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India's paint industry can be classified into decorative paints, which account for 75% of the market, and industrial paints, which make up the remaining 25%. Asian Paints is India's largest paint company. The leaders in the organized paint industry in India are Asian Paints with over 40% market share, Kansai Nerolac (20%), Berger Paints (19%) and AkzoNobel (12%). Asian Paints is a market leader in the decorative segment while Kansai Nerolac dominates the industrial and automotive segment. Asian Paints is a market leader in the decorative segment while Kansai Nerolac dominates the industrial and automotive segment. Asian paint is ranked at No 10 among the top Decorative Coatings Companies in the World. Asian Paints and its subsidiaries has operations in 22 countries across the world and 27 paint manufacturing facilities, servicing consumers in 65 countries.Asian paints was started by Champaklal Choksey, Chimanlal Choksey, Suryakant Dani and Arvind Vakil as Asian oil and Paints company .Within three years, their turnover reached 3.5 lacs. In April 2009, it reported its turnover for year 2008-09 as Rs 5463 Crores. Asian Paint is listed in Bombay Stock Exchange and in National Stock Exchange. The three main promoters of the company are the Dani, Choksi and Vakil Families.Out of the 14 member board of directors, 7 belongs to the founders family. Mr Aswin Choksi is the chairman of the board of directors and Mr P.M. Murthy is the MD and CEO. In an interesting decision, Mr. Murthy was asked to come out of retirement and run the company as CEO in April 2009. Asian Paints aims to become one of the top five Decorative coatings companies world-wide. They intend to achieve this through alliances with established global partners. One of the main issues with company could be that it has to compete with the same established global players in the international market with whom it has alliance in domestic market. As far as the social issues are concerned, all the paint plants have achieved 'zero industrial discharge' capability. Asian Paints Ltd is India's largest paint company and Asia's third largest paint company. Asian Paints Ltd was incorporated in the year 1945. In the year 1965, the name of the company was changed to Asian Paints (India) Pvt Ltd. In the year 1973, the company was converted into a public limited company. In the year 1972, they undertook a major modernization programme to streamline the paint production facilities by improving the layout of machines, addition to balancing equipment and replacement of old machinery to meet the demand. The company, along
with their subsidiaries, has operations in 22 countries globally with 27 paint manufacturing facilities servicing consumers in 65 countries through Berger International, SCIB Paints, Apco Coatings and Taubmans. The products of the company include ancilliaries, automotive, decorative paints, industrial paints. The company has manufacturing plants in Maharashtra, Gujarat, Andhra Pradesh, Uttar Pradesh, Tamil Nadu and Haryana.
In Decorative paints, the company is present in all the four segments, namely Interior Wall Finishes, Exterior Wall Finishes, Enamels and Wood Finishes. They have also introduced many innovative concepts in the Indian paint industry like Colour Worlds (Dealer Tinting Systems), Home Solutions (painting solutions Service), Kids World (painting solutions for kid's room), Colour Next (Prediction of Colour Trends through in-depth research) and Royale Play Special Effect Paints, just to name a few.
Asian Paints Ltd was incorporated in the year 1945. In the year 1965, the name of the company was changed to Asian Paints (India) Pvt Ltd. In the year 1973, the company was converted into a public limited company. In the year 1972, they undertook a major modernization programme to streamline the paint production facilities by improving the layout of machines, addition to balancing equipment and replacement of old machinery to meet the demand.
9,118.92 7,242.65 5,776.47 5,027.33 4,085.59 783.6 621.64 403.74 549.08 496.83 8,335.32 6,621.01 5,372.73 4,478.25 3,588.76 141.49 74.9 169.31 60.06 60.23 115.07 140.61 106.88 17.41 33.9 8,591.88 6,836.52 5,648.92 4,555.72 3,682.89 4,143.95 3,187.48 2,454.08 2,196.01 1,649.73 76.96 68.61 47.03 45.78 35.86 341.63 300.45 257.41 232.81 188.89 806.72 701.22 575.47 497.64 401.45 1,636.73 1,288.24 1,111.56 932.11 771.63 92.16 57.37 18.86 32.38 14.94 0 7,098.15 1,493.73 31.31 1,462.42 99.49 1,362.93 400.38 0 4.16 958.39 23.28 935.11 0 600 0 858.39 700 383.69 0 400 93.43 0 5,603.37 1,233.15 16.34 1,216.81 94.48 1,122.33 320.77 0 26.41 775.15 1.6 773.55 0 600 0 775.15 600 306.94 0 320 75.59 0 0 0 4,464.41 3,936.73 3,062.50 1,184.51 618.99 620.39 19.1 15.91 13.46 1,165.41 603.08 606.93 60.74 57.15 43.77 1,104.67 545.93 563.16 327.72 160.4 172.62 0 6.78 5.96 2.45 16.39 9.38 774.5 362.36 375.2 66.41 -1.12 0.34 708.09 363.48 374.86 0 0 0 230 200 150 0 0 0 404.5 332.36 325.2 600 230 200 258.98 167.86 163.06 0 0 0 270 175 170 76.23 34.8 36.23
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95.92 95.92 95.92 95.92 95.92 2,391.86 1,879.40 1,461.30 998.55 832.58 0 0 0 0 0 0 0 0 0 0 2,487.78 1,975.32 1,557.22 1,094.47 928.5 38.23 31.31 25.59 24.59 36.7 150.78 42.31 43 49.94 58 189.01 73.62 68.59 74.53 94.7 68.78 71.39 0 0 0 2,745.57 2,120.33 1,625.81 1,169.00 1,023.20 1,659.51 1,611.22 1,194.39 1,116.93 640.12 543.78 473.65 466.82 10.35 10.25 13.28 27.2 1,009.04 1,057.19 707.46 622.91 0 0 0 0 602.84 39.67 380.72 88.86 542.22 547.83 703.69 234.77 1,264.42 1,071.76 500.24 355.56 500.97 509.01 248.96 176.24 763.14 331.43 28.6 219.11 546.71 311.02 128.26 242.43 937.89 469.41 39.65 428.83 0 110.39 422.88 538.97 251.9 41.35 211.45
