Company analysis of asian paint and berger paint

"COMPANY ANALYSIS OF ASIAN PAINTS AND BERGER PAINTS"
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TOPIC:- COMPANY ANALYSIS OF ASIAN PAINT AND
BERGER PAINT
BLACK BOOK PROJECT
JEETU MATTA

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OBJECTIVE
1.To understand fundamentals of the paints company.
2.How to do a company analysis.
3.To find out the qualitative & quantitative factors of the company or Ratios of the
company for investor investing in company.
4. To know impact of company analysis result after investing.
5.what are the ratio, chart& how ratio work in investment decisions

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EXECUTIVE SUMMARY
Quantitative and qualitative research are commonly considered to differ
fundamentally. Yet, their objectives as well as their applications overlap in
numerous ways.
The Indian paint industry is currently estimated at ~ Rs. 16,000 crores and is
expected to grow between 12-15% per annum over the next 5 years.
The top 4 players i.e. Asian Paints, Kansai Nerolac, Berger Paints and Akzo Nobel
control about 60% of the total share of the paint market with the unorganised sector
controlling roughly 35% of the market.
Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a
quick indication of a firm's financial performance in several key areas. The ratios are
categorized as Short-term Solvency Ratios, Debt Management Ratios, Asset
Management Ratios, Profitability Ratios, and Market Value Ratios.

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COMPANY ANALYSIS
Qualitative Factor
INDEX
CHP
NO.
PARTICULARS
1
1.1 Introduction 1
1.2
4
1.3 Quantitative Factors 6
2. COMPANY ANALYSIS OF ASIAN
PAINTS
9
2.1 History/Background 9
2.2 Current Achievement 11
2.3 Balance Sheet of Asian Paints Ltd. 12
2.4 Profit & Loss Statement of Asian Paints Ltd. 14
PAGE
NO.
1.

5
2.5 Market Share of Asian Paints 16
2.6 Ratios in the books of account of Asian Paints Ltd. 17
3. COMPANY ANALYSIS OF BERGER PAINTS
INDIA LTD.
19
3.1 History/Background 19
3.2 Current Achievement 20
3.3 Market Share of Berger Paints 21
3.4 Balance Sheet of Berger Paints Ltd. 22
3.5 Profit & Loss Statement of Berger Paints Ltd. 24
3.6 Ratios in the books of account of Berger Paints Ltd. 25
4. COMPARISON BETWEEN BERGER PAINTS
AND ASIAN PAINTS
27
4.1 P/E Ratio 27
4.2 P/BV Ratio 29
4.3 Debt-Equity Ratio 30
4.4 Return on Assets 32
4.5 Return on Equity 33
4.6 Net Profit Margin 35

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4.7 Current Ratio 36
5. CONCLUSION 38
6. REFERENCES 39
UNIT 1
INTRODUCTION TO COMPANY ANALYSIS
1.1: INTRODUCTION
Company analysis refers to the process of evaluating a company’s profitability, profile and
products or services. It is also known as “fundamental analysis,” and it is generally used by
investors. It incorporates basic company information, such as the mission statement, goals and
values. This process involves reviewing the history of a company and the events that contributed
to shaping the firm. Moreover, it looks into the company’s goods and services. Company analysis
studies the products manufactured by the company and analyzes the quality and demand for these
products. If the firm is in the service sector, the investor reviews the services offered to the related
market.
To evaluate a company, core elements, operations and functions are analyzed. The reports from
the analysis of various aspects of the firm put together the big picture of its corporate quality.
Analysts use the SWOT (strength, weakness, opportunity, threat) approach to determine a firm’s
current and probable future position in its respective industry.
Thorough evaluation is essential in performing a company analysis, as it provides insight on the
value of a company. This analysis helps investors assess the past performance and future prospects

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of the firm. It encompasses all aspects of the firm, including market share, profitability, growth
prospects, finances and management structure. The results of a company analysis help external
parties reach business decisions, such as investing or entering a partnership with the analyzed
company.
1.1.1: MEANING AND DEFINITION:
In company analysis, different companies are considered and evaluated from the selected industry
so that most attractive company can be identified. Company analysis is also referred to as security
analysis in which stock picking activity is done.
Company analysis, or corporate analysis, refers to actions undertaken for an in-depth evaluation
and to gain an understanding of a particular company's past performance and future prospects. A
thorough company analysis will focus on all aspects of the corporate entity, including management
structure and expertise, finances, growth prospects, profitability, market share and intangible
factors such as goodwill in the market and brand image. Results of the analysis are used in reaching
business decisions by external parties, such as whether or not to invest in or go into a partnership
with the analyzed company.
1.1.2: HOW TO DO A COMPANY ANALYSIS?
It is essential for a company analysis to be comprehensive to obtain strategic insight. Being a
thorough evaluation of an organization, the company analysis provides insight to rationalize
processes and make revenue potentials better.
The process of conducting a company analysis involves the following steps:
1. The primary step is to determine the type of analysis which would work best for your
company.
2. Research well about the methods for analysis. In order to perform a company analysis, it
is important to understand the expected outcome for doing so. The analysis should provide
answer about what is done right and wrong on the basis of a thorough evaluation. It is,
therefore, important6 to make the right choice for the analysis methods.

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3. As a next step, all the major findings should be supported by use of statistics.
The final step involves reviewing the results. The weaknesses are then attempted to be corrected.
The company analysis is used in concluding issues and determining the possible solutions. The
company analysis is conducted to provide a picture of the company at a specific time, thus
providing the best way of enhancing a company, internally as well as externally
1.2: QUALITATIVE FACTOR
Qualitative Factors - The Company:
Before diving into a company's financial statements, we're going to take a look at some of the
qualitative aspects of a company.
Fundamental analysis seeks to determine the intrinsic value of a company's stock. But since
qualitative factors, by definition, represent aspects of a company's business that are difficult or
impossible to quantify, incorporating that kind of information into a pricing evaluation can be quite
difficult. On the flip side, as we've demonstrated, you can't ignore the less tangible characteristics
of a company. In this section, we are going to highlight some of the company-specific qualitative
factors that you should be aware of.
• Competitive Advantage:
Another business consideration for investors is competitive advantage. A company's long-term
success is driven largely by its ability to maintain a competitive advantage - and keep it. Powerful
competitive advantages, such as Coca Cola's brand name and Microsoft's domination of the
personal computer operating system, create a moat around a business allowing it to keep
competitors at bay and enjoy growth and profits. When a company can achieve competitive
advantage, its shareholders can be well rewarded for decades.

