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LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF MANAGEMENT

COMMON SIZE ANALYSIS OF ICI INDIA LTD. WITH BERGER

Submitted to Lovely Professional University In partial fulfillment of the requirements for the award of degree of MASTER OF BUSINESS ADMINISTRATION

Submitted by: Student name: Upma Reg. no.:2020070155

DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY PHAGWARA (2007-2008)

LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF MANAGEMENT

Certificate of Completion
TO WHOMSOEVER IT MAY CONCERN
This is to certify that the project report titled" Common Size Analysis of ICI INDIA LTD. With BERGER carried out by Ms.Upma D/o Sh.Yash Paul Anand has been accomplished under my guidance & supervision as a duly registered MBA student of the Lovely Professional University, Phagwara. This project is being submitted by her in the partial fulfillment of the requirements for the award of the Master of Business Administration from Lovely Professional University. Her dissertation represents his original work and is worthy of consideration for the award of the degree of Master of Business Administration. ___________________________________ (Name & Signature of the Faculty Advisor) Title: ______________________________ Dare: ______________________________

Date:

LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF MANAGEMENT

Declaration of Authenticity by Student


DECLARATION

I, " , hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of a degree programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in the reference section.

_______________________ (Student's name & Signature) Reg. No.-2020070155 Date: __________________

Acknowledgement

I would like to express my gratitude to all those who gave me the possibility to complete this project. My debts are due to many individuals who provided me guidance, advice and useful comments that helped me in the successful completion of this report. As usual the debts can be only warmly acknowledged but never fully recompensed. I am thankful to Mr. K.Gopal krishna, Non Executive Director, ICI INDIA LTD, DEHLI with ease & for their continuous motivation, encouragement and firmly guidance for the successful completion of this project report. My thanks are due to Ms.SWATI, faculty, department of management, Lovely whose help, stimulating suggestions and encouragement helped me in all the time of research for and writing of this project report who provided me the knowledge about the field and the timely guidance which help me a lot on the way for the completion of this project. Above all I owe a debt of gratitude to my parents for their encouragement.

CONTENTS

Chapter I: The Project


1.1 Introduction 1.2 Purpose & Scope of study 1.3 Research Methodology

Page No.

Chapter II The Company


2.1 Overview of the Industry 2.2 Profile of the Organisation 2.3 History of the company 2.4 Recent Achievement and Milestone 2.5 Product Range of the Company 2.6 Performance of the Company

Chapter III: Review of Literature Chapter IV: Common Size Statements


4.1 Common Size Balance Sheets of last 5 Years 4.2 Common Size Income Statement of last 5 Years of ICI India Ltd 4.3 Common Size Income Statement of last 5 Years of Berger Paints

Chapter V: Findings & Recommendations


5.1 Conclusion 5.2 Limitations 5.3 Recommendations

Bibliography Annexure

Chapter I: The Project


1.1 Introduction Financial analysis The term financial analysis, also known as analysis and interpretation of financial statements, refers to the process of determining financial statements, refers to the process of determining financial strengths and weaknesses of the firm by establishing strategic relationship between the items of the balance sheet, profit and loss account and other operative data, analyzing financial statements, According to Metcalf and Titard, is a process of evaluating of a firms position and performance. In the words of Myers, financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set-of statements, and study of the trend of these factors as shown in a series of statements. The purpose of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm. Just like a doctor examines his patient by recording his body temperature, blood pressure,etc.before making his conclusion regarding the illness and before giving his treatment ,a financial analysis the financial statements with various tools of analysis before commenting upon the financial health or weaknesses of an enterprise. The analysis and interpretation of financial statements is essential to bring out the mystery behind the figures in financial statements. Financial statements analysis is an attempt to determine the significance and meaning of the financial statement data so that forecast may be of the future earning, ability to pay interest and debt maturities(both current and long term) and profitability of a sound dividend policy.

Methods of devices of financial analysis The analysis and interpretation of financial statements is used to determine the financial position and results of operations as well. A number of methods or devices are used to study the relationship between different statements. An effort is made to use those devices which clearly analyze the position of the enterprise. The following methods of analysis are generally used: 1) Comparative statements 2) Trend analysis 3) Common size statements 4) Fund flow 5) Cash flow analysis 6) Ratio analysis 7) Cost volume profit analysis Common size statement The common size statement ,balance sheet and income statement, are shown in analytical percentages. The figures are shown as percentages of total assets, liabilities and total sales. The total assets are taken as 100 and different assets are expressed as a percentage of the total. Similarly, various liabilities are taken as a part of total liabilities. These statements are also known as component percentage or 100 percent statements because every individual item is stated as a percentage of the total 100.The short-comings in comparative statements and trend percentages where changes in items could not be compared with the totals have been covered up. The analyst is able to assets the figures in relation to total values. The common-size statement may be prepared in the following way: 1) The totals of assets or liabilities are taken as 100 2) The individual assets are expressed as a percentage of total assets i.e.100 and different liabilities are calculated in relation to total liabilities. For example, if total assets are rs.5lakhs and inventory value is rs.50,000, then it will be10% of total assets then 50,000is multiplied by 100 and divided by 5,00,000.

I) Common-Size Balance Sheet A statement in which balance sheet item are expressed as the ratio of the ratio of each asset to total assets and the ratio of each liability is expressed as ratio of total liabilities is called common-size balance sheet. For example, following assets are shown in a common-size balance sheet: Particulars Cash in hand and at bank Sundry debtors Stock Land and Buildings Plant and Machinery Total Assets Rs. 5000 20000 25000 50000 100000 200000 Percentage 2.50 10.00 12.50 25.00 50.00 100.00

The total figure of assets Rs.2,00,000 is taken as 100 and all other assets are expressed as a percentage of total assets. The relation of each asset to total asset is expressed in the statement. The relation of each liability to total liabilities is similarly expressed. The common-size balance sheet can be used to compare companies of different size. The comparison of figures in different periods is not useful because total figures may be affected by a number of factors. It is not possible o establish standard norms for various assets. The trends of figures from year to year may not be studied and even may not give proper results. II) Common Size Income Statement The item in income statement can be shown as percentage of sales to show the relation of each item to sales. A significant relationship can be established between item of income statement and volume of sales. The increase in sales will certainly increase selling expenses and not administrative or financial expenses. In case the volume of sales increase to a considerable extent, administrative and financial expenses may go up. In case the sales are declining, the selling expenses should be reduced at once. So, a

relationship is established between sales and other items in income statement and this relationship is helpful in evaluating operational activities of the enterprise. For Example:

particulars Sales Mis.income

2003 500 20 520 700 15 715

2004

Expenses Cost of sales Office expenses Selling expenses Net profit 325 20 30 25 400 120 520 510 25 45 30 610 105 715

Chapter II: Introduction To Company

ICI INDIA LTD.


2.1 Overview Of The Company

"ICI Paints produces some of the world's top paint and decorative product brands. Our aim is to inspire consumers to transform their surroundings with performance products and colour. ICI Paints makes products to prepare and care for all building materials, and also provide coatings for cans and packaging. The critical success factors of growth for ICI Paints are the deployment of new technology, innovation and the successful marketing and promotion of our key brands. The Paints business is headquartered in Slough, UK. Major manufacturing facilities are located in the USA, UK, Brazil, Argentina, Germany, the Netherlands, France, China, India and Malaysia. Additional manufacturing facilities are in 14 other countries. Since the beginning of 2008 we have been part of Akzo Nobel, one of the world's leading industrial companies. We are the biggest global coatings manufacturer and the number one in decorative paints and performance coatings, as well as being a major worldwide supplier of specialty chemicals.

We employ around 60,000 people in more than 80 countries and are committed to developing innovative products and cutting-edge technologies, with a heavy emphasis on sustainability. We have the scale and expertise to deliver whatever our customers require, wherever and whenever they need it." 2.2 Profile Of The Industry About Us ICI India manufactures and markets paints, speciality chemicals, adhesives & starch. With an employee strength of about 900, ICI India's manufacturing sites, business and sales offices and distribution network span the length and breadth of the country. ICI's Paints business in India owes its success to innovative technology and strong brands such as Dulux and Duco. In the decoratives business, ICI's exterior paints portfolio exhibited a strong performance. Commendable growth was registered by our exterior emulsion brands - Weathershield and Supercote. Our retail tinting package 'Colour Solutions' is emerging as the preferred choice for top quality paint retailers in the country, backed by strong retail brands like Dulux Velvet Touch, Acrylic Emulsion and Gloss. Our decorative products are free from any added lead, mercury or chromium compounds. Philosophy The thought that guides ICI is to be the industry leader in creating value for customers and shareholders by operating at the highest level of excellence, acquiring unrivalled knowledge of key markets and using technology creatively. This results in products that

deliver greater benefits for the company's customers, higher returns for shareholders and increased rewards for employees. Our Vision

Our ambition is to be the industry leader in creating value for customers and shareholders We will be the most admired specialty products company in India

The Mission We Have Set Ourselves

We will be the leader in India in chosen specialty products to delight our customers while creating superlative value for our shareholders. We will have an inspiring high performance culture underpinned by responsible care for all people and the environment and innovation as the key driver for winning in the marketplace

The Values We Believe In


Show unrivalled understanding of customers and their markets. Seize opportunities rapidly, taking intelligent risks when required, to bring measurably better products to market. Meet demanding year on year growth targets above industry norms and constantly improve our operational performance. Hire, inspire and develop outstanding people by encouraging initiative, supporting new ideas and rewarding delivery. Never compromise our commitment to Security, Safety, Health and Environment.

Security, Safety, Health and Environment


The Companys on-site safety performance continued to be amongst the best with lowest ever injury rates.Implementation of Responsible Care Management System (RCMS) has helped in achieving an excellent performance in the field of safety, health and environment across the various operations of the Company. Waste reduction achieved good sustained performance.

Management
Chairman Aditya Narayan Executive Team Rajiv Jain, Managing Director & Chief Executive Officer Paints Sandeep Batra, Wholetime Director & Chief Financial Officer Non-Executive Directors Anthony J Britt M R Rajaram M V Subbiah R Gopalakrishnan R S Karnad (Ms.)

Investor Relations
Welcome to the Investor Relations section. Here you will find basic information about the ICI stock and answers to common investor questions.

The ICI Stock Code:


The Stock Exchange, Mumbai: 500710 National Stock Exchange: EQ ICI Reuters: ICI.BO ISIN: INE133A01011

Top

2.3 History Of The Company The History The ICI India story began way back in 1911 when Brunner Mond & Co, one of the four companies that combined in 1926 to form ICI in UK, opened a trading office in Calcutta to sell alkalis and dyes. In 1923, it became Brunner Mond & Co (India) and in 1929 the name was changed to Imperial Chemical Industries (India) Ltd. This was followed by a period of sustained expansion, diversification and growth. ICI's manufacturing activities in India commenced in 1939 with the setting up of Alkali and Chemical Corporation of India Ltd in Rishra, West Bengal. Indian Explosives Ltd was set up in Gomia in 1954, the result of an agreement with the government of India. Chemical and Fibres of India Ltd came up in Thane in 1963, manufacturing polyester staple fibre. When fertilizer manufacturing operations began in Panki near Kanpur in 1969 it was the largest private sector investment in fertilizers in India. On completion of the 3rd stream, the plant had a capacity to manufacture 675,000 tpa of urea fertilizer.

