CHAPTER - I

INTRODUCTION OF THE STUDY

1.1 INTRODUCTION

Colour has fascinated culture throughout history, every age and every
region has produced dyes and pigment depending on the available resources.
colour has been with us for more than 20,000 years. The evidence can be
found in the cave paintings. The tradition of painting in India subcontinent
grew and developed and finest style, incorporating the culture and faith of
the region and religion. The history of Indian paints Industry is as old as
the history of the Indian people. Indian paints always embrace rich colours
and clear symbolism, using specific iconography to make religious figures
clearly recognizable.

The Indian paints industry has recently completed 100 years

of manufacturing. Manufacturing of Indian paints started around 1902.
The Indian paint industry has been a gradual shift in the preferences of
people from the traditional white wash to higher quality paints like
emulsions and enamel paints. Growing popularity of new variants providing
improved finishing and textures, increasing per capital income of people
and efforts on the part of manufacturers to introduce improved version
like eco-friendly, odour free and dust and water resistant paints, have
propelled the growth of the paint market in India. Efforts on the part of the
manufacturers to introduce innovation technologies in the paint market
have led to a growth in demand for paints in India.
1
 Paints manufacturers are giving due attention to customer’s colour
preferences. The markets is witnessing introduction of break through
technologies to improve the paint quality. Paint companies are also
increasingly investing in their R&D, to crave out a differentiated product in
the market. For instance, paints which use water in place of solvent, have
been introduced in the market. They are better in performance and not
harmful for health as it emits little or no Volatile Organic Compounds
(VOC). The industry has also seen the introduction of solar reflective
coating , which is a roof surface coating that lowers the surface
temperatures of the roof resulting into greater comfort inside the building.
New technologies in the paint market would lead to better performance ,
cost reduction and wider applications of paints in India.

The Indian Paint Industry is only segment of the Indian

chemical industry that had been sharing a consistent double digit growth rate
in the last five years. The growth rates recorded over the last few years has
been extremely encountered with upward trend in paint demand and
consumption. The large scale sector is dominated by four players, namely Asian
Paints, Nerolac Paints , Berger Paints and Dulux India Paints. The small scale
sector consists of over 5000 players. This growth has been closely linked with
the business and industrial development of modem India.

2
 Performance is anchored today in a wide variety of decorative and
industrial paints. An ISO 9001 company has come a long way in the highly
competitive Indian paints industry and has its products. It is global company in
a real sense. Indian housing sectors are booming and also increasing urbanization
has made easy availability of housing loans. This has been resulted into a shift
from semi-permanent to permanent housing structures. Growth in the decorative
paints segment accounts for nearly 65-70% of the Indian paint industry.
Seasons are also involved in the demand for decorative paints, where
consumption peaks around festive time.

Over the past few years , the Indian paint market has
substantially grown and caught the attention of many international players. The
growth in the market is driven by emergence of the middle class in India,
growing infrastructure, increase in the tendency to spend and growing young
population inclined towards lavish lifestyle. The country continues to enjoy a
healthy growth rate compared to other economics , backed by the increasing
level of disposable income, and demand from infrastructure , industrial and
automotive sectors.
3
 Indian paint industry had two types: Decorative & Industrial
paints. Decorative paint market has been further segment into emulsions,
enamel, distemper and cement paints. Similarly, Industrial paint market is also
segmented into automotive coating, high performance coating, powder coating
and coli coatings. The major boost to the growth in the Indian paint market
has been provided by the decorative paint segment, which is anticipated to
grow at a Compounded Annual Growth Rate (CAGR) of more than 16%
during the period 2013-2014 to 2015-2016.

Under the decorative segment, the emulsion paint market has

witnessed a massive demand over the past few years and is expected to drive
the market has witnessed a massive demand over the past few years and is
expected to drive the market in the coming years too. There is a phenomenal
growth on the housing sector front with rapid urbanization and availability of
easy to secure housing loans, which have become the prime drives of growth
in the decorative paint segment, which comprises 70% of the $2 billion Indian
Paint Industry. An average increase of growth of about 10% in the automobile
sector contributes to 50% of the revenues in the industrial paints segment.

DEFINITION OF PAINT

4
 The paint is defined as a coating material in liquid or
solid which when spread on a surface adheres and hardens forming
a film that protect, decorated or add a specific feature to the
surface on which it is deposited. It is most commonly used to
protect, preserve, decorate or add functionality to an object or
surface by covering with a pigmented coating.

COMPOSITION OF PAINTS

Paint is formulated as a mixture of four ingredients:

 Binder
 Solvent
 Pigment
 Additives

BINDERS OF PAINTS

Binder is the main ingredient of paints. Binders are polymers (resin)

forming a continuous film on the substrate surface. Binders are responsible for
good adhesion of the coating to the substrate . The Binder holds the Pigment
particles distributed throughout the coating. The Binder is dispersed in a carrier
(water or organic Solvent either in molecular form ( true solutions ) or as
colloidal dispersion ( emulsions or sols).

5
SOLVENTS OF PAINTS

Solvent ( water or organic Solvent) is a medium where the Binder,

Pigment and Additives are dispersed (emulsions or sols). SOLVENTS ( thinners)
are also used for modification of the paints viscosity required for the
application methods : brush, roller, dip, spray.

The solid coating is formed due to evaporation of Solvent therefore

the evaporation rate is one of the important properties of solvents. Other
important properties are the ability to dissolve the paint ingredients and
toxicity.

PIGMENTS OF PAINTS

Pigment is a solid substance dispersed throughout the coating to

impart it a color, opacity ( hide the substrate surface ). Pigments may protect
the substrate from UV light. Pigments change the paint appearances (gloss
level) and properties: increase hardness and decrease ductile. Pigments may be
natural, synthetic, inorganic or organic.

ADDITIVES FOR PAINTS

6
 Additives are small amounts of substances modifying the paints
properties.

Examples of Additives:

 Driers accelerate the paints drying (hardening) by catalyzing the

oxidation of 6he Binder.

FINANCIAL STATEMENT

The financial statement of a company reflect a true picture of its

financial performances. They depict not only profits and losses, but even
assets and liabilities. It is only at the end of all accounting processes that we
can generate financial statements. Let’s take a look at the objectives of
financial statements along with their features.

Financial statements are basically reports that depict financial an

accounting information relating to business. A company’s management use it to

7
communicate with external stakeholders. These include shareholders , tax
authorities, regulatory bodies , investors , creditors , etc.

Financial statements basically include the following reports:

 Balance sheet.
 Profit and loss statement.

STATEMENT OF THE PROBLEM

8
 The paint sector is one of the core industries in India and
plays a major role in influencing decision making for all the other important
sections of the economy. India’s economic growth is closely related to energy
demand; therefore the need and importance of paint projected to grow more .
Asian paint pvt limited is a key player in such an important industry in India.
Thus there is a need to study the financial performance of the entity.

9
SCOPE OF THE STUDY

 This study aims at providing an insight into the performance of

ASIAN PAINT PVT LTD. The study identifies the strength and
weakness of the company in financial aspects for their future
development.

 The study of Asian paints committed to protecting the environment.

 The study covers Ratio analysis of the company. It offers scope for
further improvement in the performance and plan for future.

10
OBJECTIVES OF THE STUDY

 To study the profitability of Asian paint private limited.

 To analysis the solvency position of Asian paint private limited.

 To measure the impact of Efficiency on Return on Investment.

 To evaluate the financial performance of Asian paint private limited in

respect of liquidity, Solvency and Profitability.

 To examine the Liquidity and solvency in Asian paint private limited.

RESEARCH METHODOLOGY

Research methodology is a systematic way to solve a research

problem. It includes various steps that are generally adopted by a research in
studying the search problem along with the logic behind them.

11
PERIODS OF STUDY

The study is for a period of 5 years from the financial year

2016-2017 to 2020-2021.

AREA OF STUDY

The study is done by analysis the financial performance of Asian

paint private limited.

SOURCE OF DATA

The study is mainly based on secondary data collected from

company for the period of five years from 2016-2017 to 2020-2021. The data
were obtained from the annual reports which were published by the company.
The performances have been analysed from profit and loss Account and
Balance sheet of the company. The additional information was obtained from
the officials of the accounts department and other officials of the company.

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TOOLS OF ANALYSIS

The statistical tools are used in the study for market the
inference of the company. The tools adopted in the study are explained below.