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If company like Moser Baer making CDs and DVDs have better competition advantage compare
to company or firm making cassettes for audio and video promotion of movies and songs.
• Management:
Just as an army needs a general to lead it to victory, a company relies upon management to steer
it towards financial success. Some believe that management is the most important aspect for
investing in a company. It makes sense - even the best business model is doomed if the leaders of
the company fail to properly execute the plan. So how does an average investor go about
evaluating the management of a company? This is one of the areas in which individuals are
truly at a disadvantage compared to professional investors. You can't set up a meeting with
management if you want to invest a few thousand dollars. On the other hand, if you are a fund
manager interested in investing millions of dollars, there is a good chance you can schedule a face-
to-face meeting with the upper brass of the firm. Every public company has a corporate information
section on its website. Usually there will be a quick biography on each executive with their
employment history, educational background and any applicable achievements. Don't expect to
find anything useful here. Let's be honest: We're looking for dirt, and no company is going to put
negative information on its corporate website.
• Ownership and Insider Sales:
Just about any large company will compensate executives with a combination of cash, restricted
stock and options. While there are problems with stock options (See Putting Management under
the Microscope), it is a positive sign that members of management are also shareholders. The ideal
situation is when the founder of the company is still in charge. Examples include Bill Gates (in the
'80s and '90s), Michael Dell and Warren Buffett. When you know that a majority of management's
wealth is in the stock, you can have confidence that they will do the right thing. As well, it's worth
checking out if management has been selling its stock. This has to be filed with the Securities and
Exchange Commission (SEC), so it's publicly available information. Talk is cheap - think twice if
you see management unloading all of its shares while saying something else in the media.
• Past Performance:

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Another good way to get a feel for management capability is to check and see how executives
have done at other companies in the past. You can normally find biographies of top executives on
company web sites. Identify the companies they worked at in the past and do a search on those
companies and their performance.
• Corporate Governance:
Corporate governance describes the policies in place within an organization denoting the
relationships and responsibilities between management, directors and stakeholders. These policies
are defined and determined in the company charter and its bylaws, along with corporate laws and
regulations. The purpose of corporate governance policies is to ensure that proper checks and
balances are in place, making it more difficult for anyone to conduct unethical and illegal activities.
Good corporate governance is a situation in which a company complies with all of its governance
policies and applicable government regulations in order to look out for the interests of the
company's investors and other stakeholders.
a. Financial and Information:
Transparency This aspect of governance relates to the quality and timeliness of a
company's financial disclosures and operational happenings. Sufficient transparency
implies that a company's financial releases are written in a manner that stakeholders
can follow what management is doing and therefore have a clear understanding of the
company's current financial situation.
b. Stakeholder Rights:
This aspect of corporate governance examines the extent that a company's policies are
benefiting stakeholder interests, notably shareholder interests. Ultimately, as owners of
the company, shareholders should have some access to the board of directors if they
have concerns or want something addressed. Therefore, companies with good
governance give shareholders a certain amount of ownership voting rights to call
meetings to discuss pressing issues with the board.
c. Structure of the Board of Directors:

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The board of directors is composed of representatives from the company and
representatives from outside of the company. The combination of inside and outside
director’s attempts to provide an independent assessment of management's
performance, making sure that the interests of shareholders are represented. The key
word when looking at the board of directors is independence. The board of directors is
responsible for protecting shareholder interests and ensuring that the upper
management of the company is doing the same. The board possesses the right to hire
and fire members of the board on behalf of the shareholders. A board filled with insiders
will often not serve as objective critics of management and will defend their actions as
good and beneficial, regardless of the circumstances.
1.3: QUANTITATIVE FACTORS
• The Balance Sheet:
The balance sheet represents a record of a company's assets, liabilities and equity at a particular
point in time. The balance sheet is named by the fact that a business's financial structure balances
in the following manner:
Assets = Liabilities + Shareholders' Equity
Assets represent the resources that the business owns or controls at a given point in time. This
includes items such as cash, inventory, machinery and buildings. The other side of the equation
represents the total value of the financing the company has used to acquire those assets. Financing
comes as a result of liabilities or equity. Liabilities represent debt (which of course must be paid
back), while equity represents the total value of money that the owners have contributed to the
business - including retained earnings, which is the profit made in previous years.
• The Income Statement:

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While the balance sheet takes a snapshot approach in examining a business, the income statement
measures a company's performance over a specific time frame. Technically, you could have a
balance sheet for a month or even a day, but you'll only see public companies report quarterly and
annually. The income statement presents information about revenues, expenses and profit that was
generated as a result of the business' operations for that period.
Revenue, also commonly known as sales, is generally the most straightforward part of the income
statement. Often, there is just a single number that represents all the money a company brought in
during a specific time period, although big companies sometimes break down revenue by business
segment or geography. The best way for a company to improve profitability is by increasing sales
revenue. For instance, cafe Coffee has aggressive long-term sales growth goals that include a
distribution system of 20,000 stores worldwide. Consistent sales growth has been a strong driver
of café’s profitability. The best revenue is those that continue year in and year out. Temporary
increases, such as those that might result from a short-term promotion, are less valuable and should
garner a lower price-to-earnings multiple for a company.
• Operating profit margin and non operating margin
If company’s revenue is increasing from its normal business than a company’s fundamentals are
strong if company had shown growth in revenue from a business which is not a regular business
of company than that is not good for a company. For example appreciation on companies
investment in real estate is not a part of core business of company it is the part non operating profit
of company.
• What are the Expenses?
There are many kinds of expenses, but the two most common are the cost of goods sold (COGS)
and selling, general and administrative expenses (SG&A). Cost of goods sold is the expense most
directly involved in creating revenue. It represents the costs of producing or purchasing the goods
or services sold by the company. For example, if Wal-Mart pays a supplier $4 for a box of soap,
which it sells to customers for $5. When it is sold, Wal-Mart’s cost of good sold for the box of
soap would be $4. Next, costs involved in operating the business are SG&A. This category includes
marketing, salaries, utility bills, technology expenses and other general costs associated with
running a business. SG&A also includes depreciation and amortization. Companies must include