The company also commissioned its catalyst business at Panki in 1984. The ICI Research and Technology Centre was established in Thane in 1976 and a Crop Protection Chemicals and Pharmaceuticals unit came up in Ennore, near Chennai in 1978. Consolidation And Reconstructing

In 1984, the ICI group companies in India were merged in what was one of corporate India's ICI India largest Ltd, each mergers holding of 40% of that the time. equity. Nalco Chemicals India Ltd was formed in 1987 with Nalco Chemical Company USA and The first phase of ICI India's restructuring was completed in 1993 with the divestment of the seeds, fibres and fertilizers businesses while the agrochemicals business was transferred to a joint venture with Zeneca Limited of UK in 1995. 1996 saw the establishment of a joint venture, Initiating Explosives Systems India Ltd., with The Ensign-Bickford Company of the USA for the manufacture of Initiating Explosives Systems. The company has exited from the joint venture in late 2003. While the new paints plant and polyurethanes systems house were commissioned at Thane in 1997, another paints plant was commissioned at Mohali near Chandigarh and the Uniqema Zeneca, Innovation UK, as Centre part of opened its at Thane the following year. exercise. In 1998 ICI exited from its joint ventures with Nalco Chemical Company, USA and continuing restructuring The explosives business was transferred to Indian Explosives Limited, a joint venture between the company and Orica Investments Pty Ltd., Australia in 1999. The company has exited from the joint venture in late 2003. Trading in National Starch Adhesives products commenced in 1999, followed by the commissioning of a plant at Thane in 2000. The business has since been strengthened with the acquisition of the portfolio from Hindustan Lever Ltd and the plant has further been strengthened through de-bottlenecking.

In line with ICI India's strategic objective, the Polyurethanes business was sold to the Huntsman Group of USA in 2001. The Motors and Industrial Paints business was transferred to a Joint Venture with Berger Paints India Limited, also in 2001, from which the company exited in 2002. The flavours and fragrances business was taken over as a joint venture (with ICI India holding a majority stake) with Hindustan Lever Limited and Quest International B.V. in 2001. The company was converted into a wholly owned Subsidiary in 2006, from which the company has exited in 2007 by sale of its shareholding to Givaudan Group. The Pharmaceuticals business of the company was divested to Nicholas Piramal India Limited 2002. The Nitrocellulose and Trading businesses were divested in 2004 to Nitrex Chemicals India Ltd (owned / funded by ACTIS), in which the company holds a minority stake. The Rubber Chemicals business was transferred to a subsidiary of PMC Group International, USA in December 2005, where the company holds a minority stake. The company has acquired controlling interest during 2006 in Polyinks Limited, Hyderabad, which manufactures Hot Melt Adhesives; which has been integrated with the National Starch operations in India. in 2002. The catalyst business of the company has been divested to Johnson Matthey Group in late

2.4 Recent achievements Recognition of the excellent performance came through a number of prestigious national & iternational awards - Prashansa Puraskar from National Safety Council of India, a Trophy from the Government of Andhra Pradesh, in recognition of good OHS performance and for securing OSHAS-18001 certification by Paints, Hyderabad site and ICI PLCs Leadership awards for sustained excellence in manufacturing for most of the sites of ICI India. For the second consecutive year, ICI India has won 2 out of 5 coveted ICI PLCs SSHE Leadership Awards competing with entries under Health and Product Stewardship categories from the worldwide operations of ICI Group.

The Company made good progress with its Challenge 2005 initiative, which contains specific improvement targets in Safety, Health, Environment and Product Stewardship

2.5 Product Range of The company

Our Products

"Technology and innovation have always been at the heart of ICI, and within ICI Paints our success is often enhanced by being the first to the market with innovative, value-adding products and services that meet market needs. Owned by the Akzo Nobel Group since the beginning of 2008, ICI Paints is part of the world's biggest coatings manufacturer and number one in decorative paints and performance coatings. Our products don't always come in cans - services such as our Dulux Decorator scheme, so far available in some of our markets, allows customers peace of mind in helping them choose the right contractor for the job.

As you would expect from a company that sells paint in 100 countries worldwide, we have a lot of products. We aim to produce as near to the local market as we can, and all our products are tailored to local needs. You can get an idea of our brands worldwide by clicking here.To learn more about new products you can read the latest press releases in the Latest News section.It's a clich to say we have too many products to mention, but in the case of ICI Paints it's often true. Here are just a few examples of our product areas worldwide. For more details on them, go to the brands area on this website. Dulux is the world's leading brand of premium quality paint. It offers the DIY user and professional help and inspiration to achieve lasting good looks. Whilst Dulux product ranges vary from country to country, as they are tailored to meet local needs, Dulux's ambition is constant around the world - to help people create a beautiful environment with confidence. ICI Devoe Coatings in the USA offers a complete line of high performance coatings, linings and flooring for use in harsh, corrosive environments. Under the Liquid Nails brand, Macco in the USA manufactures a complete line of construction adhesives, repair products, caulks and sealants. With 40 years in the business, Liquid Nails products stand for strength and trust with professionals and DIYers. In the UK, Ireland and Thailand, Cuprinol is the brand that provides inspiration and empowerment to enable you to experience the natural beauty of wood inside and outside your home. A national chain of over 200 outlets that deliver total decorating solutions with risk free colour coordination to the female planner and quality driven residential painters in Canada - Color Your World has been delivering value to the Canadian public since 1912 and has recently become the market leader in wall coverings.

In Holland, Alabastine is the leading brand of preparation for decoration products for DIY use. The brand offers a wide range of products designed to ensure the easiest and risk free way to do a preparation or repair job Glidden, one of the most popular paint brands in North America, strives to create confidence in consumers from start to finish; from the moment of decorating and colour inspiration to the enduring enjoyment of a completed project for years to come - for DIY and pro customers alike. To consumers and professional decorators, Hammerite is the specialist metalcare brand that offers the most effective and convenient way to rejuvenate, protect and decorate metal. In Poland Pillak is the brand which operates in the medium and low price segment. It offers to DIY users a universal wide range of products designed to be used on all surfaces: mineral (emulsions), metal (metal paints), wood (varnishes and wood preservers) and to all stages of painting (undercoats, primers, final finishing). Polycell has a range of over 250 DIY preparative products, including those for filling, stripping, brush cleaning, wallpaper pasting, tiling and surface covering. All products are designed to help consumers to more easily undertake DIY preparation tasks. Akzo Nobel employs around 60,000 people in more than 80 countries and is committed to developing innovative products and cutting-edge technologies, with a heavy emphasis on sustainability. We have the scale and expertise to deliver whatever our customers require, wherever and whenever they need it. Headquartered in Amsterdam in the Netherlands, Akzo Nobel is a Fortune Global 500 company and is listed on the Euronext Amsterdam stock exchange. We are the Chemicals industry leader on the Dow Jones Sustainability Indexes, as well as being included on the FTSE4Good Index. Pro forma combined revenues for 2006 totaled EUR 15 billion.

ICI Paints Brands

Dulux is the world's leading brand of premium quality paint. It offers the DIY user and professional help and inspiration to achieve lasting good looks. Whilst Dulux product ranges vary from country to country, as they are tailored to meet local needs, Dulux's ambition is constant around the world - to help people create a beautiful environment with confidence.

In Holland, Alabastine is the leading brand of preparation for decoration products for DIY use. The brand offers a wide range of products designed to ensure the easiest and risk free way to do a preparation or repair job.

With more than 50 years of leadership in Argentina, Alba is regarded as a premium brand and its essence relies on its reliability (trust) while its main values are heritage, honesty and coatings knowledge.

Celebrating its 75th Anniversary this year, CIL is a trusted Canadian manufactured brand of paint delivering outstanding value for money through proven performance, convenience and simplicity. Now the market leader in the Canadian Home Centre channel with over 40 % channel share.

A national chain of over 200 outlets that deliver total decorating solutions with risk free colour coordination to the female planner and quality driven residential painters in Canada - Color Your World has been delivering value to the Canadian public since 1912 and has recently become the market leader in Wallcoverings.

With more than 40 years in the Brazilian market, Coral is the market leader in several regions of Brazil and number two on a country basis. Coral is regarded as a premium brand and is seen by consumers as a traditional, trustful, sophisticated and innovative brand.

Corona provides a wide range of technical products used and approved by a wide range of users from professionals to experienced dyers. Through a classic range of colours and an efficient tinting machine in many points of sale, Corona offers high quality and innovative products which, combined with the decorator expertise of the paint job, will provide a good and durable finish.

In the UK, Ireland and Thailand, Cuprinol is the brand that provides inspiration and empowerment to enable you to experience the natural beauty of wood inside and outside your home.

Dulux Trade is the number 1 brand in the UK Trade market. It provides true value for money for professional users and specifiers through the highest quality products and unrivalled business support. It gives them confidence to achieve business success.

In France, Dulux Valentine is the leading brand of premium quality paint. It offers the DIY user help and inspiration to achieve lasting good looks for their home.

Ideas. Colours. Confidence. Glidden, one of the most popular paint brands in North America, strives to create confidence in consumers from start to finish; from the moment of decorating and colour inspiration to the enduring enjoyment of a completed project for years to come - for DIY and pro customers alike.

To consumers and professional decorators, Hammerite is the specialist metalcare brand that offers the most effective and convenient way to rejuvenate protect and decorate metal.

ICI Devoe Coatings offers a complete line of high performance coatings, linings and flooring for use in harsh, corrosive environments.

With more than 50 years of leadership in Uruguay, Inca is regarded as a premium brand and its essence relies on its reliability (trust) while its main values are heritage, authenticity and innovation.

Under the Liquid Nails brand, Macco manufactures a complete line of construction adhesives, repair products, caulks and sealants. With 40 years in the business, Liquid Nails products stand for strength and trust with professionals and DIYers. General purpose products along with project specific products guarantee that the consumer has the right product for every job.

Maxilite The Maxilite range of products offers finishes for a variety of surfaces like wood, metal and wall. Available in a range of bright shades the range is ideal for the value for money user.

Molto In Germany, Central & Eastern Europe, Molto is the leading brand of preparation for

decoration products for DIY use. The brand offers a wide range of products designed to ensure the easiest and risk free way to do a preparation or repair job.

In Poland Pillak is the brand which operates in the medium and low price segment. It offers to the DIY users a universal wide range of products designed to be used on all surfaces: mineral (emulsions), metal (metal paints), wood (varnishes and wood preservers) and to all stages of painting (undercoats, primers, final finishing).