RATIO ANALYSIS

Ratio is used to present the data in suitable from for

analysis the short term and long term obligations of the company.
It is a power full tool for financial analysis.

13
LIMITATIONS OF THE STUDY

 The secondary data like profit and loss Account and Balance sheet of
the company were taken for analysis. So, the limitations pertaining to
secondary data exists.

 The study covers the period between the year 2016-2017 to 2020-2021.
It doesn’t consider the change that have taken place before and after
this period.

CHAPTER SCHEME

The study is divided into five chapters

14
CHAPTER I : INTRODUCTION AND DESIGN OF THE
STUDY

This chapter deals with introduction , statement of problem, objectives ,

scope , research methodology and limitations of the study.

CHAPTER II : REVIEW OF LITERATURE

The second chapter is the review of literature.

CHAPTER III : PROFILE OF THE COMPANY

The third chapter consists of profile the bank.

CHAPTER IV : DATA ANALYSIS AND INTERPRETATION

In this chapter data were analysed by using the tools like compound
growth rate and trend analysis.

CHAPTER V : SUMMARY OF FINDINGS , AUGGESTIONS

AND CONCLUSION

The fifth chapter narrates findings , suggestion and conclusion of the study.

CHAPTER : II

REVIEW OF LITERRATURE

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 REVIEW OF LITERATURE

A literature review is a comprehensive summary of previous

research on a topic. The literature review survey scholarly articles, books, and
other sources relevant to a particular area of research. The review should
enumerate, describe, summarize, objectively evaluate and clarify this previous
researchers, and un so doing, assures the reader that your work has been well
conceived. The following studied were reviewed.

The review of literature guide the researchers for getting a better

understanding of the limitations of various availability estimation procedures.
Besides the review of empirical studies explorer the avenues for future and
present research efforts related to the subject matter. A number of research
studies had been carried out on different aspects of financial performance by
the researchers, economics and academicians in India and other country.
Different authors had analyzed financial performance in different perspectives.
A review of these analyses is important in order to develop an approach that
can be employed in the context of the study of selected companies in Asian
paint industry

As the present study is concerned with the financial performance

analysis of selected companies in Asian paint industry, an attempt has been
made here to discuss the earlier studies on the same sa as to gain a greater
insight into the subject. The following conceptual and research studies on the
subject were reviewed.

16
 Dr. Murugesan . D , Dr. A. Krishnan (2019) 1 The study reveals that the
financial position of the Asian paint pvt limited is good as a remainder above
the standard norms throughout the period of study .

Ms . C. Shiva priya , Dr. U . Padmavathi (2019) 2 In this study, they president

the concepts of how the comutation of ratio analysis useful in analyzing the
true financial performance of the company. The simplest way to finding the
position of current assets and liabilities of the company can be done through
current ratio and Quick ratio.

Timothy Lwiki (2019)3 from financial performance tables and figures, there
are varied growth pattern for every firm . This implies that whereas the sugar
apply the same inventory management practices as determinants of their
performance levels , the implementation of the practices respond to different
specifically unique environments of each firm.

_____________________________________________________________________
1. Dr. Murugesan . D & Dr. A. Krishnan (2019) , Financial performance of
Asian paints Limited.
2. Ms. C. Shiva Priya (2019) A Study on Ratio Analysis in Asian Paints
Limited.
3. The Impact of Inventory Management practices on financial
performance of sugar manufacturing firms in Kenya Timothy Lwiki
Lecturer in Accounting& finance Sigalagala National Polytechnic.
17
 McDonald (2019)4 studied about ‘the determinants of firm profitability in
Australian manufacturing’, he concluded that the cyclicality of profit margins depends
on industry concentration – firm margins were pro- cyclical in concentrates industries
and are counter cyclical in less concentrated industries.
Mukdad lbrahim (2019)5 , The aim of the paper is to measure the
financial performance of the Emirates Telecommunications Group Company, the
largest provider of internet and telephony services in the United Arab Emirates,
during the years 2016 to 2018. This paper empirically analyzes three groups of
indicators , profitability, Liquidity, and capital structure. Due to its high degree
of validity in its ability to dissect and measure various aspects of a firm’s
financial health, financial ratio analysis was performed using data provided by
the Emirates Telecommunications Group Company in its annual reports. Ratio
analysis has consistently been recognized as the gold standard for investors
interested in analyzing the financial performance of large institutions. Relevant
ratios that reflect various aspects of the firm’s financial health have been
analyzed and compiled in order to reach a conclusion regarding the overall
financial standing of Emirates Telecommunications Group Company. The
profitability , Liquidity and capital structure analysis clearly shows a stable and
largely positive trend for the year 2016 through to 2018 , highlighting an
improvement in the firm’s management of resources and pointing towards to
the positive outlook For the company and good news for investors should
current trends continue. Due to the public availability of the data required as
well as the validity of this type of analysis, current and prospective investors
alike are encouraged to employ ratio analysis in order to measure the viability
of their investments as well as discover new investment opportunities where
they may arise.
____________________________________________________________
4. Mukdad Ibrahim, Measuring the Financial Performance of a
Telecommunications corporation. International journal of recent
technology and engineering (IJRTE) ISSN : 2277-3878 , Volume- 8 Issue-4,
November 2019.
18
 5. McDonald (2019) studied about ‘ the determinants of firm profitability in
Australian manufacturing’.

Merajud Din Drangay (2018) 6 , paint industry is a fast moving

industry in India. Every day nee paint units are entering into that industry,
but the stability of these companies is purely based on the financial and
operational performance. The 2 nd largest paint market in Asia is India with
annual demand of over four million tones. The country continues to have a
health growth rate when compared to other economics, by the increasing
level of disposable income, and demand from infrastructure, industrial and
automotive sectors. Through this support that the sector post a CAGR of
around 15 per cent during 2012 to 2015, according to Indian paint industry
expert forecast. The major boost to the growth which is anticipated to
grow at a Compounded Annual Growth Rate (CAGR) of more than 16%
during the period from 2013-2014 to 2015-2016 in Indian paint market has
been provided by the decorative paint segment, this study makes an attempt
for the comparative analysis of financial statements of select paint
companies in India. The manufacturing of paint by Indian paint industry is
Rs . 40,300 crore (in 2015-16) . The share of decorative paint is Ra.30,385
crores (75 per cent) and share of industrial paint is Rs.9,915 crores (25%).

19
 6. Merajud Din Drangay, COMPARATIVE STSTEMENT ANALYSIS
OF SELECT PAINT COMPANIES IN INDIA. Indian Journal Of
Accounting (IJA) ISSN : 0972-1479 (print) 2395-6127 (online) Vol . 50 (2) ,
December , 2018, pp.87-92.

Dr. S. Kamaladevi (2018) 7 , This paper focuses on the Liquidity

position of selected companies in Indian paint industry. An attempt has been
made to understand the abilities of selected companies to pay short term debt
obligations, how does these differ and get affected over a sufficient period of
time. The major stress has been laid down on studying liquidity ratios of
selected top 6 paint companies in India. A comparative external analysis of
these companies has been done for the period of 13 years . This analysis helps
these companies to identify the strategic financial moves while establishing their
standard goals for the long run. The present study has made use of various
financial and accounting ratios which have been tested with the help of
appropriate standard deviation and coefficient of variation. These ratios have
been further examined with the help of Repeated measure ANOVA. The paper
has concluded that there is significant difference between related population
means of current ratios and Quick ratios of the company over the years.
However the Liquidity position of the paint companies is quite satisfactory
over the period under study.

20
____________________________________________________________________
7. Dr. S. Kamalad3vi, LIQUIDITY ANALYSIS OF SELECTED
COMPANIES IN INDIAN PAINT INDUATRY. International journal of
Management, Technology And Engineering Volume 8, Issue VII , July /2018,
ISSN NO : 2249-7455.

Dr kshitija Gandhi (2018) 8, Fundamental analysis helps to evaluate the

correct price of the shares . The shareholders can invest their money in the
companies by making fundamental analysis. The main purpose of this analysis
is to identify overpriced securities. The fundamental analysis has a proper
framework. For this research Top Down approach has been adopted . The
Indian Paint Industry is growing in multiform. The innovation in products like
friendly . Odor free, and dust & water resistant paints have attracted large
customers. The paint industry has bright prospects in the coming year.
Therefore the investment in paint industry may results in profit. Two leading
companies , Asian Paints Ltd & Berger Paints Ltd, listed in National Stock
Exchange are chosen for the study. The data collected from the reports
published by RBI, Website of NSE, Annual Reports for the five years period of
the both the companies. Fundamental of both companies is carried out by ElC
approach to determine the intrinsic value.