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the cost of replacing worn out assets. Remember, some corporate expenses, such as research and
development (R&D) at technology companies, are crucial to future growth and should not be cut,
even though doing so may make for a better-looking earnings report. Finally, there are financial
costs, notably taxes and interest payments, which need to be considered.
Profits = Revenue – Expenses
Profit, most simply put, is equal to total revenue minus total expenses. However, there are several
commonly used profit subcategories that tell investors how the company is performing. Gross
profit is calculated as revenue minus cost of goods sold. Returning to Wal-Mart again, the gross
profit from the sale of the soap would have been $1 ($5 sales price less $4 cost of goods sold = $1
gross profit). Companies with high gross margins will have a lot of money left over to spend on
other business operations, such as R&D or marketing. So be on the lookout for downward trends
in the gross margin rate over time. This is a telltale sign of future problems facing the bottom line.
When cost of goods sold rises rapidly, they are likely to lower gross profit margins - unless, of
course, the company can pass these costs onto customers in the form of higher prices. Operating
profit is equal to revenues minus the cost of sales and SG&A. This number represents the profit a
company made from its actual operations, and excludes certain expenses and revenues that may
not be related to its central operations. High operating margins can mean the company has effective
control of costs, or that sales are increasing faster than operating costs. Operating profit also gives
investors an opportunity to do profit-margin comparisons between companies that do not issue a
separate disclosure of their cost of goods sold figures (which are needed to do gross margin
analysis). Operating profit measures how much cash the business throws off, and some consider it
a more reliable measure of profitability since it is harder to manipulate with accounting tricks than
net earnings.

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UNIT 2
COMPANY ANALYSIS OF ASIAN PAINTS
2.1: HISTORY/BACKGROUND
Asian Paints Limited was established way back on February 1,1942 and today stands as India’s
largest and Asia’s third largest paint company. Asian Paints operates in 17 countries and has 25
paint manufacturing facilities in the world servicing consumers in over 65 countries.
The company manufactures paints in the category of Decorative, Automative and Industrial
segment. Apart from these the company also manufactures various Accessories like, Wall Primer,
Wood Primer, Putty and Stanier’s etc. Driven by its strong consumer–focus and innovative spirit,
the company has been the market leader in paints since 1967.
Besides Asian Paints, the group operates around the world through its subsidiaries Berger
International, Apco Coatings, SCIB Paints and Taubman’s, Berger International, SCIB Paints–
Egypt, Asian Paints, Apco Coatings and Taubman’s. Asian Paints operates in 5 regions across the
world viz. South Asia, South East Asia, South Pacific, Middle East and Caribbean region through
the five corporate brands viz. Asian Paints, Berger International, SCIB Paints, Apco Coatings and

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Taubman’s. In 10 markets, it operates through its subsidiary, Berger International Limited; in
Egypt through SCIB Paints; in 5 markets in the South Pacific it operates through Apco Coatings
and in Fiji and Samoa it also operates through Taubman’s.
The company is having its strategically located Indian plants at Bhandup (Maharashtra), Kasna
(Uttar Pradesh) and Sriperumbudur (Tamil Nadu), Ankleshwar (Gujarat), Patancheru (Andhra
Pradesh) and the newly built plant at Rohtak (Haryana). Asian Paints operates in 17 countries and
has 25 paint manufacturing facilities in the world servicing consumers in over 65 countries. The
company is having state–of–the–art supply chain system using cutting edge technology to integrate
all its plants, regional distribution centers, outside processing centers and branches in India. All
the company’s paints plants in India, two chemical plants, 18 processing Centre’s, 350 raw
material and intermediate goods suppliers, 140 packing material vendors, 6 regional distribution
Centre’s, 72 depots are integrated.
The company is having a big and experienced R&D team which has successfully managed to
develop High–end exterior finished and wood finishes in–house, which was earlier imported into
the country. These products are currently marketed under Asian Paints Elastomeric Hi–Stretch
Exterior paint and Asian Paints PU wood finish respectively.
The company is having three subsidiaries viz, Apco Coatings – it is a subsidiary of Asian Paints
in the South Pacific islands. The company operates in Australia, Fiji, Tonga, Solomon Islands and
Vanuatu under the brand name of Apco Coatings.
The other subsidiary of the company is Asian Paints Industrial Coatings Limited which has been
set up to cater to the powder coatings market which is one of the fastest growing segments in the
industrial coatings market.
Berger International Limited in November 2002, became a part of the Asian Paints Group. Today,
the name of Berger is synonymous with quality and innovation. BIL has presence across three
regions viz. Middle East, Caribbean and South-East Asia. Asian Paints participates in the Industrial
Coatings segment directly, through a 50:50 JV with PPG Inc. of US as well as through a 100%
subsidiary

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On the recommendations of Booz, Allen and Hamilton, Asian Paints restructured itself into
Growth, Decorative and International business units and has adopted SCM and ERP technology.
Asian Paints aims to become the 5th largest decorative paint company in the world
2.2: CURRENT ACHIEVEMNET
• Asian Paints was included in Forbes Magazine's – Asia's Fab 50 List of companies in 2011, 2012
and 2013.
• Asian Paints was ranked 13th amongst the top paint companies in the world by Coatings World
– Top Companies Report 2013 (July 2013 Issue).
• In March 2012, Asian Paints was presented the Asian Centre for Corporate Governance &
Sustainability Award for the Best Governed Company in 2011.
• Mr. P M Murty, the then MD & CEO, Asian Paints received the 'CEO of the Year' award from
Business Standard, one of India's leading business dailies (March 2011).
• Asian Paints receives the Best Audit Committee Award from the Asian Centre for Corporate
Governance & Sustainability (Feb 2011)
• Asian Paints is the 10th largest decorative paint company in the world.
• Awarded the 'Sword of Honour' by the British Safety Council for all the paint plants in India.
This award is considered as the pinnacle of achievement in safety across the world.
• Forbes Global magazine, USA ranked Asian Paints amongst the 200 'Best Small Companies of
the world' in 2002 and 2003 and amongst the top 200 'Under a Billion Firms' of Asia in 2005.