Polycell has a range of over 250 DIY preparative products, including those for Filling, Stripping, Brush Cleaning, Wallpaper Pasting, Tiling and Surface Covering. All products are designed to help consumers to more easily undertake DIY preparation tasks.

In France, Belgium, Southern Europe and Denmark, Polyfilla is the leading brand of preparation for decoration products for DIY use. The brand offers a wide range of products designed to ensure the easiest and risk free way to do a preparation or repair job.

In Continental European countries, Xyladecor is the brand that provides inspiration and empowerment to enable you to experience the natural beauty of wood inside and outside your home.

2.6 Performance Of The Company

BERGER PAINTS

Profile
BERGER PAINTS is the culmination of over seven-decade process of evolution and growth that began in 1923. Its growth has been closely linked with the business and industrial development of modern India. BERGER'S performance is anchored today in a wide variety of Decorative and Industrial paints which continue to gain an increasing share of the highly competitive Indian paint market. Being an ISO 9001 company its quality products have attained instant recognition, worldwide, and continues to meet quality requirements that are demanded today even in the domestic market. The Country's third largest paint manufacturer and the second largest decorative paint player, Berger is headquartered in Calcutta and services the market through a distribution network comprising of 75 stock points and 12,000+ paint retailers.

History
Welcome to the world of Berger Paints where we turn your dreams into colorful reality. With an unmatched range of products and services, Berger Paints India Ltd is a leader in paints, offering its customers a variety of innovative painting solutions, be it decorative or industrial. Whether it is your home or office, your shop or factory, interiors or exteriors, metal, wood, plastic or any other surface - we have a paint solution for it! With an everevolving profile and rich history, Berger Paints India Ltd. (an ISO 9001 Company) has come a long way in the highly competitive Indian paints industry. Today the names "Berger" and "Lewis Berger" are synonymous with colour. Berger Paints continues to be inspired by the creation and innovation of Mr. Lewis Berger, who through his marvelous shades, had offered people a chance to transform their homes through the power of imagination. At Berger we believe in taking paints to the level of fine art. Enriched by the imagination of Lewis Berger since 1760.

Prolinks

Prolinks is Berger Paints' response to a market environment that is increasingly driven by technology and calibrated by expertise.Prolinks is aimed at placing the initiative in the hands of builders, architects and designers to enable them to directly source innovative products and services. The team is entrusted with maintaining a seamless interface between paint specifiers and Berger Paints. The objective is to provide specifiers with a complete basis for recommending products and processes - databases, technical services, color consultancy, site inspection, etc. Prolinks experts ensure specific solutions to specific problems, whether it is a particular shade that needs development, special climatic factors to be provided for, or application factors that have to be maintained. From know-how to legwork, the Prolinks team delivers total support.

Code of conduct
Applicability This Code is applicable to all Directors and employees of the Company. This is in addition to the code framed under SEBI (Prohibition of Insider Trading Regulations), 1992 and all other applicable policies, procedures as well as the existing rules and regulations applicable to the Company. This Code applies to all places where the Company's business is conducted. Standards of Conduct The Company expects all Directors, employees, agents and contractors to take steps for furthering safety and welfare of citizens and for ensuring a cooperative, efficient, positive, harmonious and productive work environment.Those who neglect or willfully breach this Code may be subject to corrective action, which may include termination.

Shareholder Value The Directors and employees of the Company shall be fully committed to enhancing shareholder value and net worth. Every member of the Board and employees shall take adequate steps and measures that would have been taken by a man of ordinary prudence towards achieving this objective. Conflict of Interest The Directors and employees shall not participate in the decision making process in respect of any subject matter where there is a conflict of interest between the interest of the Company and the personal interest of such persons. The Directors and employees shall also not participate in taking decisions in respect of any matter or transaction involving an organisation, firm or a person in which case such Directors or employees may be deemed to be interested. Business Opportunity The Directors and employees shall not take advantage of any business opportunity belonging to the Company and known to them to be so belonging. Quality Directors and employees shall function so as to ensure that the Company preserves its reputation in the market, supplies quality products and valued services to the customers, both internal and external, and will continuously work towards enhancement of the Company's goodwill. Dissemination of Information Directors and employees shall ensure that all information, which is made available by the Company to the public, is correct, and is free from ambiguity. Information related to the Company and not in the public domain will be generally treated as confidential. Confidential information will be deemed to be a valuable asset and shall be treated as such

by all employees and Directors. The Company shall be entitled to take all such steps as may be required to prevent any unauthorised disclosure of information. Funds Every employee shall be personally responsible for the Company funds over which he or she exercises control. Company funds must be used only for Company purposes. Every employee will ensure that he or she and the Company's agents and contractors take all reasonable steps such that the Company receives value for the Company funds and accurate and timely record of each and every expenditure is kept. Records Every employee shall take necessary steps to preserve records as may be necessitated by law and the Company's business. Records include written documents, CD's, computer hard disks, email, floppy disks, microfilm, microfiche and all other media. Compliance with Laws The Directors and employees shall take steps to ensure that the Company complies with applicable laws, regulations, rules and regulatory orders. They will also seek such compliance from the Company's contractors and agents.All employees shall comply with applicable laws in India and non-compliance will render them susceptible to action by the Company. Utilisation of Assets The Directors and employees shall ensure that the assets of the Company are utilised in the best interest of the Company and not for their personal benefit, unless specifically allocated for such purpose.

Non-discrimination All other factors being equal, Directors and employees shall not discriminate on the basis of race, religion, colour, creed, sex, disability or marital status. Any form of sexual harassment is prohibited. Complaints of sexual harassment will be investigated and action taken against offending persons. Benefits No Director or employee shall derive any undue benefit from the Company which would not be otherwise available to him or her in the course of the Company's business. Enforcement 1. All the present Directors and employees of the Company shall be deemed to have accepted this Code from 31 December 2005. All other persons who may become Directors and employees shall be deemed to have accepted the Code from the date when they become Director or employee of the Company. 2. The Company Secretary shall be the compliance officer for the purpose of this Code. 3. All Directors and Managers will have to make an annual affirmation of the Code. Any person aware of violation of the Code may lodge a written complaint with the Compliance Officer. 4. The Company may suo moto undertake internal investigation or enquiry in respect of a suspected breach of the Code. 5. This Code may be amended by the Board of Directors of the Company.

Companys performance
Accounts for the financial year ended 31st March, 2008.
1. FINANCIAL RESULTS & APPROPRIATIONS

2. OPERATIONAL & FINANCIAL PERFORMANCE

The consolidated sales achieved during the financial year ended 31st March, 2008, were Rs. 15,857 million as against Rs. 13,838 million in the previous year showing a growth of 14.6%. The consolidated net profit, at Rs. 930 million was higher than those of the previous year (Rs. 877 million) by 6.04%. During the financial year ended 31st March, 2008, the Company achieved sales of Rs. 15,217 million as against Rs. 13,222 million in the previous year registering a growth of 15.09%. The profit before depreciation, interest and exceptional item was Rs. 1,490 million as against Rs. 1,284 million in the previous year, recording an improvement of 16.04%. The profit before tax at Rs. 1,188 million and the profit after tax at Rs. 921 million during the year under review showed an improvement of 16.24% and 10.96% respectively. Your Company was able to

deliver steady top line growth in spite of a lower GDP growth and slow down in the automotive sector. The margins could have been further improved but for inflationary pressures in raw materials from the 4th quarter. The Company continued to focus on improving product mix, cutting costs and improving service level to customers so as to retain its competitive edge.

The growth in the architectural/decorative segment continued to be good, boosted by a buoyant performance by the housing and infrastructure sectors. Your Company continued its efforts of trying to reach out to a larger number of direct customers and also paint applicators through innovative new products and value added services. The new products introduced during the year include Illusions Sealer an undercoat used to protect the walls from dampness and salt leaching, Illusions Metallica to provide metallic satin finishes to the interior walls in gold, silver and copper bases which can be further enhanced to myriads of shades and designs, Kidz Glitter and Glow which provides a sparkling effect during the day and glow in the dark at night for children. The Lewis Berger Home Painting Services have been extended to 17 centres, which cater to 34 cities in the country. This business continues to grow well and provides excellent painting service at reasonable cost to the customers. It also helps the Company to build a loyal customer base for the future. Your Company has introduced preview option on its website. This is an additional service, which would enable a customer to upload images and examine different colour

combinations and designs before making the final colour selection. Your Company continues to focus on the growing large project business in the country through its Prolinks Division since the share in this segment has gone up substantially over the last few years. The Company is also actively working on the applicator loyalty programme to ensure larger share from this growing new project business segment. The Protective Coatings business performed well and your Company continues to ensure that it maintains the preferred supplier position in this segment. The Powder Coating business also registered a good growth to ensure effective capacity utilization of the new plant at Jammu. The ERP project is on track and likely to be completed by calendar year 2008. The Company is constantly making improvements in the area of godown management and logistics to improve servicing of the markets across all its depots throughout the country.

3. CAPITAL, DIVIDEND AND BONUS ISSUE

Pursuant to the resolutions adopted by the shareholders by postal ballot on 11th April, 2008, the authorized capital of your Company stands increased from Rs. 650,000,000 divided into 325,000,000 Ordinary (Equity) Shares of Rs. 2/- each to Rs. 750,000,000 divided into 375,000,000 Ordinary (Equity) Shares of Rs. 2/- each with effect from 11th April, 2008. Your Directors recommend a dividend @ 25 % for the year under review. This, if approved, will absorb an amount of Rs. 159 million and will be paid to those members whose names appear in the Register of Members as on 30th July, 2008. The dividend payment for the year will therefore be Rs. 159 million as compared to Rs. 319 million in the previous year. Pursuant to the approval accorded by

the shareholders by way of postal ballot on 11th April, 2008, the Company has allotted 20,000,000 warrants (Equity Warrants) to Jenson and Nicholson (Asia) Limited, U.K., a part of the promoter group, on 19th May, 2008, at a price of Rs. 49.50 per Equity Warrant, which is higher than the price determined in accordance with the Securities and Exchange Board of India (Disclosure & Investor Protection) Guidelines, 2000. The allotment was made on 19th May, 2008 upon receipt of 10% of the price. The Equity Warrants are convertible into equity shares at the option of the holder within a period of 18 months from the date of issue, i.e. within 18th November, 2009. The proceeds of the issue will be deployed for funding various growth proposals of the Company. In terms of the provisions of Section 205C of the Companies Act, 1956, your Company transferred an amount of Rs. 1,306,168 to the Investor Education and Protection Fund, in respect of dividend amounts lying unclaimed / unpaid for more than seven years from the date they became due i.e., for the year ended 31st March, 2000.

