FINANCIAL

ANALYSIS OF
ASIAN PAINTS

• KANIKA RAJPUT
• 20RM923
• PGDM-RM
 ABOUT THE COMPANY
 Asian Paints Limited was established way back on February 1,1942 by Champaklal Choksey, Chimanlal
Choksi, Suryakant Dani and Arvind Vakil
 It is an Indian multinational paint company headquartered in Mumbai, Maharashtra.
 The company is engaged in the business of manufacturing, selling and distribution of paints, coatings,
products related to home decor, bath fittings and providing of related services.
 Product range of the company includes:
Automotive Paints
Decorative Paints
Industrial Paints
Ancillaries 
 Berger International Limited in November 2002, became a part of the Asian Paints Group. Today, the
name of Berger is synonymous with quality and innovation.
 VISION
Clear Goals for Clear Future
“To be the fore runner of inspiring décor and to actively
empower customers to create their dream homes”
BRINGING JOY TO PEOPLE’S LIFE
TRANSFORMING SPACES HOMES LIFE
158% of fresh water 74.6 crores CSR

SOCIAL
ENVIRONMENT
consumed has been spent
EDUCTION recharged by the
company’s water project 1,47,400
1,800 MT approx.
Flexible plastics cumulative participants
collected. skilled at Asian Paints
Color Academy
ENHANCING 39.46 MW installed
HEALTH AND
VOCATIONAL renewable energy
SKILLS
HYGIENE
capacity.
7,600+ employee
hours contributed to
77% reduction in employee engagement
specific trade effluent activities.
over 5 years.

WATER
COMPARITIVE FINANCIAL ANALYSIS
LIQUIDITY RATIO
  ratios show the ability of an enterprise to meet its short term financial obligations.
These

CURRENT RATIO = QUICK RATIO =

ASIAN PAINTS NEROLAC

•  Current Ratio = = 1.82:1 •  Current Ratio = = 3.37:1

• Quick Ratio = = 0.93:1 • Quick Ratio = = 1.98:1

• Current ratio is a relationship of current assets to current liabilities
and is computed to assess the short term financial position of an
enterprise.
• From the analysis, we can see that the current ratio of Asian paints is
less than Nerolac, which is a good sign as it shows that the funds are
properly utilized and there is no idealness of funds.

• Quick ratio is a relationship of liquid assets with current liabilities and

is computed to assess the short term liquidity of enterprise.
• From the above ratios we can see that both the companies have
maintained good position here, but the Quick ratio of Nerolac is
slightly better than Asian Paints.
SOLVENCY RATIO
Solvency ratios are those ratios which show the ability of enterprise to meet its
long term liabilities.
•  Debt Equity Ratio =

• Proprietary Ratio =

• Interest Coverage Ratio =

ASIAN PAINTS NEROLAC

•  Debt Equity Ratio = = 0.067:1 •  Debt Equity Ratio = = 0.012:1

• Proprietary Ratio = = 0.713 • Proprietary Ratio = = 0.837

• Interest Coverage Ratio = = • Interest coverage Ratio = =

43.49 32.90
• Debt equity ratio is computed to assess long term financial soundness
of the enterprise. It shows the relation between external equities and
internal equities.
• Debt equity ratio of Asian paints is good as compared to Nerolac and
it shows that higher degree of protection is enjoyed by the lenders.

• Proprietary ratio measure the proportion of total assets financed by

proprietor’s funds.
• Nerolac has slightly better ratio here, which shows greater satisfaction
of lenders and creditors.
ACTIVITY RATIO
Activity ratio also termed as performance or turnover ratios, measure how well the resources have been used by the

 
enterprise.
Inventory Turnover Ratio =

Working Capital Turnover Ratio=

ASIAN PAINTS NEROLAC

•  Inventory turnover Ratio = = •  Inventory turnover Ratio = =
6.08 times 5.31 times

• Working capital turnover Ratio = • Working capital turnover Ratio =

= 3.59 times = 3.122 times
• Inventory or stock turnover ratio establishes relationship between
cost of goods sold and average amount of inventory during the
period.
• Inventory turnover ratio of Asian paints is higher as compared to
Nerolac, which is a good indicator as it shows more sales are being
produced.

• Working capital shows the number of times working capital has been
employed in the process of carrying on a business.
• Again, Asian paints ratio is higher, which shows better the efficiency in
the utilization of working capital.
PROFITABILITY RATIOS
 Return on Investment=
Efficiency in business is measured by profitability ratios.
x 100
Net Profit Ratio = x 100

ASIAN PAINTS NEROLAC

•  ROI = 100 = 33.28% •  ROI = x 100 = 18.10%

• Net profit Ratio = x 100 = • Net profit Ratio = x 100 =

15.12% 10.77%
• Return on investment shows the relationship of profit with capital
employed. The net result is either profit or loss.
• From the figures, we can say that Asian paints ROI is really good as
compared to Nerolac. It indicates how efficiently the resources
entrusted to the company are used.

• Net profit ratio establishes the relation between net profit and net
sales. It is a indicator of overall efficiency of the business.
• Net profit ratio of Asian paints is higher, which indicates the
operational efficiency of the business.
SWOT ANALYSIS
STRENGTH
1) Strong domestic and
global presence.
2) Leader in decorative
paints and coating.
3) Wide range of products.
4)Good marketing campaigns.
5) Strong financials.
6) Experienced R&D team.
OPPORTUNITY
Good scope for growth
especially in automobile paint
segment.
WEAKNESS
1) Customer tastes and
perceptions change very fast
so, products may become
obsolete with change in
trends.
2) Slow International
Business.
THREAT
1) Growth prone to
slowdown effects.
2) The unorganized sector
still has about 35 percent of
the market share and this
can prove out to be a
deterrent to the growth.
 RECOMMENDATIONS

The company is performing good in domestic market. But in the international

operations, key units such as Egypt and Sri Lanka are witnessing challenging business
conditions which is impacting the overall performance. So, the company should focus
on the international operations as well.
THANK YOU