2,514.59 2,112.57 1,342.28 1,228.42 1,043.67 1,576.48 1,182.44 1,156.27 577.23 476.77 304.17 2,153.71 1,659.21 1,460.44 360.88 453.36 -118.16 771.9 186.15 958.05 270.37 784.56 166.49 951.05 92.62
Deferred Tax Assets Deferred Tax Liability Net Deferred Tax Other Assets Total Assets Contingent Liabilities
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0 0 0 0 0 25.38 27.4 22.57 20.03 16.75 106.13 102.9 70.47 67.94 48.27 -80.75 -75.5 -47.9 -47.91 -31.52 311.34 97.78 0 0 0 2,745.57 2,120.33 1,625.81 1,169.00 1,023.20 443.68 319.64 297.3 355.67 297.9
Asian Paints gives a detailed account of the break up of fixed assets under several heads. Appreciating the data given and observing the trends could go a long way in understanding the
financial interests of the company. In this analysis, we like to focus more on the Fixed Assets, Current Assets, Depreciation and Inventory figures of the company. Fixed Assets 1) Tangible Assets
i) Freehold land As on 31.03.10, Asian Paints had Rs. 90.88 cr worth freehold land. ii) Leasehold land During the fiscal year 09-10, Asian Paints added a significant land area on lease, to its existing assets. It acquired Rs 66.75 cr. worth leasehold land in a year to set up new plants at different locations. There has been a 235.62 percent increase in the worth of leasehold land in just one year. iii) Buildings Asian Paints acquired Rs. 12.35 cr. worth of buildings through mergers and acquisitions in the previous financial year. Buildings worth Rs. 11.02 cr. were added to the assets of the company. So, the total worth of buildings stands at Rs. 229.47 crores as on 31.03.10. iv) Plant and Machinery The Company has added Rs. 40.01 crores worth machinery in the previous fiscal year. That is an increase of around 7% on the existing machinery. The total plant and machinery worth now stands at Rs 601.23 crores. v) Capital Work In Progress The CWIP for all the projects that were undertaken in the year amounted to Rs. 407.23 crores. vi) Investments Long-term investments -Asian Paints has invested in Govt. securities, subsidiaries, mutual funds and a joint venture with Asian PPG Industries Ltd. Total long term investments was Rs. 236.74 crores as on 31.03.10 Current investments Mutual funds accounted for all the current investments made by the company. Some of the well-known mutual funds are BIRLA Sunlife, ICICI Prudential Flexible Income Plan, JM Money Manager, Kotak Flexi Debt, LIC MF, Reliance Money Manager, Religare Ultra Short Term fund etc.
vii) Depreciation There has been an accumulated depreciation of Rs. 473.65 crores, which accounts for 39.65% of the gross block. The company however, has also added buildings and machinery during the year. 2) Intangible Assets :The intangible assets that include the trademark of the company and the software installed, amounts to Rs. 34.78 crores, which is 2.91% of the total assets.
Current Assets, Loans and Advances 1) Cash in hand Accounting for cash and current/savings accounts in scheduled banks, the cash in hand comes up to Rs. 28.60 crores. Thus, Asian Paints has maintained just 2.1% of the total current assets as cash. The majority of current assets are accounted for in the form of inventory and loans/advances. 2) Debtors or receivables The amounts due from customers amounted to Rs. 331.43 crores, which is a huge 24.6 % of all current assets of the company as on 31.03.10. The percentage of bad debtors as a part of total debts is negligible.
3) Inventories The stock of raw materials, packing materials, work-in-process items etc. amounted to Rs. 763.14 crores. The break up of inventory is shown below:
Finished goods accounted for Rs 408.16 crores, which is a big 44.93%, leap from previous years figures. This indicates that the company was up and ready for increased sales projections last year. 4) Loans and advances The loans and advances /claims kept with the central govt./subsidiaries and other heads are given below:
For Asian Paints equities comprises around 96% of the total sources and reserves account for 94% of the equities which indicates that the company basically relies on investing the retained profits i.e., harnessing profits rather than issuing new shares to finance its operations. It also indicates that the company is in a position to declare dividends and that it does not have major investment proposals with them. For Berger Paints also equities account for 96% of the total sources out of which reserves account for around 89% . For Asian Paints loans comprise around 4% of the total sources out of which secured loan accounts for 38.6% whereas in the case of Berger Paints secured loans account for 99.8% of the total loans. Since unsecured debt carries more risk for the lender, the loan is more expensive for Asian Paints. The shareholding pattern is as shown below:
As is seen from the pattern, promoters hold a major chunk of the shares at 50.62%. The general public comes second with 14% of the shares. Domestic financial institutions hold almost 10% of the shares. However, foreign financial institutions play a major role with respect to sourcing the companys assets with a 15.49% of the total share volume.