raksha financial statement project

8/17/2019 Raksha Financial Statement Project

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CHAPTERS

1.1 Financial StatementsA financial statement (or financial report) is a formal record of the financial activities and

position of a business, person, or other entity.

Relevant financial information is presented in a structured manner and in a form easy to

understand. They typically include basic financial statements, accompanied by a management

discussion and analysis:[1

1. A balance sheet, also referred to as a statement of financial position, reports on a

company!s assets, liabilities, ando"ners e#uity at a given point in time.

$. An income statement, also %no"n as a statement of comprehensive

income, statement of revenue & expense, P& or profit an! loss report, reports on

a company!s income, e&penses, and profits over a period of time. A profit and loss

statement provides information on the operation of the enterprise. These include sales

and the various e&penses incurred during the stated period.

'. A statement of chan"es in e#uit$, also %no"n as e#uit$ statement or statement of

retaine! earnin"s, reports on the changes in e#uity of the company during the stated

period.

. A cash flo% statement reports on a company!s cash flo" activities, particularly its

operating, investing and financing activities.

1. Reportin" an! 'nterpretation of Financial Statement

'ntro!uction

inancial statements on their o"n are of limited use. or e&ample: if you "ere to identify that

a business has made profits of *1 million "hat does that tell you about the business+ oes it

suggest the business is a success+ -t might, but not if in the previous year they made profits of

*/ million and their closest rival earned profits of *0/ million.

-t is important that users of financial statements can interpret the financial statements to be

able to dra" out valid conclusions. Typically this involves the use of comparisons to prior

years, forecasts and competitors. sers can compare sales and e&pense figures, asset andliability balances and cash flo"s to perform this analysis.

https://en.wikipedia.org/wiki/Management_discussion_and_analysishttps://en.wikipedia.org/wiki/Management_discussion_and_analysishttps://en.wikipedia.org/wiki/Financial_statement#cite_note-1https://en.wikipedia.org/wiki/Balance_sheethttps://en.wikipedia.org/wiki/Balance_sheethttps://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Liability_(financial_accounting)https://en.wikipedia.org/wiki/Equity_(finance)https://en.wikipedia.org/wiki/Income_statementhttps://en.wikipedia.org/wiki/Incomehttps://en.wikipedia.org/wiki/Incomehttps://en.wikipedia.org/wiki/Expensehttps://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Statement_of_retained_earningshttps://en.wikipedia.org/wiki/Equity_(finance)https://en.wikipedia.org/wiki/Cash_flow_statementhttps://en.wikipedia.org/wiki/Investinghttps://en.wikipedia.org/wiki/Financinghttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Financial%20Statements.aspx?mode=nonehttps://en.wikipedia.org/wiki/Financial_statement#cite_note-1https://en.wikipedia.org/wiki/Balance_sheethttps://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Liability_(financial_accounting)https://en.wikipedia.org/wiki/Equity_(finance)https://en.wikipedia.org/wiki/Income_statementhttps://en.wikipedia.org/wiki/Incomehttps://en.wikipedia.org/wiki/Expensehttps://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Statement_of_retained_earningshttps://en.wikipedia.org/wiki/Equity_(finance)https://en.wikipedia.org/wiki/Cash_flow_statementhttps://en.wikipedia.org/wiki/Investinghttps://en.wikipedia.org/wiki/Financinghttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Financial%20Statements.aspx?mode=nonehttps://en.wikipedia.org/wiki/Management_discussion_and_analysishttps://en.wikipedia.org/wiki/Management_discussion_and_analysis


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Ratio analysis is "idely used to support this process of comparison. on!t forget though that

ratios are calculated using the figures already present in the financial statements. The ra"

data is e#ually useful "hen performing analysis. Ratios are simply a tool to try and assist

understanding and comparison.

(sers of financial statements

2hen interpreting financial statements it is important to ascertain "ho are the users of

accounts and "hat information they need:

• shareholders and potential investors 3 primarily concerned "ith receiving an ade#uate

return on their investment, but also "ith the stability4li#uidity of the business

• suppliers and lenders 3 concerned "ith the security of their debt or loan

• management 3 concerned "ith the trend and level of profits, since this is the main

measure of their success.

