Paint and coatings industry is expected to grow at about 7% CAGR in India which is now seeing a number of mergers and acquisitions taking place. The government also is supporting this industry which recently brought down GST from 28% to 18%. The top three peers, Asian Paints, Berger Paints and Kansai Nerolac, in this industry are considered in this study and qualitative and quantitative analysis of these three companies have been conducted. Atlas.ti is used for doing qualitative analysis and codes were made and finally gone through to rank the companies selected. Seven attributes have been considered which are framed as seven research questions.

1. AFSA
BERGER ASIAN PAINTS AND KANSAI NEROLAC

2. INTRODUCTION
Paint and coatings industry is expected to grow at about 7% CAGR in India which
is now seeing a number of mergers and acquisitions taking place. The government also
is supporting this industry which recently brought down GST from 28% to 18%. The top
three peers, Asian Paints, Berger Paints and Kansai Nerolac, in this industry are
considered in this study and qualitative and quantitative analysis of these three
companies have been conducted. Atlas.ti is used for doing qualitative analysis and codes
were made and finally gone through to rank the companies selected. Seven attributes
have been considered which are framed as seven research questions.
RQ1) Which company Is most growth oriented?!
ANS: BERGER
 All the new products have generated considerable interest in the market. The
production capabilities continued to be expanded, restructured and reoriented to meet
business requirements.
 Saboo Coatings Private Ltd, acquired by the Company during the year, as mentioned
above, recorded revenue from operations of Rs.87.29 crore during the full year 2017-
18. Berger Becker Coatings Private Limited, the Company’s joint venture with Becker
Industrifarg, Sweden, showed good performance with revenue from operations of
Rs.293.66 crore.
 The British Paints Division of the Company has commenced commercial production
of its distemper and putty manufacturing facility in Nalbari near Guwahati on 29th
March, 2017 with a capacity of 6,600 KL / MT and 7,200 MT per annum respectively.
The newly constructed Automotive and General Industrial paints plant at Jejuri, near
Pune, with a capacity of 4,800 KL/MT per annum, commenced production on 27th
March, 2017.
 The company regularly obtains international certificates which are required by
customers for specialized products. Several ingenious products are under
development which are expected to be rolled out in future.
ASIAN PAINTS

3.  The Company started commercial operations in Indonesia through tie-ups with
business partners and is also working on completing the setting up of its own
manufacturing facility with an initial capacity of 5,000 KL per annum. The Company
has recently acquired 100% stake in Causeway Paints Lanka (Pvt) Ltd., Sri Lanka –
a leading player in the Sri Lankan coatings market and this would help it further
strengthen its international footprint.
 The Company completed the expansion project at its Rohtak plant during the last year.
Post the expansion, the capacity at Rohtak has been taken to 4,00,000 KL per annum
now. Operations at the plant were stabilized quickly during the year and the plant
capacity is being ramped up now.
 Asian Paints forayed into the kitchen business by acquiring 51% stake in Sleek
International Pvt. Ltd. (Sleek) in FY2013-14. During FY2017-18, the Company
acquired the remaining 49% stake in Sleek from the previous promoters to make it a
100% subsidiary. The modular kitchen business through the franchise channel has
been the success story for the year, with aggressive expansion and onboarding of
new dealers.
KANSAI NEROLAC
 KNPL has completed the acquisition of 1,20,00,000 Equity Shares of Rs10 each of
Nerofix Private Ltd. Company also acquired 100% equity shareholding in Marpol
Private Limited, Goa (“Marpol”), one of the leading companies in powder coating
business, for an aggregate consideration of `34.12 Crores. After acquisition, many
actions were taken to improve turnover and profitability.
 Kansai has acquired 100% equity shareholding in Perma Construction Aids Private
Limited (“Perma”), in April 2019, which manufactures and sells construction
chemicals, for an aggregate consideration of ` 29.10 Crores. Perma has a diverse
product range encompassing water-proofing, adhesives, epoxy, admixtures etc. and
this acquisition will increase the Company’s product offerings in construction
chemicals business, thereby enabling it to expand its product portfolio in construction
chemicals.