4. ACQUISITION OF BOLIX S.A., POLAND

Your Company has signed an agreement on 28th April, 2008 for acquisition of Bolix S.A. (Bolix), a leading provider of External Insulation Finishing Systems (EIFS) in Poland, from Advent International, a global private equity group. Bolix is the largest provider of EIFS systems in the B2B segment in Poland. It also exports to neighbouring countries such as Ukraine, Russia and the Baltic countries viz., Estonia, Latvia and Lithuania. The annual turnover of Bolix exceeded 100 million Zlotys (45.5 million US Dollars) in 2007. The acquisition is subject to anti-monopoly

clearances, as may be required. EIFS is a comprehensive solution for meeting both the insulation and decorative requirements of external walls of buildings. Bolixs products, all of which are manufactured in-house, include adhesives, mortars, plasters, primers and paints. In combination with other insulation materials like polystyrene foam or mineral wool and auxiliary materials such as fibre glass meshes, Bolixs EIFS products provide significant insulation solutions while at the same time offering decorative finish suitable for traditional brick or concrete structures. In the context of the attention given by European Union and other countries to energy saving and the concerns of global warming, EIFS represents a good growth potential. The proposed acquisition will provide synergy benefits to the Companys presence in the region both in terms of new business opportunities and regional markets. The technology and the products complement the Companys existing businesses and the Company proposes to introduce this range of products in the Indian market. This will result in considerable savings in energy costs, benefits to the environment, better aesthetics and long life of exterior walls. The advisors to the transaction were Ernst and Young, India and Tomczak & Partners, Advocates, Poland. The acquisition will be made through Lusako Trading Limited (Lusako), currently the Companys subsidiary in Cyprus. The transaction will be made at an approximate value of USD 34.8 million, subject to usual net debt and working capital adjustments.

5. SUBSIDIARY COMPANIES & JOINT VENTURE

The Statement of the holding Companys interest in the subsidiary companies namely Beepee Coatings Private Limited (Beepee Coatings), Berger Jenson & Nicholson (Nepal) Private Limited (BJN - Nepal), Berger Paints (Cyprus) Limited (Berger Cyprus) and subsidiary of its subsidiary company, viz., Berger Paints Overseas Limited as specified in Sub-section (3) of

Section 212 of the Companies Act, 1956 (the Act) is attached to the Report and Accounts of the Company. Post 31st March, 2008, all the shares of Lusako Trading Limited have been acquired by Berger Paints India Limited for the purpose of purchase of shares of Bolix S.A., Poland, as mentioned above. The performance of Beepee Coatings, a wholly owned subsidiary with its entire manufacturing facilities dedicated to processing the Companys products was satisfactory. The processing income amounted to Rs. 72.85 million.

BJN-Nepal, also a wholly owned subsidiary, has shown substantial improvement. During the year under review, this company achieved a turnover of Rs. 160.83 million and Profit Before Tax of Rs. 10.35 million. Berger Paints (Cyprus) Limited, Cyprus, is a special purpose vehicle for the purpose of making investments in your Companys interests abroad. So is Lusako Trading Limited. Berger Paints Overseas Limited in Russia has commenced commercial production in September 2007 at its modern plant in the Republic of Adygeya, with alkyd based and water based paints. During the year under review, it registered a loss of 2,790,000 Roubles (Rs. 4.48 million). The Companys joint venture, Berger Becker Coatings Limited continued to achieve good business during the year under review. BNB Coatings India Limited (BNB), the Companys joint venture with Nippon Bee Chemicals Co. Ltd. of Japan (NBC) for manufacture of coatings for plastic substrates used in automobiles was incorporated on 21st June, 2007. The products manufactured by BNB require sophisticated technological inputs and strict quality surveillance. BNB has commenced business and has started supplying to its customers. The Company has applied for exemption under Section 212 of the Companies Act, 1956 from the Department of Company Affairs from annexing to this Report the Annual Reports of the above subsidiaries for the year ended 31st March, 2008 and expects to obtain the same before publication. The Consolidated Financial Statement includes the

results of these subsidiary companies duly audited by their respective statutory auditors. Annual Accounts of the subsidiary companies andrelated detailed other information shall be made available to the members seeking such information and shall also be kept open for inspection at the Head Office of the Company by any investor during working hours. The Companys joint venture with Punjab National Bank, Vijaya Bank and Principal Financial Group (Mauritius) Limited in the form of Pnb Principal Advisory Company Private Limited continued its business of direct broking. During the year ended 31st March, 2008, this company generated business income of over Rs. 23.25 crores (2006-07: Rs.16.74 crores) and made a profit after tax of Rs. 7.72 crores (2006-07: Rs.1.5 crores).

6. PROJECTS

During the year, your Company commenced the following projects: Work on setting up of an automobile paint manufacturing plant with a combined capacity of 24,000 MTPA at the Jejuri Industrial Estate, Pune is progressing in full swing. The Company has received environment clearance from the Ministry of Environment and Forests for this purpose and

is finalizing the design and the contractors. The capacity expansion of the Goa solvent based paint plant up to 18,000 KL per annum is complete and the plant is expected to be commissioned soon. Capacity of the Jammu powder plant has been expanded during the year. The Company has started preliminary work for expansion of water based paint and resin manufacturing capacity in its existing plant at Rishra in West Bengal and installation of a resin manufacturing plant in Goa. The Companys subsidiary, Beepee Coatings Private Limited is expanding its capacity in Gujarat.
7. CONSOLIDATED FINANCIAL STATEMENTS

The duly audited Consolidated Financial Statement as required under the Accounting Standards 21 and 27 and provisions of Clause 32 of the Listing Agreement has been prepared after considering the audited financial statements of your Companys subsidiaries and appear in the Annual Report of the Company for the year 2007-08.

8. CORPORATE GOVERNANCE

Your Company re-affirms its commitment to the standards of corporate governance. This Annual Report carries a Section on Corporate Governance and benchmarks your Company with the provisions of Clause 49 of the Listing Agreement (Annexures I & II). During the year under review, your Company has voluntarily carried out a Secretarial Audit. The Secretarial Audit Report forms a part of the Annual Report.
9. TECHNICAL LICENCE AGREEMENTS

Your Company has Technical License Agreements with (1) DuPont Performance Coatings in the area of Automotive Coatings, (2) Orica Australia Pty Ltd. in the area of Protective Coatings, and (3) TIGERWERK Lack-u.Farbenfabrik GmbH & Co. KG, Austria for specialized powder coatings. Products manufactured with the know-how of the collaborators have been well received by the customers.
10. FOREIGN EXCHANGE

Your Company earned foreign exchange of Rs. 13.2 million from export of paints andconsultancy fees. Details of Foreign Exchange outgo and earnings appear in items (v) to (viii) of Schedule 21, of the Accounts for the year under review.
11. FUTURE PROSPECTS

There are signs of slowdown in the economy with higher inflation and significant rise in the prices of raw materials. The spiraling prices of crude oil may impact the demand as well as the profitability. Your Company has experienced these challenges in the earlier years and has successfully faced them in the market through various measures of containing costs, changes in product mix, widening the customer base by introducing various categories and ranges of products, reaching out to new consumers in all sectors, increasingly strengthening the supply chain and logistics, opening up new depots and formulating marketing strategies and enhancing the commitment of customers. In the long term, the Company believes that there will be no let up in the demand and compared to other economies, the demand in India is likely to grow at a much higher rate supported by growth in housing, of which there is a shortfall. The per capita consumption of paints in India continuesto be low and there is major opportunity for improvement. There may be a slight dip in the demand over the short term but the long term prospects remain good due to obvious growth potential in housing, infrastructure and the industrial sectors, given the current state of the countrys development. The year to date performance is encouraging and barring unforeseen circumstances, your Directors are optimistic that your Company will continue to show results as per market expectations.

12. FIXED DEPOSITS

There are no outstanding public deposits in the Company as on 31st March, 2008, except those lying unclaimed. The Company had earlier discontinued acceptance of fresh deposits and renewal of deposits. Deposits amounting to Rs. 0.606 million which had matured for repayment are lying unclaimed, for which your Company has sent out reminders. Out of the aforesaid unclaimed deposit, an amount of Rs. 21 thousand has been transferred to the Investor Education and Protection Fund.
13. COST AUDITORS

The Board of Directors have re-appointed M/s N. Radhakrishnan & Co., Kolkata, Mr. Gopalkrishnan, Pondicherry and M/s Shome & Banerjee & Co., Kolkata, as the Cost Auditors of the Company under Section 233B of the Companies Act, 1956, for its various factories across the country, subject to the approval of the Central Government for the year 2007-08. The Cost Auditors Reports will be forwarded to the Central Government as required under law.
14. HUMAN RESOURCES, ENVIRONMENT, OCCUPATIONAL HEALTH AND SAFETY

As on 31st March, 2008 your Company had 1693 employees. Industrial Relations were satisfactory during the year under review. Human Resources continue to be a prime area of attention and importance for your Company. In relentless pursuit of excellence, it continues to focus on both recruitment and retention, giving priority to meritocracy and ensuring that performance is first

recognized and then rewarded in an appropriate manner. Your Company understands that culture, core values and integrity constitute the framework of a corporate that is held in esteem by the employees and makes continuous efforts to progress in these directions. Tailor made training and development programmes are continuously designed and implemented to address the growing needs of the market. Your Company continues to place highest importance to environment, occupation health and safety. The Risk Assessment and Minimisation Committee of your Company regularly meets and monitors the situation obtaining in the Company and makes recommendations, which are implemented. Your Company wishes to put on record its deep appreciation, co-operation and efforts of all employees for the betterment of the organization.

15. INFORMATION PURSUANT TO SECTION 217 OF THE ACT a. Conservation of Energy & Technology Absorption

Information pursuant to Section 217(1)(e) of the Act, read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the financial year ended 31st March, 2008 are given in Annexure III to the Report.
b. Particulars of Employees

Statement under Section 217(2A) of the Act, read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in Annexure IV to this Report.
c. Directors Responsibility Statement

Your Directors wish to inform that the Audited Accounts containing Financial Statements for the financial year ended 31st March, 2008 are in full conformity with the requirements of the Companies Act, 1956. They believe that the Financial Statements reflect fairly the form and substance of transactions carried out during the year and reasonably present your Companys financial condition and results of operations. Your Directors further confirm that in preparation of the Annual Accounts : i) the applicable accounting standards have been followed and wherever required, proper explanations relating to material departures have been given, ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and Previous years figures restated based on the face value of Rs. 2 per share fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period, iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, iv) the Accounts have been prepared on a going concern basis.
16. DIRECTORS

Your Board had appointed Mr. Gerald Kenneth Adams as additional director effective 30th January, 2008, to hold office till the next Annual General Meeting. Mr. Adams is a Bachelor of Arts from the University of Washington and an MBA with distinction from Harvard Business School. Mr. Adams has wide business experience and has held senior positions in companies all over the world including those in Box USA, Rexam Release, USA, Orica Consumer Products, Australia and Vita Life Sciences Limited, Australia. Currently, Mr. Adams is the Chairman of Berger Paints Bangladesh Limited and a Director and Remuneration Committee Member of ZORK Pty Limited, Australia. Mr. Adams is the founder and MD of Jerry Adams Consulting Pty Ltd. in Australia, a consulting company specializing in strategy and business development. Pursuant to the provisions of Section 260 of the Companies Act, 1956 Mr. Adams holds office till the forthcoming Annual General Meeting. A notice has been received from a member under Section 257 of the Companies Act, 1956 signifying his intention to propose the candidature of Mr. Adams for the office of a Director. Pursuant to Article 112 of the Articles of Association of the Company, Mr. Kuldip Singh Dhingra and Mr. Naresh Gujral retire by rotation and being eligible, offer themselves for re-appointment. Messrs Dhingra and Gujral do not hold any committee

position in the companies in which they are directors. Currently, the Audit Committee consists of Mr. Anil Bhalla, as the Chairman, Mr. K.R. Das and Mr. G.S. Dhingra.
17. RELATED PARTY TRANSACTIONS

