ASIAN PAINTS

Calculation of ratios

A) Profitability ratios 1) Profit as a percentage of sales Net Profit / Net Sales * 100 2006 186.78 / 2447.78 * 100 = 7.63 % 2007 272.05 / 2953.38 * 100 = 9.21 %
2) Return on Investment (ROI) PBIT / Total Assets * 100

2006 345.63 / 1291.27 * 100 = 26.76 % 2007 423.2 / 1554.82 * 100 = 27.22 % 3) Return on equity (ROE) Profit after tax and preference dividend / Equity shareholders funds * 100 2006 220.39 / 622.28 * 100 = 35.41 % 2007 267.86 / 744.08 * 100 = 35.99 % 3) Earnings per share (EPS) Profit after tax and preference dividend / Number of equity shares 2006 220.39 / 95919779 = 22.97 2007 267.86 / 95919779 = 27.92 4) Price earning ratio ( PE ratio) Market price of share / EPS 2006 750/ 22.97 2007 1190/ 27.92
= 32.65 = 42.62

B) Activity or turnover ratios

1) Total Asset Turnover ratio Net sales / Total assets

2006 2447.78 / 1291.27 = 1.89 times 2007 2953.38 / 1554.82 = 1.89 times 2) Average collection period = Debtors / Credit sales per day 2006 185.11 / (2447.78 / 365) = 28 days 2007 235.96 / (2953.38 / 365) = 29 days
3) Inventory turnover ratio Cost of goods sold / Average stock

2006 2081.74 / 349.71 = 5.95 2007 2517.09 / 434.07 = 5.79 4) Fixed asset turnover ratio Net sales / Net fixed assets * 100 2006 2447.78 / 598.32 = 4.09 2007 2953.38 / 680.92 = 4.33 C) Leverage ratios
1) Debt ratio = Total debt / Total assets(Bal sheet)

2006 91.08 / 1291.27 = 0.07 : 1 2007 125.67 / 1554.82 = 0.08 : 1

2) Interest coverage ratio = PBIT ( EBIT ) / Interest(P & L)

2006 345.63 / 8.16 = 42.35 2007 423.2 / 15.34 = 27.59

3) Average payment period = Creditors / Credit purchases per

day(B/S-P&L) 2006 470.62/(1365.3/360) = 123.84 2007 630.93/(1661.78/360) = 136.56

D) Liquidity ratios
1) Current ratio = Current assets / Current liabilities(B/S)

2006 692.95 / 577.91 = 1.19 : 1 2007 - 837.9 / 685.07 = 1.22 : 1

2) Quick ratio = (Current assets inventories) / Current

liabilities(B/S) 2006 343.24 / 577.91 =0.59 : 1 2007 403.83 / 685.07 =0.59 : 1

Introduction Asian Paints Ltd (formerly known as Asian Paints India Ltd [APIL]), promoted in 1942 is India's largest paint company and ranks among the top ten decorative coatings companies in the world today, with a turnover of Rs.25.6 billion (around USD 585 million). Asian Paints has become the 10th largest decorative paint company in the world. Asian Paints operates in 22 countries across the world. It has manufacturing facilities in each of these countries and is the largest paint company in nine overseas markets. Asian Paints operates in five regions across the world viz. South Asia, South East Asia, South Pacific, Middle East and Caribbean region through the four corporate brands viz. Asian Paints, Berger International, SCIB Paints and Apco Coatings. In 10 markets it operates through its subsidiary, Berger International Limited and in Egypt through SCIB Chemical SAE. Over the course of 25 years Asian Paints became a corporate force and India's leading paints company. Driven by its strong consumer-focus and innovative spirit, the company has been the market leader in paints since 1968. Today it is double the size of any other paint company in India. Asian Paints manufactures a wide range of paints for Decorative and Industrial use. The company has presence in both Decorative and Industrial Coating segment of the Paint business. In Industrial coating segment which comprises Automotive Coating, powder coating and protective coating, APIL serves/operates directly in the protective coating and has presence in other two sub-segments i.e Automotive Coating and Powder coating through Asian PPG Inds(a JV Co. with PPG of US) and Asian Paints Industrial Coatings Ltd(a 100% subsidiary of APIL). APIL's product range includes Wall paints, Metal paints, Wood Finishes, Primers and others. Vertical integration has seen the company diversify into specialty products such as Pentaerythritol and Phthalic Anhydride. These are used in paints, plasticizers, inks and dyes. Apart from offering the customers a wide range of decorative and industrial paints, the company even custom-creates products to meet specific needs. APIL's brands, Royal in the premium segment, Apcolite in the middle segment, Gattu, Tractor, Utsav, 3-Mango, etc, in the lower segment, are all well- established brands in their respective segments. Its one-