4.  Nerolac’s Entry in Bangladesh Market. Japanese Kansai Paint shelled out $7 million
or Tk 57.26 crore in 2018 for a 55 per cent stake of RAK Paints through its Indian
subsidiary Kansai Nerolac Paints. The growth of the local automotive industry has also
attracted Kansai Nerolac to Bangladesh.
RANK COMPANY
1 Asian Paints
2 Berger Paints
3 Kansai Nerolac Paints
Although there is no big gap in growth orientation of Asian paints and Berger
Paints, Asian paints has a more holistic growth plans for the future. It has been venturing
into emerging businesses like modular kitchen. All the three have been expanding their
production capacities and acquiring subsidiaries however at their own best levels on
which they have been ranked accordingly. The paint industry is having a lot of growth
potential in the coming years and the companies across the globe are expanding their
presence to satisfy the growing demand which is directly linked to increase in income
levels and infrastructure developments by the economies and households.
RQ2) Which company is best in innovation or introducing new products?!
BERGER
 Two years back, the Company had launched Express Painting™ – a hassle free
solution for painting houses, which is 40 per cent faster than traditional painting, much
cleaner and can be carried out at the same cost. Berger provide a packaged solution
to ensure maximum customer satisfaction and make Express Painting™ the preferred
solution for Indian homes. This has been confirmed by the satisfaction surveys
conducted by the Company.
 Consistent growth is attributable to providing tailor-made products and services,
chosen after careful attention to customer needs, higher sales of value-added
products, innovation at all levels, expansion of footprint in new geographies and
market segments, better distribution and logistics and empowering of sales and
service teams through specially deployed tools.

5.  The Company launched XP Advanced™, with specially formulated paints. Other than
specifically designed paints, the XP™ services involve trained painters and carefully
selected tools.
 Many new products introduced catering to specific needs of the customers and have
identified properties such as high heat resistance, low VOC (volatile organic
compounds), quick curing etc.
ASIAN PAINTS
 ‘The Company continues to excite the customers with a slew of innovative and path
breaking new products and a good sizeable growth of the Company comes from the
contribution of new products. Anti-rust metal coatings, Shyne variants in emulsions,
hyper stain resistant coatings in exteriors and ‘health and hygieneʼ coatings in interiors
are some of the breakthrough innovations.
 To upgrade the distemper market, the Company has launched ‘Tractor Aqualock’
entry level emulsion with good water- resistance property. In addition, the Company
has made foray into the adhesive market with the introduction of ‘True Grip Ultra’
adhesive. Many other innovative products are in the pipeline.
 A unique bacteria-killing product Royale Healthshield was launched in the fourth
quarter, a product that kills 99% varieties of bacteria in the home.
 The Company focused on establishing itself as a brand in health and hygiene coatings
with the launch of Royale HealthShield (anti-bacterial interior paint), Royale Atmos
(odour absorbing interior paint) and Ultima Puranature (anti-pollution and antiradiation
exterior paint).
KANSAI NEROLAC
 Kansai Nerolac Paints Ltd (KNPL), one of the leading paint companies in India
launched their new offering, ‘Colour Trails Wall Designs’ with star players from the
Royal Challengers Bangalore (RCB) team.
 Striving in product innovation with its initiatives including no added lead, Low VOC
and HD nishes with brands like Impression & Excel.

6.  ‘Colour Trails Wall Designs’ by Kansai Nerolac is a unique theme-based photowalk
initiative where in each wall design is inspired by images clicked by photography
enthusiasts across different places in India. These inspirations are then converted
into wall designs for the home.
 The new R&D facility is equipped with many new Labs and is well equipped with
Automatic Robotic Bell applicator to simulate the actual automotive painting line
application conditions and to test the products beforehand so as to have faster
launch of new product on continuous and automotive production lines. This is
supported by a modern Instrumentation and Analytical Lab which has the latest
equipment for conducting high end analysis of different paints and polymers.
RANK COMPANY
1 Asian Paints
2 Berger Paints
3 Kansai Nerolac Paints
The paint industry is currently at growing stage and all players are focusing on
introducing various new and better products. Also, these companies are in search of more
organic raw materials and have been investing considerable amount in R&D along with
the capacity expansion. Innovation of new products has been main strategy for these
companies, but Asian has been more successful in attracting customers through its
product launches.
RQ3) Which company has the best financial performance?!
BERGER
 Revenue from Operations (excluding GST and excise duty, as applicable) for the year
ended 31st March, 2019 was Rs.5,515.55 crore (previous year: Rs.4,705.09 crore),
representing an increase of 17.23%. Net profit for the year ended 31st March, 2019
was Rs.497.45 crore as against Rs.460.83 crore in the previous year, representing an
increase of 7.95%.

