Page 1 of 24

COMPANY PROFILE

Since its inception in 1959, Pidilite Industries Limited has been a pioneer in consumer and specialties chemicals in India. Over two-third of the companys sales come from products and segments it has pioneered in India. The industries product range includes :
y y y y y y

Adhesives and Sealants, Construction and Paint Chemicals, Automotive Chemicals, Art Materials, Industrial Adhesives, Industrial and Textile Resins and Organic Pigments and Preparations.

Page 2 of 24

HIGHLIGHTS
 07.  In a recent report by Economic Times, Pidilite ranked 131st amongst the top 500 listed companies in India.  Pidilite Industries is the market leader in adhesives and sealants, construction chemicals, hobby colours and polymer emulsions in India.  The brand name Fevicol has become synonymous with adhesives to millions in India and is ranked amongst the most trusted brands in India.  Pidilite is also growing it's International presence through acquisitions and setting up manufacturing facilities and sales offices in important regions around the world.  Fevicol is now the largest selling adhesives brand in Asia. The Group's turnover is about US $ 350 Million for the year 2006 -

Customer Relations :
The Company continued to take several initiatives to increase awareness of its products and brands, increase consumption of its products and to strengthen relationship with customers, influencers and end -users. Pidilite has reached where it is today mainly due to the close team -work of their employees and due to their shared value system which emphasizes commitment to excellence, closeness to customers, and the spirit of innovation.

Page 3 of 24

Board of Directors

B K Parekh S K Parekh M B Parekh N K Parekh H K Parekh R M Gandhi N J Jhaveri Bansi S Mehta Ranjan Kapur Yash Mahajan Bharat Puri A B Parekh A N Parekh V S Vasan

Chairman Vice Chairman Managing Director Joint Managing Director Director Director Director Director Director Director Director (wef 28th May 2008) Whole-Time Director Whole-Time Director Whole-Time Director

Page 4 of 24

P RODUCT INFORMATION

Fevicol is synonymous with adhesives in India. Pidilite offers an extensive range of consumer, craftsmen, engineering and industrial adhesives under Fevicol brand name. Excellent quality, extensive product range, close relations with customers and award winning advertisement have made Fevicol one of the most trusted brands in India and the largest selling adhesives brand in Asia.

Fevicol has been ranked No. 1 in Household Care Segment

Economic Times Edition: Mumbai Date: June 2008

Fevicol Ranked amongst India's top 100 Most Trusted Brands

Economic Times Date: 17th June, 2009

India 's Most Trusted Brand

FEVICOL has been ranked no. 24 overall in the latest survey, Indias Most Trusted Brand" in the country conducted by Brand Equity (Economic Times). Our ranking has improved by 7 positions compared to last year.

Report in the Brand Equity section of The Economic Times, on 30th May'07

Pidilite offers a range of hobby & craft products under the Hobby Ideas brand name. The products are complemented with book, videos and training workshops to make hobby fun and easy for hobby enthusiasts. Pidilite has also opened Indias first chain of hobby & craft retail stores under the Hobby ideas brand name. The shops offer a large variety of hobby & craft products sourced from around the world.

Pidilite offers a wide range of constructions chemicals under the Dr. Fixit brand name. The extensive product range is used for waterproofing and repair for both new & old constructions. Dr. Fixit is market leader in retail market of construction chemicals and the products are available in all leading cement, hardware, tile and paint shops.

M-Seal is India's leading sealant brand. Pidilite offers a range of sealants for sealing, joining & repairing applications for both consumer & craftsmen market under M-Seal brand name. M-Seal is also gaining acceptance in international market.

Page 5 of 24

LOCATION

Corporate Office

Ramkrishna Mandir Road Off Mathuradas Vasanji Road Andheri (E), Mumbai 400 059

Registered Office

Regent Chambers, 7th Floor Jamnalal Bajaj Marg 208, Nariman Point Mumbai 400 021

Registrar & Transfer Agent

TSR Darashaw Limited 6-10, Haji Moosa Patrawala Ind. Estate 20, Dr. E Moses Road, Mahalaxmi Mumbai 400 011

Page 6 of 24

R A T I O
Meaning and definition of ratio analysis :

A N A L Y S I S

Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or quantitative relationship between two variables.

