May 06, 2015
TOPICS TO BE COVERED• Introduction to Asian Paints• Financial Statements Analysis
o Ratio analysis Liquidity RatiosLeverage RatiosTurnover RatiosProfitability Ratios
o Index analysis o Common size statement analysis
• SWOT Analysis of ASIAN PAINTS
INTRODUCTION TO ASIAN PAINTS
• Asian Paints was started in 1942 by four entrepreneurs:
o Champaklal Choksey
o Chimanlal Choksey
o Suryakant Dani
o Arvind Vakil
• The company was started under the name “ASIAN OIL & PAINTS
COMPANY.”
• Within three years, their turnover reached 3.5 lacs.
• In 1967, Asian paints became the 10th largest paint company in the world.
INTRODUCTION TO ASIAN PAINTS
• Asian Paints is India’s largest paint company and Asia’s third largest
paint company, with a turnover of INR 77.06 billion.
• The group has an enviable reputation in the corporate world for
professionalism, fast track growth, and building shareholder equity.
• Asian Paints operates in 21 countries and has 29 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
and Taubmans.
AWARDS & RECOGNITION• Asian Paints was included in Forbes Magazine's - Asia's Fab 50 List of
companies in 2011 and 2012.
• Asian Paints was ranked 13th amongst the top paint companies in the
world by Coatings World - Top Companies Report 2012 (July 2012 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).
FINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSIS
• There are FIVE basic ways of analyzing financial statements – Ratio analysis Comparative analysis Index analysis Common size statement analysis DuPont analysis.
RATIO ANALYSIS
LIQUIDITY RATIOS
CURRENT RATIO
2006 2007 2008 2009 2010 20110
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6YEAR Current ratio
2006 1.36
2007 1.29
2008 1.16
2009 1.40
2010 1.10
2011 1.17
QUICK RATIO
2006 2007 2008 2009 2010 20110
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8YEAR Current ratio
2006 0.59
2007 0.58
2008 0.48
2009 0.70
2010 0.44
2011 0.41
DEBT RATIO
2006 2007 2008 2009 2010 20110
0.05
0.1
0.15
0.2
0.25YEAR Current ratio
2006 0.16
2007 0.21
2008 0.14
2009 0.07
2010 0.08
2011 0.05
DEBT-EQUITY RATIOYEAR Current
ratio
2006 0.19
2007 0.26
2008 0.16
2009 0.08
2010 0.09
2011 0.05
2006 2007 2008 2009 2010 20110
0.05
0.1
0.15
0.2
0.25
0.3
DEBT-ASSET RATIOYEAR Current
ratio
2006 0.06
2007 0.07
2008 0.03
2009 0.02
2010 0.01
2011 0.01
2006 2007 2008 2009 2010 20110
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
INTEREST COVERAGE RATIOYEAR Current
ratio
2006 92.22
2007 67.59
2008 74.23
2009 565.03
2010 86.15
2011 80.58
2006 2007 2008 2009 2010 20110
100
200
300
400
500
600
TURNOVER/ACTIVITY/ASSET MANAGEMENT RATIOS
“It measures how efficiently the assets are employed by the firm. These ratios are also called as efficiency ratios.”