5ther potential users include:

• financial institutions

• employees

• professional advisors to investors

• financial 6ournalists and commentators.

Ratio anal$sis

Ratios use simple calculations based upon the interactions in sets of data. or e&ample7

changes in costs of sale are directly lin%ed to changes in sales activity. 8hanges in sales

activity also have an effect upon "ages and salaries, receivables, inventory levels etc. Ratios

allo" us to see those interactions in a simple, concise format.

Ratios are of limited use on their o"n, thus, the follo"ing points should serve as a useful

chec%list if you need to analyse data and comment on it:

• 2hat does the ratio literally mean+

• 2hat does a change in the ratio mean+

• 2hat is the norm+

http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx?mode=nonehttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx?mode=nonehttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx?mode=nonehttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx?mode=nonehttp://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx?mode=none


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• 2hat are the limitations of the ratio+

1.) Financial Anal$sis *eanin" an! Concept

Financial anal$sis (also referred to as financial statement anal$sis or accountin"

anal$sis or Anal$sis of finance) refers to an assessment of the viability, stability and profitability

of a business, sub9business or pro6ect.

-t is performed by professionals "ho prepare reports using ratios that ma%e use of information

ta%en from financial statements and other reports. These reports are usually presented to top

management as one of their bases in ma%ing business decisions. inancial analysis may

determine if a business "ill:

• 8ontinue or discontinue its main operation or part of its business7

• a%e or purchase certain materials in the manufacture of its product7

• Ac#uire or rent4lease certain machineries and e#uipment in the production of its goods7

• -ssue stoc%s or negotiate for a ban% loan to increase its "or%ing capital7

• a%e decisions regarding investing or lending capital7

• a%e other decisions that allo" management to ma%e an informed selection on various

alternatives in the conduct of its business.

1.+ Tools an! Techni#ues of Financial Statement Anal$sis,ollo"ing are the most important tools and techni#ues of financial statement analysis:

1. ;ori


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and percentage form.

;oriho"ing changes bet"een years in percentage form helps the analyst to gain perspective and

to gain a feel for the significance of the changes that are ta%ing place. or e&ample a *1

million increase in sales is much more significant if the prior year!s sales "ere *$ million

than if the prior year!s sales "ere *$/ million. -n the first situation, the increase "ould be

/? that is undoubtedly a significant increase for any firm. -n the second situation, the

increase "ould be ? that is 6ust a reflection of normal progress.

Tren! Percenta"e,

;ori


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/efinition of Accountin" Ratios,

The term Daccountin" ratiosD is used to describe significant relationship bet"een figures

sho"n on a balance sheet, in a profit and loss account, in a budgetary control system or in any

other part of accounting organi


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conventions and concepts. Fersonal 6udgment plays a great part in determining the figures for

financial statements.

$. Comparative stu!$ re#uire!, Ratios are useful in 6udging the efficiency of the

business only "hen they are compared "ith past results of the business. ;o"ever, such a

comparison only provide glimpse of the past performance and forecasts for future may not prove correct since several other factors li%e mar%et conditions, management policies, etc.

may affect the future operations.

'. Ratios alone are not ade#uate: Ratios are only indicators, they cannot be ta%en as final

regarding good or bad financial position of the business. 5ther things have also to be seen.

. Problems of price level chan"es, A change in price level can affect the validity of

ratios calculated for different time periods. -n such a case the ratio analysis may not clearly

indicate the trend in solvency and profitability of the company. The financial statements,

therefore, be ad6usted %eeping in vie" the price level changes if a meaningful comparison is

to be made through accounting ratios.

. Gac% of ade#uate standard: Ho fi&ed standard can be laid do"n for ideal ratios. There

are no "ell accepted standards or rule of thumb for all ratios "hich can be accepted as norm.

-t renders interpretation of the ratios difficult.

0. imite! use of sin"le ratios, A single ratio, usually, does not convey much of a

sense. To ma%e a better interpretation, a number of ratios have to be calculated "hich is li%ely

to confuse the analyst than help him in ma%ing any good decision.

B. Personal bias, Ratios are only means of financial analysis and not an end in itself.

Ratios have to interpreted and different people may interpret the same ratio in different "ay.