Significance or Importance of ratio analysis o It helps in evaluating the firms performance:

 With the help of ratio analysis conclusion can be drawn regarding several aspects such as financial health, profitability and operational efficiency of the undertaking. Ratio points out the operating efficiency of the firm i.e. whether the management has utilized the firms assets correctly, to increase the investors wealth. It ensures a fair return to its owners and secures optimum utilization of firms assets.

o It helps in inter-firm comparison:

 Ratio analysis helps in inter -firm comparison by providing necessary data. An interfirm comparison indicates relative position.It provides the relevant data for the comparison of the performance of different depart ments. If comparison shows a variance, the possible reasons of variations may be identified and if results are negative, the action may be intiated immediately to bring them in line.

o It simplifies financial statement:

 The information given in the basic f inancial statements serves no useful Purpose unless it s interrupted and analyzed in some comparable terms. The ratio analysis is one of the tools in the hands of those who want to know something more from the financial statements in the simplified manner.

o It helps in determining the financial position of the concern:

 Ratio analysis facilitates the management to know whether the firms financial position is improving or deteriorating or is constant over the years by setting a trend with the help of ratios The analysis with the help of ratio analysis can know the direction of the trend of strategic ratio may help the management in the task of planning, forecasting and controlling.

Page 7 of 24

o It is helpful in budgeting and forecasting:

 Accounting ratios provide a reliable data, which can be compared, studied and analyzed.These ratios provide sound footing for future prospectus. The ratios can also serve as a basis for preparing budgeting future line of action.

o It is helpful in determining Liquidity position:

 With help of ratio analysis conclusions can be drawn regarding the Liquidity position of a firm. The liquidity positon of a firm would be satisfactory if it is able to meet its current obligation when they become due. The ability to met short term liabilities is reflected in the liquidity ratio of a firm.

o It is helpful in determining Long term solvency:

 Ratio analysis is equally for assessing the long term financial ability of the Firm. The long term solvency is measured by the leverage or capital structure and profitability ratio which shows the earning power and operating efficiency, Solvency ratio shows relationship between total liability and total assets.

o It is helpful in determining Operating efficieny:

 Yet another dimension of usefulness or ratio ana lysis, relevant from the view point of management is that it throws light on the degree efficiency in the various activity ratios measures this kind of operational efficiency.

Page 8 of 24

CLASSIFICATION OF RATIO

Accounting ratio may be broadly classified into following categories:-

1. Balance sheet ratio:Ratios calculated from the different items of the Balance sheet of a concern are called Balance Sheet Ratios. eg. Current ratio, Liquid ratio, Proprietory Ratio, Capital Gearing Ratio, Debt equity Ratio etc. 2. Revenue Statement Ratio:- Ratios calculated from the different items of the Profit & Loss A/C of a firm are called Revenue Statement Ratio. eg. Gross Profit Ratio, Net Profit Ratio, Operting Profit Ratio, Stock Turnover Ratio etc. 3. Mixed Ratio:Ratios computed by taking accounting data from the Balance Sheet on the one hand and from Profit & Loss A/C on the other, are called Balance Sheet and Revenue Statement Ratios. eg. Net Profit to Proprietors Fund Ratio , Inventory Turnover Ratio, Working Capital Ratio etc.

Page 9 of 24

C
T t ti i t w i t li iliti . l it l

For ul :

,C

tA

t =I + + iliti

t i

=P l +O t t

CURRENT ASSETS CURRENT LIABILITIES CA:CL

An l

i :T t

t 6 tiliz

ti i t i . T i i ,C tA t i

C u

I .

fi iti

R R E N T R A T I O
i l ti i i t t t t ti f ' li i it t t l il f l t t it

t i +C &A t l

i l +C &B +A +Bill i l +Di l i iti + S t t +WIP+P i l +P +B i i ft+C ti +P

l t t ; it i i

+S t t i E

CURREN T RA TIO
FOR THE YEAR ENDED 2006-2007 2007-2008 2008-2009 RS/MILLION RS/MILLION RS/MILLION 4118.68 7091.31 7052.8 1783.03 2.31 2311.98 3.06 2835.75 2.48

i . It

: . I t fl t i ti t l

,t t f i t i t. t l

ti i

Page 10 of 24

QUICK RATIO
The quick ratio - aka the quick assets ratio or the acid-test ratio - is a liquidity indicator that further refines the current ratio by measuring the amount of the most liquid current assets there are to cover current liabilities. The quick ratio is more conservative than the current ratio because it exclud es inventory and other current assets, which are more difficult to turn into cash. Therefore, a higher ratio means a more liquid current position. Formula :