INVENTORY TURNOVER RATIOYEAR Current
ratio
2006 6.99
2007 6.74
2008 6.46
2009 8.1
2010 6.04
2011 5.61
2006 2007 2008 2009 2010 20110
1
2
3
4
5
6
7
8
9
DAYS OF INVENTORY HOLDINGSYEAR Current
ratio
2006 52.22
2007 54.15
2008 56.50
2009 45.06
2010 60.43
2011 65.06
2006 2007 2008 2009 2010 20110
10
20
30
40
50
60
70
TOTAL ASSETS TURNOVER RATIOYEAR Current
ratio
2006 2.16
2007 2.17
2008 1.36
2009 1.50
2010 1.25
2011 1.27
2006 2007 2008 2009 2010 20110
0.5
1
1.5
2
2.5
FIXED ASSESTS TURNOVER RATIOYEAR Current
ratio
2006 9.32
2007 10.12
2008 9.55
2009 8.09
2010 8.19
2011 6.85
2006 2007 2008 2009 2010 20110.00
2.00
4.00
6.00
8.00
10.00
12.00
CURRENT ASSETS TURNOVER RATIOYEAR Current
ratio
2006 4.54
2007 4.28
2008 4.42
2009 4.63
2010 4.55
2011 4.38
2006 2007 2008 2009 2010 20114.10
4.20
4.30
4.40
4.50
4.60
4.70
PROFITABILITY RATIOS
GROSS PROFIT MARGIN RATIOYEAR Current
ratio
2006 0.13
2007 0.14
2008 0.15
2009 0.12
2010 0.2
2011 0.17
2006 2007 2008 2009 2010 20110
0.05
0.1
0.15
0.2
0.25
NET PROFIT MARGIN RATIOYEAR Current
ratio
2006 0.07
2007 0.08
2008 0.09
2009 0.07
2010 0.13
2011 0.11
2006 2007 2008 2009 2010 20110
0.02
0.04
0.06
0.08
0.1
0.12
0.14
OPERATING EXPENSE RATIO
2006 2007 2008 2009 2010 20110.82
0.83
0.84
0.85
0.86
0.87
0.88
0.89
0.9
0.91YEAR Current ratio
2006 0.88
2007 0.90
2008 0.87
2009 0.89
2010 0.85
2011 0.87
OPERATING RATIOYEAR Current
ratio
2006 1.75
2007 1.76
2008 1.72
2009 1.76
2010 1.64
2011 1.70
2006 2007 2008 2009 2010 20111.55
1.6
1.65
1.7
1.75
1.8
RETURN ON TOTAL ASSETSYEAR Current
ratio
2006 0.14
2007 0.17
2008 0.12
2009 0.11
2010 0.17
2011 0.14
2006 2007 2008 2009 2010 20110
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
RETURN ON NET ASSETSYEAR Current
ratio
2006 0.40
2007 0.53
2008 0.68
2009 0.39
2010 0.94
2011 0.60
2006 2007 2008 2009 2010 20110
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
RETURN ON EQUITYYEAR Current
ratio
2006 0.48
2007 0.67
2008 0.79
2009 0.42
2010 1.03
2011 063
2006 2007 2008 2009 2010 20110
0.2
0.4
0.6
0.8
1
1.2
EARNING PER SHAREYEAR Current
ratio
2006 1.95
2007 2.84
2008 3.91
2009 3.78
2010 8.07
2011 8.08
2006 2007 2008 2009 2010 20110
1
2
3
4
5
6
7
8
9
COMMON SIZE ANALYSIS
BALANCE SHEET: ASSETS
YEAR 2006 2007 2008 2009 2010 2011
Net fixed assets 23.2 21.48 14.23 18.56 15.3 18.54
Investments 21.2 21.44 14.03 7.00 15.22 17.97
Deferred tax assets 0.66 0.94 0.56 0.60 0.49 0.48
Current assets 47.61 50.8 30.76 32.48 27.52 28.99
Loans & advances 5.06 4.29 35.89 36.46 33 32.83
Total assets 100 100 100 100 100 100
BALANCE SHEET: LIABILITIES
YEAR 2006 2007 2008 2009 2010 2011
Net worth 30.29 26.12 15.82 25.82 16.33 21.7
Borrowings 5.61 6.9 2.57 1.95 1.43 1.12
Shareholder's funds 48.06 47.72 30.81 32.62 33.68 34.65
Current liabilities & provisions
43.47 43.02 65.02 63.41 63.36 62.42
Deferred tax liability 2.86 2.36 1.6 2.02 1.52 1.8
Total Liabilities 100 100 100 100 100 100
INCOME STATEMENTYEAR 2006 2007 2008 2009 2010 2011
Sales 100 100 100 100 100 100
Gross Profit 12.62 13.7 14.99 12.22 20.46 17.07
EBDIT 12.62 13.7 14.99 12.22 20.46 17.07
EBIT 10.99 12.36 13.92 11.08 19.41 15.77
EBT 10.86 12.16 13.72 10.88 19.18 15.56
PAT 6.67 8.03 9.16 7.19 13.37 10.7
EPS 0.00019 0.00013 0.0001 0.0001 0.00006 0.00006
INDEX ANALYSIS
BALANCE SHEET: ASSETS
YEAR 2006 2007 2008 2009 2010 2011
Net fixed assets 100 111.48 142.74 207.35 235.49 351.9
Investments 100 121.79 154.02 85.51 256.3 373.24