21
 8. Dr. Kshitija Gandhi Research Paper on Fundamental Analysis of
Indian Paint Industry IOSR journal of Business and Management (IOSR-
JBM) e- ISSN NO : 2278-487X, P- ISSN: 2319-7668. Volume 20 , Ver. XI
(March 2018 ) , pp 74-86 . www.iosrjournals.org.

RAJESH (2017)9 , in this “study on financial performance of care it

solution private limited”. The objective of this study is liquidity, stability and
profitability position, common size, and Financial strength of the company. The
gives a clear idea of the financial performance of the Company over last 5 years. It
can be suggested that the company improve their customer Services and
technology they will come up with the standard level. The study conclude that
Findings and recommendations which would be useful for the development and
improvement To the company.

ROOPA ET AL (2017) 10, in her “study on financial performance of select

IT and ITeS Companies Listed in NSE, India.” The objective of their study is
liquidity, solvency, activity and Profitability position to evaluate the financial
performance. ROI, EPS and dividend paid by Big companies is more in terms of
high and average values.The risk and return relationship Analysis shows big
companies provide high return to moderate risk, medium companies have low risk
and low return but small companies are more uncertain with high risk and
moderate Return. The study concluded it has been found that big companies are
better performers and Medium companies are consistent performers.

22
_____________________________________________________________________
9. RAJESH (2017) In this study on financial performance of care it
solution private limited.

10. ROOPA ET AL., (2017) in her study on financial performance of

select it and companies listed in NSW, india.

PAVITHRA ET AL (2017) 11,in her “study on the analysis of financial

performance with reference To Jeppiaar Cements Pvt Ltd”. The study has been carried
out for he period of 5 years and it Is not sufficient enough to analyze the entire aspect
of the company. The objective of their Study is overall profitability position, trend
financial analysis of the company. It can be Suggested that the company must be
made more vigilant to maintain or improve the present Situation because if there is
any further fall in the current ratio. It may be a serious problem For the company. The
study concluded that company overall financial performance normal. The current
assets have to properly maintain to bring the current ratio to the normal.

Krishnaveni (2016) 12 , in the study evaluated the impact of policy changes

since 1982-92 on profitability and growth of firms in the industry using profitability.
In this study, she found that there was no evidence to show that firms have made
supernormal profits. Profitability was found to be show that firms have made firms,
vertical integration, diversification and industry policy dummy variables. Important
determinants of the growth of firms were found as diversification, industry policy
gross retained profit and expansion of capacities. Results also reveal difference in
performances between car and expansion of capacities. Results also difference in

23
performance between car and non-car sectors as well as within the sectors of the
industry.

11. PAVITHRA ET AL., (2017) in her study on the analysis of financial

performance with reference to jeppiar cement pvt Ltd.
12. krishnaveni (2016) In her study evaluated the impact of policy changes
since 1982-93 on profitability

Pavithra . K (2016)13 , Working capital is the life blood and never

center of business. Working capital is very essential to maintain smooth running
of a business . No business can run successfully without an adequate amount
of working capital. Working capital helps to operate the business smoothly
without any financial problem for making the payment of short-term liabilities.
Purchase if raw materials and payment of Salary, wages and overhead can be
made without any delay. Adequate working capital helps in maintaining
solvency of the business by providing uninterrupted flow of production. This
finance project report on working capital management is based on the study of
working capital management in Asian Paints and Berger Paints. An insight

24
view of the project will encompass on ratios like current ratio, Quick ratio,
and fixed asset to current asset ratio.

13. Pavithra.K , S. Karthika , S. Umamaheswari , A comparative

study on Working Capital Management of Asian Paints Ltd. In India.
Volume – 6, Issue -3 may - june 2016 International journal of
Engineering and Management Research Page Number : 549-553.

Benjamin Malingu Achode (2016) 14 , when firms are incorporated,

equity capital is the most available source from the promoters. Equity
financing consists of ordinary share capital, preference shares, and retained
earnings. As business improves, additional capital may be required and debt
option is usually the fastest given there are fewer regulatory barriers. In the
recent years the performance of some companies listed at the NSE, has
been dismal due to their high level debt compared to equity. The objective
of this research was to assess the effects of accounts payable on financial
performance of publicly listed manufacturing companies at NSE , Kenya.
Census sampling technique was used and the study used secondary data,
which was obtained from the companies statistics and journals at the
Nairobi Securities Exchange. SPSS was used to carry out the descriptive
analysis of the variables, requisite analysis and advanced analysis of the

25
 data. A multiple regression model was used to test the relationship between
the Accounts payable and firm performance. The results from this research
suggested that in most of the manufacturing firms listed at the NSE , there
was a direct positive relationship between Accounts Payable and the
dependent variable, Profitability and Liquidity , supporting the Pecking Order
Theory.

____________________________________________________________________
14. Benjamin Malingu Achode, 2 Gladys Rotich, Effects of accounts
payable as source of Financing on Performance of Listed
Manufacturing Firms at the Nairobi Securities Exchange. International
journal of Research studies in Agricultural sciences (IJRSAS) Volume 2,
Issue 4 , 2016, PP 24-32 ISSN 2454-6224 .

15
Jothi K and Geethalakshmi A (2016) , This study tries to evaluate the
Profitability and financial position of the company’s using statistical tools like ratio
analysis, mean, standard deviation correlation. The study reveals the positive
relationship between profitability short term and long term capital.

Krishnaveni (2016) 16 , in the study evaluated the impact of policy changes

since 1982-92 on profitability and growth of firms in the industry using profitability.
26
In this study, she found that there was no evidence to show that firms have made
supernormal profits. Profitability was found to be show that firms have made firms,
vertical integration, diversification and industry policy dummy variables. Important
determinants of the growth of firms were found as diversification, industry policy
gross retained profit and expansion of capacities. Results also reveal difference in
performances between car and expansion of capacities. Results also difference in
performance between car and non-car sectors as well as within the sectors of the
industry.

_____________________________________________________________________
15. Jothi K and Geethalakshmi A (2016), “An insight into the
performance of Indian companies”, Science Educatio Development Institute.

16. krishnaveni (2016) In her study evaluated the impact of policy

changes since 1982-93 on profitability.

Ravichandran M. and Subramanian M Venkita (2015)17, the main idea

believed in this study is to assess viability, stability and profitability of Force Motors
Ltd.Operating position of the company can be measured by using various financial

27
tools such as profitability ratio, solvency ratio, comparative statement and graph etc.
This study finds their company has got enough funds to meet its debts and liability.
Company can further improve financial performance by reducing the administrator,
selling is operating expense.

Dr. E.B. khedkar (2015) 18, This paper discusses the relationship between
Financial Leverage and Return of Investment, Operating Leverage and Return
on Investment, and combined Leverage and Return on Investment , for Dr.
Reddy’s Laboratories, the pharmaceutical firm having the highest sales turnover
for the financial year 2013 – 2014. Current ratio, Quick ratio, Debt to Equity ratio
, Total Assets Turnover ratio and Return on Investment had been analyzed for
understanding the financial performance of Dr. Reddy’s Laboratories . The study
has been carried out during the period of the financial period of 2010 – 2014.

17. Ravichandran M. and Subramanian M Venkita (2015), Liquidity vs

Profitability, Indian Journal Of Accounting, Vol. XXXV (2), pp.39-43.
18. Dr. E.B. khedkar ‘A STUDY OF LEVERAGE ANALYSIS AND
PROFITABILITY FOR DR REDDY’S LABORATORIES’ International
journal of Research in Engineering and social sciences ISSN NO : 2249-9482.

