

The lower the ratio, the more the company is
burdened by debt expense. Here the co. having
high interest coverage ratio.
Kansai Nerolac Paints

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Kansai Nerolac Paints

  • 1.
  • 2. Company Information • Established : 1920 • Manufactures and sell paints and enamels, varnishes, oils, pigments, colours. • Is second largest paint company. • Market share of 18 percent. • It has 39 Joint Ventures, subsidiaries and licensees around the world and has recorded a turnover of over 2 billion USD.
  • 3. Company Information • Key executives • Board Members • Auditing Committee
  • 4. Auditor’s Report • The auditor's report is a formal opinion, or disclaimer thereof, issued by either an internal auditor or an independent external auditor as a result of an internal or external audit or evaluation performed. • This report was conducted in accordance with auditing standards generally accepted in India. • The Balance Sheet as at 31 March 2011, of the company was audited.
  • 5. Continued… The following key points were included in the report: • The Company has maintained proper records of fixed assets. • The inventory has been physically verified. • Dues have been generally regularly deposited during the year by the Company with the appropriate authorities. • The Company does not have any accumulated losses. • The Company has not defaulted in repayment of dues. • No money was raised by public issues during the year. • No material fraud on or by the Company has been noticed or reported during the course of our audit.
  • 6. Financial Statements • Profit and Loss Account • Balance Sheet • Statement of Cash Flows • Ratios
  • 7. Profit and Loss Account Mar '11 Mar '10 Sales Turnover 2,493.19 1,971.71 Excise Duty 234.48 156.99 Net Sales 2,258.71 1,814.72 Other Income 48.5 20.07 Stock Adjustments 70.22 47.32 Total Income 2,377.43 1,882.11 Raw Materials 1,478.71 1,122.01 Power & Fuel Cost 33.45 26.16 Other Manufacturing Expenses 22.39 18.35 Selling and Admin Expenses 395.31 341.62 Miscellaneous Expenses 15.35 13.66 Total Expenses 2,037.85 1,597.85 Operating Profit 291.08 264.19
  • 8. Continued… Mar’ 11 Mar’ 10 PBDIT 339.58 284.26 Interest 1.23 1.64 PBDT 338.35 282.62 Depreciation 49.35 44.26 Profit Before Tax 289 238.36 PBT (Post Extra-ord Items) 289.16 239.49 Tax 83.15 73.96 Reported Net Profit 205.98 165.5 Equity Dividend 53.89 40.42 Corporate Dividend Tax 8.74 6.71
  • 9. Balance Sheet Liabilities 2011 2010 Assets 2011 2010 -----Crores----- ------Crores------ Total Share Capital 53.89 26.95 Gross Block 675.28 637.67 Equity Share Capital 53.89 26.95 Less: Depreciation 397.07 348.35 Preference Share Cap. 0 0 Net Block 278.21 289.32 Reserves 862.28 745.87 Capital Work in Prog. 103.57 16.43 Revaluation Reserves 0 0 Investments 371.82 401.54 Net worth 916.17 772.82 Inventories 354.1 247.44 Secured Loans 8.11 33.53 Sundry Debtors 260.26 232.37 Unsecured Loans 74.37 76.45 Cash and Bank Bal. 39.69 41.08 Total Debt `82.48 109.98 Total Current Assets 654.05 520.89 Current Liabilities 363.54 305.45 Loans and Advances 63.64 53.74 Provisions 109.11 93.67 Net Current Assets 245.04 175.51 Total Liabilities 998.65 882.8 Total Assets 998.64 882.8
  • 10. Statement of Cash Flows Mar '11 Mar '10 ----- in crores ----- Net Profit Before Tax 289.13 238.61 Net Cash From Operating Activities 130.57 150.46 Net Cash (used in)/from Investing Activities -56.46 -162.89 Net Cash (used in)/from Financing Activities -75.5 -22.65 Net (decrease)/increase In Cash and Cash Equivalents -1.39 -35.08 Opening Cash & Cash Equivalents 41.08 76.16 Closing Cash & Cash Equivalents 39.69 41.08
  • 13. Profit Margin Ratio Profit Margin= Profit after tax/Net sales*100 Particulars 2011 2010 Profit after tax 205.98 165.5 Net sales 2258.71 1814.72 205.98/2258.71*100 165.5/1814.72*100 PROFIT MARGIN= = 9.12 times = 9.14 times It measures overall profitability. In 2011 co. profit is reduced by 0.02 times.
  • 14. Asset turnover ratio Asset Turnover= Sales/Average total assets Particulars 2011 2010 Net sales 2258.71 1814.72 Average total 998.64+882.8/2 882.8+998.64/2 asset =940.72 =940.72 ASSET 2258.71/940.72 1814.72/940.72 TURNOVER= =2.40 times =1.93 times There is increase in asset turnover by 0.47 times that is company has invested more in building its assets.
