CIA - 1

Cost and Management Accounting

By
Garv Sehgal (23214412)
Under the Guidance of
Dr Bhupendra Singh Hada

SCHOOL OF COMMERCE FINANCE AND

ACCOUNTANCY
CHRIST (DEEMED TO BE UNIVERSITY), DELHI NCR
JANUARY 2025
 INTRODUCTION

Asian Paints Limited is one of India's most established and successful companies in the
paints and coatings industry. Established in 1942, it has grown into a market leader in
decorative paints and related products, both in domestic and international markets. The
company has its headquarters in Mumbai and is spread across several regions with a strong
presence, supported by a network of manufacturing facilities, research and development
centers, and marketing offices all over the country.

With such strong heritage and innovation at its heart, Asian Paints has consistently led the
paints and coatings sector through its rich product portfolio, including various categories such
as decorative paints, industrial coatings, and home improvement solutions. The company has
backed these characteristics to develop a reputation as being high-quality, durable, and
aesthetically pleasing products across various spectrums in India as well as aboard. The most
renowned brands are those of Royale, Apex, Tractor Emulsion, and Ultima.
Asian Paints' growth is because the company has shown a deep understanding of consumer
needs and the change in preferences for Indian consumers. By offering a very diverse range
of products that meets the requirements of both urban and rural populations, the company
maintains a strong market presence. With a focus on providing quality at every price point,
Asian Paints has earned the trust of millions of consumers across the country, from
metropolitan cities to remote villages.

The company's strong product portfolio notwithstanding, it truly stands out based on its
strong commitment to both sustainability and innovation. Asian Paints has been ahead of the
rest in introducing such eco-friendly paints and solutions with a view that environmental
responsibility has to be very much woven into its business. It also invests heavily in research
and development to come out ahead with the trends, presenting consumers with cutting-edge
products that upgrade the beauty and longevity of space.

Besides business success, Asian Paints believes in social responsibility and community
welfare. The company supports various initiatives toward education, skill development, and
the livelihoods of the economically deprived sections of society. This is how Asian Paints
contributes to India's growth, not only economically but also socially, through its varied
programs.

With the Indian economy growing and consumer aspirations ever on the increase, Asian
Paints is well-positioned to continue as a leader in the paints business. The innovation,
quality, and sustainability aspects will help this company meet consumers' changing needs,
while driving value for all of its stakeholders for the long-term. Asian Paints will definitely
continue to lead the Indian and world markets through its consistent pursuit of excellence
 INDUSTRY AND TYPE OF PRODUCTS

Paints and coatings industry is one of the key sectors of the world economy and contributes
significantly to different sectors, including construction, automotive, and home decoration.
The growth in the industry in India has been quite spectacular with factors such as
urbanization, increase in infrastructure development, and emphasis on aesthetics and
sustainability. The paints sector is comprised mainly of two types of products: decorative
paints, used for enhancing the appearance of residential and commercial spaces, and
industrial coatings, used to meet the protective and functional needs of sectors such as
automotive, manufacturing, and infrastructure.
Key characteristics of the paints and coatings industry are:
Wide Usage: Paints are essential products across many sectors, used for beautification,
protection, and maintenance.
Innovation and Technology: Continuous innovation in formulations, colors, texture, and
environment-friendly products helps companies offer a superior solution to changing
consumer needs.
Brand Preference: Consumers often prefer paints based on reputation, quality of the product,
and level of trust in the company. In this respect, customers prefer products that last longer
and contribute to aesthetic value.
In India, urban and rural markets have become key growth drivers. With more people
focusing on home improvement and public infrastructure projects, the demand for high-
quality paints and coatings has risen substantially. The increasing popularity of sustainable,
eco-friendly products has also influenced the industry's evolution, with consumers becoming
more conscious of the environmental impact of their purchases.