Ashenafi Haile (2014) 19 , Accounting data are useful in assessing the

economic prospects of the firm. The paper shows how financial ratios can be
used to explore the sources of a firms profitability and evaluate the “ quality ” of
its earning in a systematic fashion. Hence, the aim of the study is to analyze
28
the financial performance of commercial banks in Ethiopia for the period
between 2009 and 2012. A sample of the top seven commercial banks was
selected based on the value of their total assets at the end of the 2009
financial year. These are the banks that dominate the sector with the top 7
banks controlling 90.4 % of the total industry assets which makes then
systemically important banks. The results of the study indicates that CBE
showed the highest level of Roe all the time but this was driven by its high
leverage levels. We gage Bank had the most stable earnings over time ad a
result of its policy to use high level of equity financing. For a sustained good
banking performance in the country, it is recommended that the banks invest
more in interest bearing assets, mainly loans, to fully utilize their revenue
generating capacity. The Ethiopian government is also recommended to balance
its desire to control inflation with the need to maintain lasting viability of the
banking industry.

19. Ashenafi Haile, Tadesse Getacher and Hailemichael Tesfay

Financial Performance Analysis of selected Commercial Banks in Ethiopia.

29
 Jasmer Singh (2013)20 , Efficiency management of Finance is very
important for the success of an enterprise. Term financial performance is very
dynamic term . The subject matter of financial performance has been changing
very rapidly. In present time greater importance is given to financial
performance. So, here an attempt is made by me to analysis the financial
performance of the selected unit i.e., Asian paint Ltd. While analyzing the
financial performance of the selected units, we include the analysis profitability.

Toby (2013)21 did research on financial management modeling of the performance of

Nigerian quoted small and medium-sized enterprises. He has concluded that the
sustained growth adequate liquidity and requisite profitability in the small and
medium sized enterprise sector is significantly related to their investment and
financing decisions. The experiential results showed that there was not significant
different between current ratio and the gross profit mardin ratio and found the
working capital gap constant. He has also observed that citation SMES current asset
ratio, liquidity ratio.

_____________________________________________________________________
20. Jasmer Singh , Analysis of Financial performance of Asian Paints
Ltd. Journal Of Advance and Schorely Researches in Allied Education Vol .
VI , Issue XI , July-213, ISSN 2230-7540.

21. toby (2013) did research on financial management modeling of the

performance of nigerian quoted small and medium-sized enterprises.

30
ZAFER AND KHAILD (2012)22studied how the financial ratios are calculated from
financial statements. Result Was that ratio is a comparison between numerator and
denominator. This is used to produce a clear picture Of business.

RAY SABAPRIYA (2012)23studied financial data of automobile companies to

analyse financial performance. And found that industry was facing financial crisis and
suggested to improve labour production and Flexibility for the success of the firm.

PRASANTA PAUL (2011)24 stated on the Financial Performance Evaluation – Some

of the selected NBFCs are Taken for the comparative study. In the study, five of the
listed NBFCs are considered for the analyzation Of comparative financial
performance. Different type of statistical tools like standard deviation, arithmetic
Mean, correlation etc. are used extensively.

22. ZAFER AND KHAILD (2012) studied how the financial ratios are
calculate from financial data.

23. RAY SABAPRIYA (2012) studied Financial data of automobile

companies of analysis financial performance.

31
 24. PRASANTA PAUL (2011) stated on the financial performance
evaluation.

Dangwal and Kapoor (2010)25, undertook the study on financial performance

of nationalized banks in India and assessed the growth Index value of various
parameters through overall profitability indices.They found that out of 19 banks,
four banks had excellent performance five banks had good performance and six banks
had poor performance.Thus the performance nationalized banks differ widely.

RBI BULLETIN (2010)26 finance if foreign direct investment companies has

made studied on financial performance analysis using profit margin ratio, return on
net worth ratio of selected 490 non- government non-financial foreign direct
investment (FDI)companies for the period 2000-2003 based on their audited annual
accounts. This study concluded that the financial results of the selected company
should improve performance in terms of higher growth in sales, value of production,
manufacturing expenses and gross profit during 2002-03 compared with the
respective growth rates in the previous year. In also revalued that profitability ratios
like profit margin return on network increased during the year under review company
having major portion of FDF from UK, USA, Switzerland and Maturities registered
net flow of foreign companies in all the three years.

_______________________________________________________________

32
 25. Dangwal and Kapoor (2010), ‘Financial performance of Indian
Manufacturing Companies during Pre and vPost Merger’, International
Research Journal of Finance and Economics- Issue 12(2007), pp 7-35.

26. RBI bullection(2010) finance of foreign direct investment companies

has made studied on financial performance analysis.

Kakani, Saha & Reddy ( 2009) 27 have studied about empirical validation of
the widely held existing theories on the determinants of firm performance in the
Indian context . In their study they have used financial statements and capital market
data of 556 large Indian firms over a time frame of eight years divided into two sub-
period (2008-2009) and to analyse Indian firms financial performance across various
dimensions viz., shareholders value, accounting profitability it’s components, growth
and risk of the sample firms. They have found that size, marketing expenditure and
international diversification had a positive relation with a firms market evaluation.

D'souza & Megginson (2006)28 they have concluded that the capital expenditure
increase significantly in absolute terms, but not relative to sales and employers
declines, but Insignificantly. As per findings, they strongly recommended that
privatization yields significant performance improvement.

33
 27. Kakani, saha & Reddy (2009) have studied about an empirical
validation.

28. D’souza & Megginson (2006) have studied concerning the financial
and operating performance.

Raghunatha Reddy and Padma (2005)29, in their study, an attempt has beenmade to
study the impact of mergers on corporate performance. It compares the pre and post
merger operating performance of the corporations involved in merger to identify their
financial characteristics. Empirical research on share price performance suggests that
acquiring firm generally earns positive returns prior to announcement, but less
than the market portfolio in the post liberalization period in general and analysis
of the pre and post merger operating performance of the acquiring firm.

Pai, Vadivel & Kamala (2003)30 , in this study, a set performance measures / ratios
was employed to the level of financial performance and variation in performance from
one firm to another hasbeen observed and statistically established.

34
____________________________________________________________________
29. Raghunatha Reddy and Padma (2005), “Role of organizational
management and managerial effectiveness in promoting performance and
production”, International management reviews. Vol. 9(1), pp 53-80.

30. pai, vadivel & kamala (2003) have studied about the diversified
companies and financial performance.

35
 CHAPTER - III
PROFILE OF THE COMPANY

Asian Paints Ltd is an Indian multinational paint company, headquartered

in Mumbai, Maharashtra, India. The company is engaged in the business of
manufacturing, selling and distribution of paints, coatings, products related to home
décor, bath fittings and providing of related services. Asian Paints is India’s largest
and Asia’s third largest paints corporation. Asian Paints is the holding company
of Berger International.[6] The company generated a revenue of ₹17,194.1 crores in
the financial year 2019-20 and a profit of ₹2,654 crores. The company’s
manufacturing operations encompass 15 countries of the world including India, with
considerable presence in the Indian subcontinent and the Middle East.

HISTORY
The company was started in a garage in Gaiwadi, Girgaon, Mumbai by four
friends Champaklal Choksey, Chimanlal Choksi, Suryakant Dani and Arvind
Vakil They all belong to Jain families, and founded the company in February 1942.
During World War II and the Quit India Movement of 1942, a temporary ban on paint
imports left only foreign companies and Shalimar Paints in the market. Asian Paints
took up the market and reported an annual turnover of ₹23 crore in 1952 but with
only 2% PBT margin. By 1967, it became the leading paints manufacturer in the
country.

The four families together held the majority shares of the company. But disputes
started over the global rights in 1990s when the company expanded beyond India. The
disputes resulted in Choksey selling their 13.7% shares and exiting in 1997.
Champaklal died in July 1997 and his son Atul took over. After failed collaboration
talks with the British company Imperial Chemical Industries, Choksey's shares were
36
mutually bought by the remaining three families and Unit Trust of India. As of 2008,
the Choksi, Dani and Vakil families hold a share of 47.81%.

OWNERSHIP STRUCTURE

The company has 12 institutional owners and shareholders that are investing
through Securities Exchange Commission (SEC). Largest stakeholders include Bridge
Builder International Equity Fund, and Touchstone Sands Capital Emerging Markets
Growth Fund.

MARKETING AND ADVERTISING

In 1950s, the company launched a "washable distemper", which was a

balance between the cheap dry distemper that peeled easily and the more expensive
plastic emulsions. Promoting their brand Tractor Distemper, the company used "Don't
lose your temper, use Tractor Distemper" in their advertisings. In 1954, "Gattu" – a
mischievous boy with a paint bucket in his hand – was launched as mascot. Created
by R. K. Laxman, the mascot found appeal with the middle-classes.

