1 Term

Paper

TERM PAPER

OF

ACCOUNTING FOR MANAGERS

ON

ASIAN PAINTS LIMITED.

SUBMITTED TO;
SUBMITTED BY;
Miss SUKHWINDER KAUR
VIJAY YADAV
ROL
L NO: B-55
SE
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Paper

Asian Paints is India's largest paint company based in Mumbai. It operates in 17 countries
and has 23 paint manufacturing facilities in the world servicing consumers in over 65
countries. Besides Asian Paints, the group operates around the world through its
subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and Taubmans

Forbes listing
Forbes Global magazine USA ranked Asian Paints among the 200 Best Small Companies in
the World for 2002 and 2003 and presented the 'Best under a Billion' award, to the company.
Asian Paints is the only paint company in the world to receive this recognition. One of the
country's leading business magazine "Business Today" in Feb 2001 ranked Asian Paints as
the Ninth Best Employer.It has been recognized by "Economic Times" as well.

History
The company has come a long way since its small beginnings in 1942. Four friends who
were willing to take on the world's biggest, most famous paint companies operating in India
at that time set it up as a partnership firm. Its started in Kapadwanj in the Kheda district in
the state of Gujarat as a collection of small plants. Over the course of 25 years Asian Paints
has became a corporate force and India's leading paints company. Driven by its strong
consumer-focus and innovative spirit, the company has been the market leader in paints
since 1968. Today it is double the size of any other paint company in India. Asian Paints
manufactures a wide range of paints for Decorative and Industrial use.

Vertical integration has seen it diversify into products such as Phthalic Anhydride and
Pentaerythritol, which are used in the paint manufacturing process. Asian Paints along with
PPG Inc, USA, one of the largest automotive coatings manufacturer in the world has begun
a 50:50 joint venture, Asian PPG Industries to service the increasing requirements of the
Indian automotive coatings market. Another wholly owned subsidiary, Asian Paints Industrial
Coatings Limited has been set up to cater to the powder coatings market which is one of the
fastest growing segments in the industrial coatings market. This wholly owned subsidiary of
Asian Paints has entered into a tie-up with Canada-based Protech Chemicals which is one
of the top ten powder coatings companies in the world for technological know-how in the
area of powder coatings.

Sales
Most of its revenue from outside India come from the Middle East.
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International operations
Asian Paints operates in 22 countries across the world. It has manufacturing facilities in each
of these countries and is the largest paint company in ten overseas markets. Asian Paints
operates in five regions across the world viz. South Asia, Southeast Asia, South
Pacific, Middle East and Caribbean region through the five corporate brands viz. Asian
Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans. In ten markets, it
operates through its subsidiary, Berger International Limited; in Egypt through SCIB Paints;
in five markets in the South Pacific it operates through Apco Coatings and in Fiji and Samoa
it also operates through Taubmans.

The countries that Asian Paints has presence are as follows:

South Asia : Bangladesh, Nepal, and Sri Lanka

South East Asia : China, Malaysia, Singapore and Thailand

Caribbean Islands : Barbados, Jamaica, Trinidad and Tobago

Middle East : Bahrain, Egypt, Oman and United Arab Emirates

South Pacific : Australia, Fiji, Solomon Islands, Samoa Islands, Tonga and Vanuatu

Board of Directors
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Mr. Ashwin Choksi Mr. Ashwin Dani Mr. Abhay Vakil Mr. P M Murty
Non-Executive Non-Executive Vice Director Managing Director
Chairman Chairman & CEO

Mr. Mahendra Mr. Amar Vakil Mrs. Ina Dani Ms. Tarjani Vakil
Choksi Director Director Chairperson of
Director Audit Committe

Mr. Dipankar Basu Mr. Mahendra Shah Mr. Deepak Mr. Rajendra Shah
Director Director Satwalekar Director
Director