I. 'ncomparable, Hot only industries differ in their nature, but also the firms of the

similar business "idely differ in their si


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understanding of some financial aspects of a business firm. It may show assets position at

a moment of time as in the case of balance sheet, or may reveal a series of activities over a

given period of times, as in the case of an income statement.

>ince there is recurring need to evaluate the past performance, present financial position, the

position of li#uidity and to assist in forecasting the future prospects of the organi


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An assortment of techni#ues is employed in analy


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CHAPTER'

A SIAN P AINTS INTRODUCTION

Asian Faints Gimited "as established "ay bac% on ebruary 1,1C$ and today stands as

-ndiaJs largest and AsiaJs third largest paint company. Asian Faints operates in 1B countries

and has $ paint manufacturing facilities in the "orld servicing consumers in over 0

countries.

The company manufactures paints in the category of ecorative, Automative and -ndustrial

segment. Apart from these the company also manufactures various Acessories li%e, 2all

Frimar, 2ood Frimer, Futty and >tainers etc. riven by its strong consumer3focus and

innovative spirit, the company has been the mar%et leader in paints since 1C0B.

Eesides Asian Faints, the group operates around the "orld through its subsidiaries Eerger

-nternational, Apco 8oatings, >8-E Faints and Taubmans, Eerger -nternational, >8-E Faints3

@gypt, Asian Faints, Apco 8oatings and Taubmans. Asian Faints operates in regions across

the "orld viouth Asia, >outh @ast Asia, >outh Facific, iddle @ast and 8aribbean region

through the five corporate brands vi8-E Faints, Apco

8oatings and Taubmans. -n 1/ mar%ets, it operates through its subsidiary, Eerger

-nternational Gimited7 in @gypt through >8-E Faints7 in mar%ets in the >outh Facific it

operates through Apco 8oatings and in i6i and >amoa it also operates through Taubmans.

The company is having its strategically located -ndian plants at Ehandup (aharashtra),

asna (ttar Fradesh) and >riperumbudur (Tamil Hadu), An%lesh"ar (Ku6arat), Fatancheru

(Andhra Fradesh) and the ne"ly built plant at Rohta% (;aryana). Asian Faints operates in 1B

countries and has $ paint manufacturing facilities in the "orld servicing consumers in over

0 countries. The company is having state3of3the3art supply chain system using cutting edge

technology to integrate all its plants, regional distribution centres, outside processing centres

and branches in -ndia. All the companyJs paints plants in -ndia, t"o chemical plants, 1I

processing centres, '/ ra" material and intermediate goods suppliers, 1/ pac%ing material

vendors, 0 regional distribution centres, B$ depots are integrated.

The company is having a big and e&perienced RL team "hich has successfully managed to

develop ;igh3end e&terior finished and "ood finishes in3house, "hich "as earlier imported

into the country. These products are currently mar%eted under Asian Faints @lastomeric ;i3

>tretch @&terior paint and Asian Faints F "ood finish respectively.

The company is having three subsidiaries viouth Facific islands. The company operates in Australia, i6i, Tonga, >olomon

-slands and =anuatu under the brand name of Apco 8oatings.

The other subsidiary of the company is Asian Faints -ndustrial 8oatings Gimited "hich has

been set up to cater to the po"der coatings mar%et "hich is one of the fastest gro"ing

segments in the industrial coatings mar%et.

Eerger -nternational Gimited in Hovember $//$, became a part of the Asian Faints Kroup.

Today, the name of Eerger is synonymous "ith #uality and innovation. E-G has presence

across three regions viouth @ast Asia.Asian Faints


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participates in the -ndustrial 8oatings segment directly, through a /:/ M= "ith FFK -nc. of

> as "ell as through a 1//? subsidiary

5n the recommendations of Eoo

We want to be an innovative, agile, and responsive world class research and technology

organisation that’s aligned to future customer needs and catalyses the growth of the

company across existing and future businesses.


