Post on 14-Apr-2016
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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
Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08
-500
0
500
1000
1500
2000
2500
3000
Equity share capitalReserves & surplusSecured loansUnsecured loansNet Block of Fixed assetsTotal net current assets
Graph depicting the Vertical Analysis of the Balance Sheet of Asian Paints from 2008-2012
Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08
-20.00
0.00
20.00
40.00
60.00
80.00
100.00
Equity share capitalReserves & surplusSecured loansUnsecured loansNet Block of Fixed AssetsTotal net current assets
Graph depicting the Trend Analysis of the Balance Sheet of Asian Paints from 2008-2012
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5
-1500
-1000
-500
0
500
1000
1500
2000
Equity share capitalReserves & surplusSecured loansUnsecured loansNet block of Fixed AssetsTotal net current assets
Observations :The Equity Share Capital remains constant through the
yearsThe Reserves and Surplus are increasing each yearThe 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.
Net current assets have increased by a huge margin ; both the current assets and current liabilities have increased but current assets are increasing at a greater rate.
PROFIT & LOSS ACCOUNT
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 50.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
8,000.00
9,000.00
Operating incomeCost of salesOperating profitAdjusted PBTAdjusted PATReported net profitRetained earnings
Graph depicting the Profit and Loss statement of Asian Paints from 2008-2012
Line Graph depicting the trend analysis of Profit and Loss statement of Asian Paints from 2008-2012
0 1 2 3 4 50.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
Operating incomeCost of salesOperating profitAdjusted PBTAdjusted PATReported net profitRetained earnings
Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 080
20
40
60
80
100
120
Operating incomeCost of salesOperating profitAdjusted PBTAdjusted PATReported net profitRetained earnings
Graph depicting the vertical analysis of Profit and Loss statement of Asian Paints from 2008-2012
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.”(Chairman’s Letter of the Annual Reports 2012.)
Operating Profit has more than doubled during the prescribed period , “mainly on the back of buoyant domestic demand.” (Chairman’s 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.
Following from increased profits , the company has been increasing its Retained Earnings
CASH FLOW STATEMENTS
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5
-1,000.00
-500.00
0.00
500.00
1,000.00
1,500.00
Profit before taxNet cashflow-operating activityNet cash used in investing activityNetcash used in fin. activityCash and equivalnt end of year
Graph depicting the Cash Flow Statement of Asian Paints from 2008-2012
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50.00
200.00
400.00
600.00
800.00
1000.00
1200.00
1400.00
Profit before taxNet cashflow-operating activityNet cash used in investing activityNetcash used in fin. activityCash and equivalnt end of year
Line Graph depicting the trend analysis of Profit and Loss statement of Asian Paints from 2008-2012
1 2 3 4 5
-80
-60
-40
-20
0
20
40
60
80
100
120
Profit before taxNet cashflow-operating activityNet cash used in investing activityNetcash used in fin. activityCash and equivalnt end of year
Bar Graph depicting the vertical analysis of Profit and Loss statement of Asian Paints from 2008-2012
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 hasn’t 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.
1996 1998 2000 2002 2004 2006 2008 2010 2012 20140
50
100
150
200
250
300
350
Dividend (%)
Dividend (%)
Graph Showing Dividend paid out over the years at Asian Paints from 1996-2012
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 providing dividends to its equity share holders.
RATIOS
Mar ' 12
Mar ' 11
Mar ' 10
Mar ' 09
Mar ' 08
0 5 10 15 20 25 30 35 40 45
Dividend per share
Dividend per share
Graph Showing Dividend Per Share over the years ( as a % of face value) at Asian Paints from 2008-2012
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.55
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Operating margin (%)Gross profit margin (%)Net profit margin (%)Adjusted cash margin (%)
Profitability Ratios over the years ( as a % of face value) at Asian Paints from 2008-2012
Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 080
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
Long term debt / EquityTotal debt/equity
Leverage Ratios at Asian Paints from 2008-2012
Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 080
0.2
0.4
0.6
0.8
1
1.2
Current ratioQuick ratio
Current and Quick Ratios at Asian Paints from 2008-2012
Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 080
2
4
6
8
10
12
Inventory turnover ratio
Inventory turnover ratio
Inventory turnover ratio at Asian Paints from 2008-2012
1 2 3 4 50
20
40
60
80
100
120
Dividend per shareAdjusted EPS (Rs)
A comparison of Earnings Per Share and Dividend Per Share
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 financial leverage 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.
Observations :
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 NEROLACSERIES 3 – BLACK– BERGER PAINTS SERIES 4 – GREEN - AZKO NOBEL
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50.00
5.00
10.00
15.00
20.00
25.00
asian paintskansai nerolacbergerakzo nobel
Graph comparing the OPERATING PROFIT across the companies
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
asian paintskansai nerolacbergerakzo nobel
Graph comparing the NET PROFIT across the companies
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
asian paintskansai nerolacbergerakzo nobel
Graph comparing the EQUITY DIVIDEND across the companies
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
asian paintskansai nerolacbergerakzo nobel
Graph comparing the RETAINED EARNINGS across the companies
• 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 non-recurring 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.
Observations :
Common Size Balance Sheet
Compared across four companies of Indian paint Industry
COLOR KEY :SERIES 1 – DARK BLUE – ASIAN PAINTS
SERIES 2 – RED – KANSAI NEROLACSERIES 3 – BLACK– BERGER PAINTS SERIES 4 – GREEN - AZKO NOBEL
Graph comparing the EQUITY SHARE CAPITAL across the companies
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
Asian PaintsKansai NerolacBerger PaintsAkzo Nobel
Graph comparing the RESERVES AND SURPLUS across the companies
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.540.00
50.00
60.00
70.00
80.00
90.00
100.00
Asian PaintsKansai NerolacBerger PaintsAkzo Nobel
Graph comparing the SECURED LOANS across the companies
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50.00
3.00
6.00
9.00
12.00
15.00
18.00
21.00
24.00
Asian PaintsKansai NerolacBerger PaintsAkzo Nobel
Graph comparing the UNSECURED LOANS across the companies
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50.00
2.00
4.00
6.00
8.00
10.00
12.00
Asian PaintsKansai NerolacBerger PaintsAkzo Nobel
Graph comparing the NET BLOCK OF FIXED ASSETS across the companies
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50.00
10.00
20.00
30.00
40.00
50.00
60.00
Asian PaintsKansai NerolacBerger PaintsAkzo Nobel
Graph comparing the NET CURRENT ASSETS across the companies
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5
-20.00
-10.00
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
Asian PaintsKansai NerolacBerger PaintsAkzo Nobel
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.