He was used only in print advertisements and packaging till 1970s and by 1990s, was
also seen on television advertisements. Gattu helped in bringing the commodity-led
business of painters to the actual end users of home-owners. Ogilvy & Mather, the
advertising agency associated with Asian Paints, launched marketing strategy by
focusing on festive occasions in 1980s with their tag line "Har Ghar Kucch Kehta
Hai" (Every home says something). Relating with festivals and important life events
like marriages and child birth, the company advertised it as an occasion to paint
homes by connecting on emotional level. In 1990s, the advertisements focused on the
home exteriors, focusing on how the paints could keep the exteriors timeless. The

37
company revamped its corporate identity in 2000s and axed Gattu as their mascot, and
later changed its "Asian Paints" logo to the shorter "AP" mnemonics

Asian Paints Ltd.

Type Public
Traded as  BSE: 500820
 NSE: ASIANPAINT
 BSE SENSEX Constituent
 NSE NIFTY 50 Constituent
ISIN INE021A01026
Industry Chemicals
Founded 1 February 1942; 80 years ago
Founders  Champaklal Choksey

 Chimanlal Choksi

 Suryakant Dani

 Arvind Vakil

Headquarters Mumbai, Maharashtra

India
Area served Worldwide
Key people  Ashwin Dani (Chairman)
 Manish Choksi (Vice Chairman)
 Amit Syngle (CEO)
 Abhay Vakil (Non Executive Director)

38
Products  Chemicals
 Decorative paints
 Industrial finishing products
 Coatings
Revenue ₹22,016 crore (US$2.9 billion) (2021)
Operating ₹4,860 crore (US$640 million) (2021)
income
Net income ₹3,207 crore (US$420 million) (2021)
Total assets ₹20,370 crore (US$2.7 billion) (2021)
Total equity ₹12,806 crore (US$1.7 billion) (2021)
Number of 7,160 (2021)
employees
Website asianpaints.com

PAINT SYSTEM AND COMPONENTS

A paint system is basically composed of primer/sealer, undercoat

and topcoat as shown in the Figure. Depending on the design requirement,
texture coating may be provided. Dye to volume constraint, this guidebook will
focus on paints that are commonly used in the local market. The functions of
each system component are illustrated in below.

 Topcoat
 Undercoat
 Texture (optional)
 Primer or sealer

39
CLASSIFICATION OF PAINTS

 Classification of paints by physical type.

 Classification of painting products their functions.

CLASSIFICATION OF PAINTS BY PHYSICAL TYPE

 Solvent – borne paints obtain up to 80% of solid constituents

(Binder, pigments and additives) dispersed in the organic Solvent.
Solvent-borne paints dry fast and may contain a wide range of
binders. The main disadvantages of the solvent-borne paints are
their toxicity and combustibility.

 Water- borne paints contain water as the paint Solvent. Waterborne

paints are non-toxic and non-combustible but they are characterized
by long drying time due to slow evaporation rate of water.

 High-solids paints ( Low VOC paints ) contain more than 80% of

solid constituents ( binders, pigments ) dispersed in an organic
Solvent. VOC - Volatile Organic Compounds.

 Powder coatings are obtained from powdered resin, particles of

which are attracted by the electrostatic force to the substrate
surface ( electro deposition ). No Solvent is involved in the process

40
 therefore powder coatings produce no/Low toxic waste. The main
disadvantages of powder coatings is high cost of equipment.

 Radiation curable coatings are formed from a mixture of

prepolymers, monomers and additives, which is cured under ultra-
violet radiation. Radiation curable coatings harden fast and contain
no solvents. The main disadvantages is relatively high cost.

CLASSIFICATION OF PAINTING PRODUCTS

Thus, Classification of painting products by their functions

 Paint – coloured non- transparent protective coating.

 Varnish – transparent or semi-transparent protective coating. A

varnish is made if Binder, Solvent and Additives. Some varnishes
contain small amount of Pigment.

 Enamel – hard protective coating with glossy finish.

 Primer – the first coating applied to the surface in order to

enhance the adhesion of the final paint (topcoat) and to seal the
substrate surface. Primer may be formulated to impart additional

41
 protection to the substrates ( e.g. antitrust primer for steel
substrates).

With technological advancements, the traditional Classification of paints into

either enamel or emulsion has become misleading. Today , the industry has
enamel paints that can be diluted with water and emulsion paints that have
smooth , glossy finishes. Hence, it becomes essential to identify paint by its
resin components to minimise contusion.

A Part from Classification paints by their resin components, paints may

also be classified in accordance with their curing mechanism, solvent used ,
function and market segment as shown in Table.

CLASSIFICATION BY TYPE OF PAINTS

Curing mechanism Baking or air - dry
Solvent for the paint Water- based or Solvent - based
Function of system components Primer , sealer , Undercoat or Finishing
coat
Resin component Epoxy , Alkyd, Acrylic, Polyurethane, etc.
Market segment Architectural coating , Heavy Duty
coating , Marine or Industrial coating.

PROPERTIES OF PAINT
The properties of paint determine the general quality of
the coating and its workability , ease of application and resistance
characteristics . Table itself shows some basic properties of paints.

42
 PROPERTIES EXAMPLES
Appearance Gloss/Matt/Semi- gloss
Application Method By Brush , Roller or Sprayer
Dying time Fast dry / Slow dry
Adhesion Adhesion to substrates / Existing
coating/ Intercoating.
Mechanical characteristics Hardness / Flexibility
Resistance Ultra-violet / chemical / Abrasion / Fungus
/ Algae
Outdoor Durability Gloss retention / Colour / Ultra-Violet
Storage Stability Settling tendency / Viscosity stability

MISSION & VISION ANALYSIS

Generally, the main purpose behind the company’s mission and

vision statements is to inform the stake holders and general public regarding what the
organization is, what the reason behind established it is, what it seeks to accomplished
and who it seeks to serve.
Mission statements basically tend to be precise, clear and they
should be realistic in nature. The vision statement tends to be expressed as a
perspective of what a company wants to achieve in the future. Fig: Ashville Model

VISION

43
 Clear Goals for Clear Future
“ To be the fore runner of inspiring decor and to actively empower customers to
create their dream homes ”

OUR OCCUPATIONAL SAFETY AND HEALTH POLICY

o We shall comply with all statutory requirements. We consider

compliance with statutory EHS requirements as the minimum
performance standard and are committed to go beyond and adopt
stricter standards. We shall work in partnership with the
government and industry associations for policy and regulatory
reforms related to the environment. We shall annually publish our
environmental performance to all stakeholders.

44
 - We shall source our materials and products from vendors
that comply with the child labor laws and other statutory
regulations.
- We shall continually improve our products with an
intention to reduce their environmental footprint. We shall
inform the customers about the environmental impact and
safe use of our products.
- We are committed to protecting the environment.
- Adhering to the highest operational standards for handling
hazardous materials.
- Preventing Pollution & leveraging the 3R (Reduction,
Recycle, Reuse) principle and moving towards zero
industrial effluent generation and zero hazardous solid
waste generation.
- Minimizing impact of end-of-life plastics generated out of
our packaging material.

- Reducing energy-intensity, carbon-intensity and increasing

contribution of energy from renewable sources.
- Leveraging rainwater harvesting, water conservation &
water replenishment and utilizing wastewater as an
alternate source.
- Nurturing biodiversity within and outside our factory
premises.

45
 - We are committed to continual improvement in
environment-related parameters in all business processes
and shall track such improvements through measurable
indicators.

ASIAN PAINT LOGO

46
 CHAPTER - IV

DATA ANALYSIS

RATIO ANALYSIS

Ratio is used to present the data in suitable form for

analysis the short term and long term obligations of the company.
It is a power full tool of financial analysis.

 Liquidity ratio
 Activity ratio
47
 Profitability ratio
 Leverage ratio

LIQUIDITY RATIO

Liquidity refers to the ability of a concern to meet its current

obligations as and when there becomes due the short-term obligations of a
firm can be met only when there are sufficient liquid asset. The short term
obligations are not by realizing amounts from current, floating (or) circulating
assets.
It current asset can pay off current liabilities, then liability position
will be satisfactory.
To measure the liquidity of a firm the following ratio can be
calculated.
 Current ratio
 Liquidity ratio

ACTIVITY RATIO

Funds are invested in various assets in business to make sales and ear
profiles. The efficiency with which assets are manage directly effects the
volume of sales. Activity ratios measures the efficiency (or) effectiveness with
which a fir manager. Its resources (or) assets. These ratios are also called
“turnover ratio” because the speed with which assets ae converted or turned
over into sales.
48
 Fixed assets turnover ratio
 Inventory turnover ratio
 Return on shareholders fund

PROFIT ABILITY RATIO

The primary objections of business undertaking are to earn profit.