Dr. S Sivaram Mr. S Ramadorai

Director Director
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Balance Sheet:
Year Mar 10 Mar 09
SOURCES OF FUNDS :
Share Capital + 362.91 362.91
Reserves Total + -4,240.86 -2,496.37
Equity Share Warrants 7.48 8.11
Equity Application Money 0.00 0.00
Total Shareholders Funds -3,870.47 -2,125.35
Secured Loans + 4,842.43 2,622.52
Unsecured Loans + 3,080.17 3,043.04
Total Debt 7,922.60 5,665.56
Total Liabilities 4,052.13 3,540.21
APPLICATION OF FUNDS :
Gross Block + 2,048.13 1,891.80
Less : Accumulated Depreciation + 493.62 316.28
Less:Impairment of Assets 0.00 0.00
Net Block + 1,554.51 1,575.52
Lease Adjustment 0.00 0.00
Capital Work in Progress+ 980.61 1,630.94
Investments + 0.05 0.05
Current Assets, Loans & Advances
Inventories + 164.88 147.25
Sundry Debtors + 322.48 274.23
Cash and Bank+ 206.47 171.87
Loans and Advances + 1,936.90 1,606.34
Total Current Assets 2,630.73 2,199.69
Less : Current Liabilities and Provisions
Current Liabilities + 3,501.37 3,494.68
Provisions + 46.76 45.55
Total Current Liabilities 3,548.13 3,540.23
Net Current Assets -917.40 -1,340.54
Miscellaneous Expenses not written off + 0.00 4.51
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Deferred Tax Assets 2,841.03 2,034.08

Deferred Tax Liability 406.67 364.35
Net Deferred Tax 2,434.36 1,669.73
Total Assets 4,052.13 3,540.21
Contingent Liabilities+ 1,218.64 1,560.57

Profit And Loss Account:

Year Mar 10(12) Mar 09(12)
INCOME :
Sales Turnover + 5,067.92 5,238.98
Excise Duty 0.00 0.00
Net Sales 5,067.92 5,238.98
Other Income + 203.75 840.69
Stock Adjustments + 0.00 0.00
Total Income 5,271.67 6,079.67
EXPENDITURE :
Raw Materials + 0.00 0.00
Power & Fuel Cost+ 1,810.55 2,609.21
Employee Cost + 689.39 825.42
Other Manufacturing Expenses + 1,191.35 1,235.65
Selling and Administration
2,232.78 2,305.05
Expenses +
Miscellaneous Expenses + 506.21 347.80
Less: Pre-operative Expenses
0.00 0.00
Capitalised+
Total Expenditure 6,430.28 7,323.13
Operating Profit -1,158.61 -1,243.46
Interest + 1,096.50 778.55
Gross Profit -2,255.11 -2,022.01
Depreciation+ 162.80 133.20
Profit Before Tax -2,417.91 -2,155.21
Tax+ 0.00 0.00
Fringe Benefit tax+ -6.06 12.50
Deferred Tax+ -764.63 -558.88
Reported Net Profit -1,647.22 -1,608.83
Extraordinary Items + -405.37 -0.66
Adjusted Net Profit -1,241.85 -1,608.17
Adjst. below Net Profit + -97.27 0.00
P & L Balance brought forward -2,576.59 -967.76
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Statutory Appropriations + 0.00 0.00

Appropriations + 0.00 0.00
P & L Balance carried down -4,321.08 -2,576.59
Dividend 0.00 0.00
Preference Dividend 0.00 0.00
Equity Dividend % 0.00 0.00
Earnings Per Share-Unit Curr 0.00 0.00
Earnings Per Share(Adj)-Unit Curr
Book Value-Unit Curr -149.48 -83.88
Comparative Balance Sheet:
Mar Mar Chang %Chang
Year 10 09 e e
SOURCES OF FUNDS :
Share Capital + 362.91 362.91 0 0
- - -
4,240. 2,496. 1744.4
Reserves Total + 86 37 9 -69.88
Equity Share Warrants 7.48 8.11 -0.63 -7.77
Equity Application Money 0 0 0 0.00
- - -
3,870. 2,125. 1745.1
Total Shareholders Funds 47 35 2 -82.11
4,842. 2,622. 2219.9
Secured Loans + 43 52 1 84.65
3,080. 3,043.
Unsecured Loans + 17 04 37.13 1.22
7,922. 5,665. 2257.0
Total Debt 60 56 4 39.84
4,052. 3,540.
Total Liabilities 13 21 511.92 14.46
APPLICATION OF FUNDS :
2,048. 1,891.
Gross Block + 13 80 156.33 8.26
Less : Accumulated Depreciation + 493.62 316.28 177.34 56.07
Less:Impairment of Assets 0 0 0 0.00
1,554. 1,575.
Net Block + 51 52 -21.01 -1.33
Lease Adjustment 0 0 0 0.00
1,630. -
Capital Work in Progress+ 980.61 94 650.33 -39.87
Investments + 0.05 0.05 0 0.00
Current Assets, Loans & Advances
Inventories + 164.88 147.25 17.63 11.97
Sundry Debtors + 322.48 274.23 48.25 17.59
Cash and Bank+ 206.47 171.87 34.6 20.13
1,936. 1,606.
Loans and Advances + 90 34 330.56 20.58
Total Current Assets 2,630. 2,199. 431.04 19.60
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73 69
Less : Current Liabilities and
Provisions
3,501. 3,494.
Current Liabilities + 37 68 6.69 0.19
Provisions + 46.76 45.55 1.21 2.66
3,548. 3,540.
Total Current Liabilities 13 23 7.9 0.22
-
1,340.
Net Current Assets -917.4 54 423.14 31.56
Miscellaneous Expenses not written
off + 0 4.51 -4.51 -100.00
2,841. 2,034.
Deferred Tax Assets 03 08 806.95 39.67
Deferred Tax Liability 406.67 364.35 42.32 11.62
2,434. 1,669.
Net Deferred Tax 36 73 764.63 45.79
4,052. 3,540.
Total Assets 13 21 511.92 14.46