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• Ranked 24th amongst the top paint companies in the world by Coatings World – Top Companies
Report 2006.
• The Asset – one of Asia's leading financial magazine ranked Asian Paints amongst the leading
Indian companies in Corporate Governance in 2002 and 2005.
• Received the Ernst & Young 'Entrepreneur of the Year – Manufacturing' award in 2003.
• Rated Best Employer by BT–Hewitt survey, 2000 Bluest of the blue chips by Hindu Business
Line; Most admired company to work for by ET–BT survey, 2000
2.3: BALANCE SHEET OF ASIAN PAINTS LTD.
Parameter MAR'17
(₹ Cr.)
MAR'16
(₹ Cr.)
YoY
%Change
EQUITY AND LIABILITIES:
Share Capital 95.92 95.92 0.00%
Share Warrants & Outstanding
Total Reserves 6,855.06 5,829.81 17.59%
Shareholder's Funds 6,950.98 5,925.73 17.30%
Long-Term Borrowings 0.00 0.00 0.00%
Secured Loans 10.38 7.09 46.40%
Unsecured Loans 0.00 22.18 -100.00%
Deferred Tax Assets / Liabilities 261.17 217.17 20.26%
Other Long-Term Liabilities 5.96 3.50 70.29%
Long Term Trade Payables 0.00 0.00 0.00%
Long Term Provisions 109.84 94.23 16.57%

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Total Non-Current Liabilities 387.35 344.17 12.55%
Current Liabilities:
Trade Payables 1,671.26 1,333.20 25.36%
Other Current Liabilities 1,086.12 1,021.70 6.31%
Short Term Borrowings 26.83 0.00 100.00%
Short Term Provisions 91.52 100.15 -8.62%
Total Current Liabilities 2,875.73 2,455.05 17.14%
Total Liabilities 10,214.06 8,724.95 17.07%
ASSETS:
Non-Current Assets 0.00 0.00 0.00%
Gross Block 3,133.62 2,863.10 9.45%
Less: Accumulated Depreciation 528.94 234.11 125.94%
Less: Impairment of Assets 0.00 0.00 0.00%
Net Block 2,604.68 2,628.99 -0.92%
Lease Adjustment A/c 0.00 0.00 0.00%
Capital Work in Progress 219.76 92.79 136.84%
Intangible assets under development 0.00 0.00 0.00%
Pre-operative Expenses pending 0.00 0.00 0.00%
Assets in transit 0.00 0.00 0.00%
Non-Current Investments 1,454.55 1,319.64 10.22%
Long Term Loans & Advances 307.14 111.23 176.13%
Other Non-Current Assets 198.05 30.54 548.49%
Total Non-Current Assets 4,784.18 4,183.19 14.37%
Current Assets Loans & Advances
Currents Investments 1,315.40 1,477.00 -10.94%
Inventories 2,194.09 1,610.12 36.27%
Sundry Debtors 994.63 759.06 31.03%
Cash and Bank 205.27 160.78 27.67%
Other Current Assets 411.98 293.91 40.17%

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Short Term Loans and Advances 308.51 240.89 28.07%
Total Current Assets 5,429.88 4,541.76 19.55%
Net Current Assets (Including Current Investments) 2,554.15 2,086.71 22.40%
Total Current Assets Excluding Current Investments 4,114.48 3,064.76 34.25%
Miscellaneous Expenses not written off 0.00 0.00 0.00%
Total Assets 10,214.06 8,724.95 17.07%
Contingent Liabilities 261.01 184.43 41.52%
Total Debt 39.19 35.71 9.75%
Book Value (in ₹) 72.47 61.78 17.30%
Adjusted Book Value (in ₹) 72.47 61.78 17.30%
2.4: PROFIT & LOSS STATEMENT OF ASIAN PAINTS LTD.
Parameter MAR'17
(₹ Cr.)
MAR'16
(₹ Cr.)
Change %
Gross Sales: 16,203.39 14,974.24 8.21%
Less: Inter divisional transfers 0.00 0.00 0.00%
Less: Sales Returns 1,842.96 1,642.06 12.23%
Less: Excise 1,713.32 1,501.85 14.08%
Net Sales 12,647.11 11,830.33 6.90%
EXPENDITURE:
Increase/Decrease in Stock -515.58 194.51 -365.07%
Raw Materials Consumed 6,212.66 5,340.48 16.33%

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Power & Fuel Cost 102.18 107.86 -5.27%
Employee Cost 742.83 666.83 11.40%
Other Manufacturing Expenses 1,400.62 1,271.65 10.14%
General and Administration Expenses 555.47 472.45 17.57%
Selling and Distribution Expenses 1,345.91 1,182.07 13.86%
Miscellaneous Expenses 128.14 113.95 12.45%
Expenses Capitalised 0.00 0.00 0.00%
Total Expenditure 9,972.23 9,349.80 6.66%
PBIDT (Excl OI) 2,674.88 2,480.53 7.84%
Other Income 300.90 249.43 20.64%
Operating Profit 2,975.78 2,729.96 9.00%
Interest 22.30 27.00 -17.41%
PBDT 2,953.48 2,702.96 9.27%
Depreciation 295.43 234.51 25.98%
Profit Before Taxation & Exceptional Items 2,658.05 2,468.45 7.68%
Exceptional Income / Expenses 0.00 -65.35 100.00%
Profit Before Tax 2,658.05 2,403.10 10.61%
Provision for Tax 854.95 780.29 9.57%
PAT 1,803.10 1,622.81 11.11%
Extraordinary Items 0.00 0.00 0.00%
Adj to Profit After Tax 5.38 1.72 212.79%
Profit Balance B/F 2,181.55 1,839.64 18.59%
Appropriations 3,990.03 3,464.17 15.18%