Deferred tax assets 100 171.13 194.99 233.18 262.75 318.98
Current assets 100 128.5 150.39 176.79 206.38 268.09
Loans & advances 100 102.07 1649.57 1866.02 2326.96 2854.7
Total assets 100 120.44 232.73 259.17 357.08 440.31
BALANCE SHEET: LIABILITIES
YEAR 2006 2007 2008 2009 2010 2011
Net worth 100 103.84 121.52 220.87 192.44 315.44
Borrowings 100 148.25 106.64 89.96 91.33 88.36
Shareholder's funds 100 119.57 149.21 175.88 250.24 317.43
Current liabilities & provisions
100 119.19 348.07 378.07 520.44 632.25
Deferred tax liability 100 99.43 130.25 183.32 190.15 277.66
Total Liabilities 100 120.44 232.73 259.17 357.08 440.31
INCOME STATEMENTYEAR 2006 2007 2008 2009 2010 2011
Sales 100 121.04 146.28 180.12 206.98 258.81
Gross Profit 100 131.46 173.8 174.36 335.62 350.17
EBDIT 100 131.46 173.8 174.36 335.62 350.17
EBIT 100 136.15 185.29 181.59 365.54 371.28
EBT 100 135.6 184.91 180.45 365.62 370.91
PAT 100 145.65 200.88 194 414.66 415.01
EPS 100 82.09 74.28 90.66 60.35 76.49
Strengths
SWOT analysis
Weaknesses
Opportunities Threat
OVERVIEW
Parent Company - Asian Paints Category - Paint Industry Sector - Industrial Products and Chemicals Tagline/ Slogan - Merawala blue; Har ghar
kuch kehta hai ki ;Ask Aparna USP - India’s biggest brand with widest
reach.
STRENGTHS1. The largest paint company in India and third
largest company in Asia.2. They have over 35% of market share in
organized sector and are clear leaders in decorative paints and are strong competitors to Kansai Nerolac to be leaders in Industrial paints and coatings.
3. They operate in 17 countries and have 24 manufacturing facilities providing service to 65 countries all over the world.
• 4. Asian paints has strong international presence with its four 4 subsidiaries; Berger International Limited, Apco Coatings, SCIB Paints and Taubmans.
• 5. Most renowned brand in Indian Paint Industry & its strong customer focus and innovative-spirit has made it market leader since 1968.
• 6. Superior technologies deployed to achieve and maintain the competitive edge.
• 7. They have maintained their brand name and increased awareness by unique ways of advertising and roping in celebrities like Saif Ali Khan.
• 8. The company has strong financials.
• 9. logo 'Gattu', an impish boy with the paint tin and brush, is most popular and easily recognized.
WEAKNESSES
1. Limited market share in industrial paints segment with Kansai Nerolac and Akzonobel giving stiff competition.
2.In decorative paints Industry Customer tastes and perceptions change very fast and products may become obsolete with change in trends, hence production planning and inventory problem.
OPPORTUNITIES
1. Big an international standard paint company it should look for more opportunities abroad
2. There is a good scope for growth especially in industrial paints category
3. Needs to have more focus on Automobile industry in industrial paints segment
4. Competitors are going for Hi-tech process and Asian paints with good financial and intellectual capital can go for hi-tech.
THREATS1. Growth prone to slowdown effects2.Stringent Government rules and regulations
regarding the quality of products and manufacturing facilities as Environment policies are given more emphasis
3.Raw material scarcity and volatlility in prices.
COMPETITORS
1.Jenson & Nicolson India Limited.2. Kansai Nerolac3.Akzonobel4. Sherwin-Williams Co.5. Nippon Paints Co.6. PPG Industries Inc.
CONCLUSION