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>;AR@;5G-HK FATT@RH


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>


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>AG@> 5 A>-AH FA-HT> -H =AR-5> N@AR>


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85HTR-ET-5H -H R@=@H@ K@H@RAT-5H 5 =AR-5>

-T@>

The follo"ing table gives the sales brea% do"n of different products of the company in the

year $//1 3 1

The follo%in" chart sho%s the sales b$ re"ion for the compan$ in the $ear 81+13


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8;AFT@R -=

inancial >tatements

Frofit L Goss A4c

Asian PaintsStandalone Profit & Lossaccount

------------------- in Rs. Cr. -------------------

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Incoe

Sales Turnover 1,!"1.#$ 11,$$!.%& &,#'1.'! ',#$".1$ $,$.!&

(xcise )uty 1,#.1 1,2"1.&! !.!! !.!! !.!!

*et Sales 11,$"&.& 1!,"1&.'& &,#'1.'! ',#$".1$ $,$.!&+ther ncome 1'.2# 1$.'! 12$.1% 1"1."# '".#!

Stoc- d/ustments 12." '%." 1'%.#1 1".'& 1%'.%"

!otal Incoe 11"#54.55 1$"%5.2 #"23.% "24#.43 %"5%.52

()*enditure

0aw aterials $,$!#.'" $,!"".$$ %,$1.!! ",&$$.$ ,&12."'

ower 3 4uel 5ost 11.&& 11&. 1!1.$% '$.#$ $&.$1

(mployee 5ost $!$.#" "&2." "!".%# "1.$ !!."%

iscellaneous (xpenses 2,""!.1& 2,!'!.&' 1,'.1! 1,"'!.#' 1,1%".&

Total (xpenses #,''!.'" &,'1$.&% ',$!!." $,'%$.1# %,$.$



+*eratin, Profit 2"$1$.52 1".2 1"54.2 1"351.5 1"15.2%

6)T 2,1&.&1 1,#"!.#' 1,$'."2 1,"#.2" 1,22.1$

nterest 2'.1 2$.!& !.%$ !.&2 1%.%

6)T 2,1%$.$& 1,#1". 1,$"2.&$ 1,"$2."2 1,21$.&1

)epreciation 22.11 212.2 12$.#& ##."# #"."&

rofit 6efore Tax 1,#.%' 1,'!2.%' 1,%1%.&& 1,$2.# 1,122.

6T 7ost (xtra8ord tems9 1,#.%' 1,'!2.%' 1,%1%.&& 1,$2.# 1,122.Tax $!$.1' %.%1 "$%.&& "!".%" "'.1&


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Re*orted et Profit 1"32.4$ 1"1%#.$% 1"$5$.$$ #5.3# 5.15

Total :alue ddition ,1$1.!! 2,$'2.1# 2,2#." 1,&.%$ 1,%2.

(;uity )ividend %&%.12 %!&.' ""1.2 &.$# !$.#"

5orporate )ividend Tax 112.#% &2.!2 '".2# $2.2" %!.11

Per sare data /annualised0

Shares in issue 7la-hs9 #,%#1.#& #,%#1.#& #%#.2! #%#.2! #%#.2!

(arnin, Per Sare /Rs0 13.4 12.1# 1$#.4 ##.#2 $.1

(;uity )ividend 7


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2

et loc61"#%5.4

#2"$12.2$ 2"1$1.# 1"$$#.$4 1"$5.1#

5apital Wor- in rogress 1#.%" '.#% %2.%% $!2.&" #.$'

In7estents1"#3.

1"$3$.1# 44#.$ 542.22 54.3

nventories1,&!2.1

&1,$$%.!% 1,"&!.'# 1,2$"."2 1,!'1.'$

Sundry )ebtors '2&.&' '12.$ $.&& %!!.2" %%.%$

5ash and 6an- 6alance $1.&1 '"%.$ %$$.&$ %!!.#' %!#.!1

Total 5urrent ssets 2,%#2.&$

,122.'' 2,$&1.% 2,2$%.$ 1,#$.

=oans and dvances $&1.% "'&.$! $2.$1 %$!.! 2'".!2

Total 5, =oans 3 dvances,2'".