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Equity Dividend (%) 1,030.00 750.00 37.33%
Earnings Per Share (in ₹) 18.80 16.92 11.11%
Book Value (in ₹) 72.47 61.78 17.30%
2.4: MARKET SHARE OF ASIAN PAINTS

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Asian Paints is India’s leading paint company with a group turnover of Rs 170.85 billion. The
group has an enviable reputation in the corporate world for professionalism, fast track growth, and
building shareholder equity. Asian Paints operates in 16 countries and has 24 paint manufacturing
facilities in the world servicing consumers in over 65 countries. Besides Asian Paints, the group
operates around the world through its subsidiaries Berger International Limited, Apco Coatings,
SCIB Paints, Taubman’s and Kadisco.
According to a research report “India Paints Industry Outlook to 2017 - Rising Urbanization and
Advent of Environment Friendly Paints” by Ken Research, the India Paints market would grow at
a considerable CAGR rate thus exceeding USD 12,430 million by 2017 due to the major thrust
from rising urbanization and growing disposable incomes.
2.5: RATIOS IN THE BOOKS OF ACCOUNT OF ASIAN PAINTS LTD.

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Parameter MAR'17 MAR'16
Operational & Financial Ratios:
Earnings Per Share (Rs) 18.80 16.92
DPS(Rs) 10.30 7.50
Book NAV/Share(Rs) 72.47 61.78
Margin Ratios:
Yield on Advances 0.00 0.00
Yield on Investments 0.00 0.00
Cost of Liabilities 0.00 0.00
NIM 0.00 0.00
Interest Spread 0.00 0.00
Performance Ratios:
ROA (%) 19.04 20.29
ROE (%) 28.01 31.96
ROCE (%) 41.39 47.50
Efficiency Ratios:
Cost Income Ratio 0.00 0.00
Core Cost Income Ratio 0.00 0.00
Operating Costs to Assets 0.00 0.00
Capitalization Ratios:
Tier 1 ratio 0.00 0.00
Tier 2 ratio 0.00 0.00
CAR 0.00 0.00
Valuation Parameters:
PER(x) 56.98 51.35
PCE(x) 48.96 44.86
Price / Book(x) 14.78 14.06

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Yield (%) 0.96 0.86
EV / Net Sales(x) 8.11 7.03
EV / Core EBITDA(x) 34.47 30.48
EV / EBIT(x) 38.27 34.24
EV / CE(x) 10.04 9.54
M Cap / Sales 8.12 7.04
Growth Ratio:
Core Operating Income Growth -17.41 -13.35
Operating Profit Growth 9.00 24.01
Net Profit Growth 11.11 22.25
BVPS Growth 17.30 40.08
Advances Growth 0.00 0.00
EPS Growth (%) 11.11 22.26
Liquidity Ratios:
Loans / Deposits(x) 0.00 0.00
Total Debt / Equity(x) 0.00 0.00
Current Ratio(x) 0.00 0.00
Quick Ratio(x) 0.00 0.00
Total Debt / Mcap(x) 0.00 0.00
Net NPA in Rs. Million 0.00 0.00
UNIT 3

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Company Analysis of Berger Paints India Ltd.
3.1: HISTORY/BACKGROUND
Berger Paints was incorporated in 1923. It is the third largest paint manufacturer and second
largest manufacturer in decorative paints. Its headquarter is located in Kolkata, it has distribution
network of 75 stock points and 12,000 paint retailers. The company has come a long way to
become at one point of time; a part of the worldwide BERGER group in 1983 and thereby
acquiring its present name Berger Paints India Limited to having subsequently gone through
further ups & downs as well as ownership changes to gain its present status wherein the majority
stake is with Delhi based Dhingra brothers.
The gentleman who took over, as its first managing director was Mr. Alexander Vernon Niblet,
an Englishman who was later on followed by Mr. Alfred Godwin in 1962.Further in the year 1965,
the share capital of British Paints (Holdings) Limited was acquired by Celanese Corporation, USA
and the controlling interest of British Paints (India) Ltd was acquired by CELEURO NV, Holland,
a Celanese subsidiary.
Subsequently in 1969, the Celanese Corporation sold its Indian interests to Berger, Jenson &
Nicholson, U.K. Then onwards the company British Paints (India) Ltd became a member of the
worldwide BERGER group having its operations across oceans in numerous geographies and this
marked the beginning of Lewis Berger's legacy in India – which the company would later take
forward to enviable heights. From 1973 the company entered into one of its dynamic phases of
business with introduction of new generation products in the industrial, marine and decorative
segments under the able leadership of its first Indian Managing Director Mr. Dongargaokar
Madhukar.
Year 1976 was another turning point in the history of the company when the foreign holding in
the company was diluted to below 40% by sale of a portion of the shares to the UB Group
controlled by Mr. Vittal Mallya. The reins of the company were taken over by Mr. Biji K Kurien

26
as its Chief Executive & Managing Director in the year 1980. Finally, in the year 1983, the British
Paints (India) Limited, changed its name to Berger Paints India Limited.
The entire 80s & 90s saw the lunch of many new products from company's stable such as
premium emulsions and high quality acrylic distempers. The COLOUR BANK tinting system was
launched through which the consumer could select from a range of over 5000 shades.
Again, the fortunes of the company changed hands in 1991 with UB Group's stake in the company bought over
by the Delhi based Dhingra brothers, Mr. K.S. Dhingra & Mr. G.S. Dhingra and their associates of the UK Paints
Group. Presently Dhingra’s' control a majority stake of almost 73% in Berger Paints India Limited, which is a
professionally managed organization, headquartered in Kolkata, with the stewardship resting since 1994 with
the current Managing Director Mr. Subir Bose.
The company’s manufacturing facilities are located in West Bengal, Uttar Pradesh, Pondicherry, Goa, and
Jammu and Kashmir.
It has subsidiaries are Beepee Coatings, Berger Jenson & Nicholson (Nepal), Berger Paints (Cyprus) and Berger
Paints Overseas. It also acquired 100% stake of Motor and Industrial paints business of ICI India.
It has technical license agreement with DuPont Performance in the area of automotive coating; Nippon paints
for new generation automotive coating, Orica Australia Pty for protective coating and TIGERWERK
Lacku.Farbenfabrik GmbH, Australia for specialised powder coating.
The company has a joint venture with Nippon Bee Chemical for manufacturing of coatings for plastic substrates
used in automobiles and mobile phones.
It has wide range of colour bank with over 5000 shades. Lewis Berger Color Bank offers computerized paint
technology through its outlets which mixes different shades to create desired paint. Headquartered at Kolkata,
with 11 strategically located manufacturing units and about 170 sales offices (all including those belonging to
the Company’s own division and subsidiaries). The company also has an international presence in 3 countries.
3.2: ACHIVEMENTS
• 10th Annual Construction World Global Awards 2012
• Builder Information Bureau (BIB) 2012 Leadership in the paint category