  • 15. Return on Asset Return On Asset = Profit after tax__ *100 Average total asset Particulars 2011 2010 Profit after tax 205.98 165.5 Average total 998.64+882.8/2 882.8+998.64/2 asset =940.72 =940.72 RETURN ON 205.98/940.72*100 165.5/940.72*100 ASSET= =21.89% 17.59% The return on assets ratio measures how efficiently profits are being generated from the assets employed. As compare to the previous year co. is able to generate the more profit on assets.
  • 16. Return on Equity Return On Equity= Profit after tax *100 Average shareholder’s equity Particulars 2011 2010 Profit after tax 205.98 165.5 Average 53.89+26.95/2 26.95+53.89/2 shareholder’s =40.02 =40.02 equity RETURN ON 205.98/40.02 165.5/441.4 EQUITY= =5.12 times 4.13 times The higher this percentage, the higher the absolute return to shareholders. In 2011 co. is giving more return on investment to their shareholder’s as compare to the previous year.
  • 17. Earning per Share Earning Per Share= Profit after tax__ No. of shares outstanding Particulars 2011 2010 Profit after tax 205.98 165.5 No. of shares 5.39 crores 2.69 crores EARNING PER 205.98/5.39 165.5/2.69 SHARE= =Rs38.21 =Rs61.52 EPS indicates the quantum of net profit of the year that would be ranking for dividend for each share of the company being held by the equity share holders. That is decreased by 23.31 in 2011
  • 19. Current ratio Current Ratio= Current asset Current liabilities Particulars 2011 2010 Current asset 654.05 520.89 Current liabilities 363.54 305.45 CURRENT 654.05/363.54 520.89/305.45 RATIO= =1.79:1 1.70:1 Current Ratio measures short term liquidity of the concern and its ability to meet its short term obligations within a time span of a year. Co. is having more current asset to meet its current liability.
  • 20. Quick ratio Quick Ratio= Quick Assets___ Current liabilities Particulars 2011 2010 Quick asset =current asset-stock- =current asset-stock- cash/bank cash/bank =654.05-354.1-36.39 =520.89-247.44-41.08 =263.56 =232.28 Current liabilities 363.54 305.45 QUICK RATIO= 263.56/363.54 232.28/305.45 =0.72:1 0.76:1 The higher the quick ratio, the better the position of the company. In this case company’s quick ratio is decreased by 0.04.
  • 22. Debtors turnover ratio Debtors Turnover Ratio= Sales/Avg debtors Particulars 2011 2010 Net sales 2258.71 1814.72 Average debtors 262.26+232.37/2 882.8+998.64/2 =246.31 =246.31 DEBTORS 2258.71/246.31 1814.72/246.31 TURNOVER= =9.17 times =7.37 times The higher debtor turnover in 2011 indicates better management of receivable as compare to the previous year.
  • 23. Stock turnover ratio Stock Turnover Ratio= Cost of goods sold Average Stock Particulars 2011 2010 Cost of goods =Sales-Profit =Sales-Profit sold =2258.71-205.98 =1814.72-165.5 =2052.73 =1649.22 Average debtors 262.26+232.37/2 882.8+998.64/2 =246.31 =246.31 DEBTORS 2052.73/246.31 1649.22/246.31 TURNOVER= =6.82 times =5.48 times The higher stock turnover in 2011 points to better stock management.
  • 24. Debt to Equity ratio Debt To Equity Ratio=Secured+Unsecured loan Shareholders Equity Particulars 2011 2010 Secured loans 8.11 33.53 Unsecured loans 74.37 76.45 Shareholder’s equity 53.89 26.95 DEBT EQUITY 8.11+74.37/53.89 33.53+76.45/26.95 RATIO= =1.53 times = 4.08 times In 2010 co. had aggressively using the leverage but in 2011 company making little use of leverage as compared to previous year.
  • 25. Liability to Equity ratio Particulars 2011 2010 Total Debt 82.48 109.98 Current liabilities 74.37 76.45 Shareholder’s equity 53.89 26.95 LIABILITY TO 8.11+363.54/53.89 109.98+305.45/26.95 EQUITY RATIO= =8.28 times = 15.41 times It showing that in 2011 company is having less liability towards the outsiders as compared to the previous year (2010).
  • 26. Interest coverage ratio Interest Coverage Ratio= Profit before interest & tax/ Interest Expenses Particulars 2011 2010 Profit before tax 339.58 284.26 Interest Expenses 1.23 1.64 INTEREST 339.58/1.23 284.26/1.64 COVERAGE RATIO= =276.08 times =173.32 times The lower the ratio, the more the company is burdened by debt expense. Here the co. having high interest coverage ratio.