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A Study Of Annual Reports

of Asian Paints

By V.Bhargav & Seemoli Ganatra

BALANCE SHEET

Graph depicting the Balance Sheet of Asian Paints from


2008-2012
3000

2500

2000

Equity share capital

1500

Reserves & surplus


Secured loans
Unsecured loans
Net Block of Fixed assets

1000

Total net current assets

500

0
Mar ' 12

-500

Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

Graph depicting the Vertical Analysis of the


Balance Sheet of Asian Paints from 2008-2012
100.00

80.00

60.00
Equity share capital
Reserves & surplus
Secured loans

40.00

Unsecured loans
Net Block of Fixed Assets
Total net current assets

20.00

0.00
Mar ' 12

-20.00

Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

2000

Graph depicting the Trend Analysis of


the Balance Sheet of Asian Paints from
2008-2012

1500

1000

Equity share capital

500

Reserves & surplus


Secured loans
Unsecured loans

0
0.5

-500

-1000

-1500

Net block of Fixed Assets


1

1.5

2.5

3.5

4.5

5.5

Total net current assets

Observations :
The Equity Share Capital remains constant
through the years
The Reserves and Surplus are increasing each
year
The Secured loans are reducing each year . The
unsecured loans are however increasing :
The company might be paying off its long term
debts. It is becoming more easy for the
company to get unsecured loans which
suggests an improved credit rating. The
company is relying more on short term debt
than long term for financing as compared to
before.
Fixed assets have increased ; the company is
investing more to acquire fixed assets.

PROFIT & LOSS ACCOUNT

Graph depicting the Profit and Loss


statement of Asian Paints from 20082012
9,000.00

8,000.00

7,000.00

6,000.00
Operating income
Cost of sales

5,000.00

Operating profit
Adjusted PBT

4,000.00

Adjusted PAT
Reported net profit
Retained earnings

3,000.00

2,000.00

1,000.00

0.00
0

0.5

1.5

2.5

3.5

4.5

Line Graph depicting the trend analysis of


Profit and Loss statement of Asian Paints
from 2008-2012
350.00

300.00

250.00

Operating income
200.00

Cost of sales
Operating profit
Adjusted PBT
Adjusted PAT

150.00

Reported net profit


Retained earnings

100.00

50.00

0.00
0

Graph depicting the vertical analysis of


Profit and Loss statement of Asian Paints
from 2008-2012
120

100

80
Operating income
Cost of sales
Operating profit

60

Adjusted PBT
Adjusted PAT
Reported net profit
Retained earnings

40

20

0
Mar ' 12

Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

Observations :
Operating income is increasing through the years
Cost of Sales has almost doubled from 2008 to 2012.
Possible Causation factors inflation surged to near double digit levels
The concerns in Euro zone and Middle East remain
unresolved and the US economy is still not out of the
woods.
(Chairmans Letter of the Annual Reports 2012.)
Operating Profit has more than doubled during the
prescribed period , mainly on the back of buoyant
domestic demand. (Chairmans Letter of the Annual
Reports 2012.)
PBT & PAT also have increased steadily.
Reported Net Profit has increased by a huge amount
from 2008-2012 and 17.3% in the last year alone.

CASH FLOW
STATEMENTS

Graph depicting the Cash Flow Statement of


Asian Paints from 2008-2012
1,500.00

1,000.00

500.00

Profit before tax


Net cashflow-operating activity
Net cash used in investing activity
Netcash used in fin. activity