A Statement of related party transactions pursuant to Accounting Standard 18 forms a part of this Annual Report.
18. LISTING WITH STOCK EXCHANGES

Your Company is listed with The Calcutta Stock Exchange Association Limited, Bombay Stock Exchange Limited and National StockExchange of India Limited and the Company has paid the listing fee to each of the Exchanges. The addresses of these Stock Exchanges and other information for Shareholders are given in this Annual Report.
19. AUDITORS

The Auditors, Messrs Lovelock & Lewes, retire at the conclusion of the ensuing Annual General Meeting and, being eligible under Section 224(1B) of the Act, offer themselves for re-appointment.
20. APPRECIATION

Your Directors place on record their deep appreciation of the assistance and guidance provided by the Central Government and the Governments of the States of India, its suppliers, technology providers and all other stakeholders. Your Directors thank the financial institutions and banks associated with your Company for their support as well. Your Directors also thank the Companys dealers and its customers for their unstinted commitment and valuable inputs. Your Directors acknowledge the support received from you as shareholders of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS OF INDUSTRY. 1. INDUSTRY STRUCTURE AND DEVELOPMENT


Considering factors reigning the international economic scenario, the estimated GDP growth posted by India in the year 2007- 08, boosted by healthy growths in agriculture and service sectors, is a sign of the countrys resilience and ability to insulate itself from external vagaries. The positive growth in the field of agriculture is particularly encouraging. Growth in the manufacturing sector at 8.8% has been lower than that posted in the year 2006-07. Construction sector continued to perform well with a 9.8% growth. Indian paint industry has been growing at an average rate of 13% over the last five years at a rate higher than the GDP growth. The Indian paint market is dominated by the architectural/decorative coatings systems segment, constituting almost three-fourth of the markets share. Other large segments are automotive and industrial paints, protective coatings and powder coatings. This Company has sizeable presence in all the major sectors.

2. OPPORTUNITIES AND THREAT


India continues to lag behind in so far as consumption of paint is concerned. Optimistic estimates put it around 1.2 to 1.4 litres per capita. The industry is less than half the size of the Chinese market and about one-fifth of the U.S. market by volume. The lower consumption of paints in India may be attributed to insufficient number of dwellings, a large number of temporary and semi-temporary houses which are not built of bricks or concrete, time lag between re-paintings and use of lime powder. However, with a high growth rate, a high percentage of discerning young population, reduction in poverty levels, construction of new homes, higher inclination to spend, increasing dcor-consciousness and gradual replacement of lime powder, there is a palpable change and currently the architectural/decorative segment has a potential to grow at a healthy rate. In the event the agricultural growth is sustained, demands from rural and semi-urban areas may also surge ahead. In the automotive and industrial segments too, the demands are likely to be high. In order to cater to the growing demands and to achieve economies of scale, the Company has embarked upon various expansion plans as detailed in the Directors Report for the year. The rising price of fuel and food may lead to inflationary pressures, lowering the overall disposable income of people and affecting demand in the near term.

3. OUTLOOK

Considering the needs of housing and the rapid development in this field that is bound to take place, the Company does not expect major slow down in this sector. The infrastructure sector is also expected to clock a uniform growth. These are likely to keep boosting the paint demand in the long term. Your Company is at the forefront of the market explaining to the dealers and the applicators and communicating with the customers about the benefits of the new offerings and better aesthetics which they offer. In the past couple of years, the Company has offered many new products to address the needs of the consumers in a fast evolving, rapidly growing and globally assimilating India. Such technologically advanced offerings have been well accepted in the market. Your Company is committed to continuing such progressive as well as pioneering initiatives to not only maintain but enhance its leadership in its field. The Protective Coatings Business and the Automotive Business are also expected to perform well. With the concerns of energy savings catching up with India, particularly in view of the rising crude and gas prices, the Company will be able to offer External Insulation and Finishing Systems from Bolix S.A. of Poland, which it proposes to acquire in the near future. This would lead to major savings of electricity (and therefore, fuel), other than offering aesthetic values and durability.

4. RISK AND CONCERN


Never in the recent past has the country witnessed so many issues cropping up at the same time from high inflation, weakening currency and fears of a rising interest rate. The increase in prices of petroleum based raw materials and the freight charges will squeeze the household kitty. Further, all paint companies are dependent on raw materials, which have a direct nexus with crude. These are issues which are being faced by all industries. In the long term, the Indian economy is expected to counter these pressures effectively and adjust itself to the needs of the time. In the paint industry, the Company expects the shift towards value added, long lasting products to continue.

5. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY


The Company has a well established internal control system, commensurate with its size and spread, with defined guidelines on compliance, which enable it to run its factories, offices and depots with a fair degree of comfort. The system incorporates continuous monitoring, routine reporting, checks and balances, purchase policies, authorization and delegation procedures, audits including compliance audits, which are periodically reviewed by the Audit Committee. The Internal Audit Department maintains a regular surveillance over the entire operations. The Head of

Internal Audit Department is present throughout the Audit Committee Meetings and places his reports at every meeting. The Audit Committee itself meets on a routine basis and extensively covers operational matters in addition to statutory matters. There is a Risk Assessment and Minimisation Committee dealing with risks faced by the Company and providing specific recommendations.

6. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE


The Companys gross sales revenue for the year 2007-08 has been Rs. 15,217 million, registering a growth of 15.09% over that for 2006-07. All factories performed well during the year under review. The Companys profit after tax, at Rs. 921 million, registered a growth of 10.96% over that of the previous year.

7. MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT


There has been no significant development in this area. Industrial Relations situation was peaceful. The number of people employed as on 31st March, 2008 was 2179 (31st March, 2007 : 2045).

Chapter III:Review Of Literature

The articles regarding common size statements were searched and their reviews of literature are given below:

Title 1: Analysis Of The Mission Statements Of AACSB-Accredited Schools Review of literature.


Purpose Research indicates that high-performing firms share common components among their mission statements. The present study aims to begin a search for a similar correlation among academic schools of business. Design/methodology/approach Content and statistical analyses are used to analyze mission statements gathered from nearly all AACSB-accredited business schools. Findings Mission statements for AACSB-accredited schools are less than a page but not extremely short nor memorable. They address multiple stakeholders and usually do not include vision statements, goals or objectives. They often do not reference quality or the AACSB. Research limitations/implications The sample was AACSB schools. As such, one should be circumspect in generalizing to other areas of business. Practical implications This paper shows deans and other interested stakeholders what an average mission statement for an AACSB school looks like. It also suggests that mission statements do not effectively identify individual universities. In general, mission statements are found to be longer than expected. Originality/value Business school deans need to be aware of the mission statements among their competitors in order to make better decisions in writing their own statements. Also, the research lays useful groundwork for those who want to discuss more controversial issues, such as the following: do mission statements differentiate the schools or is each school mission statement so similar to the others that there is little or no value in its expression

Title 2: Financial Returns From New Public Management: A New Zealand Perspective Review of literature
Purpose The purpose of this study is to consider the potential for profit under new public management, through a study of New Zealand's state-owned enterprises (SOEs). Design/methodology/approach Examination from the outside involved analysis of financial data from 2001 to 2005 for the SOE sector. Inquiry from the inside involved interviews with senior executives from 12 of the 17 SOEs operating in New Zealand. Findings Findings indicate the potential for SOEs as profitable government investments, with clear support for financial returns under NPM. Research limitations/implications While this study is limited to SOEs in New Zealand, it provides valuable insight into one country's SOE sector, and offers a platform for similar studies in other countries. Strong financial returns from several SOEs highlight the potential for SOEs as valuable investments, and an important alternative to traditional sources of government funding. However, variations noted in the financial returns of individual SOEs also indicate that profitable and commercial operations may not be possible in all cases. Originality/value The value of this paper lies in the combination of quantitative and qualitative data, to provide insight not only into SOEs' financial performance, but also into the operational and strategic issues underlying that performance.

Title 3: Exploring The Differences Between Accountants And Marketers In Terms Of Information Sharing Review of literature
Purpose The purpose of this paper is to explore the nature of information sharing, rewards and selected performance measures based on the dyadic relationship between accountants and marketers.

Design/methodology/approach Mail survey administered to senior executives of larger Canadian firms. MANOVA followed by univariate analyses are used to identify significant dimensions. Variables that are important to distinguish between the two groups are identified using logistic regression. Findings Accountants are more satisfied with the quality of shared information and rate its impact on performance higher than marketers. Marketers view accountants as a more important source of information. Research limitations/implications Longitudinal studies, in-depth surveys within a single firm and employing respondents at different hierarchical levels would provide important insights and reduce common-method bias. Practical implications Accountants should recognize marketing as an important source of information since resource complementarity is crucial to collaborative success. Using market-based reward systems and establishing quality as an important goal would have a bigger impact on marketers in enhancing information sharing between the two functions. Originality/value Contributes to filling the gap regarding the nature of information sharing between marketing and accounting as well as its relationship to market-based rewards and selected performance measures.

Title:4 From balance sheet to income statement: a study of a transition in accounting 1926-1936
Accounting history; Assets valuation; Balance sheets; Income; USA journal:accounting,auditing&accountability journal volume:10 number:2 year:1997

Review of literature
Studies the relative focus on the balance sheet and income statement in the Journal of Accountancy and The Accounting Review during the period, 1926-1936. An index number representing the relative focus for each year for each journal was obtained from a content analysis of a sample of pages from the journals. Four hypotheses derived from accounting literature were tested, none of which can be accepted. In general, the focus on the income statement occurred earlier than expected and the combined time series for both journals

was U-shaped over the period. Offers three explanations for the behaviour of the time series: the hypotheses are based on several sources, each source potentially having a unique time-series; second, the impact of significant increases in federal income tax rates on the content of accounting literature has been underestimated; and third, authors in the two journals, particularly the Journal of Accountancy, reacted very quickly to perceived problems and opportunities.