Asian Paints’ Products and Services

Asian Paints provides various products and services that meet the needs of diverse
consumers, professionals, and businesses across the country. Below is an overview of the
main categories and offerings from Asian Paints:

Decorative Paints: Asian Paints leads in decorative paints and provides an assortment of
products for making the surfaces more visually appealing and long-lasting. Brands available
in this category include:

Royale: High-end paint products from Asian Paints for interior walls, offering a smooth and
rich finish. These paints make the place feel luxurious and elegant and provide durable
protection along with excellent colors.
Apex : Designed for outer surfaces, Apex paints are made strong enough to keep buildings
safe in all weather, looking good over the years
Tractor Emulsion: This can be used indoors and outdoors both, offering higher quality,
efficiency, and finish, especially price-sensitive markets require it.
Ultima: Offering high-performance coverage and finish to residential and commercial spaces,
a premium product range.
Industrial Coatings: Asian Paints has a strong presence in the industrial coatings market,
where it provides specialized solutions for various applications. These products are designed
for automotive, industrial equipment, metal protection, and other commercial needs. The
coatings offered are durable, resistant to wear and tear, and suitable for diverse conditions.

Home Improvement Services: Asian Paints reaches beyond its paint products to provide
consumers with many home improvement services aimed at ensuring a hassle-free experience
through:

Asian Paints Safe Painting Service: A complete solution that includes consultation,
professional painting, and post-painting services. This service ensures high-quality execution
with expert supervision, making it convenient for homeowners.
Colour Consultancy: This service facilitates customers in making a right decision regarding
colors and design themes, and providing personalized support toward creating the exact
atmosphere they want for their spaces.
Research and Development: The company invests in innovation, which is continuously
improved upon. Through its R&D initiatives, Asian Paints has been able to introduce new
technologies, such as products that adapt to different climates and conditions, ensuring that
its paints perform better in varying environments.

Asian Paints has always been at the forefront with its experience in innovation, superior
quality, and well-rounded services in paints and coatings. The focus on meeting varied needs
of the customers and pushing towards excellence with a product can help this company grow
and become even stronger.
 IDENTIFICATION AND CLASSIFICATION OF COST ELEMENTS

The cost elements in the production process at Asian Paints can be broadly classified into three
main categories: Direct Materials, Direct Labor, and Overheads. These categories represent the
costs incurred during the production of paints and coatings and are essential for calculating the
overall cost of production and determining the profitability of the company.

1. Direct Material
Direct materials are raw materials directly used in a process for creating an end product. These
are the prime materials to be directly traceable of their production for a particular product. For
Asian Paints, this will consist of the following:
Raw materials used in the formulation of paints and coatings; that is, pigments, resins,
solvents, and chemicals.
Packaging materials, such as cans, bottles, and labels, for decorative paints, industrial coatings,
and automotive paints.
Additives and performance enhancers that improve the quality and durability of the paints, such
as anti-fungal agents or weatherproofing chemicals.
2. Direct Labor
Direct labor refers to the wages and salaries given to workers involved in the process of
transforming raw materials into finished goods. In Asian Paints, direct labor would include the
following:

All the wages paid to workers in manufacturing facilities that are engaged in the blending and
formulation of paints.
Salaries given to machine operators to drive automated systems and equipment for producing
paints and coatings.
Labor costs for packaging workers who are involved in the final stages of packing the finished
paint products into containers and ensuring they are ready for distribution.
3. Overheads
Overheads, also known as indirect costs, are the costs incurred in the production process that
cannot be directly traced to a specific product. These include both factory overheads (costs
related to running production facilities) and administrative or selling expenses. For Asian
Paints, overheads can be classified into:

Factory Overheads: This includes costs like factory rent, utilities (electricity, water),
machinery maintenance, and depreciation of production equipment.
Administrative Overheads: Salaries of managerial staff, office supplies, IT infrastructure, and
other overheads that relate to general business operations.
Selling and Distribution Overheads: Marketing, advertising, and distribution logistics costs,
including advertising campaigns, sales commissions, and warehousing.
Overheads are usually spread over all products by an appropriate allocation method, such as
machine hours or labor hours, since they cannot be traced directly to a specific product.
 EXAMPLES AND DATA RELATED TO THE COMPANY

Direct Material:
For the year ending 31st March 2024:

Total Direct Material Cost: ₹6,512 Crores

Raw Materials: ₹4,839 Crores (pigments, resins, solvents, chemicals)
Packaging Materials: ₹1,673 Crores (cans, bottles, labels)
Comparative Data:

For 31st March 2023: ₹5,912 Crores

Raw Materials: ₹4,220 Crores
Packaging Materials: ₹1,692 Crores
For 31st March 2022: ₹5,246 Crores
Raw Materials: ₹3,882 Crores
Packaging Materials: ₹1,364 Crores
For 31st March 2021: ₹4,789 Crores
Raw Materials: ₹3,480 Crores
Packaging Materials: ₹1,309 Crores