0.00
0.5

-500.00

-1,000.00

Cash and equivalnt end of year


1

1.5

2.5

3.5

4.5

5.5

Line Graph depicting the trend


analysis of Profit and Loss statement
of Asian Paints from 2008-2012
1400.00

1200.00

1000.00

Profit before tax

800.00

Net cashflow-operating activity


Net cash used in investing activity
600.00

Netcash used in fin. activity


Cash and equivalnt end of year

400.00

200.00

0.00
0.5

1.5

2.5

3.5

4.5

5.5

Bar Graph depicting the vertical analysis


of Profit and Loss statement of Asian
Paints from 2008-2012
120
100
80
60
40

Profit before tax


Net cashflow-operating activity

20

Net cash used in investing activity


Netcash used in fin. activity
Cash and equivalnt end of year

0
1
-20
-40
-60
-80

Observations :
Cash from operating activities reduced from 2008 to
2009 but hence forth always increased.
Cash from investing activities has also increased over
the years but not by a huge margin.( The company
probably hasnt invested outside ?)
Cash from financing activities was increasing till 2011
but 2012 sees a slight drop.
Comparing the profit with the cash flows we see that
only a small portion of the profit is in the form of cash
and cash equivalents. Probably the cash is just enough
to fund the working capital and the rest of the profit is
plugged back into the company.

Graph Showing Dividend paid out over the


years at Asian Paints from 1996-2012
Dividend (%)
350

300

250

200

Dividend (%)

150

100

50

0
1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Observations :
At the outset , the dividend being
paid out to equity share holders is
on a upwards trend as depicted by
the graph
So the company is performing well
even after issuing dividends to the
equity share holders which shows
the financial capability of the
company and its favour of

RATIOS

Dividend per share


Mar ' 08

Mar ' 09

Dividend per share


Mar ' 10

Mar ' 11

Mar ' 12

10

15

20

25

30

35

40

45

Graph Showing Dividend Per Share over the


years ( as a % of face value) at Asian Paints
from 2008-2012

20
19
18
17
16
15
14
13

Operating margin (%)

12

Net profit margin (%)

Gross profit margin (%)


Adjusted cash margin (%)

11
10
9
8
7
6
5
0.5

1.5

2.5

3.5

4.5

5.5

Profitability Ratios over the years ( as a % of face


value) at Asian Paints from 2008-2012

0.09
0.08
0.07
0.06
0.05
Long term debt / Equity
Total debt/equity

0.04
0.03
0.02
0.01
0
Mar ' 12

Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

Leverage Ratios at Asian Paints from


2008-2012

1.2

0.8

Current ratio

0.6

Quick ratio

0.4

0.2

0
Mar ' 12

Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

Current and Quick Ratios at Asian Paints


from 2008-2012

Inventory turnover ratio


12

10

8
Inventory turnover ratio
6

0
Mar ' 12

Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

Inventory turnover ratio at Asian Paints


from 2008-2012

120

100

80

Dividend per share

60

Adjusted EPS (Rs)

40

20

0
1

A comparison of Earnings Per Share and


Dividend Per Share

Observations :
The dividend paid per share has been increasing steadily
from 2008-2012.This is a measure of a company's
performance, simply because it is linked to the profits.
The operating margin and the gross profit margins have
infact dropped over the past 2 years. This is linked to the
increasing Cost of Sales ( as discussed in the profit and
loss account)
Looking at the leverage ratios , the company is steadily
reducing long term debt whereas equity remains
constant. The company is financed heavily by equity. Low
debt-to-equity ratios may also indicate that a company is
not taking advantage of the increased profits that
financialleverage may bring. On the other hand ,
investors usually prefer low debt-to-equity ratios because
their interests are better protected in the event of a
business decline.

The current ratio is always near 1 , signifying an almost


equal share of current assets and liabilities.
The quick ratio seems to signify that stock is a major portion
of the current assets at an increasing rate . This maybe a
business strategy increasing stock available to go for
aggressive selling.
Inventory turnover ratios have remained around the same
figure with slight rises and drops.
As we can see , the earnings per share have constantly been
higher than the dividends paid per share.
The investors may be happy with dividends as these are
generally high and increasing. However the earning per
share is much greater than what is being paid out. Therefore
much more can be retained in the business.