stop colour shop has software to choose and select 1,511 combinations of various colours. The company boasts state-ofthe-art manufacturing plants for paints at Bhandup (Maharashtra), Ankleshwar(Gujarat), Patancheru (Andhra Pradesh), Kasna(Uttar Pradesh), Sriperumbudur(Tamil Nadu) and all these paint plants are ISO 14001 certified. The company has manufacturing plant for Phthalic Anhydride and Pentaerythritol at Ankleshwar and Cuddalore respectively. Forbes Global magazine USA ranked Asian Paints among the 200 Best Small Companies in the World for 2002 and 2003 and presented the 'Best under a Billion' award, to the company. Asian Paints is the only paint company in the world to receive this recognition. One of the country's leading business magazine 'Business Today' in Feb 2001 ranked Asian Paints as the Ninth Best Employer in India. A survey carried out by 'Economic Times' in January 2000, ranked Asian Paints as the Fourth most admired company across industries in India. To keep abreast of world technology and to protect its competitive edge, Asian Paints has a 50:50 joint venture with Pittsburgh Paints and Glass Industries (PPG) of USA, the world leader in automotive coatings, to meet the increasing demand of the Indian automotive industry. Another wholly owned subsidiary, Asian Paints Industrial Coatings Limited has been set up to cater to the powder coatings market which is one of the fastest growing segments in the industrial coatings market. This wholly owned subsidiary of Asian Paints has entered into a tieup with Canada-based Protech Chemicals which is one of the top ten powder coatings companies in the world for technological know-how for powder coatings and service customers with a wider coatings in this segment. During 19992000, the resins manufacturing capacity was increased by 3800 tons per annum and Phthalic plant was also increased by 400 tons per annum. In the compnies first-ever acquisition overseas, Asian Paints Ltd (APL) acquired a 76 per cent equity stake in Sri Lanka-based Delmege Forsyth & Co (Paints) Ltd On 4th September 2000, the company allotted bonus shares to its shareholders in the ratio of 3 equity shares for every 5 equity shares held. During 2000-2001, the company was in the process of getting permission from various pollution control boards for increasing the capacity of overall paints facilities from 168900

tonnes per annum to 228900 tonnes per annum. Asian Paints Industrial Coatings Limited a wholly owned subsidiary of AsianPaints,was incorporated in October,2001. And the company has acquired thepowder coatings business of Hawcoplast Chemicals Ltd. The acquisition wasfunded from equity of Rs.80 million and a loan of Rs.60 million,financed byAsian Paints((India) Ltd. The subsidiary commenced operations with effectfrom 1st November,2001. Technical Instruments Manufacturers(India)Ltd(TIM), a wholly owned subsidiary owns the building which houses APIL'sCorporate Office. APIL had setup two units each in Oman and Mauritius during 2000-2001. During 2001-2002, the company acquired the trade mark 'HAWCOPLAST' from Hardcastle & Waud Manufacturing Co Ltd for a consideration of Rs.110 million. This trademark was licensed by the company to its subsidiary Asian Paints Industrial Coatings Ltd. The company received permission from respective pollution control boards of Gujarat and Andhra Pradesh to increase production at Ankleshwar and Patancheru Plants from 50,000 tpa each to 80,000 tpa. There was also a marginal increase in capacity of 2,000 tonnes at Kasna plant. Consequently the manufacturing capacity at paint plants had also gone up from 1,68,900 TPA to 2,30,900 TPA. During this year, the company restructured share holding of various subsidiaries. All Equity shares held by the company in the subsidiaries at Fuji, Tonga, Solomon Island, Vanuatu, Australia and the Sultanate of Oman were transferred to a wholly owned subsidiary in Mauritius. The company also Launched $3 million joint venture with Bangladesh-based Confidence Cements in which the company holds 51 per cent stake. During the period 2002-2003, the company made two acquisitions. In November 2002, the company acquired 50.1 percent controlling stake in Berger International Ltd of Singapore which has operations and manufacturing facilities in 11 different countries. In December 2002, the company purchased 60 percent stake in SCIB Chemical SAE Egypt which is the country's fifth largest paints company. Both this acquisitions were made through APIL's wholly owned subsidiary in Mauritius i.e. Asian Paints (International) Ltd, Mauritius(APILM). After these acquisitions, Asian Paints operations were spread across 24 countries in the world. The

