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Sl. No. QUALITATIVE FACTOR

1 MANAGEMENT BACKGROUND
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2 MANAGEMENT COMPENSATION
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3 MANAGEMENT CHANGE
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4 AUDITOR CHANGE & COMMENTS
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5 MANAGEMENT CLAIM & PERFORMANCE
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6 STAKEHOLDER ENGAGEMENT
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7 LEGAL COMPLIANCE WITH GOVT. POLICIES
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8 RELATED PARTY TRANSACTIONS
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9 ASSET QUALITY
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10 CLIENT CONCENTRATION & QUALITY
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WHAT DOES THE EDGE SCORE SIGN

1
A PART OF THE LEARN2INVEST SERIES BY VIVEK BAJAJ

WEIGHTS RATING** EDGE SCORE

10% 3 3

10% 3 3

10% 3 3

10% 3 3

10% 3 3

10% 3 3

10% 3 3

10% 3 3

10% 3 3

10% 3 3

100% 30

EDGE SCORE SIGNIFY?

1
** Rating Description

1 Bad
2 Average
3 Good

INPUT
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Source: Business Standard

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MANAGEMENT BACKGROUN

What is the management's educational qualification?

What is the management's work experience?
Under the mangement's previous stint, how did that company perform?
Are there any criminal charges against the management at an individual level?
Is the management often being accussed for breaking the law or often falling in trou
What is the common sentiment or perception of various investors and minority sha
How many family members are participating in the top management?
Are the family members qualified for their positions in the top management?
Is the family run management welcoming of external professionals on the board?

Source: Business Standard

FLAG

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If you compare the PAT with the total salary of the top management it comes to less than 10% of the PAT
 A PART OF THE LEARN2INVEST SERIES BY VIVEK BAJ
MANAGEMENT COMPENSATION

Is the management compensation looking abnormal?

Is the management compensation more than 10% of PAT (prescribed limit under Co
Is the management increasing or decreasing its compensation as per the business cy
Is there a big gap between the promotoer's compensation in comparison to other e
Is the ratio of the director's compensation compared to a median employee too hig
How is the above point(5) comparing to its industry peers?
Is the breakup between fixed and variable components of the compensation abnorm

e the PAT with the total salary of the top management it comes to less than 10% of the PAT.
FLAG

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FY 2012

FY 2017
FY 2021
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MANAGEMENT CHANGE

How often is the management being churned?

Has any indpendent director resigned recently and why?
Is there any sudden exit from the top management due to unforeseen reasons?
Has any industry stallwart joined the management in recent times?
Has any industry stallwart left recently or planning to leave the management?
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FY 21
FY17

FY12
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AUDITOR CHANGE & COMMENTS

How often is the auditor being churned?

Is there any sudden exit of an auditor during the tenure and why?
Has the auditor raised any serious concerns in its comment on internal control?
Has the auditor raised any serious concerns in its comment on financials?
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Performance of the stock over the 10 years

Financial Performance
In Annual Report FY21, the management has given hint towards the inflation in commodit
Q2FY22 Concall Summary

Q2FY22 Concall Analysis

 Q3FY22 Concall Analysis

Source: Business Standard

Asian Paints decides to enter into home improvement segment in 2015
Q3FY22 Concall Analysis
 A PART OF THE LEARN2INVEST SERIES BY VIVEK BAJAJ
MANAGEMENT CLAIM & PERFORMANCE

Does the management have a history of setting aggressive growth targets for the co
Does the management deliver on the same every year?
Is the management's outlook of the industry understated/overstated?
Is the management claim towards innovation/new verticals being implemented the
Does the management often claim to enter new businesses and ends up taking u-tu
Is the management transparent in disclosing the reasons behind downturns in the b
Has the management's capital allocation decisions proven to be right in terms of ne
Is the management claim on CAPEX too aggressive to sustan the business model?

Performance of the stock over the 10 years

Financial Performance
In Annual Report FY21, the management has given hint towards the inflation in commodity prices and the outlook.
Q2FY22 Concall Summary

Q2FY22 Concall Analysis

 Q3FY22 Concall Analysis

ess Standard
decides to enter into home improvement segment in 2015
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Annual Report FY21
Regular Updates through Announcements
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STAKEHOLDER ENGAGEMENT

Is the management regularly conducting concalls/investor presentations?

Does the management share timely updates with the investors?
Is the management receptive towards stakeholder greivances?
Is the management receptive towards stakeholder queries?
Is the management employee friendly or has there been any employee harassment
Does the management regularly conduct engagement programmees/meets with all
Annual Report FY21
Regular Updates through Announcements
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Source: Annual Report FY21

Source: Annual Report FY21
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LEGAL COMPLIANCE WITH GOVERNMENT POLICIES

Are the manufacturing faciltiies meeting pollution norms of the government?

Has any serious penalty been imposed on the company due to non-compliance of re
Does the company operate in an industry that is vulnerable to frequent changes in t
Does the company operate in a highly regulated industry?
Is the management compliant of law when matters relate to internal control?
Does the company immediately act to changes in Government policies affecting its i
Does the company have significant tax cases on them?
Does the company follow SEBI/RBI/Companies Act and other concerned regulatory

Source: Annual Report FY21

Source: Annual Report FY21
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Annual Report FY21 (Very Transparent way of disclosing Related Party Transactions)
 A PART OF THE LEARN2INVEST SERIES BY VIVEK BAJAJ
RELATED PARTY TRANSACTIONS

Does the company have too many related party transactions?

Is the amount involved in the above point(1) too high?
Is the company transparently disclosing all its related party transactions?
Is the company transparently disclosing all its related parties?
Is the company providing guarantees to lenders on behalf of promoter group entitie

t FY21 (Very Transparent way of disclosing Related Party Transactions)

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The intangible assets as of FY21 is 5.67% of the gross block.
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ASSET QUALITY

Does the company have too much reliance on a single manufacturing unit?
Is the company diversified with the locations of its manufacturing facilities?
Does the company have labour issues very often?
Have there been too many instances of plant shutdowns?
Is the employee attrition rate of the company very high?
Is there increase in the number of employees with increase in assets such as manuf
Does the company's intangible asset form a substantial portion of the gross block?
Does the company have patents that provide it with an edge?
The intangible assets as of FY21 is 5.67% of the gross block.
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CLIENT CONCENTRATION & QUALITY

Does the customer profile of the company consists of reputed brands/companies?

Is the company heavily dependant on a select few clients?
Is the client/customer portfolio of the company well diversified?
Is the target audience of the company well-defined and focused?
Does the customer profile have a upper hand at negotiating with the company?
Is government your major client?
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