Title:5 THE PREVENTION OF MISLEADING ACCOUNTS THROUGH DISCLOSURES OF RELATED PARTY TRANSACTIONS Author(s): Juliet cottingham,roger hussey year:1995,vol:3,issue 4 JULIET COTTINGHAM, ROGER HUSSEY Review of literature

The published annual report and accounts of a company are regarded as a main source of information for making investment and other decisions. One assumption used by readers of such accounts is that the financial statements reflect transactions which have been made at arm's-length. However, the presence of related parties may mean that free market dealings do not exist. In this case the accounts are, at best, misleading and, at worst, fraud may have been perpetrated. Although a number of countries have issued accounting standards which require companies to disclose certain information in respect of related party transactions, this had not occurred in the UK by the summer of 1995. A proposal had been issued by the Accounting Standards Committee (ASC), but this received severe criticism and could not be amended before the ASC was disbanded. Its successor body, the Accounting Standards Board (ASB) has issued its own proposals, taking into account some of the earlier criticisms. The proposals attempt to define related parties, the transactions which are entered into and the disclosures which should take place. The most recent proposals have also received severe criticism mainly because of the additional work entailed for companies and their auditors in relation to the possible benefits to be gained by the users. An examination of the new proposals reveal that there are some definitional problems and that it is far from certain that the disclosures will do more than alert the reader to the presence

of related party transactions, nor is it certain that the disclosures will provide information which is useful for sophisticated decision making and it would be naive to believe that such disclosures would prevent fraud.

Title 6: Financial reporting on the Internet by leading Japanese companies Authors (s)Claire MarstonJournal: Corporate Communications: An International JournalYear: 2003 Volume: 8 Issue: 1

Review of literature

Financial reporting on the Internet is an activity that has increased in recent years. This paper reports the results of a survey of Internet reporting by the top 99 Japanese companies in 1998. It was found that the majority of these companies (78) had a Web site in English and that of these 68 reported some financial information with 57 providing detailed accounting information. Company size was significantly positively associated with the existence of a Web site but the extent of financial disclosure did not appear to be related to size. There was no significant association between profitability, industry grouping and overseas listing status and Internet disclosure. The survey was updated in 2001 by reevaluating those companies which had no Web site or only a Japanese Web site in 1998. It was found that the majority of these companies now have an English language Web site with full annual reports available.

Title 7: NEW DATABASE PRODUCTS: BUSINESS (ISSUE 12)Author(s): Martha E. Williams, Harry A. GaylordJournal: Online Information ReviewYear: 1998 Volume: 22 Issue: 6

Review of literature
This is the twelfth article on business and law (BSL) databases in a continuing series of articles summarizing and commenting on new database products. Two companion articles, one covering science, technology, and medicine (STM) appeared in Online & CD-ROM Review vol. 22, no.4 and the other covering social science, humanities, news, and general (SSH) appeared in Online & CD-ROM Review vol. 22, no. 5. The articles are based on the newly appearing database products in the Gale Directory of Databases. The Gale Directory of Databases (GDD) was created in January 1993 by merging Computer-Readable Databases: A Directory and Data Sourcebook (CRD) together with the Directory of Online Databases (DOD) and the Directory of Portable Databases (DPD).

Title 8:Credibility and expectation gap in reporting on uncertainties Author(s): Junaid M. Shaikh, Mohammad TalhaJournal: Managerial Auditing JournalYear: 2003 Volume: 18 Issue: 6/7

Review of literature
This paper analyzes and reports on studies that examine the extent to which international auditing boards have accomplished the goal of reducing the expectation gap in reporting on uncertainties. This is because there has been a long-running controversy between the auditing profession and the community of financial statement users concerning the responsibilities of the auditors to the users. Enron and WorldCom scandals have provoked the public to incite the government and professional bodies to impose stringent regulation in protecting their interests. It also suggests the solutions to minimize the gap and enhance the publics perception towards the profession.

Title 9: INDEX OF ACCOUNTING RESEARCH ON ASIAN/PACIFIC COUNTRIES: 19651990


Review of literature
first, a historical perspective of accounting research relating to Asian/Pacific countries as seen from the vantage of the leading international journal in the United States and, second, a bibliographical data base and index of twenty-six years of articles on this region of the world. It accomplishes the first objective by presenting a tabular profile of research in international accounting as it pertains to countries in the Asian/Pacific Rim region as shown in articles published in the International Journal of Accounting (formerly, the International Journal of Accounting, Education and Research) and related publications which appeared from 1965 to 1990. The articles are classified according to country, research methodology, subject, and five-year time periods. The paper accomplishes the second objective by providing an annotated bibliography of 125 articles on Asian/Pacific Rim countries and indices by country and methodology, and subject.

Title 10:Materiality and Risk Judgements: A Review of Users' Expectations

Review of literature
In reviewing contemporary literature on materiality judgement and the audit expectations gap (AEG), this paper considers an apparent void concerning that aspect of the AEG caused by the non-disclosure of materiality and risk thresholds and criteria in the financial reports. The review enables the formation and discussion of two premises: first, disclosing cornerstone concepts, such as materiality and risk judgements, in financial reports enhances users' understanding of the limitations of information contained therein; and second, expanding the wording in audit reports reduces the AEG and enhances users' understanding of the objectives and limitations of an audit. In supporting the validity of these premises, it

is concluded that the disclosure of materiality and risk judgements in financial reports may reduce the AEG. This hypothesis may be useful for future empirical research.

Title 11: THE PREVENTION OF MISLEADING ACCOUNTS THROUGH DISCLOSURES OF RELATED PARTY TRANSACTIONS

Review of literature
The published annual report and accounts of a company are regarded as a main source of information for making investment and other decisions. One assumption used by readers of such accounts is that the financial statements reflect transactions which have been made at arm's-length. However, the presence of related parties may mean that free market dealings do not exist. In this case the accounts are, at best, misleading and, at worst, fraud may have been perpetrated. Although a number of countries have issued accounting standards which require companies to disclose certain information in respect of related party transactions, this had not occurred in the UK by the summer of 1995. A proposal had been issued by the Accounting Standards Committee (ASC), but this received severe criticism and could not be amended before the ASC was disbanded. Its successor body, the Accounting Standards Board (ASB) has issued its own proposals, taking into account some of the earlier criticisms. The proposals attempt to define related parties, the transactions which are entered into and the disclosures which should take place. The most recent proposals have also received severe criticism mainly because of the additional work entailed for companies and their auditors in relation to the possible benefits to be gained by the users. An examination of the new proposals reveal that there are some definitional problems and that it is far from certain that the disclosures will do more than alert the reader to the presence of related party transactions, nor is it certain that the disclosures will provide information which is useful for sophisticated decision making and it would be naive to believe that such disclosures would prevent fraud.

Title 12:Financial returns from new public management: a New Zealand perspective
Review of literature Purpose The purpose of this study is to consider the potential for profit under new public management, through a study of New Zealand's state-owned enterprises (SOEs). Design/methodology/approach Examination from the outside involved analysis of financial data from 2001 to 2005 for the SOE sector. Inquiry from the inside involved interviews with senior executives from 12 of the 17 SOEs operating in New Zealand. Findings Findings indicate the potential for SOEs as profitable government investments, with clear support for financial returns under NPM. Research limitations/implications While this study is limited to SOEs in New Zealand, it provides valuable insight into one country's SOE sector, and offers a platform for similar studies in other countries. Strong financial returns from several SOEs highlight the potential for SOEs as valuable investments, and an important alternative to traditional sources of government funding. However, variations noted in the financial returns of individual SOEs also indicate that profitable and commercial operations may not be possible in all cases. Originality/value The value of this paper lies in the combination of quantitative and qualitative data, to provide insight not only into SOEs' financial performance, but also into the operational and strategic issues underlying that performance.

Title 13:Financial Services Regulation and Liability of Corporations

Review of literature
The spectacular performance of the US financial market in recent years, the financial crises in South-East Asia and Russia and the collapse of one of the most established merchant banks in the world are landmark events in economic history that have prompted concerns around the globe. The advent of the information age and globalisation means that the consequences of these events are felt more readily and extensively than ever before. Sustainability of financial growth and avoidance of future crises raise questions with a common denominator good governance. With one of the principal financial centres in the world, it is trite to suggest that the need for good governance in the UK cannot be overstated. Protecting investors against abusive and fraudulent practices in the financial services industry has always assumed great importance. Since its emergence as an international financial and trading centre in the 13th century, the City of London has consistently emphasised the values of market confidence and integrity. In the Financial Services and Markets Bill, which is currently being read in Parliament, it is stated that its object is to maintain confidence in the financial markets, to promote public awareness and understanding, to secure an appropriate degree of protection for consumers through recognising the different degree of risks involved in different transactions and the different degrees of expertise and experience of different consumers, and to reduce the extent to which financial undertakings are used for the furtherance of financial crime.

Title 14: Why do firms measure their intellectual capital?

Review of literature
It is now generally believed, within the current literature, that an academic and practitioner focus on intellectual capital (IC) is important and that the measurement of a company's intangibles provides real business benefits. However, it is essential for researchers in the

field of IC to be able to justify these newly formed theoretical assumptions through rigorous empirical testing. This paper reports on the results of a systematic investigation into the theoretical underpinnings of why firms measure their IC and existing empirical evidence that helps to prove that the measurement of IC is really worthwhile. The paper then critically reviews the state of research evidence in the field. The major finding of this paper is that the majority of research within the IC measurement field is at the theory building stage, and that very little of the proposed measurement theory has yet been fully tested. This paper outlines possible avenues scholars might pursue in order to further the development of the IC measurement field.

Title15: EMPIRICAL EVIDENCE ON THE USE OF MANAGEMENT ACCOUNTING TECHNIQUES IN A SAMPLE OF SAUDI MANUFACTURING COMPANIES

Review of literature
This study examines the use of selected management accounting techniques by a sample of large and medium sized Saudi manufacturing companies. The analysis revealed that the vast majority of management accounting techniques that are the focus of this study are used. Traditional management accounting techniques are perceived to be important and are heavily used by participant companies. Although new management accounting techniques, such as ABC and JIT, are used by a limited number of participants, the result is in line with those reported by studies conducted in some developed countries.

Chapter IV:Common Size Statements


4.1 Common Size Balance Sheets of Last 5 Years

Common-Size Balance Sheet as on Dec.31,2004

Particulars Amount 1690500 4688900 6379400

ICI % RS. 18.17 50.41 68.58

BERGER Amount 814866 171715 986581 % Rs. 24.10 5.08 29.18

Fixed assets Investment Total Fixed Assets Current assets Inventories Debtors Cash Loan Mis.Expenses Total Current Assets Total Assets

1239000 1065900 234000 332500 50900 2922300 9301700

13.32 11.46 2.25 3.57 0.55 31.42 100.00

1117801 693575 306034 270692 6274 2394376 3380957

33.06 20.51 9.05 8.01 0.19 70.82 100.00

Share Capital & Reserves Capital Reserves & Surplus Total Capital & Reserves 408700 4792800 5201500 4.39 51.53 55.92 265691 1612039 1877730 7.86 47.68 55.54

Long term loans Current Liabilities Tax Liabilities & Provisions

200000

2.15

387149

11.45

85400 3814800 3900200

0.92 41.01 41.93 100.00

78675 1037403 1116078 3380957

2.33 30.68 33.01 100.00

Total of Liability Side

9301700

Comments 1. An analysis of pattern of financing of both the companies shows that ICI is

more traditionally financed as compared to BERGER.ICI company has depend more on its own funds as is shown by balance sheet. Out of total investments, 55.92% of funds are proprietors funds and outsiders funds accounts are 2.15%. In BERGER, proprietors funds are 55.54% while outsiders share is 11.45% which shows that this company has dependent upon outsiders funds. In the present day economic world, generally, companies depend more on outsiders funds. In this context, ICI is more financed on traditional lines. 2. ICI Company suffered from inadequacy of working capital suffered from

inadequacy of working capital. The percentage of current liabilities is more than the percentage of current assets. But BERGER is not suffering from inadequacy of working capital because his current assets are more than his current liabilities. 3. A close look at the balance sheets shows that investments in fixed assets

have been financed from working capital in ICI .In ICI, fixed assets account for 68.58%of total assets while long term funds a/c for 58.07% of total funds. In BERGER, fixed assets account for 29.18% whereas long term funds account for

66.99%of total funds. BERGER company does not used working capital for financing of fixed assets. 4. ICI company face working capital problem and immediate steps should be taken to issue more capital or raise long term loans.

