Break even point, P/v ratio and MOS

1. Presentation On Break Even Point & P/V Ratio
Presented By
Dipanway Bhabuk
DM14D15

2. Sectorial Information
 Growth of paint industry has been consistent with the growth of Indian GDP. The
paint industry is expected to grow at 12-13% annually over the next five years from
Rs. 280bn in financial year 2013 to around Rs. 500bn by financial year 2018.
Industry Players expect close to 12% growth in business volume and 10-12% rise
in sales in Financial Year 2015.
 The market for paints in India is expected to grow at 1.5 times to 2 times of the
GDP in the next five years. With GDP growth expected to be between 5-6% levels,
top three players are likely to clock above industry growth rates in the future,
considering they have a strong brand and good reach.

3. Company Overview
• Kansai Nerolac Paints Ltd is the largest industrial paint and second largest
decorative paint company of India based in Mumbai.
• It is a subsidiary of Kansai Paints Ltd., Japan.
• It is engaged in the industrial, automotive and powder coating business.
• It develops and supplies paint systems used on the finishing lines of
electrical components, cycle, material handling equipment, bus bodies,
containers and furniture industries.

4. Particulars /
Year
2014 2013 2012 2011
Sales 31361.05 28395.09 25858.79 21265.60
(-)Direct Cost 22698.22 20607.60 18473.57 14933.76
Contribution 8662.83 7787.49 7385.22 6331.84
(-) Fixed Cost 5874.21 5068.68 4722.67 4065.06
EBIT 2788.62 2718.81 2662.55 2266.78
(-)Finance Cost 4.51 0.61 0.86 1.35
EBT 2784.11 2718.20 2661.69 2265.43
Financials
INFERENCE :
• The Sales is increasing every year from 2013 to 2014 along with the Direct Cost and
Fixed Cost.
In Millions

5. Calculation of P/V Ratio
Particulars 2014 2013 2012 2011
Contribution 8662.83 7787.49 7385.22 6331.84
Sales 31361.05 28395.09 25858.79 21265.60
P/V Ratio 27.62% 27.43% 28.56% 29.78%
P/v ratio =
𝒄𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏
𝒔𝐚𝒍𝒆𝒔
x 100
INFERENCE :
• The Profit Volume Ratio is the ratio of Contribution over Sales.
• It measures the Profitability of the firm.
• The Contribution is the extra amount of sales over variable cost.
• The P/V Ratio has slightly increased from 27.43% in 2013 to 27.62% in 2014.
• The sales has also increased from 28395.09 Million in 2013 to 31361.05 Million during
2014.
• This ratio is maintained at a good level and is most satisfactory.
In Millions

6. Calculation of Break Even Point
Particulars 2014 2013 2012 2011
Fixed Cost 5874.21 5068.68 4722.67 4065.06
P/V Ratio 27.62% 27.43% 28.56% 29.78%
Break Even Point 21267.96 18478.60 16535.96 13650.30
Break Even Point =
𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕
𝑷𝒗 𝑹𝒂𝒕𝒊𝒐
𝐗𝟏𝟎𝟎
INFERENCE :
• Breakeven point is the sales volume at which a business earns exactly no money.
• The Break Even Point has increased from 18478.60 Million during 2013 to 21267.96
Million during 2014.
• This increase in BEP is because of increase in Fixed costs from 5068.68 Million in
2013 to 5874.21 Million during 2014.
In Millions

7. Margin of Safety
MOS = 𝑨𝒄𝒕𝒖𝒂𝒍 𝑺𝒂𝒍𝒆𝒔 − 𝑩𝑬𝑷 𝑺𝒂𝒍𝒆𝒔
Particulars 2014 2013 2012 2011
Sales 31361.05 28395.09 25858.79 21265.60
Break Even Point
(Sales)
21267.96 18478.60 16535.96 13650.30
Margin of Safety 10093.09 9646.49 9322.83 7615.30
INFERENCE :
This is the amount of sales that the company has made after Break Even Point Sales to
earn revenues.
In Millions

8. BIBLIOGRAPHY
• COMPANY’S ANNUAL REPORT
• I.M.Pandey

9. Thank You
For more details please visit
www.pibm.in