Direct Labor:
For 31st March 2024:
Direct Labor Cost: ₹1,189 Crores, consisting of:
Salaries and Wages: ₹990 Crores
Provident Funds: ₹74 Crores
Welfare and Other Benefits: ₹125 Crores
Comparative Data:
For 31st March 2023: ₹1,134 Crores
Salaries and Wages: ₹920 Crores
Provident Funds: ₹70 Crores
Welfare and Other Benefits: ₹144 Crores
For 31st March 2022: ₹1,067 Crores
Salaries and Wages: ₹860 Crores
Provident Funds: ₹65 Crores
Welfare and Other Benefits: ₹142 Crores
For 31st March 2021: ₹1,032 Crores
Salaries and Wages: ₹845 Crores
Provident Funds: ₹62 Crores
Welfare and Other Benefits: ₹125 Crores
Overheads:
Depreciation and Amortization:
For 31st March 2024: ₹542 Crores
For 31st March 2023: ₹497 Crores
For 31st March 2022: ₹487 Crores
Other Expenses:
For 31st March 2024:

Advertising: ₹2,195 Crores

Freight and Logistics: ₹1,235 Crores
Royalties and Licenses: ₹1,003 Crores
Miscellaneous Expenses: ₹2,823 Crores
Total Other Expenses: ₹7,256 Crores
Comparative Data:

For 31st March 2023: ₹6,982 Crores

Advertising: ₹2,021 Crores
Freight: ₹1,177 Crores
Royalties: ₹890 Crores
Miscellaneous Expenses: ₹2,894 Crores
For 31st March 2022: ₹6,350 Crores
Advertising: ₹1,981 Crores
Freight: ₹1,120 Crores
Royalties: ₹845 Crores
Other Costs: ₹2,404 Crores
 COST SHEET

AS OF MARCH 2024

Particulars
Opening stock of raw material: ₹1,944.17 crore
+ Purchases: ₹12,424.40 crore
+ Carriage inward:

+ Octroi:
- Closing stock: ₹1,709.19 crore
Raw material consumed: ₹12,659.38 crore

+ Direct wages: ₹1,332.28 crore

+ Other Direct expenses:
Prime cost: ₹14,991.66 crore

Add: Factory Overheads:

Factory lighting: Indirect material:
Indirect Labour:

Factory rent rates and taxes:

Factory insurance:
Depreciation on Plant and Machines:
Insurance, maintenance of P & M:
General work expenses:
Stationary:

Supervisor and factory manager cost:

Canteen & welfare expenses:
Fuel and power: ₹122.15 crore
Any other factory-related expenses:
Gross factory Cost: ₹14,991.66 crore

+ Op. stock of WIP: ₹177.42 crore

- Closing stock of WIP: ₹167.25 crore
- Sale of scrap: ₹24.74 crore
Net Factory cost: ₹15,019.09 crore

Add: Office and Administrative overheads:

Office rent, rates, and taxes: ₹19.95 crore
Insurance, depreciation of office building:
Office salaries:
Office lighting
Office stationary & printing:

Postage, legal exp:

Audit fee:

General office expenses:

Director's fee:
Any expenses related to office and administration:
Cost of Production: ₹15,039.04 crore
+ Opening stock of finished goods: ₹2,261.57 crore
- Closing stock of finished goods: ₹2,397.08 crore
Cost of goods sold: ₹14,903.53 crore

Add: Selling & Distribution expenses:

Advertisement: ₹1,305.86 crore
Salesman's salaries & commissions:

Sales Manager's salary:

Sales office expenses:

Bad debts:
Collection charges:
Showroom expenses:
Warehouse expenses:

Packing expenses
Carriage outward:
Delivery expenses:
Insurance, depreciation of delivery vans:
Cost of tender:
Any other sales/distribution-related expenses:

Cost of Sales: ₹1,305.86 crore

Add Profit: ₹122.51 crore
Sales: 1428.37 crore
AS OF MARCH 2023

Particulars
Opening stock of raw material: ₹2,403.14 crore
+ Purchases: ₹14,613.63 crore
+ Carriage inward:
+ Octroi:
- Closing stock: ₹2,168.19 crore
Raw material consumed: ₹14,849.88 crore