Common-Size Balance Sheet as on Dec.31,2005

Particulars Amount 1512400 4136100 5648500

ICI % RS. 17.12 46.82 6384

BERGER Amount 1079977 109109 1189086 % Rs. 25.83 2.61 28.44

Fixed assets Investment Total Fixed Assets Current assets Inventories Debtors Cash Loan Mis.Expenses Total Current Assets Total Assets

1295500 1233800 220500 410500 25800 3186100 8834600

1466 13.97 2.49 4.65 0.29 36.06 100.00

1668360 846463 219657 254631 3332 2992443 4181529

39.90 20.24 5.25 6.09 0.08 71.56 100.00

Share Capital & Reserves Capital Reserves & Surplus 408700 4883300 4.63 55.27 398561 1651045 9.54 39.48

Total Capital & Reserves Long term loans Current Liabilities Tax Liabilities & Provisions Total of Liability Side

5292000 160000

59.9 1.81

2049606 644095

49.02 15.40

98500 3284100 3382600 8834600

1.12 37.17 38.29 100.00

71031 1416797 1487828 4181529

1.70 33.88 35.58 100.00

Comments 1. An analysis of pattern of financing of both the companies shows that ICI is more traditionally financed as compared to BERGER.ICI company has depend more on its own funds as is shown by balance sheet. Out of total investments, 59.9% of funds are proprietors funds and outsiders funds accounts are 1.81%. In BERGER, proprietors funds are 49.02% while outsiders share is 15.40% which shows that this company has dependent upon outsiders funds. In the present day economic world, generally, companies depend more on outsiders funds. In this context, ICI is more financed on traditional lines. 2. ICI Company suffered from inadequacy of working capital suffered from inadequacy of working capital. The percentage of current liabilities is more than the percentage of current assets. But BERGER is not suffering from inadequacy of working capital because his current assets are more than his current liabilities. 3. A close look at the balance sheets shows that investments in fixed assets have been financed from working capital in ICI .In ICI, fixed assets account for

63.84%of total assets while long term funds a/c for 61.71% of total funds. In BERGER, fixed assets account for 28.44% whereas long term funds account for 64.42%of total funds. BERGER company does not used working capital for financing of fixed assets. 4. ICI company face working capital problem and immediate steps should be taken to issue more capital or raise long term loans.

Common-Size Balance Sheet as on Dec.31,2006

Particulars Amount 1501900 4356500 585400

ICI % RS. 17.00 49.32 66.32

BERGER Amount 1083416 128168 1411584 % Rs. 25.39 2.54 27.93

Fixed assets Investment Total Fixed Assets Current assets Inventories Debtors Cash Loan Mis.Expenses Total Current Assets Total Assets

1217100 1120700 158300 466600 12100 2974800 8833200

13.78 12.69 1.79 5.28 0.14 33.68 100.00

1995793 1095091 253353 296429 1841 3642507 5054091

39.49 21.67 5.01 5.87 .036 72.07 100.00

408700 5104600 Share Capital & Reserves Long term loans Current Liabilities Tax Liabilities & Provisions 5513300 -

4.63 57.79 62.42 -

398554 1897883 2296437 427703

7.89 3.55 45.44 8.46

130400 3189500

1.48 36.10

67860 2262091

1.34 44.76

Total of Liability Side

3319900 8833200

37.58 100.00

2329951 5054091

46.1 100.00

Comments 1. An analysis of pattern of financing of both the companies shows that ICI is more traditionally financed as compared to BERGER.ICI company has depend more on its own funds as is shown by balance sheet. Out of total investments, 62.42% of funds are proprietors funds and outsiders funds accounts are NIL. In BERGER, proprietors funds are 45.44% while outsiders share is 8.46% which shows that this company has dependent upon outsiders funds. In the present day economic world, generally, companies depend more on outsiders funds. In this context, ICI is more financed on traditional lines. 2. ICI Company suffered from inadequacy of working capital suffered from inadequacy of working capital. The percentage of current liabilities is more than

the percentage of current assets. But BERGER is not suffering from inadequacy of working capital because his current assets are more than his current liabilities. 3. A close look at the balance sheets shows that investments in fixed assets have been financed from working capital in ICI .In ICI, fixed assets account for 66.32%of total assets while long term funds a/c for 62.42% of total funds. In BERGER, fixed assets account for 27.93% whereas long term funds account for 53.9%of total funds. BERGER company does not used working capital for financing of fixed assets. 4. ICI company face working capital problem and immediate steps should be taken to issue more capital or raise long term loans.

Common-Size Balance Sheet as on Dec.31,2007

Particulars Amount 1332900 8257200 9590100

ICI % RS. 10.14 62.83 73.97

BERGER Amount 1345131 128168 1473299 % Rs. 22.00 2.10 24.1

Fixed assets Investment Total Fixed Assets Current assets Inventories Debtors Cash Loan Mis.Expenses

1321500 1646500 13900 444600 -

10.06 12.49 1.06 3.39 -

2520694 1435218 217427 466799 764

41.23 23.47 3.56 7.63 0.01

Total Current Assets Total Assets

3551600

27.03

4640902

75.9

13141700

100.00

6114201

100.00

Share Capital & Reserves Capital Reserves & Surplus Total Capital & Reserves Long term loans Current Liabilities Tax Liabilities & Provisions 81000 4364200 0.62 33.21 68018 2134606 1.11 34.91 408700 8287800 8696500 3.11 63.06 66.17 637745 2120714 2758459 1153118 10.43 34.69 45.12 18.86

4445200

33.83

2202624

34.91

13141700 Total of Liability Side

100.00

6114201

100.00

Comments 1. An analysis of pattern of financing of both the companies shows that ICI is more traditionally financed as compared to BERGER.ICI company has depend more on its own funds as is shown by balance sheet. Out of total investments, 66.17% of funds are proprietors funds and outsiders funds accounts are NIL. In BERGER, proprietors funds are 45.12% while outsiders share is 18.86% which shows that this company has dependent upon outsiders funds. In the present day economic world, generally, companies depend more on outsiders funds. In this context, ICI is more financed on traditional lines. 2. ICI Company suffered from inadequacy of working capital suffered from inadequacy of working capital. The percentage of current liabilities is more than the percentage of current assets. But BERGER is not suffering from inadequacy of working capital because his current assets are more than his current liabilities. 3. A close look at the balance sheets shows that investments in fixed assets have been financed from working capital in ICI .In ICI, fixed assets account for 73.97%of total assets while long term funds a/c for 66.17% of total funds. In BERGER, fixed assets account for 24.1% whereas long term funds account for

63.98%of total funds. BERGER company does not used working capital for financing of fixed assets. 4. ICI company face working capital problem and immediate steps should be taken to issue more capital or raise long term loans.

Common-Size Balance Sheet as on Dec.31,2008

Particulars Amount 1437200 6926000 8363200 Total Fixed Assets Current assets Inventories Debtors Cash Loan Mis.Expenses Total Current Assets Total Assets

ICI % RS. 12.65 60.99 73.64

BERGER Amount 1584163 218467 1802630 % Rs. 22.41 3.09 25.5

Fixed assets Investment

1239500 1040000 169900 544300 299370 0 11356900

10.91 9.16 1.50 4.79 -

2690954 1584355 399003 592139 -

38.07 22.41 5.64 8.38 -

26.36 100.00

5266451 7069081

74.5 100.00

383800 7245900 Share Capital & Reserves Capital Long term loans Current Liabilities Tax Liabilities & Provisions Total of Liability Side 94800 3632400 3727200 11356900 7629700 -

3.38 63.80 67.18 -

637745 2852342 3490087 1209187

9.02 40.35 49.37 17.11

0.83 31.9 32.82 100.00

65104 2304703 2369807 7069081

0.92 32.60 33.52 100.00

Comments 1. An analysis of pattern of financing of both the companies shows that ICI is more traditionally financed as compared to BERGER.ICI company has depend more on its own funds as is shown by balance sheet. Out of total investments, 67.18% of funds are proprietors funds and outsiders funds accounts are NIL. In BERGER, proprietors funds are 49.37% while outsiders share is 17.11% which shows that this company has dependent upon outsiders funds. In the present day economic world, generally, companies depend more on outsiders funds. In this context, ICI is more financed on traditional lines. 2. ICI Company suffered from inadequacy of working capital suffered from inadequacy of working capital. The percentage of current liabilities is more than

the percentage of current assets. But BERGER is not suffering from inadequacy of working capital because his current assets are more than his current liabilities. 3. A close look at the balance sheets shows that investments in fixed assets have been financed from working capital in ICI .In ICI, fixed assets account for 73.64%of total assets while long term funds a/c for 67.18% of total funds. In BERGER, fixed assets account for 25.5% whereas long term funds account for 66.48%of total funds. BERGER company does not used working capital for financing of fixed assets. 4. ICI company face working capital problem and immediate steps should be taken to issue more capital or raise long term loans.

4.2 Common Size Income Statement Of Last 5 Years of ICI INDIA LTD.

Common-Size income statement For the year ending mar.31,2004&2005

Particulars

2004

2005

Sales Less: Expenditure Material consumed Other expenses Operating profit

Amount 68512

% RS. 100

Amount 75434

% Rs. 100

40054 22432 6026

58.46 32.74 8.8

46236 22705 6493

61.29 29.70 9.01

Less non operating exp. Dep(net) Interest(net) Non operating exp. Profit before tax 2428 458 2886 3140 3.54 0.67 4.21 4.59 2014 350 2364 4129 2.67 0.46 3.13 5.58

Less/add Exceptional Items Net profit before tax Less:Tax Net profit after tax

7718

11.27

(1368)

1.81

10858 2236 8622

15.86 3.26 12.6

2761 850 1911

3.77 1.13 2.44

Interpretation
1. The sales and operating profit has increased in absolute figures in 2005 as compared to 2004 and also the percentage of operating profit to sales has gone up in 2005.