Quick Assets = Current Assets Stock in Trade Quick Liabilities = Current Liabilities Bank Overdraft

F r th Y r End d 2006-2007 2007-2008 2008-2009 RS/MILLION RS/MILLION RS/MILLION Quick Assets ( QA) Quick Liabilities ( QL) QA : QL 2142.5 1783.03 1.2 4435.87 2311.98 1.92 4763.87 2835.75 1.68

Analysis : The standard ratio in this case is 1 : 1. This means that for every Re.1 of Current Liabilities, there should be Re.1 of Current Assets. This ratio is also used for testing the solvency of the enterprise. In the year 2007 -2008, that the companies position is solvent and the company is not utilizing all of its current assets . Cause : In 2007-2008, the Liquid Assets are proportionately higher than the year 2006 -2007.

Quick Rat io

Page 11 of 24

D E B T- E Q U I T Y R A T I O
The debt-equity ratio is another leverage ratio that compares a company's to tal liabilities to its total shareholders' equity . This is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the sharehold ers have committed. Similar to the debt ratio, a lower percentage means that a company is using less leverage and has a stronger equity position.
Formula:

Long Term Debt = Secured Loans + Unsecured Loans Shareholders Fund = Share Capital + Reserve

DEBT EQUITY RATIO

FOR THE YEAR ENDED 2006-2007 2007-2008 2008-2009 RS/MILLION RS/MILLION RS/MILLION Long term Debt(A) Shareholder's Fund(B) A:B 1383.01 4879.8 0.28 5025.98 6424.81 0.78 5580.14 7336.15 0.76

Analysis : The standard ratio in this case is 5 : 1.( Long-Term Debt : Shareholders Fund ). The position of the creditors will be uncomfortable if the ratio is higher than this.The analysis for the years 2007 -2008 and 2008 -2009 says that the position of the creditors is uncomfortable. Cause : In the years 2006 -2007 and 2007-2008 both Secured and Unsecured loans have increased more than proportionately. In the year 2007 -2008 only Secured loan increased more than proportionately.

Page 12 of 24

FIXED

SSE

S R

Thi ti v l the el ti et een the i ed et nd p iet f nd f c ncern. hows whether the financial planning of a concern is sound or not or how uch of the It l fi ed assets are converted y the proprietors fund. The ratio is applicable for the purpose of testing the solvency position and efficiency of the anagement. Formula :

Fix

Gross loc epreciation +

et loc +

apital Work In rogress eserve and urplus

Propri ors Fund = quity share capital + reference hare apital +

FIXED ASSETS RATIO

FOR THE YEAR ENDED 2006-2007 2007-2008 2008-2009 RS/MILLION RS/MILLION RS/MILLION FIXED ASSETS(FA) PROPTIETORS FUND(PF) FA : PF 3371.5 4879.8 0.69 5470.67 6424.81 0.85 6733.01 7336.15 0.92

Analysis : It reflects sound financial plan of the company.

R B 2A32 HB 243B 5 4 5G 5 G B 31 4 2 5F 54 2P D D2B 2GG 31 A31 A 1 E A 32Q AP 5 I2 G 21 4 F5 6 D2A32 H2D A31 B 5 4 A5G 4 65 G 21 4 431 4 AB 32F A 1 EC 887 887 DB 3 9887 C 887 B 31 4 AA2 A @887 9887 65 5 43 21
r i r i i l ii r r r ri r i r 6r i :i r

   0  (  "$    # $        ' )      !         !'!    #           "  !  "      (  "$    #  $      ' " !  "   # &         !    % $ #! "             "  " !                      
T i r r i i i r i i l r w r i r l l ri

C u An Formu

: :

T i T T i

NET SALES ( NS )