7.  The Board recommended dividend ofRs.1.90 (190%) per equity share ofRs.1/- each
for the financial year ended 31st March, 2019.
 Over the last five years the CAGR of EBIDTA was 15.5%. Decorative paints have
been the largest business segment. Exploration of alternate sources for all major raw
materials, informed and intelligent buying and effective negotiation continued to
provide savings.
 Looking at the data, we can see that 30% of Berger Paints India’s profits were paid
out as dividends in the last 12 months. This is a middling range that strikes a nice
balance between paying dividends to shareholders, and retaining enough earnings to
invest in future growth.
ASIAN PAINTS
 Revenue from operations on standalone basis increased to ` 16,391.78 Crores as
against ` 14,153.71 Crores in the previous year – a growth of 15.8%.
 The Profit after Tax for the current year is ` 2134.76 Crores against ` 1894.80 Crores
in the previous year – growth of 12.7%.
 RONW for consolidated: As compared to FY2017-18, FY2018-19 RONW is lower by
5.40%, mainly due to the higher dividend amount paid in FY2017-18 (which included
payment of special dividend of Rs. 2 per share) as compared to the dividend amount
paid in FY2018-19 which resulted in higher increase in the Net Worth for FY2018-19.
KANSAI NEROLAC
 Gross Sales and other operating income for the year aggregated to ` 5,682.28 Crores
as compared to ` 5,197.77 crores for the previous year. GST was introduced in July
2017; hence Sales figures of previous year are not comparable with the Sales figures
of current year. However, Net Sales (excluding excise duty) and other operating
income reflects a growth of 12.5% over the previous year.
 The company's operating profit decreased by 5.2% YoY during the fiscal. Operating
profit margins witnessed a fall and stood at 13.9% in FY19 as against 17.0% in FY18.
Also, Net profit for the year declined by 12.9% YoY.
RANK COMPANY

8. 1 Asian Paints
2 Berger Paints
3 Kansai Nerolac Paints
Berger and Asian paints have improved their PAT margins by 7.9% and 12.7
respectively whereas Kansai Nerolac has seen reduction in its profit margins by almost
13%. Asian has a very large book profits compared to other as it has been into other
business along with paint and these businesses are performing well. The detailed report
on financials will be given in quantitative analysis.
RQ4) Which company has setup best governance structure in place?!
BERGER
 The Business continued to post growth both in terms of volume and value despite the
dampening effect of demonetization on some of the customer industries such as two
wheelers and commercial vehicles. This was possible through increase in business
share with existing customers, more supplies to industry segments which continued
to perform well, introduction of new products and shades based on identified customer
needs and development of new customers.
 However, the Company’s business development efforts helped it to stay on course
and add business both in terms of products and customers. The Company’s product
portfolio helps it to supply to almost all the user industries including infrastructure,
metals, oil and power, railways, steel and OEM.
 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 reasonable degree of assurance. The control
environment ensures commitment towards integrity and ethical values and
independence of the Board of Directors from the management
 All related party transactions have been carried out at arms’ length basis in the
ordinary course of business. However, the transfer of “the Business” to BNPA was not
in the ordinary course and was, therefore, approved by the Board of Directors and the
Audit Committee. There is no material related party transaction i.e. transaction