#,$!1.' ,!"".1" 2,&2%.# 2,21!.%

5urrent =iabilities2,1.%

'2,"2.%% 2,!'&.#" 1,#!&.&' 1,"'$.&%

rovisions $#'.2& $1'.'2 %!!.2 "2!.2 "1.1&

Total 5= 3 rovisions,!1!.&

%,!"1.2' 2,%'#.2$ 2,2#.1! 1,&1&.!

et Current Assets 2%3.54 5%$.1$ 4%4. 4#%.3 3#2.32

!otal Assets4"2%2.3

53"%4$.44 3"$%#.$2 2"%5$.#3 2"$3.$1

5ontingent =iabilities %#&.2& ""'.'% "$".2& '&%.' $1&."%

6oo- :alue 70s9 "".1! '.%" 1%.!& 2%#.$ 2!%.#


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85FARAT-=@ EAGAH8@ >;@@T


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Cash Flo% Statement

sian PaintsCas lo ------------------- in Rs. Cr. -------------------



et Profit efore !a) 1#33.5 1$2.5 1515. 13%2.#3 1122.3

*et 5ash 4rom +perating ctivities 11".%' 1$&.&" 1!&1.12 '%.$' '".2%

*et 5ash 7used in9Afromnvesting ctivities

82#2.2 8$1%.& 8"2".&' 8"$".&' 8"1!.2

*et 5ash 7used in9Afrom 4inancing ctivities

8'2$.%% 8%%#.$' 8%#!.% 82#'.!$ 821.1%

et /decrease08increase In Cas and

Cas (9ui7alents124.# 1#3.# %5.#$ -.2% 11.5

+pening 5ash 3 5ash (;uivalents '"%.!& %%1.%' %!!.#' %!#.2 "#%.%%

5losing 5ash 3 5ash (;uivalents &$#.&' '"%.$ %$$.&' %!!.#' %!'."!

Source : Dion Global Solutions Limited


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CHAPTER''

Profile of Asian Paints t!.

Asian Paints is India's largest paint company and Asia's second largest paintcompany, with a turnover of Rs 141.8 !illion. "he group has an envia!le

reputation in the corporate world for professionalism, fast trac# growth, and

!uilding shareholder e$uity. Asian Paints operates in 1% countries and has &

paint manufacturing facilities in the world servicing consumers in over (

countries. )esides Asian Paints, the group operates around the world through its

su!sidiaries )erger International *imited, Apco +oatings, +I) Paints, "au!mans

and -adisco.

Asian Paints was included in or!es Asia's 'a! (/' list of +ompanies in AsiaPaci0c in &/11, &/1&, &/1 and &/14. or!es lo!al maga2ine 3A ran#ed Asian

Paints among the '&// )est mall +ompanies in the orld' for &//& and &//

and presented the ')est under a )illion' award, to the company. Asian Paints is

the only paint company in the world to receive this recognition. or!es has also

ran#ed Asian Paints among the ')est under a )illion companies in Asia' in &//(,

&// and &//5.

"he company has come a long way since its small !eginnings in 1%4&. our

friends who were willing to ta#e on the world's !iggest, most famous paintcompanies operating in India at that time set it up as a partnership 0rm. 6ver

the course of &( years Asian Paints !ecame a corporate force and India's leading

paints company. 7riven !y its strong consumerfocus and innovative spirit, the

company has !een the mar#et leader in paints since 1%5. "oday it is dou!le the

si2e of any other paint company in India. Asian Paints manufactures a wide range

of paints for 7ecorative and Industrial use.

In 7ecorative paints, Asian Paints is present in all the four segments v.i.2 Interior

all inishes, 9:terior all inishes, 9namels and ood inishes. It alsointroduced many innovative concepts in the Indian paint industry li#e +olour

orlds ;7ealer "inting ystems


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Bertical integration has seen it diversify into products such as Phthalic Anhydride

and Pentaerythritol, which are used in the paint manufacturing process. Asian

Paints also operates through 'PP Asian Paints Pvt *td' ;(/C(/ DB !etween Asian

Paints and PP Inc, 3A, one of the largest automotive coatings manufacturer in

the world< to service the increasing re$uirements of the Indian automotivecoatings mar#et. Asian Paints has formed another (/C(/ DB with PP named

'Asian Paints PP Pvt *td' to service the protective, industrial powder, industrial

containers and light industrial coatings mar#ets.


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raksha financial statement project

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