company decided to set up subject to necessary approvals a 100,000 TPA plant for manufacturing paints at Pondicherry during this period. In May 2002, the powder coating business of the company was transferred to the wholly owned subsidiary APICL. The company also discontinued the production of Automotive paints manufactured in technical collaboration with Nippon Paints (Japan). The company Acquired Taubmans Paints (Fiji) Ltd. through its subsidiary in Fiji, Asian Paints (South Pacific) Ltd (APSP) During 2003-2004, the company acquired 3,760,783 Equity shares of face value of Rs.10/- each from government of India for a consideration of Rs.772.46 million through a Public bid. The companies paint plant at Sriperumbudur in Tamil Nadu with an ultimate capacity of 100,000 tonnes and with an initial capacity of 30,000 tonnes. is set up in phases.The plant is proposed to be operational by March 2005. Pentasia Investments Ltd (wholly owned subsidiary of the company) was merged with the company with the approval of the High Court of Mumbai. In January 2005, Asian Paints new paint plant at Sriperumbudur, in Tamil Nadu commenced production. The plant has been established to manufacture emulsion paints alone with a initial capacity of 30,000 KL per annum. Further during 2004-2005, the company also decided to set up Greenfield Industrial coating manufacturing facilities in the areas of industrial coatings and powder coatings (through its subsidiary). The project are being set up at Taloja , Maharashtra (for industrial coatings) and at Baddi, Himachal Pradesh (for powder coatings) with final capacities of 30,000 KL and 6,500 KL respectively. The company also divested its total investment of 89.6% equity in the Mauritian subsidiary to two existing shareholders of the subsidiary during this period. The company has changed its name from Asian Paints (India) Ltd (APIL) to Asian Paints Ltd during September 2005. During 2004-05 the company disposed of some of its subsidiaries namely Asian Paints (Mauritius) Ltd in March 2005, Berger Paints (Malta) Ltd in May 2004 and Berger Paints (Shanghai) Ltd in February 2004. Further the company's subsidiary, Asian PaintsDistributors (Private) Ltd Sri Lanka went under voluntary liquidation. During 2005-2006, the company has set up two new manufacturing facilities. one was commissioned recently for powder coatings at Baddi, Himachal

Pradesh, and the second for Industrial coatings will be commissioned at Taloja, Maharashtra in 2006-07. The companies Greenfield industrial coating manufacturing facilities was on schedule during this period. The company plans to commission the first phase of the plant towards the end of third quarter and propose to increase the capacity of 14,000 KL per annum to 30,000 KL per annum in a phased manner. The company also increased the capacity of the Sriperumbudur plant to 50,000 KL . The companies capacity of five paint manufacturing plants stands at 300,150 tons at the end of the financial year 2005-2006. At present the companies production capacities for Paints, Synthetic Resins, Phthalic Anhydride, Sodium formate and Formaldehyde (50%) stands at 300150 MT, 77880 MT, 24000 MT, 3000 MT, 1800 MT and 13500 MT respectively