27
• Genius HR Excellence Award 2011 – Excellence in Best Training Initiative Category A – 22nd
April 2011, Kolkata
• Readers Digest Gold Award for the most trusted brand – 2008
• Best Supplier Award for outstanding contribution in Product Development from OEM customer
M/S Whirlpool –2005, Faridabad.
• Berger Paints received the 1st rank as fastest growing paint company at Construction World
NICMAR Award –2005, Bengaluru.
• Environment Excellence Award for Howrah Works – by West Bengal Pollution Control Board
& Indian Chamber of Commerce – 2001, Kolkata
3.3: MARKET SHARES OF BERGER PAINTS
Berger Paints saw an increase of 8.6 percent in its revenue at Rs 1,129 crore from Rs 1,040 crore
and the net profit jumped 60 percent to Rs 92.80 crore from Rs 58 crore in the fourth quarter of

28
FY16. Volume growth of the company in Q4 was 14 percent, while the value growth was
comparatively
The volume growth for the company for the entire year was around 12.5 percent and Roy expects
it to be better going forward. "H1FY17 won't be that great, but after the rains (post September),
volume growth will spur," said Roy. It posted its gross margin at 46.8 percent and Roy expects the
expansion to continue in the first quarter of FY17. Berger Paints enjoys a market share of 17
3.4: BALANCE SHEET
Parameter MAR'17
(₹ Cr.)
MAR'16
(₹ Cr.)
YoY
%Change
EQUITY AND LIABILITIES
Share Capital 97.10 69.35 40.01%
Share Warrants & Outstanding’s
Total Reserves 1,824.17 1,521.96 19.86%
Shareholder's Funds 1,922.14 1,592.14 20.73%
Long-Term Borrowings 0.00 0.00 0.00%
Secured Loans 0.00 0.00 0.00%
Unsecured Loans 0.00 0.00 0.00%
Deferred Tax Assets / Liabilities 60.09 46.39 29.53%
Other Long-Term Liabilities 3.73 3.00 24.33%
Long Term Trade Payables 0.00 0.00 0.00%
Long Term Provisions 2.71 2.51 7.97%
Total Non-Current Liabilities 66.53 51.90 28.19%
Current Liabilities
Trade Payables 727.51 634.44 14.67%
Other Current Liabilities 207.89 155.56 33.64%
Short Term Borrowings 114.49 66.51 72.14%
Short Term Provisions 13.83 11.51 20.16%
Total Current Liabilities 1,063.72 868.02 22.55%
percent currently, Roy added.

29
Total Liabilities 3,052.39 2,512.06 21.51%
ASSETS
Non-Current Assets 0.00 0.00 0.00%
Gross Block 1,051.57 786.55 33.69%
Less: Accumulated Depreciation 168.43 82.46 104.26%
Less: Impairment of Assets 0.00 0.00 0.00%
Net Block 883.14 704.09 25.43%
Lease Adjustment A/c 0.00 0.00 0.00%
Capital Work in Progress 56.23 48.77 15.30%
Intangible assets under development 0.00 0.00 0.00%
Pre-operative Expenses pending 0.00 0.00 0.00%
Assets in transit 0.00 0.00 0.00%
Non-Current Investments 210.35 115.22 82.56%
Long Term Loans & Advances 58.26 70.29 -17.11%
Other Non-Current Assets 3.45 3.48 -0.86%
Total Non-Current Assets 1,211.43 941.85 28.62%
Current Assets Loans & Advances
Currents Investments 367.27 299.92 22.46%
Inventories 884.17 688.22 28.47%
Sundry Debtors 480.59 461.46 4.15%
Cash and Bank 32.04 62.81 -48.99%
Other Current Assets 9.95 8.58 15.97%
Short Term Loans and Advances 66.94 49.22 36.00%
Total Current Assets 1,840.96 1,570.21 17.24%
Net Current Assets (Including Current Investments) 777.24 702.19 10.69%
Total Current Assets Excluding Current Investments 1,473.69 1,270.29 16.01%
Miscellaneous Expenses not written off 0.00 0.00 0.00%
Total Assets 3,052.39 2,512.06 21.51%
Contingent Liabilities 357.86 394.68 -9.33%
Total Debt 114.49 66.51 72.14%
Book Value (in ₹) 19.79 22.95 -13.77%
Adjusted Book Value (in ₹) 19.79 16.39 20.72%

30
3.5: PROFIT AND LOSS STATEMENT
Parameter MAR'17
(₹ Cr.)
MAR'16
(₹ Cr.)
Change %
Gross Sales 4,608.53 4,305.91 7.03%
Less: Inter divisional transfers 0.00 0.00 0.00%
Less: Sales Returns 0.00 0.00 0.00%
Less: Excise 487.00 448.10 8.68%
Net Sales 4,121.53 3,857.81 6.84%
EXPENDITURE:
Increase/Decrease in Stock -116.28 -18.37 -532.99%
Raw Materials Consumed 2,172.85 2,008.69 8.17%
Power & Fuel Cost 36.25 34.32 5.62%
Employee Cost 227.92 203.76 11.86%
Other Manufacturing Expenses 698.76 635.59 9.94%
General and Administration Expenses 216.34 192.76 12.23%
Selling and Distribution Expenses 214.32 185.20 15.72%
Miscellaneous Expenses 8.53 8.25 3.39%
Expenses Capitalized 0.00 0.00 0.00%
Total Expenditure 3,458.69 3,250.20 6.41%
PBIDT (Excl OI) 662.84 607.61 9.09%
Other Income 48.67 36.20 34.45%
Operating Profit 711.51 643.81 10.52%
Interest 7.41 17.05 -56.54%
PBDT 704.10 626.76 12.34%
Depreciation 97.07 88.07 10.22%
Profit Before Taxation & Exceptional Items 607.03 538.69 12.69%
Exceptional Income / Expenses 58.67 0.00 100.00%
Profit Before Tax 665.70 538.69 23.58%
Provision for Tax 219.25 182.43 20.18%