9. exceeding 10% of the annual consolidated turnover as per the last audited financial
statements.
 Your Company has framed a policy on the Prevention of Sexual Harassment of
Women at workplace which commits to provide a workplace that is free from all forms
of discrimination, including sexual harassment.
 As mentioned earlier, there has been a rise in key raw material prices, in the later part
of 2017-18. The Company tries to soften their impact through informed buying,
development of alternate sources and improvement in formulations.
ASIAN PAINTS
 The Company has followed a tiered network strategy to engage with its vast dealer
network and to upgrade the capabilities of dealers in customer engagement at their
stores.
 The focus on Prevention of Sexual Harassment was maintained through workshops
conducted across the company in which 202 employees were covered. This is in
addition to the POSH workshops which are conducted for all new-joinee inductions.
 To encourage talented young masters and engineers in Chemistry and Chemical
Engineering to undertake research projects on surface Coatings, the Company has
instituted “Asian Paints PhD Fellowship Scheme” from this year.
 Simultaneously in 5-year period, there has been 63% reduction in non-process
freshwater consumption, 73% reduction in trade effluent generation 32% reduction in
electricity consumption and 37% reduction in hazardous waste generation across our
Indian architectural coating manufacturing facilities. A truly commendable
achievement that we expect to improve on in the years ahead.
 Rigorous processes have been implemented and a feedback loop has been created
by reaching out to individual employees to institutionalize the Company’s intention of
generating a Signature Employee Experience across all touchpoints of an employee’s
journey.
KANSAI NEROLAC

10.  Thus far, from its seven depots in the country Kansai Nerolac rolled out seven new
types of decorative paints. The company also plans to unveil a full range of protective
coatings, coil coatings, powder coatings, marine coatings and construction chemicals.
 After a week-long demonstration staged in front of the factory premises, the protesting
workers of Kansai Nerolac factory have decided to sign the ‘Good Conduct
Undertaking’ on September 19. The workers will resume their shift work from
tomorrow. However, what will be the fate of the hired ‘untrained’ workers are still not
clear.
 One of India’s leading paint companies is joining hands with their dealer partners to
organise a Cyclothon. Post the race the participants will help paint the school over
incorporating inspiring messages and colourful designs. This event brings both
‘Swasth’ or health & ‘Swachhata’ or cleanliness into focus.
 A Complaints Committee has also been set up to redress complaints received on sexual
harassment as well as other forms of verbal, physical, written or visual harassment.
 Rural Development / Community Development – The objective is to reach to the grass root
citizens by providing basic facilities and amenities in the villages near to the plant
locations/depot locations. Bus pick up shed, borewells, solar street lights, water coolers,
drinking water pipe lines are some of the initiatives taken under the said Program.
RANK COMPANY
1 Asian paints
2 Berger Paints
3 Kansai Nerolac Paints
Kansai Nerolac has been ranked third in case of management potential, which
according to Warren Buffet is the most important to look at while investing in a company.
Berger and Asian has a more than decent governance in place. There have been
continuous efforts in reducing cost of raw material by these two companies but Asians’
management is a step ahead in expansion of its business strategically.
RQ5) Which company has the best work culture?!
ANS: BERGER

11.  The Company’s employees participated in international symposiums and seminars.
The Vice President – R & D received the AkzoNobel Award for Excellence in Coatings
Research and Promotion granted by the Society for Surface Protective Coatings –
India. The Company’s R & D scientists also received the second prize in the Research
Category from the Indian Paint Association.
 The number of people employed as on 31st March, 2018 was 3,130 (31st March,
2017: 2,993). The Industrial Relations were generally satisfactory during the year. The
trade union at the Company’s Goa factory had called a strike on 10th May, 2017. The
factory was operating at a reduced scale and the strike was withdrawn on 25th July,
2017. There was no significant effect on the operations of the Company as a result of
the strike.
 Training, including on the job training, is given the highest priority and the Company
measures the time and efficacy of all kinds of training provided to the employees which
includes e-leaming modules. As a result of these, the attrition rate and recruitment
cost have been continuously climbing down and employee satisfaction surveys are
showing positive results.
 The Vice President – R & D received the AkzoNobel Award for Excellence in Coatings
Research and Promotion granted by the Society for Surface Protective Coatings –
India.
 The EHS team is actively working to mitigate the organizational risks associated with
the Environment-Health-Safety related to all aspects of Company operations.
Safeguarding the environment, protection of people, property and health of the
workforce is the primary focus.
ASIAN PAINTS
 Employees volunteered to work with various NGOs across India in activities ranging
from reading sessions for children, excel lessons for youth, sports drill sessions,
science fair, etc. and even included volunteering in old-age homes. In the
Kaleidoscope launch programme’s lifecycle of less than 50 days, 7,500 Beneficiaries
were reached and 1,350 Employee Volunteers participated with 5,100 Volunteer
hours’ contribution.