Common Size Balance Sheet:

Mar Mar
Year 10 %age 09 %age
SOURCES OF FUNDS :
8.95603 10.2510
Share Capital + 362.91 05 362.91 9
- - -
4,240.8 104.657 2,496.3 -
Reserves Total + 6 6 7 70.5147
0.18459 0.22908
Equity Share Warrants 7.48 43 8.11 2
Equity Application Money 0 0 0 0
- - -
3,870. 95.5169 2,125. -
Total Shareholders Funds 47 3 35 60.0346
4,842.4 119.503 2,622.5 74.0780
Secured Loans + 3 32 2 9
3,080.1 76.0136 3,043.0 85.9564
Unsecured Loans + 7 03 4 8
7,922. 195.516 5,665. 160.034
Total Debt 60 93 56 6
4,052. 3,540.
Total Liabilities 13 100 21 100
APPLICATION OF FUNDS :
2,048.1 1,891.8 53.4375
Gross Block + 3 50.54 0 1
8.93393
Less : Accumulated Depreciation + 493.62 12.18 316.28 3
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Paper

Less:Impairment of Assets 0 0.00 0 0

1,554.5 1,575.5 44.5035
Net Block + 1 38.36 2 7
Lease Adjustment 0 0.00 0 0
1,630.9 46.0690
Capital Work in Progress+ 980.61 24.20 4 2
0.00141
Investments + 0.05 0.00 0.05 2
Current Assets, Loans & Advances 0.00 0
4.15935
Inventories + 164.88 4.07 147.25 8
7.74615
Sundry Debtors + 322.48 7.96 274.23 1
4.85479
Cash and Bank+ 206.47 5.10 171.87 7
1,936.9 1,606.3 45.3741
Loans and Advances + 0 47.80 4 4
2,630.7 2,199.6 62.1344
Total Current Assets 3 64.92 9 5
Less : Current Liabilities and
Provisions 0.00 0
3,501.3 3,494.6 98.7139
Current Liabilities + 7 86.41 8 2
1.28664
Provisions + 46.76 1.15 45.55 7
3,548.1 3,540.2 100.000
Total Current Liabilities 3 87.56 3 6
-
1,340.5 -
Net Current Assets -917.4 -22.64 4 37.8661
Miscellaneous Expenses not written 0.12739
off + 0 0.00 4.51 4
2,841.0 2,034.0 57.4564
Deferred Tax Assets 3 70.11 8 8
10.2917
Deferred Tax Liability 406.67 10.04 364.35 6
2,434.3 1,669.7 47.1647
Net Deferred Tax 6 60.08 3 2
4,052. 3,540.
Total Assets 13 100.00 21 100