+ Direct wages: ₹2,028.07 crore

+ Other Direct expenses:
Prime cost: ₹16,877.95 crore

Add: Factory Overheads:

Factory lighting: ₹138.29 crore
Indirect material:
Indirect Labour:
Factory rent rates and taxes:
Factory insurance:
Depreciation on Plant and Machines: ₹500 crore
Insurance, maintenance of P & M: ₹161.84 crore
General work expenses:
Stationary:

Supervisor and factory manager cost:

Canteen & welfare expenses:
Fuel and power: ₹138.29 crore
Any other factory-related expenses:
Gross factory Cost: ₹17,816.37 crore

+ Op. stock of WIP: ₹195.02 crore

- Closing stock of WIP: ₹187.11 crore
- Sale of scrap:
Net Factory cost: ₹17,824.28 crore

Add: Office and Administrative overheads:

Office rent, rates, and taxes
Insurance, depreciation of office building: ₹755.83 crore
Office salaries: ₹2,028.07 crore
Office lighting:
Office stationary & printing:
Postage, legal exp:
Audit fee:

General office expenses:

Director's fee:
Any expenses related to office and administration:

Cost of Production: ₹18,580.11 crore

+ Opening stock of finished goods:

- Closing stock of finished goods:
Cost of goods sold: ₹23,293.39 crore

Add: Selling & Distribution expenses:

Advertisement: ₹1,152.93 crore
Salesman's salaries & commissions: ₹164.25 crore
Commission of sales agents:

Sales Manager's salary:

Sales office expenses:

Bad debts: ₹3.44 crore
Collection charges:
Showroom expenses:

Warehouse expenses:

Packing expenses:
Carriage outward:
Delivery expenses:

Insurance, depreciation of delivery vans:

Cost of tender:
Any other sales/distribution related expenses:
Cost of Sales: ₹23,477.26 crore

Add Profit: ₹11,011.33 crore

Sales: ₹34,488.59 crore
 AS OF MARCH 2022

Particulars
Opening stock of raw material: ₹1,412.33 Crores

+ Purchases: ₹16,254.59 Crores

+ Carriage inward: ₹117.23 Crores

+ Octroi:

Closing stock: ₹2,403.14 Crores

Raw material consumed: ₹15,263.78 Crores

+ Direct wages: ₹1,786.67 Crores

+ Other Direct expenses:

Prime cost: ₹17,050.45 Crores

Add: Factory Overheads

Factory lighting: ₹117.23 Crores

Indirect material: ₹76.79 Crores

Indirect Labour: ₹1,786.67 Crores

Factory rent, rates, and taxes:

Factory insurance:
Depreciation on Plant and Machines: ₹509.93 Crores
Insurance, maintenance of P & M:

General work expenses:

Stationary:

Supervisor and factory manager cost:

Canteen & welfare expenses:

Fuel and power:

Any other factory-related expenses:

Gross factory cost:

+ Opening stock of WIP: ₹133.46 Crores
- Closing stock of WIP: ₹195.02 Crores
- Sale of scrap:

Net factory cost: ₹21,383.41 Crores

Add: Office and Administrative overheads

Office rent, rates, and taxes:

Insurance, depreciation of office building:

Office salaries: ₹1,786.67 Crores

Office lighting:

Office stationary & printing:

Postage, legal expenses:

Audit fee:

General office expenses:

Director's fee:

Any expenses related to office and administration:

Cost of production: ₹21,444.97 Crores

+ Opening stock of finished goods: ₹1,597.48 Crores

- Closing stock of finished goods: ₹2,502.34 Crores

Cost of goods sold: ₹20,540.11 Crores

Add: Selling & Distribution expenses

Advertisement:

Salesman's salaries & commissions: ₹1,786.67 Crores

Commission of sales agents:
Sales Manager's salary: ₹1,786.67 Crores

Sales office expenses:

Bad debts:

Collection charges:

Showroom expenses:

Warehouse expenses:
Packing expenses:
Carriage outward:

Delivery expenses:

Insurance, depreciation of delivery vans:

Cost of tender:

Any other sales/distribution-related expenses:

Cost of sales: ₹23,170.08 Crores

Add Profit: ₹1,832.02 Crores

Sales: ₹25,002.1 Crores

 AS OF MARCH 2021

Opening Stock of Raw Material: ₹1,135.11 Crores

+ Purchases: ₹8,830.18 Crores
+ Carriage Inward:

+ Octroi:

Closing Stock of Raw Material: ₹1,412.33 Crores

Raw Material Consumed: ₹8,552.96 Crores

+ Direct Wages: ₹1,349.11 Crores

+ Other Direct Expenses:

Prime Cost: ₹9,902.07 Crores

Add: Factory Overheads

Factory Lighting:

Indirect Material:

Indirect Labour:

Factory Rent, Rates, and Taxes:

Factory Insurance:

Depreciation on Plant and Machines: ₹637.61 Crores

Insurance, Maintenance of P&M:

General Work Expenses:

Supervisor and Factory Manager Costs:

Canteen & Welfare Expenses:

Fuel and Power: ₹86.05 Crores

Any Other Factory-Related Expenses:

Gross Factory Cost: ₹10,539.68 Crores

+ Opening Stock of WIP: ₹93.42 Crores

- Closing Stock of WIP: ₹133.46 Crores
Net Factory Cost: ₹10,499.64 Crores

Add: Office and Administrative Overheads

Office Rent, Rates, and Taxes:
Insurance, Depreciation of Office Building:
Office Salaries: ₹295.3 Crores

Office Lighting:

Office Stationery & Printing:

Postage, Legal Expenses:

Audit Fee: ₹1.2 Crores

General Office Expenses:

Director's Fee: ₹5.14 Crores

Any Office-Related Expenses:

Cost of Production: ₹11,841.32 Crores

+ Opening Stock of Finished Goods:

- Closing Stock of Finished Goods:
Cost of Goods Sold (COGS): ₹15,212.4 Crores

Add: Selling & Distribution Expenses

Advertisement: ₹482.4 Crores

Salesman's Salaries & Commissions:

Commission of Sales Agents:

Sales Manager's Salary:

Sales Office Expenses:

Bad Debts: ₹3.1 Crores

Collection Charges:

Showroom Expenses:

Warehouse Expenses:

Packing Expenses: ₹248.6 Crores

Carriage Outward: ₹1,023.4 Crores

Delivery Expenses:

Insurance, Depreciation of Delivery Vans:

Cost of Tender:
Any Other Sales/Distribution Related Expenses: ₹282.5 Crores

Cost of Sales: ₹17,760.4 Crores

Add Profit: ₹3,952.4 Crores
Sales: ₹21,712.8 Crores
 AS OF MARCH 2020

Particulars
Opening Stock of Raw Materials: ₹1,165.50 Crores
Add: Purchases: ₹8,424.97 Crores
Add: Carriage Inward:
Add: Octroi:
Less: Closing Stock of Raw Materials: ₹(1,135.11) Crores
Raw Materials Consumed: ₹8,455.36 Crores
Add: Direct Wages: ₹1,201.48 Crores
Add: Other Direct Expenses:
Prime Cost: ₹11,462.07 Crores
Add: Factory Overheads
Factory Lighting:
Indirect Material:
Indirect Labour:
Factory Rent, Rates, and Taxes:
Factory Insurance:
Depreciation on Plant and Machines:
Insurance, Maintenance of P&M:
General Work Expenses:
Stationery:
Supervisor and Factory Manager Cost:
Canteen & Welfare Expenses:
Fuel and Power: ₹97.79 Crores
Any Other Factory-Related Expenses:
Gross Factory Cost: ₹11,935.81 Crores
Add: Opening Stock of WIP: ₹116.81 Crores
Less: Closing Stock of WIP: ₹(93.42) Crores
Net Factory Cost: ₹11,959.20 Crores
Add: Office and Administrative Overheads
Office Rent, Rates, and Taxes:
Insurance, Depreciation of Office Building:
Office Salaries: Not specifically itemized
Office Lighting: Not mentioned
Office Stationery & Printing:
Postage, Legal Expenses:
Audit Fee:
General Office Expenses
Director’s Fee:
Cost of Production: ₹11,959.20 Crores
Add: Opening Stock of Finished Goods: ₹1,395.59 Crores
Less: Closing Stock of Finished Goods: ₹(1,528.99) Crores
Cost of Goods Sold (COGS): ₹11,825.80 Crores
Add: Selling & Distribution Expenses
Advertisement: ₹917.54 Crores
Salesman’s Salaries & Commissions:
Commission of Sales Agents:
Sales Manager’s Salary:
Sales Office Expenses:
Bad Debts:
Collection Charges:
Showroom Expenses:
Warehouse Expenses:
Packing Expenses
Carriage Outward:
Delivery Expenses:
Insurance, Depreciation of Delivery Vans:
Cost of Sales: ₹13,951.21 Crores
Add Profit: ₹6,260.04 Crores
Sales: ₹20,211.25 Crores
 ANALYSIS OF COST SHEETS