12.  To provide a truly holistic platform for people, job rotations have been strategically
increased and all movement and development decisions are institutionalized. Work
on developing a 360° Feedback Framework and Transition programs at all levels of
the organization has been carried out during the year.
KANSAI NEROLAC
 Management encouraging growth of individuals irrespective of gender, religion, caste
or community as well as policy on “Appropriate Social Conduct at Workplace”. All
these policies add up to a congenial work environment to drive performance that is
free from threat or fear. KNPL also has a “Code of conduct to regulate, monitor and
report trading by insiders” and a “Code of practices and procedures for fair disclosure
of Unpublished Price Sensitive Information” to address the related requirements.
 KNPL also continued the rewards and recognition program with an employee
recognition platform called GEMS. GEMS is a framework for employees to
acknowledge support and help by colleagues in their day to day interaction. It is a
company-wide rewards program that fosters an environment of appreciation. In-house
training workshops on people, management, excellence and KNPL competency
framework were designed and conducted by HR.
 Bawal plant team won Gold awards in 2 categories in the Kaizen conclave Delhi
chapter, organized by “Quality Circle Forum of India”. Over 45 companies participated
in the event.
RANK COMPANY
1 Asian Paints
2 Kansai Nerolac Paints
3 Berger Paints
All the three companies have a well-organized work culture. Safety is more
important in paint industry as there is high usage of chemicals at factories. There have
been few incidents of riots in Berger for which it has been ranked third. Asian Paints, is
observed to be having a good review for its work culture.

13. RQ6) Which company is technologically more advanced?!
ANS: BERGER
 The Company continues to strengthen its R & D facilities and technological capabilities
by adding suitable manpower and new equipment and interactions with academic
institutions. The objective is to build a collaborative research-oriented environment in
not only the Company’s R & D Centre but across the manufacturing and product
development centers throughout the Company’s operations and businesses.
 External Thermal Insulation and Composite Systems (ETICS) Solutions Technology
in construction of highly energy efficient green/smart buildings in India. ETICS
Technology is a robust and long-lasting building energy performance solution
developed to current standards over the last 40 years. It has proven to be highly cost
effective, safe for inhabitants living in insulated houses and hugely beneficial for the
environment.
 All the plants have the latest environment protection and safety related measures.
Finished goods warehouses having Automatic Storage and Retrieval System (ASRS)
are on the verge of completion at Jammu and the Beepee Coatings Plant at Vallabh
Vidya Nagar.
 The activities of the company focus on futuristic technologies and upcoming trends.
These include recycling waste, dispersion technologies and optimization of raw
materials.
 The company has engaged information technology to the fullest possible extent in the
business processes. The Company’s Enterprise Resource Management Systems with
Standard Operating Procedures based on work flows and process flow charts adopted
by Berger also supports for comfortable management of internal control systems.
ASIAN PAINTS
 Windmill was commissioned in the state of Tamil Nadu. During the previous year, 22%
of the total energy requirement at the paint manufacturing locations was met by
renewable energy. Additionally, the Company has started using Biogas at the