Common Size income statement

Mar Mar change in change in
10(12) 09(12) 2010 2009

INCOME :
Sales Turnover + 5,067.9 5,238.9 100 100
2 8
10 Term
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Excise Duty 0 0 0 0
Net Sales 5,067.9 5,238.9 100 100
2 8
Other Income + 203.75 840.69 4.02038706 16.04682591
2
Stock Adjustments + 0 0 0 0
Total Income 5,271.6 6,079.6 104.020387 116.0468259
7 7 1
EXPENDITURE : 0 0
Raw Materials + 0 0 0 0
Power & Fuel Cost+ 1,810.5 2,609.2 35.7257020 49.8037786
5 1 6
Employee Cost + 689.39 825.42 13.6030166 15.75535696
2
Other Manufacturing Expenses + 1,191.3 1,235.6 23.5076717 23.58569798
5 5 9
Selling and Administration 2,232.7 2,305.0 44.0571279 43.99806833
Expenses + 8 5 7
Miscellaneous Expenses + 506.21 347.8 9.98851599 6.638696846
9
Less: Pre-operative Expenses 0 0 0 0
Capitalised+
Total Expenditure 6,430.2 7,323.1 126.882034 139.7815987
8 3 4
Operating Profit - - - -23.7347728
1,158.6 1,243.4 22.8616473
1 6 8
Interest + 1,096.5 778.55 21.6360952 14.86071716
0 8
Gross Profit - - - -
2,255.1 2,022.0 44.4977426 38.59548996
1 1 6
Depreciation+ 162.8 133.2 3.21236325 2.542479643
8
Profit Before Tax - - - -41.1379696
2,417.9 2,155.2 47.7101059
1 1 2
Tax+ 0 0 0 0
Fringe Benefit tax+ -6.06 12.5 - 0.238596063
0.11957568
4
Deferred Tax+ -764.63 -558.88 - -10.6677254
15.0876493
7
Reported Net Profit - - - -
1,647.2 1,608.8 32.5028808 30.70884027
2 3 7
Extraordinary Items + -405.37 -0.66 - -
7.99874504 0.012597872
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7
Adjusted Net Profit - - - -30.6962424
1,241.8 1,608.1 24.5041358
5 7 2
Adjst. below Net Profit + -97.27 0 -1.91932785 0
P & L Balance brought forward - -967.76 -50.8411735 -
2,576.5 18.47229804
9
Statutory Appropriations + 0 0 0 0
Appropriations + 0 0 0 0
P & L Balance carried down - - - -
4,321.0 2,576.5 85.2633822 49.18113831
8 9 2
Dividend 0 0 0 0
Preference Dividend 0 0 0 0
Equity Dividend % 0 0 0 0
Earnings Per Share-Unit Curr 0 0 0 0
Earnings Per Share(Adj)-Unit Curr 0 0
Book Value-Unit Curr -149.48 -83.88 - -
2.94953353 1.601075018
6