31
PAT 446.45 356.26 25.32%
Extraordinary Items 0.00 0.00 0.00%
Adj to Profit After Tax 0.00 0.00 0.00%
Profit Balance B/F 1,093.79 846.46 29.22%
Appropriations 1,540.24 1,202.72 28.06%
Equity Dividend (%) 175.00 165.00 6.06%
Earnings Per Share (in ₹) 4.60 5.14 -10.50%
Book Value (in ₹) 19.79 22.95 -13.77%
3.6: KEY RATIOS OF BERGER PAINTS
RATIOS Mar ' 17 Mar ' 16
Per share ratios:
Adjusted EPS (Rs) 3.99 5.12
Adjusted cash EPS (Rs) 4.99 6.39
Reported EPS (Rs) 4.60 5.12
Reported cash EPS (Rs) 5.60 6.39
Dividend per share 1.75 1.65
Operating profit per share (Rs) 6.83 8.76
Book value (excl rev res) per share EPS (Rs) 19.80 21.77
Book value (incl rev res) per share EPS (Rs) 19.80 21.78
Net operating income per share EPS (Rs) 42.45 59.59
Free reserves per share EPS (Rs) - -
Profitability ratios
Operating margin (%) 16.08 14.69

32
Gross profit margin (%) 13.72 12.57
Net profit margin (%) 10.83 8.58
Adjusted cash margin (%) 11.62 10.62
Adjusted return on net worth (%) 20.17 23.50
Reported return on net worth (%) 23.22 23.50
Return on long term funds (%) 31.96 36.71
Leverage ratios
Long term debt / Equity - -
Total debt/equity 0.05 0.04
Owners fund as % of total source 94.37 95.78
Fixed assets turnover ratio 2.28 2.62
Liquidity ratios
Current ratio 1.51 1.44
Current ratio (inc. st loans) 1.23 1.27
Quick ratio 0.64 0.70
Inventory turnover ratio 5.21 6.66
Payout ratios
Dividend payout ratio (net profit) 21.74 32.24
Dividend payout ratio (cash profit) 17.86 25.84
Earning retention ratio 74.97 67.76
Cash earnings retention ratio 79.98 74.16
Coverage ratios
Adjusted cash flow time total debt 0.23 0.15
Financial charges coverage ratio 96.02 37.33
Fin. charges cov. ratio (post tax) 74.35 26.75
Component ratios
Material cost component (% earnings) 60.86 56.07
Selling cost Component - -
Exports as percent of total sales - 0.06
Import comp. in raw mat. consumed - 33.92
Long term assets / total Assets 0.49 0.46
Bonus component in equity capital (%) 52.40 73.38

33
UNIT.4
COMPARISON BETWEEN BERGER PAINTS AND ASIAN
PAINTS
4.1: Key Ratios
Ratio
Berger
Paints (X)
Asian
Paints (Y) X/Y (%)
P/E 55.8 63.1 88.4
P/BV 17.4 15.7 110.8
Debt/Equity 0.1 0
Current Ratio 1.5 1.79 16.2
Return on Assets 13.7 16.5 82.9
Return on Equity 25.0 26.5 94.3
Net Profit Margin 8.0 13.2 60.5
(1) P/E Ratio –
The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current
share price relative to its per-share earnings. The price-earnings ratio is also sometimes known as
the price multiple or the earnings multiple.

34
The P/E ratio can be calculated as:
P/E = Market Value per Share / Earnings per Share
In essence, the price-earnings ratio indicates the dollar amount an investor can expect to invest in
a company in order to receive one dollar of that company’s earnings. This is why the P/E is
sometimes referred to as the multiple because it shows how much investors are willing to pay per
Rupee of earnings.
P/E Ratio comparison between Asian Paints and Berger Paints from 2014 to 2017 -
A high P/E ratio indicates that the investors are anticipating higher growth in the future. Thus,
from this above chart one can tell in the recent years, the P/E ratio of both companies concerned
here experienced a major fall which hit a low at around November 2016 after which it rose
significantly indicating a higher expectancy of investors regarding the growth of these companies
in the future.

35
(2) P/BV Ratio -
The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's market value to its book
value. It is calculated by dividing the current closing price of the stock by the latest quarter's book
value per share.
Also known as the "price-equity ratio".
Calculated as:
P/B Ratio = Market Price per Share / Book Value per Share
where Book Value per Share = (Total Assets - Total Liabilities) / Number of shares outstanding
A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that
something is fundamentally wrong with the company. As with most ratios, be aware that this varies
by industry. This ratio also gives some idea of whether you're paying too much for what would be
left if the company went bankrupt immediately.

36
The P/B ratio reflects the value that market participants attach to a company's equity relative to its book
value of equity. A stock's market value is a forward-looking metric that reflects a company's future cash
flows. The above comparison shows a steady rise the P/BC ratio of both companies, with a glaringly visible
fall in this ratio of Berger Paints during the latter half of 2016 which then, immediately recovered by
November of the same year. These falls could be the result of some fundamental crisis in Berger Paints for
that particular period.
(3) Debt-Equity Ratio:
Debt/Equity Ratio is a debt ratio used to measure a company's financial leverage, calculated by
dividing a company’s total liabilities by its stockholders' equity. The D/E ratio indicates how much
debt a company is using to finance its assets relative to the amount of value represented in
shareholders’ equity.
The formula for
D/E = Total Liabilities / (Total Assets - Total Liabilities)
calculating D/E ratios can be represented in the following way:
Debt - Equity Ratio = Total Liabilities / Shareholders' Equity
The result may often be expressed as a number or as a percentage.
This form of D/E may often be referred to as risk or gearing.
This ratio can be applied to personal financial statements as well as corporate ones, in which case
it is also known as the Personal Debt/Equity Ratio. Here, “equity” refers not to the value of
stakeholders’ shares but rather to the difference between the total value of a corporation or
individual’s assets and that corporation or individual’s liabilities. The formula for this form of the
D/E ratio, then, can be represented as:

37
From a pure risk perspective, lower ratios (0.4 or lower) are considered better debt ratios. Since
the interest on a debt must be paid regardless of business profitability, too much debt may
compromise the entire operation if cash flow dries up. Companies unable to service their own
debt may be forced to sell off assets or declare bankruptcy.
A higher debt ratio (0.6 or higher) makes it more difficult to borrow money. Lenders often have
debt ratio limits and do not extend further credit to firms that are over-leveraged. Of course, there
are other factors as well, such as credit worthiness, payment history and professional
relationships.
On the other hand, investors rarely want to purchase the stock of a company with extremely low
debt ratios. A debt ratio of zero, like that of Asian Paints would indicate that the firm does not
finance increased operations through borrowing at all, which limits the total return that can be
realized and passed on to shareholders.

38
(4) Return on Assets
Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
ROA gives an idea as to how efficient management is at using its assets to generate earnings.
Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a
percentage. Sometimes this is referred to as "return on investment".
The formula for return on assets is:
Note: Some investors add interest expense back into net income when performing this calculation
because they'd like to use operating returns before cost of borrowing.
Return on Asset = Total Income/Total Asset

39
It only makes sense that a higher Return on Assets ratio is more favorable to investors because it
shows that the company is more effectively managing its assets to produce greater amounts of
net income.
Asian Paints has shown an inconsistency in its Return on Assets Ratio over the years exhibiting
several ups and downs in the same.
A positive ROA, however, which can be seen in the case of Berger Paints usually indicates an
upward profit trend as well. ROA is most useful for comparing companies in the same industry
as different industries use assets differently.
(5) Return on Equity:
Return on equity (ROE) is the amount of net income returned as a percentage of shareholders
equity. Return on equity measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested.
ROE is expressed as a percentage and calculated as:
Return on Equity = Net Income/Shareholder's Equity
Net income is for the full fiscal year (before dividends paid to common stock holders but after
dividends to preferred stock.) Shareholder's equity does not include preferred shares.Also known
as "return on net worth" (RONW). The ROE is useful for comparing the profitability of a company
to that of other firms in the same industry.

40
It's not unreasonable to expect large companies to have double digit ROEs. Most analysts, in fact,
believe that a ROE of 10% or less is unsatisfactory. A return on equity of 17% or 18% is considered
very good, 20% excellent, and 25% and above, superior.
It can be seen from the comparison above that the RoE for Berger Paints was pretty stagnant for
the major part of the period considered for comparison, but shot straight up after 2015 while sian
Paints has experienced a steady decline in its RoE over the past few years which signals that
customers are no longer willing to pay as much for its products or services as they were in the past
or that the products and services have become more expensive to offer. It could be that new
competition has forced the company to boost its budget for marketing, advertising, its sales force.

41
(6) Net Profit Margin
Profit margin is part of a category of profitability ratios calculated as net income divided by
revenue, or net profits divided by sales. Net income or net profit may be determined by subtracting
all of a company’s expenses, including operating costs, material costs (including raw materials)
and tax costs, from its total revenue. Profit margins are expressed as a percentage and, in effect,
measure how much out of every dollar of sales a company actually keeps in earnings. A 20% profit
margin, then, means the company has a net income of $0.20 for each dollar of total revenue earned.
While there are a few different kinds of profit margins, including “gross profit margin,” “operating
margin,” (or "operating profit margin") “pretax profit margin” and “net margin” (or "net profit
margin") the term “profit margin” is also often used simply to refer to net margin. The method of
calculating profit margin when the term is used in this way can be represented with the following
formula:
Profit Margin = Net Income / Net Sales (revenue)
Other types of profit margins have different ways of calculating net income so as to break down a
company’s earnings in different ways and for different purposes.

42
(7) Current Ratio
The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-
term obligations. To gauge this ability, the current ratio considers the current total assets of a
company (both liquid and illiquid) relative to that company’s current total liabilities.
The formula for calculating a company’s current ratio, then, is:
Current Ratio = Current Assets / Current Liabilities
The current ratio is called “current” because, unlike some other liquidity ratios, it incorporates all
current assets and liabilities.
The current ratio is also known as the working capital ratio.
The current ratio is mainly used to give an idea of the company's ability to pay back its liabilities
(debt and accounts payable) with its assets (cash, marketable securities, inventory, accounts
receivable). As such, current ratio can be used to take a rough measurement of a company’s
financial health. The higher the current ratio, the more capable the company is of paying its
obligations, as it has a larger proportion of asset value relative to the value of its liabilities.
A ratio under 1 indicates that a company’s liabilities are greater than its assets and suggests that
the company in question would be unable to pay off its obligations if they came due at that point.
While a current ratio below 1 shows that the company is not in good financial health, it does not
necessarily mean that it will go bankrupt. There are many ways for a company to access financing,
and this is particularly so if a company has realistic expectations of future earnings against which
it might borrow. For example, if a company has a reasonable amount of short-term debt but is
expecting substantial returns from a project or other investment not too long after its debts are due,
it will likely be able to stave off its debt. All the same, a current ratio below 1 is usually not a good
sign.

43

44
CONCLUSION
The following project report contains a comparison done through fundamental analysis of two
major players in the Indian paint industry, viz. Asian paints and Berger paints india ltd.
It begins with an introduction to company analysis and the way to do so using qualitative and
quantitative factors.
the report is then followed by an overview of the two companies under comparison consisting of
details regarding the companies' balance sheets, profit and loss statements and other financial
statements.
The project finally, is concluded with a detailed ratio comparison of the two companies using
line charts to do the same.

45
REFERENCE
BIBLIOGRAPHY:
NISM-Series-XV: Research analysis
WIBLIOGRPHY:
• www.wikipedia.org
• www.investopedia.com
• money.rediff.com
• www.readyratios.com

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