Because profits the engine, that drives the business enterprise.

 Gross profit ratio

 Net profit ratio
 Operating ratio

LONG TERM SOLVENCY RATIO

The leverage or solvency ratio refers to the ability of a concern to

meet its long term obligations. Accordingly, long term solvency ratio firm

49
solvency ratio firm solvency ability terms meet the fixed interest and cost and
repayment with its long term borrowings.

The follows ratio serves the purpose of determining the solvency of the
concern.

 Equity ratio
 Debt-equity ratio
 Fixed asset turnover ratio

4.1 CURRENT RATIO :

50
 Measure the company’s ability to pay short-term liabilities such
as payable accounts and short-term loans, which represents the ratio of current
assets to current liabilities. The magnitude of this ratio expresses high liquidity
of the company, thus a greater capacity to meet the short-term liabilities. In
contrast, decrease in the ratio under (1) expresses the deficit of liquidity and
the part of the fixed assets financed by short-term debt. Although liquidity
deficit could lead to a decline in the company’s energy, thus can affect
profitability. If the ratio (1) means that current assets equal to current liabilities.

If any operating concern, the standard current ratio should be

2:1. the formula for calculating current ratio is

CURRENT ASSETS
CURRENT RATIO = -----------------------------------------
CURRENT LIABILITIES

TABLE 4.1

51
 CURRENT RATIO

YEAR CURRENT CURRENT CURRENT

ASSETS LIABILITIES RATIO
(RS.IN CRORES) (RS.IN CRORES)
2016-2017 5,430.20 2,875.93 1.89

2017-2018 5,500.17 3,398.96 1.61

2018-2019 6,053.35 3,841.41 1.58

2019-2020 5,825.70 3,195.05 1.82

2020-2021 9,956.54 4,575.33 2.18

Source : Annual report of Asian paints

The table 4.1 shows the current ratio of Asian paints. In the current
ratio position satisfied the standard norm during the study period. It showed
the fluctuating trend during the study period. Highest growth registered during
the year 2020-2021.

52
 CHART 4.1
CURRENT RATIO

2.5

2.18

2 1.89
1.82

1.61 1.58
1.5
RATIO

0.5

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

53
 4.2 FIXED ASSETS TURNOVER RATIO

The fixed assets turnover ratio is an efficiency ratio measures

a company’s return on their investment in property , plant , and equipment by
comparing net sales with fixed assets. In other words, it calculates how
efficiency a company is a producing sales with its machines and equipment.
The fixed asset turnover formula is calculated by dividing net sales by the
total property, plant, and equipment net of accumulated depreciation.

Sales
Fixed assets turnover ratio = ----------------------------
Fixed assets

TABLE 4.2
54
 FIXED ASSETS TURNOVER RATIO

YEAR NET SALES FIXED ASSETS FIXED ASSETS

(RS.IN (RS.IN TURNOVER
CRORES) CRORES) RATIO
2016-2017 12,647.11 2,824.44 4.48

2017-2018 14,167.86 3,960.37 3.58

2018-2019 16,391.78 5,400.51 3.04

2019-2020 17,194.09 5,068.95 3.39

2020-2021 18,516.86 4,721.72 3.92

Source : Annual report of Asian paints

The table 4.2 shows the fixed assets turnover ratio of Asian paints . It
Showed the fluctuating trend during the study period 2016-17 to 2020-21.
Highest growth registered during the year 2020-2021. The lowest growth
registered in 2018-19. The ratio ranges between 3.04 and 3.92.

55
 CHART 4.2

FIXED ASSET TURNOVER RATIO

4.48
4.5

4 3.92
3.58
3.5 3.39
3.04
3
RATIO

2.5

1.5

0.5

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

56
4.3 EQUITY RATIO

The equity ratio is a financial ratio indicating the financial

proportion of equity used to finance a company’s assets. The equity ratio is a
very common financial ratios, especially in Central Europe and Japan , while in
the US the Debt to equity ratio is more often used to financial (research)
reports.

Shareholders fund
EQUITY RATIO = ---------------------------------
Total Assets

57
 TABLE 4.3

EQUITY RATIO

YEAR SHAREHOLDERS TOTAL ASSETS FIXED ASSETS

FUND (RS.IN (RS.IN TURNOVER
CRORES) CRORES) RATIO
2016-2017 7,094.75 10,358.03 0.68

2017-2018 7,798.16 11,587.93 0.67

2018-2019 8,842.96 13,682.89 0.65

2019-2020 9,453.29 13,587.62 0.70

2020-2021 12,091.10 17,582.67 0.69

Source : Annual report of Asian paints.

The table 4.3 shows the equity ratio of Asian paints. It Showed the
fluctuating trend during the study period 2016-17 to 2020-21. Highest growth
registered during the year 2019-2020. Lowest growth registered in 2018-2017. The
ratio ranges between 0.65 and 0.70.

58
 CHART 4.3

EQUITY RATIO

0.71

0.700000000000001
0.7

0.690000000000001
0.69

0.68
0.68

0.670000000000001
0.67
RATIO

0.66

0.650000000000001
0.65

0.64

0.63

0.62
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

59
4.4 NET PROFIT RATIO

The net profit percentage is the ratio of after – tax profits

to net sales. It reveals the remaining profit after all costs of
production, administration, and financing have been deducted from
sales , and income taxes recognized. It is used to compare the result
of a business with its competitors. This ratio is the overall measure
of the company’s ability to turn each rupee sales into net profit

NET PROFIT
NET PROFIT RATIO = ----------------------- × 100

SALES

60
 TABLE 4.4

NET PROFIT RATIO

YEAR NET PROFIT SALES FIXED ASSETS

(RS.IN (RS.IN TURNOVER
CRORES) CRORES) RATIO
2016-2017 1,801.72 12,647.11 14.25

2017-2018 1,894.80 14,167.86 13.37

2018-2019 2,132.17 16,391.78 13.00

2019-2020 2,653.95 17,194.09 15.44

2020-2021 3,052.51 18,516.86 16.49

Source : Annual report of Asian paints.

61
 The table 4.4 shows that net profit ratio of Asian paints. It shows the
fluctuating trend during the study period 2016-17 to 2020-21. Highest growth
registered during the year 2020-2021. Lowest growth registered in 2018-19. The
ratio ranges between 13.00 and 16.49.

CHART 4.4

EQUITY RATIO

62
 18
16.49
16 15.44
14.25
14 13.37
13

12

10
RATIO

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

63
4.5 PROPRIETORY RATIO.

The Proprietory ratio ( also known as the equity ratio ) is

the proportion of shareholder’s equity to total assets , and as such provides a
rough estimate the amount of capitalization currently used to support a
business.

SHAREHOLDERS FUND
PROPRIETORY RATIO = ------------------------------------------
TOTAL TANGIABLE ASSET

TABLE 4.5

PROPRIETORY RATIO

YEAR SHAREHOLDER TANGIABLE PROPRIETORY

S ASSETS RATIO
64
 FUND (RS.IN
(RS.IN CRORES)
CRORES)
2016-2017 7,094.75 2,512.01 2.82

2017-2018 7,798.16 2,477.44 3.15

2018-2019 8,842.96 5,131.23 1.72

2019-2020 9,453.29 4,875.23 1.94

2020-2021 12,091.10 4,525.73 2.67

Source : Annual report of Asian paints.

The table 4.5 shows that proprietory ratio of Asian paints.

It showed the fluctuating trend during the study period 2016-17 to
2020-21. Highest growth registered during the year 2017-18. The
lowest growth registered in 2018-19 . The ratio ranges between 3.15
and 1.72.

CHART 4.5

PROPRIETORY RATIO

65
 3.5

3.15

3
2.83
2.67

2.5

2 1.94
RATIO

1.72

1.5

0.5

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

66
4.6 INVENTORY TURNOVER RATIO

Inventory turnover is a showing how many times a

company has sold and replaced inventory during a given period. A company
can then divide the days in the period by the inventory turnover formula to
calculate the days it takes to sell the inventory on hand. Calculating inventory
turnover can help business makes better decisions on pricing, manufacturing,
marketing and purchasing new inventory.