Comparative income statement

Year Mar Mar Mar chang %chan chang %cnan
10(12) 09(12) 08(9) e in ge e in ge in
2010 in2010 2009 2009
INCOME :
Sales Turnover + 5,067. 5,238. 1,441. - - 3,797. 263.46
92 98 39 171.06 3.2651 59 72
4
Excise Duty 0 0 0 0.00 #DIV/0 0.00 #DIV/0
! !
Net Sales 5,067. 5,238. 1,441. - - 3,797. 263.46
92 98 39 171.06 3.2651 59 72
4
Other Income + 203.75 840.69 128.51 - - 712.18 554.18
636.94 75.764 26
Stock Adjustments + 0 0 0 0.00 #DIV/0 0.00 #DIV/0
! !
Total Income 5,271. 6,079. 1,569. - - 4,509. 287.26
67 67 90 808.00 13.290 77 48
2
EXPENDITURE : 0.00 #DIV/0 0.00 #DIV/0
! !
Raw Materials + 0 0 0 0.00 #DIV/0 0.00 #DIV/0
! !
Power & Fuel Cost+ 1,810. 2,609. 890.84 - - 1,718. 192.89
55 21 798.66 30.609 37 32
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3
Employee Cost + 689.39 825.42 245.13 - - 580.29 236.72
136.03 16.480 75
1
Other Manufacturing Expenses 1,191. 1,235. 447.02 -44.30 - 788.63 176.41
+ 35 65 3.5851 94
6
Selling and Administration 2,232. 2,305. 544.54 -72.27 - 1,760. 323.30
Expenses + 78 05 3.1352 51 22
9
Miscellaneous Expenses + 506.21 347.8 28.8 158.41 45.546 319.00 1107.6
29 39
Less: Pre-operative Expenses 0 0 0 0.00 #DIV/0 0.00 #DIV/0
Capitalised+ ! !
Total Expenditure 6,430. 7,323. 2,156. - - 5,166. 239.61
28 13 33 892.85 12.192 80 08
2
Operating Profit - - - 84.85 - - 112.03
1,158. 1,243. 586.43 6.8237 657.03 89
61 46
Interest + 1,096. 778.55 77.88 317.95 40.838 700.67 899.67
50 74 9
Gross Profit - - - - 11.528 - 204.37
2,255. 2,022. 664.31 233.10 13 1,357. 75
11 01 70
Depreciation+ 162.8 133.2 18.28 29.60 22.222 114.92 628.66
22 52
Profit Before Tax - - - - 12.189 - 215.74
2,417. 2,155. 682.59 262.70 07 1,472.
91 21 62
Tax+ 0 0 0 0.00 #DIV/0 0.00 #DIV/0
! !
Fringe Benefit tax+ -6.06 12.5 3.55 -18.56 - 8.95 252.11
148.48 27
Deferred Tax+ - - -498 - 36.814 -60.88 12.224
764.63 558.88 205.75 7 9
Reported Net Profit - - - -38.39 2.3862 - 755.12
1,647. 1,608. 188.14 06 1,420. 38
22 83 69
Extraordinary Items + - -0.66 49.43 - 61319. -50.09 -
405.37 404.71 7 101.33
5
Adjusted Net Profit - - - 366.32 - - 576.92
1,241. 1,608. 237.57 22.778 1,370. 47
85 17 7 60
Adjst. below Net Profit + -97.27 0 -0.96 -97.27 #DIV/0 0.96 -100
!
P & L Balance brought forward - - - - 166.24 - 24.285
2,576. 967.76 778.66 1,608. 27 189.10 31
59 83
Statutory Appropriations + 0 0 0 0.00 #DIV/0 0.00 #DIV/0
! !
Appropriations + 0 0 0 0.00 #DIV/0 0.00 #DIV/0
 13 Term
Paper

! !
P & L Balance carried down - - - - 67.705 - 166.24
4,321. 2,576. 967.76 1,744. 38 1,608. 27
08 59 49 83

Trend Analysis:

Year Sales Trend% Stock Trend%

2007 1622.13 100 61.62 100
2008 1441.39 88.86 48.64 78.94
2009 5238.98 322.97 147.25 238.96
2010 5067.92 312.42 164.88 267.58

Cash Flow:
Cash Flow Summary 2010 2009

Cash and Cash Equivalents at Beginning of the year 171.87 320.91

-
Net Cash from Operating Activities 1665.0 -645.78
9

Net Cash Used in Investing Activities 235.13 206.63

1464.5
Net Cash Used in Financing Activities 290.11
6

Net Inc/(Dec) in Cash and Cash Equivalent 34.6 -149.04

Cash and Cash Equivalents at End of the year 206.47 171.87

Funds Flow:
14 Term
Paper

Year Mar 10 Mar 09

Sources of funds

Cash profit 0 0

Increase in equity 0 130.11

Increase in other networth 0 0

Increase in loan funds 2257.04 4731.18

Decrease in gross block 494 0

Decrease in investments 0 0

Decrease in working capital 0 152.3

Others 4.51 109.13

Total Inflow 2755.55 5122.72

Application of funds

Cash loss 1469.88 1336.1

Decrease in networth 97.9 932.41

Decrease in loan funds 0 0

Increase in gross block 0 2853.16

Increase in investments 0 0.05

Increase in working capital 1187.77 0

Dividend 0 0

Others 0 1

Total Outflow 2755.55 5122.72

Ratios:
15 Term
Paper

2009 2010
Profitability Ratios
Operating Profit Margin(%) -10.49 4.92
Profit Before Interest And Tax Margin(%) -11.7 1.69
Gross Profit Margin(%) -13.02 1.71
Cash Profit Margin(%) -24.58 -22.43
Adjusted Cash Margin(%) -24.58 -22.43