14. Khandala plant to reduce the usage of fossil fuel (diesel) in Boilers & Thermic Fluid
Heater.
 The Company made investments in 3-D visualization technology for the ‘AP Homes
Stores’ and for the kitchen business. This empowers the consultants to create an
intuitive visual model within a short period of time thereby not only reducing the
consulting time but also nudges the consumer to complete the buying journey.
 Aided by smart technologies, the aesthetically crafted modular kitchens are at the
heart of a rapidly booming home renovation market. The Company also expects
wardrobes to substantially complement kitchen sales.
 Industry 4.0-based technologies are being deployed in the two new paint facilities
commissioned by the Company. It covers the entire gamut of factory operations from
inbound logistics, paint processing, warehousing and outbound logistics. The
foundational blocks for an intelligent factory are being put in place to help run the
factory of the future.
KANSAI NEROLAC
 The Company has increased its impetus on research and has commenced operations
at its world-class R&D facility at Vashi, Navi Mumbai. These new plants and R&D
facilities will strengthen the capability of KNPL to innovate and serve its customers
better.
 Building mind-space with consumers was taken to next level. Two new services for
consumers were launched. One a Chatbot service, whereby consumers can chat with
KNPL or by scanning a QR code and another, a virtual reality tool “Colour my space”
to visualize the home in different colors to make an informed choice.
RANK COMPANY
1 Asian Paints
2 Berger Paints
3 Kansai Nerolac
Asian paints, is technologically more advanced among the three followed by
Berger and Nerolac. Huge funds have been deployed by Asian paints in technology for

15. setting up wind mill and making their plants technology embedded. Berger and Nerolac
has also done fairly well in utilizing new technologies.
RQ7) Which company has the best reputation?!
BERGER
 The Company continues to be a leader in Protective Coatings area despite presence
of a large number of competitors including global corporations in this segment.
 A plant owned by Beepee Coatings Private ltd., a fully owned subsidiary of Berger,
received 1st prize in National Energy Efficient circle competition for organizing for best
practices in environment, health and safety.
 The company also received National award in CII-ITC sustainability awards 2018 for
its Environmental management initiatives. Also, the Jammu plant received certificate
of appreciation from National safety council of India.
ASIAN PAINTS
 During the financial year 2016 – 17, the Company was conferred with ‘Outstanding
Company of the year’ award for 2016 at the ‘CNBC TV18 India Business Leader
award’ ceremony held in March, 2017.
 The product ‘Genie Polish’ received FICCI 2016 Sustainability Award as the best
green product in chemical and petrochemical segment. This is the second consecutive
year the Company’s product received FICCI Sustainability Award.
 Received the Sword of Honour from the British Safety Council, for its Khandala plant
— this award is presented to a select few companies globally based on British
Council’s Five Star Audit.
 Chief Minister, after meeting the top Asian Paints representatives, said the company
in addition to investment in manufacturing unit is also planning to contribute to the
socioeconomic development of the region by way of vendor development, skill
development and corporate social responsibility (CSR) activities.
KANSAI NEROLAC
 The Company has chosen Mr. Ranveer Singh to be the new face of the Brand.
Ranveer was found to be a perfect fit as his versatility as an actor, coupled with his

16. bold personality and effervescent energy, which resonates well with the Nerolac
brand. The Company has signed up with Mr. Tamim Iqbal, the leading cricketer of
Bangladesh as its Brand Ambassador in Bangladesh.
 KNPL continued its association with IPL for the year 2018, and partnered with Delhi
Daredevils and SunRisers Hyderabad. Many branding and consumer involvement
activities were carried out as part of this campaign. Nerolac extended its association
with cricket by getting associated with the Asia Cup.
 Kansai Nerolac Paints was named as one of the 40 most valuable Indian brands of
2019 by Interbrand, one of the world's leading brand consultancies.
 Economic Times recognized Kansai Nerolac as one of the Best brands in 2018-19.
RANK COMPANY
1 Asian Paints
2 Kansai Nerolac Paints
3 Berger Paints
Awards and recognition received for the employees and the company has been
looked at along with marketing campaigns made by the company in this attribute. Asian
paints, is again in the top with a very good reputation followed by Nerolac and Berger.
Nerolac is very well known in industrial paintings segment and also for its IPL campaign.
Berger has relatively less reputed so ranked 3rd according to the data collected with best
efforts.
QUANTITATIVE ANALYSIS
Financial statements have been evaluated with a purpose of ranking the three
companies chosen. Various techniques like common sizing, trend analysis and ratio
analysis are employed which are generally used for quantitative research.