2. Operating Expenses are also increased in the year 2005 as compared to 2004.But non operating expenses are decreased as compared to the year 2004, But profit before tax has increased in 2005 as compared to the year 2004. 3. There are Exceptional items in the year 2005 which decreased the profit of the company in the 2005.After deducting Tax, the Profit after tax in 2005 is less as compared to the year 2004. 4. The Overall Profitability has decreased in the year 2005.The company should have to take steps to increase their profitability.

Common-Size income statement For the year ending mar.31,2005&2006

Particulars Amount 68512

2005 % RS. 100 Amount 87624

2006 % Rs. 100

Sales Less: Expenditure Material Consumed Other Expenses Operating Profit

40054 22432 6026

58.46 32.74 8.8

53943 24646 9035

61.56 28.13 10.31

Less Non Operating Exp. Dep.(net) Interest(net) Non Operating Exp. Profit before Tax 2428 458 2886 3140 3.54 0.67 4.21 4.59 2167 363 2530 6505 2.47 0.41 2.88 7.43

7718

11.27

(1101)

1.26

10858 2236 Less/add Exceptional Items Net profit before Tax 8622

15.86 3.26 12.6

5404 3536 1868

6.17 4.04 2.13

Interpretation
1. The sales and operating profit has increased in absolute figures in 2006 as compared to 2005 and also the percentage of operating profit to sales has gone up in 2006. 2. Operating Expenses are also increased in the year 2006 as compared to 2005.But non operating expenses are decreased as compared to the year 2005, which increases the profit of the year 2006. 3. Taxes also increased in the year 2006 as compared to the year 2005, which decreases the profit after tax in the year 2006. 4. The Overall Profitability has decreased in the year 2006.The company should has to take immediate steps, otherwise the Company would be in trouble.

Common-Size income statement For the year ending mar.31,2006&2007

Particulars Amount 87624

2006 % RS. 100 Amount 88822

2007 % Rs. 100 2.61 60.00 28.86 11.14

Sales Less: Expenditure Material consumed Other expenses Operating profit

53943 24646 9035

61.56 28.13 10.31

53309 25636 9877

Less non operating exp. Dep(net) Interest(net) Non operating exp. Profit before tax 2167 363 2530 6505 2.47 0.41 2.88 7.43 2247 229 2476 7401 2.53 0.26 2.79 8.35

Less/add exceptional items Net profit before tax Less: Tax Net profit after tax

(1101)

1.26

44612

50.23

5404 3536 1868

6.17 4.04 2.13

52013 13781 38232

58.58 15.52 43.06

Interpretation

1. The sales and operating profit has increased in absolute figures in 2007 as compared to 2006 and also the percentage of operating profit to sales has gone up in 2007. 2. Operating Expenses are also increased in the year 2007 as compared to 2006.But non operating expenses are decreased as compared to the year 2007, But profit before tax does not increased in 2007 as compared to the year 2006. 3. There are Exceptional items in the year 2007 which increased the profit of the company in the 2007.After deducting tax, the Profit after tax in 2007 is much more as compared to the year 2006. 4. The Overall Profitability has Increased in the year 2007.The company should have to take steps to maintain this profitability.

Common-Size income statement For the year ending mar.31,2007&2008

Particulars Amount 88822

2007 % RS. 100 Amount 93014

2008 % Rs. 100

Sales Less: Expenditure Material consumed Other expenses Operating profit

53309 25636 9877

60.00 28.86 11.14

55168 28150 9696

59.31 30.26 10.43

Less non operating exp. Dep(net) Interest(net) Non operating exp. 2247 229 2476 2.53 0.26 2.79 2251 (50) 2201 2.42 0.05 2.37

7401

8.35

7495

8.06

44612

50.23

(1873)

2.01

Profit before tax

52013 13781 38232

58.58 15.52 43.06

5622 3020 2602

6.05 3.25 2.8

Less/add exceptional items

Interpretation
5. The net sales has increased in absolute figures in 2008 as compared to 2007, but Operating profit has decreased in the year 2008 as compared to the year 2007and also the percentage of operating profit to sales has gone down in 2008. 6. Operating Expenses of the company are also increased in the year 2008 as compared to 2007.But non Operating Expenses are decreased in the year 2008,as compared to the year 2007. . 7. The Overall Profitability has decreased in the year 2008.The Company should has to take immediate steps, to maintain their profitability so that they are not facing any type of problem.

4.3 Common Size Income Statement Of Last 5 Years Of BERGER PAINTS

Common-Size income statement For the year ending mar.31,2004-05

Particulars Amount 000 7702955

2004 % RS. 100 Amount 000 8245778

2005 % Rs. 100

Sales Less: Expenditure Material Consumed Other Expenses Operating Profit

4197108 1830945 1674902

54.49 23.77 21.74

5296872 2160745 788161

64.24 26.20 9.56

Less non operating exp. Dep.(net) Interest(net) Non Operating Exp. Profit before Tax 139292 27932 167224 1507678 1.81 0.36 2.17 19.57 156869 36382 193251 594910 1.90 0.44 2.34 7.22

Less/add Exceptional Items Net profit before Tax Less: Tax Net Profit after Tax

500

.0006

56957

0.69

1508178 173880 1334298

19.56 2.26 17.304

651867 141544 510323

7.91 1.72 6.19

Interpretation

1. The sales have increased in absolute figures in 2005 as compared to 2004 and operating profit has also decreased due to which the percentage of operating profit to sales has gone down in 2005. 2. Operating Expenses are also increased in the year 2005 as compared to 2004.But non operating expenses are also increased as compared to the year 2004, But profit before tax has decreased in 2005 as compared to the year 2004. 3. There are Exceptional items in the year 2005 which decreased the profit of the company in the 2005.After deducting Tax, the Profit after tax in 2005 is less as compared to the year 2004. 4. The Overall Profitability has decreased in the year 2005.The company should have to take steps to increase their profitability.

Common-Size income statement For the year ending mar.31,2005-06

Particulars Amount 000 8245778

2005 % RS. 100 Amount 000 9798307

2006 % Rs. 100

Sales Less: Expenditure Material consumed Other expenses Operating profit

5296872 2160745 788161

64.24 26.20 9.56

6269499 2516349 1012459

63.99 25.68 10.33

Less non operating exp. Dep.(net) Interest(net) Non operating exp. 156869 36382 193251 1.90 0.44 2.34 173923 52771 226694 1.76 0.54 2.3

594910

7.22

785765

8.03

56957

0.69

3159

.032

Profit before tax

651867 141544 510323

7.91 1.72 6.19

788924 213506 575418

8.05 2.18 5.87

Less/add exceptional items

Interpretation
1. The sales and operating profit has increased in absolute figures in 2006 as compared to 2005 and also the percentage of operating profit to sales has gone up in 2006. 2. Operating Expenses are also increased in the year 2006 as compared to 2005.But non operating expenses are increased as compared to the year 2005, which increases the profit of the year 2006. 3. Taxes also increased in the year 2006 as compared to the year 2005, which decreases the profit after tax in the year 2006. 4. The Overall Profitability has decreased in the year 2006.The company should has to take immediate steps, otherwise the Company would be in trouble.

Common-Size income statement For the year ending mar.31,2006-07

Particulars Amount 000 9798307

2006 % RS. 100 Amount 000 11652334

2007 % Rs. 100

Sales Less: Expenditure Material Consumed Other Expenses Operating profit

6269499 2516349 1012459

63.99 25.70 10.31

7608303 2889177 1154854

65.29 24.80 9.91

Less Non Operating Exp. Dep.(net) Interest(net) Non Operating Exp. Profit before Tax 173923 52771 226694 785765 1.78 0.539 2.31 7.99 178016 82881 260897 893957 1.53 0.71 2.24 7.67

Less/add Exceptional Items Net profit before Tax Less: Tax Net profit after Tax

3159

0.032

550

0.004

788924 213506 575418

8.05 2.18 5.87

894507 191667 702840

7.68 1.64 6.03

Interpretation

1. The net sales has increased in absolute figures in 2007 as compared to 2006, and Operating profit has also increased in the year 2007 as compared to the year 2006 but the percentage of operating profit to sales has gone down in 2007. 2. Operating Expenses of the company are also increased in the year 2007 as compared to 2006.But non Operating Expenses are increased in the year 2007,as compared to the year 2006. . 3. Taxes are also decreased in the year 2007 due to which the profit after tax in the year 2007 has increased. 4. The Overall Profitability has increased in the year 2007.The Company should have to maintain their profitability so that they are not facing any type of problem.

Common-Size income statement For the year ending mar.31,2007-08

Particulars Amount 000 11652334

2007 % RS. 100 Amount 000 11652334

2008 % Rs. 100

Sales Less: Expenditure Material Consumed Other Expenses Operating profit

7608303 2889177 1154854

65.29 24.80 9.91

8711498 3336987 1348203

65.29 24.90 10.07

Less Non Operating Exp. Dep.(net) Interest(net) Non Operating Exp. 173923 82881 260897 1.53 0.71 2.24 112687 186468 299155 0.84 1.39 2.23

893957

7.67

1049048

7.84

550

0.004

2656

0.019

Profit before Tax

894507 191667 702840

8.05 1.64 6.03

894507 267001 784703

7.68 1.99 5.86

Less/add Exceptional Items

Interpretation
1. The net sales has increased in absolute figures in 2008 as compared to 2007, and Operating profit has also increased in the year 2008 as compared to the year 2007and also the percentage of operating profit to sales has gone up in 2008. 2. Operating Expenses of the company are also increased in the year 2008 as compared to 2007.But non Operating Expenses are increased in the year 2008,as compared to the year 2007. . 3.Taxes are also increased in the year 2008 due to which the profit after tax in the year 2008 has decreased. 4. The Overall Profitability has decreased in the year 2008.The Company should have to maintain their profitability so that they are not facing any type of problem.

Conclusion The performance of ICI India ltd.is decreasing day by day. ICI Company suffered from inadequacy of working capital suffered from inadequacy of working capital The percentage of current liabilities is more than the percentage of current assets. But BERGER is not suffering from inadequacy of working capital because his current assets are more than his current liabilities.A close look at the balance sheets shows that investments in fixed assets have been financed from working capital in ICI. whereas BERGER company does not used working capital for financing of fixed assets.The overall profitability position of the ICI India ltd.is not strong as compared to the BERGER paints.The company should have to take steps to increase their profitability so that company should not have to face any type of problem.

RECOMMEDATIONS

Recommendation and suggestions


1. ICI Company should have to increase their working capital because they are facing shortage of working capital. 2. ICI Company should have to financed fixed assets not from working capital but from long term funds. so, Company should have to increase their long term funds. 3. The company should have to make efforts to increase their sales so that their profitability will also be increased. 4. The Company should have to use outsiders funds to finance fixed assets because only proprietors funds are not sufficient to finance fixed assets. 5. The company should have to make efforts to decrease their expenses in order to increase their profitability.

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