The inventory turnover ratio, also known as the stock

turnover ratio, is an efficiency ratio that measures how efficiently inventory is
managed.

NET SALES
INVENTORY TURNOVER RATIO = --------------------------------
INVENTORY

TABLE 4.6

67
 INVENTORY TURNOVER RATIO

YEAR NET SALES INVENTORY INVENTORY

(RS.IN (RS.IN TURNOVER
CRORES) CRORES) RATIO

2016-2017 12,647.11 2,194.09 5.76

2017-2018 14,167.86 2,178.43 6.50

2018-2019 16,391.78 2,585.10 6.34

2019-2020 17,194.09 2,827.47 6.08

2020-2021 18,516.86 3,124.61 5.93

Source : Annual report of Asian paints.

The table 4.6 shows the inventory ratio of Asian

paints. It shows the fluctuating trend during the study period 2016-17 to
2020-21. Highest growth registered during the year 2017-18. Lowest
growth registered in 2016-17. The ratio ranges between 5.76 and 6.50.

68
 CHART 4.6

INVENTORY TURNOVER RATIO

6.6
6.5

6.4 6.34

6.2
6.08

6
5.93
RATIO

5.8 5.76

5.6

5.4

5.2
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

69
4.7 EXPENSES RATIO

The expense ratio is the annual fee that all funds

or ETF’s charge their shareholders. It expresses the percentage of
assets dedicated each fiscal year for fund expenses, including
management fees , administration fees , operating costs and all other asset-
based costs incurred by the fund .

EXPENSES
EXPENSES RATIO = -----------------------------
NET SALES

70
 TABLE 4.7

EXPENSES RATIO

YEAR EXPENSES NET SALES EXPENSES

(RS.IN (RS.IN RATIO
CRORES) CRORES)
2016-2017 10,491.85 12,647.11 0.83

2017-2018 11,093.24 14,167.86 0.78

2018-2019 13,134.83 16,391.78 0.80

2019-2020 13,547.26 17,194.09 0.79

2020-2021 14,114.37 18,516.86 0.76

Source : Annual report of Asian paints.

The table 4.7 shows the expenses ratio of Asian

paints. It shows the fluctuating trend during the study period 2016-17 to
2020-21. Highest growth registered during the year 2016-17 . Lowest
growth registered in 2020-21. The ratio ranges between 0.76 and 0.80.

71
 CHART 4.7

EXPENSES RATIO

0.84
0.830000000000001

0.82

0.8
0.8
0.79
RATIO

0.78
0.78

0.760000000000001
0.76

0.74

0.72
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

72
4.8 TOTAL ASSET TURNOVER RATIO

The asset turnover ratio is an efficiency ratio that measures

the company’s ability to generate sales from its assets comparing by net sales
with average total assets .

NET SALES
TOTAL ASSET TURNOVER RATIO = --------------------------------
TOTAL ASSETS

73
 TABLE 4.8

TOTAL ASSET TURNOVER RATIO

YEAR NET SALES TOTAL ASSETS TOTAL ASSETS

( RS. IN (RS.IN TURNOVER
CRORES) CRORES) RATIO
2016-2017 12,647.11 10,358.03 1.22

2017-2018 14,167.89 11,587.93 1.22

2018-2019 16,391.78 13,682.89 1.20

2019-2020 17,194.09 13,587.62 1.27

2020-2021 18,516.86 17,582.67 1.05

Source : Annual report of Asian paints.

The table 4.8 shows the total asset turnover ratio of
Asian paints. It shows the fluctuating trend during the study period
2016-17 to 2020-21. Highest growth registered during the year 2019-
20. Lowest growth registered in 2020-21. The ratio ranges between
1.05 and 1.27.

74
 CHART 4.8

TOTAL ASSET TURNOVER RATIO

1.4

1.2

0.8
RATIO

0.6

0.4

0.2

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

75
4.9 OPERATING PROFIT RATIO

Operating Profit can be obtained through operating costs

deducted from gross profit . This is a very important ratio because it reflects
the company’s ability to generate profit from operations related to a company.
The decline in this ratio refers to a week control over operating costs.

OPERATING PROFIT
OPERATING PROFIT RATIO = ------------------------------- × 100
SALES

76
 TABLE 4.9

OPERATING PROFIT RATIO

YEAR OPERATING SALES OPERATING

PROFIT (RS.IN PROFIT
(RS.IN CRORES) CRORES) RATIO
2016-2017 2,670.84 12,647.11 21.12

2017-2018 2,920.50 14,167.86 20.61

2018-2019 3,504.81 16,391.78 21.38

2019-2020 3,857.04 17,194.09 22.43

2020-2021 4,493.19 18,516.86 24.27

Source : Annual report of Asian paints.

The table 4.9 shows that operating profit ratio of Asian
paints. It Showed the fluctuating trend during the study period 2016-17
to 2020-21. Highest growth registered during the year 2020-21. Lowest
77
growth registered in 2017-18. The ratio ranges between 20.61 and
24.27.

CHART 4.9

OPERATING PROFIT RATIO

78
 25
24.27
24

23
22.43

22
RATIO

21.38
21.12
21
20.61

20

19

18
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

4.10 RETURN ON SHAREHOLDERS FUND

Return on shareholders investment ratio is a measure of

overall profitability of the business and is computed by dividing the net
79
income after interest and tax by average stockholders equity. It is also known
as on total equity (ROTE) ratio and return on net worth ratio. The ratio is
usually expressed in percentage.

NET PROFIT
RETURN ON SHAREHOLDERS FUND = ------------------------------------ × 100
SHAREHOLDERS FUND

TABLE 4. 10

RETURN ON SHAREHOLDERS FUND

YEAR NET PROFIT SHAREHOLDERS FIXED ASSETS

(RS.IN FUND RATIO TURNOVER
CRORES) (RS.IN RATIO
80
 CRORES)
2016-2017 1,801.72 7,094.75 25.40

2017-2018 1,894.80 7,798.16 24.30

2018-2019 2,132.17 8,842.96 24.11

2019-2020 2,653.95 9,453.29 28.07

2020-2021 3,052.51 12,091.10 25.25

Source : Annual report of Asian paints.

The table 4.10 shows the Return on shareholders fund

of Asian paints. It shows the fluctuating trend during the study period
2016-17 to 2020-21. Highest growth registered during the year 2019-20.
Lowest growth registered in 2018-19. The ratio ranges between 24.11
and 28.07.

CHART 4.10

RETURN ON SHAREHOLDERS FUND

81
 29

28.07
28

27

26
RATIO

25.4
25.25
25

24.3
24.11
24

23

22
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

4.11 QUICK RATIO

82
 The ratio only includes the most liquid of current assets to current
liabilities. The rise in the value of this ratio expresses high liquidity of the
company. This ratio excludes prepaid expenses and inventory from current
assets being difficult conversion into cash.

The main object of computing of this ratio is to enable the

financial controller of the enterprise to ascertain that would happen if the
creditors press for immediate payments. The standard of this ratio is 1:1 which
is considered satisfactory since the firm can easily meet all the current claims.

QUICK ASSETS
QUICK RATIO = ------------------------------
QUICK LIABILITIES

TABLE 4.11

QUICK RATIO

YEAR CURRENT CURRENT LIQUID

83
 ASSETS LIABILITIES RATIO
(RS.IN CRORES) (RS.IN CRORES)
2016-2017 3,236.11 2,875.93 1.13

2017-2018 3,321.74 3,398.96 0.98

2018-2019 3,468.25 3,841.41 0.90

2019-2020 2,998.23 3,195.05 0.94

2020-2021 6,831.93 4,575.33 2.15

Source : Annual report of Asian paints.

The table 4.11 shows that the liquid Ratio of Asian paints. In
the shows the fluctuating trend during the study period 2016-17 to 2020-21. Highest
growth registered during the year 2020-21. Lowest growth registered in 2018-19.

CHART 4.11

RETURN ON TOTAL ASSET RATIO

84
 2.5

2.15

1.5
RATIO

1.13
0.98 0.940000000000001
1 0.9

0.5

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

4.12 RETURN ON TOTAL ASSETS RATIO.

85
 Return on total asset ratio (ROTA) is a ratio that measures
the company’s earning before interest and taxes (EBIT) relative to its net assets.
The ratio is considered to be and indicator of how effectively a company is
using its assets to generate earning.