Liquidity And Solvency Ratios

Current Ratio 0.64 0.78
Quick Ratio 0.52 0.58

Management Efficiency Ratios

Inventory Turnover Ratio 30.7 35.5
Debtors Turnover Ratio 41.01 18.35
Fixed Assets Turnover Ratio 2.85 2.53
Total Assets Turnover Ratio 1.51 1.27
LEAVRAGE RATIO
capitel turnover ratio -0.48 -0.37
trading on equity 44.15 57.55

COST SHEET

Particulars
raw material 0 0
other manufacturing cost 1191.3 1235.6
5 5

prime cost 1191.3 1235.6

5 5

power and fuel 1801.5 2609.2

5 1
16 Term
Paper

depreciation 162.8 133.2

miscellaneous expenses 506.21 347.8

factory cost 3670.9 4325.8

1 6

employee cost 689.3 825.42

cost of production 4360.3 5150.9

1

selling and administration 232.78 2305.05

expenses

selling cost 4593.0 7455.96

8

profit 474.84 2216.96

sales 5067.9 5238.98

2

INTERPRATATION

Profit and Loss Account

The major concern in profit and loss account of the company is decrease in net sales of the
company from 5238.9 to 5067.9. The company has controlled its expenses in 2010 to some
extent which was necessary as the power cost decreased from 2609.2 to 1810.5, employee
cost is also decreased by 136 in 2010, and there is also a little decrease in other
manufacturing expenses of the company by 44.

Even though there is some control in the expenses of the company but still the company
could not generate profits as it shows an operating loss of 1158.6 in 2010 and which was of
1243.4 in 2009

Large funds generated by the outsiders loans results in large interests as the interest paid by
the company has increased from 778.55 to 1096.5 in 2010 which increase the gross loss to
2255.1 in 2010.

Net loss of the company is 1647.22 in 2010 and in 2009 it was 1608.83 due to which the
company is not enable to pay any dividend to its shareholders during last few years which can
lose the shareholder’s interest in the company.

Comparative Balance Sheet:

17 Term
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Following are the highlights of the comparative balance sheet of the company:

a)Reserves of the company is decreased by 69% which is not a good sign for the company.

b)There is a huge increase in secured loans of the company that is by 84% which shows the
dependency of the company on outsiders.

c)Net block of the company is decreased a little by 1.33% which is not a good sign as it
shows that the necessity of funds is fulfilled from the sale of fixed assets.

d)There is an increase in working capital of the company by 31.56 % which shows good
current financial position but the long term financial position is still in doubt.

Common size Balance Sheet:

Interpretation of common size balance sheet of the company is as follows:

a)Major part of the company’s total liabilities is covered by the loans and total debts in both
years which shows that the company has to do a lot of more work to become self dependent.

b)Net block of the company covers 44% in 2009 and in 2010 it covers 38% which shows
decrease in fixed assets which are done to finance its current requirements.

c)Working capital is in negative in both years of the company which shows that the current
financial position is also not well of the company in both years however efforts have been
made to increase working capital of the company as it was -37% in 2009 and then increased
to -22.6% in 2010.

Common size balance sheet of the company is not much impressive and shows financial
crises of the company as the company’s long term and short term financial positions are in
danger.

Comparative income statement

Following are the highlights of the comparative income statement of the company:

a)Due to increase in other income, net income also increasing in both years.

b)Expenditure of company also increasing in both years.

c)Expenditure are increasing at more rate than income that’s why company is going in loss.

Common Size income statement

Following are the highlights of the common size income statement of the company:
18 Term
Paper

a)Net sales of company is decreasing, as the result total income of company also decreasing.
Company is going in huge lose in 2010 then 2009.

b)Total expenditure also decreasing in 2010 then 2009.

c)Net profit also get big downward slope in 2010.

Trend Analyse:

Interpretation of the trend analyse of the company is as follows(base year 2007):

a)Sales of the company has shown a big ups and downs in last few years as it decreased to
88.86% in 2008 and then increased to 322.97% in 2009 and then again decreased by a few to
312.42%.

b)Stock of the company has increasing trend line in a whole but in 2008 it decreased to
78.94% and in 2009 it increased to 238.96%, then again it shows the increase in 2010 to
267.58%.