NET PROFIT ( NP )

y y

NP : NS

Material pri e and Direct expenditure

N E T

r i

r i

T r

P R O F I T

ili

r i r i i

FOR THE YEAR ENDED 2006-2007 2007-2008 2008-2009 RS/MILLION RS/MILLION RS/MILLION

r i

1539.75

11543.8

NET PROFIT RATIO

13.33

l r i i

R A T I O

15353.08 2242.76

14.61

l ri

17611.22 1632.01

9.27

l r i

ili

Page 13 of 24

ri

Page 14 of 24

U R

V E R R

The ratio is also known Inventory Turnover ratio. It expresses the relationship between sales during the year and verage Inventory held during the year. Its expressed as: Formula :

D ( CG ) )

CK (

CG

, the ratio is higher than in the year Analysis : In management. ause : The turnover on the year

y ww w x wx w x y y x x x xxwxw xxw xw xxwyxw vr vur itr s rq p i hg `fYeb bd `cbaY `YX

CK

. .

. .

. It shows a good sign of

is greater than in the year

T SW
I
. . .

TV

UTS

Page 15 of 24

N E T

P R O F I T TO

P R O P R I E T O R S F U N D RATIO
The ratio shows the ratio of return on the proprietors fund. The higher the ratio, the greater is the return. The ratio is helpful to measure the earning capacity of the concern. Formula :

NET PROFIT TO PROPRIETORS FUND RATIO

FOR THE YEAR ENEDED 2006-2007 2007-2008 2008-2009 RS/MIILION RS/MIILION RS/MIILION NET PROFIT ( NP ) PROPRIETORS FUND ( PF ) NP : PF 1539.75 4879.8 0.32 2242.76 6424.81 0.35 1632.01 7336.15 0.22

Analysis : The ratio is indicating that the earning capacity of the concern is decreasing from 2007-2008 to 2008 -2009.

Cause : Comparing 2007 and 2008 -2009 , that Net Profit in 2008 -2009 is proportionately smaller than 2007 -2008.

Page 16 of 24

N E T P R O F I T T O F I X E D A S S E T S RA T I O
The ratio is helpful in comparing the Net Profit of the business with its Fixed Assets. This ratio reveals the extent of utilization of Fixed Assets. Formula :

IX

Analysis : The ratio analysis is showing less utilization of fixed assets in the year 2008 -2009 from the previous two years 2007 -2008 and 2006 -2007. Cause : Comparing the ratios of the years 2007 -2008 and 2008 -2009 with respect to the year 2006-2007 ,Fixed Assets of 2007-2008 and 2008 -2009 is proportionately higher than in the year 2006-2007.

wp | { zyq wp | {zyq wp | {zyq w j gmi ngfxntnxmtlqfvtku tjsgr gqpkojih gfe

I IX I
2006-2007 2007-2008 2008-2009 II I II I II I 1539.75 3371.50 0.50 2242.76 5470.67 0.41 1632.01 6733.01 0.24

vo }w  vo~ yrt yyvxt o  }w~ r opq} rtw

Page 17 of 24

T U R N O V E R T O T O T A L A S S E T S

RA T I O

This ratio is used for comparing Sales to the total Assets of the business. It also reveals the extent of utilization of the the total assets in the business. The ratio proves the efficiency of the management operational activities. The higher the ratio , the larger is the rate of return on capital invested in total assets.

Form la

TURNOVER ( T ) TOTAL ASSETS ( TA ) T : TA

12901.26 7490.18 1.72

17023.71 12561.98 1.36

19073.5 13785.81 1.38

Analysis : During 2006-2007 and 2007 -2008 the ratio proves the inefficiency of the management in operational activities. The rate of return on capital investment is not sufficient of the company in the year 2007 -2008. Cause : Comparing 2006-2007 and 2007 -2008 , we see that Total Assets ( specially Fixed Assets ) is proportionately higher in the year 2007 -2008 than in 2006 -2007.

TURNOVER TO TOTAL ASSETS RATIO

FOR THE YEAR ENDED 2006-2007 2007-2008 2008-2009 RS/ ILLION RS/ ILLION RS/ ILLION

Page 18 of 24

D E B T O RS T U R N O V E R R A T I O A N D A V E R A G E C O L L E C T I O N P E R I O D

The ratio reveals the number of days the debtors enjoyed as credit period allowed to them. It shows how quickly receivables or debtors are converted into cash. It is a test of the liquidity of the debtors of a firm. This ratio is also analyzed to study the debt collection policy of an enterprise. A large credit period indicates a very bad collection policy. Average collection period is nothing but the number of days in a year divided by debtors Turnover ratio. Formula :