Common Size Profit And


Loss Account Statement
Compared across four companies of Indian
paint Industry
COLOR KEY :
SERIES 1 DARK BLUE ASIAN PAINTS
SERIES 2 RED KANSAI NEROLAC
SERIES 3 BLACK BERGER PAINTS
SERIES 4 GREEN - AZKO NOBEL

25.00

20.00

15.00
asian paints
kansai nerolac
berger
akzo nobel

10.00

5.00

0.00
0.5

1.5

2.5

3.5

4.5

5.5

Graph comparing the OPERATING PROFIT across the


companies

35.00

30.00

25.00

20.00
asian paints
kansai nerolac
berger
15.00

akzo nobel

10.00

5.00

0.00
0.5

1.5

2.5

3.5

4.5

5.5

Graph comparing the NET PROFIT across the


companies

8.00

7.00

6.00

5.00
asian paints
kansai nerolac

4.00

berger
akzo nobel
3.00

2.00

1.00

0.00
0.5

1.5

2.5

3.5

4.5

5.5

Graph comparing the EQUITY DIVIDEND across the


companies

80.00

70.00

60.00

50.00
asian paints
kansai nerolac

40.00

berger
akzo nobel
30.00

20.00

10.00

0.00
0.5

1.5

2.5

3.5

4.5

5.5

Graph comparing the RETAINED EARNINGS across the


companies

Observations :

Asian paints has the highest Operating and


Net profit figures when compared to the other
three companies.
The Net profit and Retained Earnings figures
of Akzo Nobel are higher than Asian paints
ltd. This seems to be because of a big nonrecurring item which occurred in the year
2009.
If we exclude that single figure then Asian
paints can be considered as the best
company in terms of profit among the four
companies under study.

Common Size Balance


Sheet

Compared across four companies of Indian


paint Industry
COLOR KEY :
SERIES 1 DARK BLUE ASIAN PAINTS
SERIES 2 RED KANSAI NEROLAC
SERIES 3 BLACK BERGER PAINTS
SERIES 4 GREEN - AZKO NOBEL

16.00

14.00

12.00

10.00
Asian Paints
Kansai Nerolac

8.00

Berger Paints
Akzo Nobel
6.00

4.00

2.00

0.00
0.5

1.5

2.5

3.5

4.5

5.5

Graph comparing the EQUITY SHARE CAPITAL


across the companies

100.00

90.00

80.00

Asian Paints
Kansai Nerolac

70.00

Berger Paints
Akzo Nobel

60.00

50.00

40.00
0.5

1.5

2.5

3.5

4.5

5.5

Graph comparing the RESERVES AND SURPLUS


across the companies

24.00

21.00

18.00

15.00
Asian Paints
Kansai Nerolac

12.00

Berger Paints
Akzo Nobel

9.00

6.00

3.00

0.00
0.5

1.5

2.5

3.5

4.5

5.5

Graph comparing the SECURED LOANS across the


companies

12.00

10.00

8.00

Asian Paints
Kansai Nerolac

6.00

Berger Paints
Akzo Nobel
4.00

2.00

0.00
0.5

1.5

2.5

3.5

4.5

5.5

Graph comparing the UNSECURED LOANS across


the companies

60.00

50.00

40.00

Asian Paints
Kansai Nerolac

30.00

Berger Paints
Akzo Nobel

20.00

10.00

0.00
0.5

1.5

2.5

3.5

4.5

5.5

Graph comparing the NET BLOCK OF FIXED ASSETS


across the companies

70.00

60.00

50.00

40.00

30.00

Asian Paints
Kansai Nerolac
Berger Paints

20.00

Akzo Nobel

10.00

0.00
0.5

1.5

2.5

3.5

4.5

5.5

-10.00

-20.00

Graph comparing the NET CURRENT ASSETS across


the companies

Observations
When it comes to the sources of funds,
Akzo Nobel has absolutely no loans or
debts and relies only on equity share
capital and reserves and surplus.
When it comes to the usage of funds Asian
Paints has the highest net block of fixed
assets and Berger paints has the highest
current assets as a percentage of the total
usage of funds.