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Asian paints analysis

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Information about Asian paints analysis
Education

Published on March 8, 2014

Author: saurabhgoel7

Source: slideshare.net

Description

swot analysis
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TOPICS TO BE COVERED • Introduction to Asian Paints • Financial Statements Analysis o Ratio analysis Liquidity Ratios Leverage Ratios Turnover Ratios Profitability 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 YEAR Current ratio 2006 1.36 1.6 1.4 1.2 2007 1.29 1 2008 1.16 2009 1.40 0.8 0.6 0.4 2010 1.10 0.2 2011 1.17 0 2006 2007 2008 2009 2010 2011

QUICK RATIO YEAR Current ratio 2006 0.59 0.8 0.7 0.6 2007 0.58 0.5 2008 0.48 2009 0.70 0.4 0.3 0.2 2010 0.44 0.1 2011 0.41 0 2006 2007 2008 2009 2010 2011

DEBT RATIO YEAR Current ratio 2006 0.16 0.25 0.2 2007 0.21 0.15 2008 0.14 2009 0.07 2010 0.08 2011 0.05 0.1 0.05 0 2006 2007 2008 2009 2010 2011

DEBT-EQUITY RATIO YEAR Current ratio 2006 0.19 2007 0.26 2008 0.16 2009 0.08 0.3 0.25 0.2 0.15 0.1 2010 0.09 0.05 2011 0.05 0 2006 2007 2008 2009 2010 2011

DEBT-ASSET RATIO YEAR Current ratio 2006 0.06 0.08 0.07 0.06 2007 0.07 0.05 2008 0.03 2009 0.02 2010 0.01 0.04 0.03 0.02 0.01 2011 0.01 0 2006 2007 2008 2009 2010 2011

INTEREST COVERAGE RATIO YEAR Current ratio 2006 92.22 500 2007 67.59 400 2008 74.23 2009 565.03 2010 86.15 600 300 200 100 2011 80.58 0 2006 2007 2008 2009 2010 2011

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 RATIO YEAR 2006 Current ratio 6.99 9 8 7 2007 6.74 2008 6.46 6 5 4 2009 8.1 3 2010 2011 6.04 5.61 2 1 0 2006 2007 2008 2009 2010 2011

DAYS OF INVENTORY HOLDINGS YEAR Current ratio 2006 52.22 60 2007 54.15 50 2008 56.50 70 40 30 2009 45.06 20 2010 60.43 10 2011 65.06 0 2006 2007 2008 2009 2010 2011

TOTAL ASSETS TURNOVER RATIO YEAR Current ratio 2006 2.16 2.5 2 2007 2.17 1.5 2008 1.36 2009 1.50 2010 1.25 2011 1.27 1 0.5 0 2006 2007 2008 2009 2010 2011

FIXED ASSESTS TURNOVER RATIO YEAR Current ratio 2006 9.32 2007 10.12 2008 9.55 2009 8.09 12.00 10.00 8.00 6.00 4.00 2010 8.19 2.00 2011 6.85 0.00 2006 2007 2008 2009 2010 2011

CURRENT ASSETS TURNOVER RATIO YEAR Current ratio 2006 4.54 2007 4.28 2008 4.42 2009 4.63 4.70 4.60 4.50 4.40 4.30 2010 4.55 4.20 2011 4.38 4.10 2006 2007 2008 2009 2010 2011

PROFITABILITY RATIOS

GROSS PROFIT MARGIN RATIO YEAR Current ratio 2006 0.13 2007 0.25 0.14 0.2 0.15 2008 0.15 0.1 2009 0.12 2010 0.2 2011 0.17 0.05 0 2006 2007 2008 2009 2010 2011

NET PROFIT MARGIN RATIO YEAR 2006 Current ratio 0.07 0.14 0.12 0.1 2007 0.08 0.08 2008 0.09 0.06 2009 0.07 0.04 2010 0.13 0.02 2011 0.11 0 2006 2007 2008 2009 2010 2011

OPERATING EXPENSE RATIO YEAR Current ratio 0.91 0.9 2006 0.88 0.89 2007 0.90 2008 0.87 0.88 0.87 0.86 2009 0.89 2010 0.85 0.85 0.84 0.83 2011 0.87 0.82 2006 2007 2008 2009 2010 2011

OPERATING RATIO YEAR Current ratio 1.78 1.76 2006 1.75 1.74 2007 1.76 1.72 1.7 2008 1.72 2009 1.76 1.68 1.66 1.64 2010 1.64 1.62 1.6 2011 1.70 1.58 2006 2007 2008 2009 2010 2011

RETURN ON TOTAL ASSETS YEAR Current ratio 0.18 0.16 2006 0.14 0.14 2007 0.17 2008 0.12 0.12 0.1 0.08 2009 0.11 2010 0.17 0.06 0.04 0.02 2011 0.14 0 2006 2007 2008 2009 2010 2011

RETURN ON NET ASSETS YEAR Current ratio 1 0.9 2006 0.40 0.8 2007 0.53 0.7 0.6 2008 0.68 2009 0.39 0.5 0.4 0.3 2010 0.94 0.2 0.1 2011 0.60 0 2006 2007 2008 2009 2010 2011

RETURN ON EQUITY YEAR Current ratio 2006 0.48 1 2007 0.67 0.8 2008 0.79 2009 0.42 2010 1.03 1.2 0.6 0.4 0.2 2011 063 0 2006 2007 2008 2009 2010 2011

EARNING PER SHARE YEAR Current ratio 9 8 2006 1.95 7 2007 2.84 2008 3.91 6 5 4 2009 3.78 2010 8.07 3 2 1 2011 8.08 0 2006 2007 2008 2009 2010 2011

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 STATEMENT YEAR 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 STATEMENT YEAR 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 Weaknesses SWOT analysis 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.

STRENGTHS 1. 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.

THREATS 1. Growth prone to slowdown effects 2.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 Nerolac 3.Akzonobel 4. Sherwin-Williams Co. 5. Nippon Paints Co. 6. PPG Industries Inc.

CONCLUSION

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