NET PROFIT
RETURN ON TOTAL ASSET RATIO = ---------------------‐------------- × 100
TOTAL ASSETS

TABLE 4.12

86
 RETURN ON TOTAL ASSET RATIO

.
YEAR NET PROFIT TOTAL ASSETS RETURN ON
( RS. IN (RS.IN TOTAL ASSET
CRORES) CRORES) RATIO
2016-2017 1,801.72 10,358.03 17.40

2017-2018 1,894.80 11,587.93 16.35

2018-2019 2,132.17 13,682.89 15.58

2019-2020 2,653.95 13,587.62 19.53

2020-2021 3,052.51 17,582.67 17.36

Source : Annual report of Asian paints.

The table 4.12 shows that return on total asset ratio of Asian
paints. It shows the fluctuating trend during the study period 2016-17 to 2020-21.
Highest growth registered during the year 2019-20. Lowest growth registered in the
year 2018-19. The ratio ranges between 15.58 and 19.53.

87
 CHART 4.12

RETURN ON TOTAL ASSET RATIO

25

20 19.53

17.4 17.36
16.35
15.58
15
RATIO

10

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

88
4.13 MISCELLANEOUS RATIO

It is calculated on the current profits. It indicates increasing

trend of current profits per share. Formula to calculate EPS = (Net profit after taxes -
Preference dividend) / Number of equity shares outstanding. - Price Earning Ratio
(P/E Ratio) measures the expectation of the investors.

MISCELLANEOUS
MISCELLANEOUS RATIO = ------------------------------- × 100
SALES

89
 TABLE 4.13

MISCELLANEOUS RATIO

YEAR MISCELLANEOUS SALES MISCELLANEOUS

EXPENSES (RS.IN RATIO
(RS.IN CRORES) CRORES)
2016-2017 1,717.90 12,647.11 13.58

2017-2018 1,772.76 14,167.86 12.51

2018-2019 1,744.44 16,391.78 10.66

2019-2020 1,925.82 17,194.09 11.20

2020-2021 1,993.64 18,516.86 10.77

Source : Annual report of Asian paints.

The table 4.13 shows that Miscellaneous ratio of Asian paints.

It Showed the fluctuating trend during the study period 2016-17 to 2020-21. Highest
growth registered during the year 2016-17. The lowest growth registered in the year
2018-19. The ratio ranges between 13.58 and 10.66.

90
 CHART 4.13

MISCELLANEOUS RATIO

16

14 13.58
12.51
12
11.2
10.66 10.77

10
RATIO

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

91
4.14 RETURN ON INVESTMENT RATIO

The return on investment ratio (ROI), also known as the

return on assets ratio, is a profitability measure that evaluates the
performance or potential return from a business or investment. The
ROI formula looks at the benefit received from an investment, or its gain,
divided by the investment's original cost.

NET PROFIT
RETURN ON INVESTMENT RATIO = --------------------------------
INVESTMENT

92
 TABLE 4.14

RETURN ON INVESTMENT RATIO

YEAR NET PROFIT INVESTMENT RETURN ON

(RS.IN (RS.IN INVESTMENT
CRORES) CRORES) RATIO
2016-2017 1,801.72 1,315.40 1.37

2017-2018 1,894.80 1,030.01 1.84

2018-2019 2,132.17 1,146.63 1.86

2019-2020 2,653.95 1,432.35 1.85

2020-2021 3,052.51 3,178.81 0.96

Source : Annual report of Asian paints

93
 The table 4.14 shows the Return on Investment ratio of Asian paints.
It Showed the fluctuating trend during the study period 2016-17 to 2020-21. Highest
growth registered during the year 2018-19. Lowest growth registered in 2020-21.
The ratio ranges between 0.96 and 1.86.

CHART 4.14

RETURN ON INVESTMENT RATIO

94
 2
1.84 1.86 1.85
1.8

1.6

1.4 1.37

1.2
RATIO

1 0.96

0.8

0.6

0.4

0.2

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

4.15 CURRENT ASSETS TURNOVER RATIO

95
 Current Assets Turnover Ratio indicates that the current assets are
turned over in the form of sales more number of times. A high current assets
turnover ratio indicates the capability of the organization to achieve maximum sales
with the minimum investment in current assets.

NET SALES
CURRENT ASSET TURNOVER RATIO = --------------------------------
CURRENT ASSETS

TABLE 4.15

CURRENT ASSET TURNOVER RATIO

YEAR NET SALES CURRENT CURRENT
( RS. IN ASSETS ASSETS
CRORES) (RS.IN TURNOVER
CRORES) RATIO

96
2016-2017 12,647.11 5,430.20 2.33

2017-2018 14,167.89 5,500.17 2.58

2018-2019 16,391.78 6,053.35 2.71

2019-2020 17,194.09 5,825.70 2.95

2020-2021 18,516.86 9,956.54 1.86

Source : Annual report of Asian paints

The table 4.15 shows the current assets turnover ratio of Asian
paints. It Showed the fluctuating trend during the study period 2016-17 to 2020-21.
Highest growth registered during the year 2019-20. Lowest growth registered in
2020-21. The ratio ranges between 1.86 and 2.95.

CHART 4.15

CURRENT ASSET TURNOVER RATIO

97
 3.5

3 2.95
2.71
2.58
2.5
2.33

2 1.86
RATIO

1.5

0.5

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

YEAR

CHAPTER – V
FINDINGS , SUGGESTIONS AND CONCLUSION

98
FINDINGS
Ratio analysis :
 Current ratio is the fluctuating trend during the study period. The Highest
growth registered during the year 2016-2017.
 Liquid Ratio is the fluctuating trend during the study period. The Highest
growth registered during the year 2016-2017.
 Quick Ratio is the fluctuating trend during the study period . The
Highest growth registered during the year 2020-2021.
 Current asset turnover ratio is the fluctuating trend during the study period .
Highest growth registered during the year 2019-20.
 Fixed Asset Turnover Ratio is the fluctuating trend during the study period .
Highest growth registered during the year 2016-2017.
 Inventory Turnover Ratio is the fluctuating trend during the study period .
Highest growth registered during the year 2018- 2019
 Miscellaneous ratio is the fluctuating trend during the study period. Highest
growth registered during the year 2016-2017.
 Return on shareholders fund is the fluctuating trend during the study
period .Highest growth registered during the year
 Net Profit Ratio is the fluctuating trend during the study period. Highest
growth registered during the year 2020-2021.

99
  Proprietory Ratio is the fluctuating trend during the study period. Highest
growth registered during the year 2017-2018
 Operating Profit Ratio is the fluctuating trend during the study period. Highest
growth registered during the year 2018-2019
 Equity ratio is the fluctuation trend during the study period . Highest
growth registered during the year 2018-2019.
 Return on Investment ratio is the fluctuating trend during the study period.
Highest growth registered during the year 2018-2019.
 Total asset turnover ratio is the fluctuating trend during the study period.
Highest growth registered during the year 2019-2020.
 Return on total asset turnover ratio is the fluctuating trend during the
study period . Highest growth registered during the year 2019-2020.

100
SUGGESTIONS

Based on the findings of the study the following suggestions are givenn

 It is advised to the company to reduce the current liability such as

creditors, bank overdraft, bills payable, outstanding expenses for improves
its Liquidity position.

 The company should increase the inventory Turnover for increasing the
sales and also improve its profitability.

 The company must increase the total assets for effective utilization of
new technologies arrival in market.

 As the investment are very lower , the management of the company

must concentrate on further utilizing the reserves and surplus for the
mobilization, so that it will increase the value of the firms and wealth
of the company.

 The company can also try to improve their Fixed assets turnover ratio
to be more efficient in utilizing their investment in Fixed assets to
generate reasonable revenue.

101
CONCLUSION :

The present study on “ financial performance of ASIAN PAINTS”

using the ratios and trends help to have a better about the financial
background and financial performance of the company. From the analysis it
was found that the overall financial performance of the company was good
with a positive impact but some minor drawbacks regarding current asset
position and expense. Hence, the company should concentrates on reduce the
indirect expenses , current liability and increase current assets in order to
increase the profitability and improve its overall efficiency.

102