DEBTOR'S TURNOVER RATIO AND AVERAGE COLLECTION PERIOD

FOR THE YEAR ENDED 2006-2007 2007-2008 2008-2009 RS/MLILION RS/MILLION RS/MILLION Debtors Credit Sales DEBTORS TURNOVER RATIO AVERAGE COLLECTION PERIOD 1318.13 12901.26 2057.48 17023.71 2413.03 19073.5

9.79 times

8.27 times

7.9 times

1.23 months 1.45 months 1.52 months

Page 19 of 24

Analysis : The ratio analysis is saying that the collection policy of the year 2006-2007 is in favour of the management.

Cause : Debtors turnover ratio is inversely proportional to Average Collection Period. Average Collection Period is increasing continuosly from 2006 -2007 to 2008 -2009 as Debtors Turnover Ratio falls c ontinuosly.

Page 20 of 24

W O R K I N G C A P I T A L T U R N O V E R R A T I O
It measures the number of times Sales is achieved to Working Capital. The higher the ratio the better is the utilization of Working capital. Formula :

Working Capital = Current Assets Current Liabilities

WORKING CAPITAL TURNOVER RATIO

FOR THE YEAR ENDED 2006-2007 2007-2008 2008-2009 RS/MILLION RS/MILLION RS/MILLION SALES ( S ) WORKING CAPITAL ( WC ) S : WC 12901.26 2335.65 5.52 17023.71 4779.33 3.56 19073.5 4217.05 4.52

Analysis : The ratio of 2007 -2008 is least than the previous two years 2006 -2007 and 2008 - 2009, so it is indicating the bad utilization of Working Capital during the year 2007 -2008. Cause : In 2007-2008 , Working Capital is proportionately higher compared to 2006 -2007.

Page 21 of 24

L I M I T A T I O N
1. . any ratios are calculated on t e basis of t e balance -sheet figures. ese figures are as on t e balance-sheet date only and ay not be indicative of t e year -round position. o paring t e ratios it past trends and it co petitors ay not give a correct picture as t e figures ay not be easily co parable due to t e difference in accounting policies, accounting period etc.

3. It gives current and past trends, but not future trends. . I pact of inflation is not properly reflected, as nu bers, several years old. . . any figures are taken at istorical

ere are differences in approac a ong financial analysts on o to treat certain ite s, o to interpret ratios etc. e ratios are only as good or bad as t e underlying inf or ation used to calculate t e .

Page 22 of 24

CONCLUSION

On a final note , I would like to conclude that Pidilite Industries Ltd. has a decent financial management. Still then , theres enough room for improvement and further strengthening of its financial position. By conducting RATIO ANALYSIS of the concern I have observed that the following areas or items need special attention :

 Proper utilization of Resources.

 Timely using Current Assets.

 Securing the position of Creditors by keeping Secured and Unsecured lines within a particular limit.

 Increasing return on Capital Assets.

 Average collection period should be minimized.

 Proper utilization of Working Capital.

Page 23 of 24

B I B L I O G R A P H Y

The relevant financial data of Pidilite Industries Ltd. for the financial year : 2006-2007, 2007-2008 and 2008 -2009 was acquired by referring to the following Annual Reports / Websites: Pidilite Industries Annual Report : 2006-2007, 2007 -2008 , 2008-2009

 www.pidilite.com

Page 24 of 24

A C K N O W L E D G E M E N T
To undertake such a huge project and to achieve the desired goals one needs quite a lot guidance and support . Firstly , of

 I am very much obliged and indebted to Mr. Atulya Das, Regional Sales Manager of Pidilite Industries Limited , for granting me the permission to work in the organization and providing various sorts of assistance requi red for preparing the project.

 I express my deep sense of gratitude to Mr. Shyamal Dutta, Administrative Officer, for his valuable guidance , consistent help and personal interest during my project work.

 I would like to express my profuse thanks to our respected Co-ordinator, Mrs. Rupa Bhattacharya for her exuberant encouragement during the course of the project.

 I would also like to thank our respected faculty , Mr.Ashok Basu , Mr.Shankar Bhaduri and Mr. Sudip Ghosh for their valuable suggestions throu ghout the project.

I am sure that the knowledge imparted will go a long way in enriching my career.