Cash Flow Statement:

Cash flow statement of the company is not much impressive for the year 2009 and 2010. It
shows the loss in operating activities which was 645.7 in 2009 and then it increased to
1665.09 in 2010. Which is a big matter of concern, if company is not able to generate cash
from its operating activities for a long time then it is hard to increase funds to invest even in
trading activity.

Cash from investing activity is increased from 206.63 to 235.13 in 2010.

Net cash from financing activity is also increased in a huge manner from 290.11 to 1464.56
which was almost necessary for the company as there is a big loss in operating activities of
the company.

Funds Flow Statement:

19 Term
Paper

Funds flow statement of the company reflects the dependency of the company of the
outsiders for the funds which is not an impressive statement.

The equity of the company is increased by 130.22 in 2009 but there is no increase in equity of
the company in 2010. Increase of loan funds in 2009 was 4731.18 and is 2257.04 in 2010,
which was almost expected.

There is also decrease in gross block of company in 2010 of 494 which again show the poor
financial period of the company.

Major part of application of funds of the company is utilized under the cash loss as it was
1336.1 in 2009 and then 1469.88 in 2010. Decrease in net worth of the company was 932.41
in 2009 and 97.9 in 2010. There is an increase in working capital of the company by 1187.77
in 2010.

Analyse Ratios

i) Profitability Ratios:

• Gross profit ratio of the company has increased from -13.02 to 1.71 in 2010, company
has earned some profits in 2010 after suffering from huge loss.
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• Improvement in operating activity has shown rise in operating profit ratio of the
company in 2010 which is increased to 4.92 from

-10.49. Which is a good improvement.

• Company is still suffering from a net loss with a net profit ratio of

-27.43 as it was -32.04 in 2009, there is still a big scope of improvement in the
operations of company.

ii)Liquidity ratio

• Current ratio of company is much less then satisfaction ratio 2:1. It is .64 in 2010
and .78 in2009.it means company have not capacity to meet its current obligation.
Assets are less then liabilities.

• Quick ratio is also half then satisfaction level in both year. it means company is not
good financial position.

iii)Turnover ratio

• Inventory turnover ratio is adequate. It should neither too high nor to low. Company
turnover ratio is high. That means there is glut in inventory and wrong use of funds.

• Debtor turnover ratio in 2010 is 41.01 and in 2009 is 18.35.this ratio indicates
economy and efficiency in the collection of amount due from debtors. the company is
collecting debts more quickly.
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• This ratio measures the efficiency with which fix assets are employed. Company fix
assets ratio is increasing 2.53 to 2.85 from 2009 to 2010.thats means utilisation of fix
assets are increasing.

• Total assets turnover ratio is increasing 1.27 to 1.51 from 2009 to 2010.thats mean
company using his assets in better way.

iv)Leverage ratios

• The fixed assets turnover ratio decreasing in both years. It means fixed assets are sold
by the company.

• Trading on equity ratio remains near to 50% in both years. it means interests and
taxes are increasing. company more income going through taxes .

Cost sheet:
Interpretation of cost sheet of Asian Paints Ltd. is as follows:
Prime cost of company is decreasing in 2010 as compare to 2009.that means company
decrease expenses on raw material. Factory cost in 2010 is also decrease to 3670.91 from
4325.96 in 2009.Expenceses in factory also decreasing in 2010.Selling cost in 2010 decreased
to 4360.30 from 7455.96 in 2010.dew to huge loses company profit also decreasing
.Company is going to loss as compare to 2009. There is an increase in working capital of the
company by 31.56 % which shows good current financial position but the long term financial
position is still in doubt.
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Conclusion:

From the above analysis and interpretations it can be said that the management team has
worked to improve company financial position Even though there is some control in the
expenses of the company but still the company could not generate profits as it shows an
operating loss of 1158.6 in 2010 and which was of 1243.4 in 2009. There is an increase in
working capital of the company by 31.56 % which shows good current financial position but
the long term financial position is still in doubt. Company is going to the huge losses that
cannot give dividend to their shareholder in 2010. Net cash from financing activity is also
increased in a huge manner from 290.11 to 1464.56 which was almost necessary for the
company as there is a big loss in operating activities of the company. Although company
profit is increasing in 2010 but due to huge increase in expenditure, company is yet going to
loss. Overall all we can say that time period 2010-09 is not good so its time to taken step to
control the company expenditure and to improve company financial position.