17. SOURCE: COMPANIES FINANCIAL STATEMENTS and OWN CALCULATIONS
Analysis:
Asian paints has the largest market cap among the three followed by Berger and
Kansai Nerolac. Asian paints is a large-cap company, Berger is on the verge of large-cap
and mid-cap and Kansai Nerolac is a mid-cap company. Asian, Berger and Nerolac are
currently trading at Rs.1320, Rs.300, Rs410 per share respectively on National Stock
Exchange (NSE).
The return on capital employed is also highest in case of Asian Paints (37.51%)
compared to Berger (28.66%) and Nerolac (20.81%). The profitability ratios are in favor
of Asian Paints with 20.18% operating margin and 13.02% PAT margin. Berger and
Nerolac have almost same operating profit margins (about 14%) but, Nerolac (9.03%)
has higher PAT margin than Berger Paints (7.59%).

18. The current ratio which measures how efficiently a company is able to pay off its
short-term liabilities. Berger and Asian have current ratio of 1.32 and 1.25, which implies
for every Re.1 short-term liability there are Rs.1.32 (Rs.1.25) current assets held by
Berger (Asian Paints). Nerolac has higher current ratio which generally means it is less
risky in near future and has enough funds to pay off its current liabilities. But, further
linking this with the debtor’s turnover ratio which is lowest in case of Nerolac (7.67) means
it is less efficient in managing its receivables. We can now see that the high current ratio
of Nerolac is due to high receivables in the company’s balance sheet. Asian paints’
debtor’s turnover is 13.76 which is highest amongst the three but has over past three
years increased gradually as a percent of total assets. Berger Paints has moderate
activity ratios with 9.41 debtor’s turnover and 4.8 inventory turnover ratio. The Inventory
turnover indicate how many times the company is able to rotate (sell) its inventory held in
balance sheet. Asian paints has the highest efficiency in managing its inventory followed
by Nerolac and Berger.
The retention ratio is high in Nerolac (70.02%) followed by Berger (62.63%) and
Asian Paints (60.02%). As mentioned earlier the paint industry is one of the fastest
growing and all the three companies have been reinvesting major portion of their funds
for expansion.
Return on Equity has been analyzed more deeply using DuPont Analysis. DuPont
analysis is done to check the sustainability of the returns company is generating. In this
the ROE formula is divided into assets turnover, net profit margin and equity multiplier,
where it is preferred that the first two are higher and the third to be on lower side. ROE of
Asian (24%) is highest and Berger is second with 19% ROE and Nerolac has 17% ROE.
Assets turnover ratio indicates how well the company is utilizing its assets to
generate sales. As on 31st March’ 2019, Berger Paints (1.44) has the highest assets
turnover which is followed by Asian (1.25) and Nerolac (1.20). Assets turnover of all three

19. companies have been rising for past 3 years.
The Net-Profit margin is higher in Asian paints
(13%), which indicates the company is able to
earn higher profits from its sales compared to
Berger (8%) and Nerolac (9%). Equity multiplier (EM) indicates the use of financial
leverage to raise the funds. Higher EM means higher debt employed. Berger (1.62) has
the highest EM compared to Asian (1.48) and Nerolac (1.26) on March’2019. From the
above analysis we can evidently see that Asian paints has more sustainable earnings.
The trend of increasing assets turnover and declining profit margins has been observed
to be common across all three companies.
In addition to the above discussed ratios price-to-earnings ratio (PE), price-to-book
value (PB) and price-to-cash ratio (PC) are calculated given the importance of these
factors in analyzing the value of the equity by researchers. Paint industry has a higher PE
comparatively because of the favorable government regulations and lower risk profile.
The industry PE according to Economic times in 2019 is about 64 times. Only Berger
(75.24) has the highest PE above the industry PE, followed by Asian (63.48) and Nerolac
(45.22). High PE may also communicate that the stock is overpriced currently. The
companies also rank similar in both PE ratio and PC ratio comparison. The PB ratio
measures the market's valuation of a company relative to its book value. High PB ratio
may indicate relative over valuation or lower risk profile or superior expected performance
whereas low PB ratio implies undervaluation or sub-par expected performance of the
company. Market has valued Berger the highest and followed by Asian Paints and
Nerolac.
CONCLUSION
Asian P