RAW MATERIAL AND DIRECT COST : Consumption of raw material and direct labour
costs are growing steadily up. This reflects an increase in production capacity, and hence the
cost so incurred consequently rises. These trends allow us to assess the organization's growth
and effectively manage scale up operations.
2019-20 Raw Material consumption ₹ 7,234.56 Crore. Direct wages ₹ 1,201.15 Crore.
2020-21: Raw material consumption increased to ₹8,552.96 Crores, indicating higher
production output. Direct wages also increased to ₹1,418.15 Crores, indicating higher labor
costs.
2021-22: Raw material consumption increased further to ₹15,263.78 Crores, and direct wages
increased to ₹2,028.07 Crores, indicating higher operational demands.
2022-23: Raw material costs were at a high of ₹14,849.88 Crores, with direct wages reduced
to ₹2,021.28 Crores.
2023-24: Raw material costs dropped to ₹12,659.38 Crores, and direct wages decreased to
₹1,332.28 Crores, suggesting improved cost management.

PRIME COST : Prime cost, representing direct material and direct wages, shows consistent
growth over the years, reflecting rising operational expenses as production capacity expands.
2019-20: Prime cost stood at ₹8,435.71 Crores.
2020-21: Prime cost increased to ₹9,971.61 Crores.
2021-22: Prime cost rose significantly to ₹17,050.45 Crores due to increased direct material
and labor costs.
2022-23: Prime cost decreased marginally to ₹16,877.95 Crores, indicating operational
efficiencies.
2023-24: Prime cost stabilized at ₹14,991.66 Crores, which shows better control over direct
wages despite the fluctuations in raw material prices.

FACTORY OVERHEADS Factory overheads, which include depreciation, fuel, and power
costs, have fluctuated but are generally on the rise due to increased production capacity and
indirect manufacturing expenses.
2019-20: Factory overheads were ₹1,060.78 Crores.
2020-21: Factory overheads rose to ₹1,085.10 Crores, primarily due to the increase in energy
cost and depreciation.
2021-22: Factory overheads increased further to ₹1,245.72 Crores.
2022-23: Factory overheads decreased marginally to ₹1,225.72 Crores, while depreciation
was at ₹500 Crores.
2023-24: Factory overheads remained stable, with fuel and power costs increasing to ₹122.15
Crores.

COST OF PRODUCTION:The cost of production refers to the total cost incurred in the
production of goods. The constant rise during the years is due to higher raw material and
labor costs, which are characteristic of an expanding operation.
2019-20: Cost of production ₹15,612.12 crores
2020-21: Cost of production ₹16,244.05 crores
2021-22: Cost of production increased significantly at ₹21,444.97 crores.
2022-23: Cost of production decreased marginally to ₹18,580.11 Crores, due to better
procurement and operational management.
2023-24: Cost of production reduced further to ₹15,039.04 Crores, showing improvements in
efficiency.

COST OF GOODS SOLD (COGS): COGS is the direct cost of goods sold and is a
significant indicator of manufacturing efficiency and pricing strategy.
2019-20: COGS was ₹19,836.11 Crores.
2020-21: COGS increased to ₹20,540.11 Crores.
2021-22: COGS increased to ₹23,293.39 Crores, mainly due to increased raw material and
labor costs.
2022-23: COGS increased to ₹23,293.39 Crores.
2023-24: COGS decreased to ₹14,903.53 Crores, indicating better manufacturing processes
and cost control.

SELLING & DISTRIBUTION EXPENSES: The rise in selling and distribution expenses,
particularly advertising and commissions, indicates that the company is still investing in
increasing market share and customer reach.
2019-20: Selling and distribution expenses were ₹1,879.45 Crores.
2020-21: Advertising costs rose to ₹1,667.38 Crores.
2021-22: Selling and distribution expenses reached ₹1,786.67 Crores.
2022-23: Advertising expenses grew to ₹1,152.93 Crores.
2023-24: Advertising expenses further increased to ₹1,305.86 Crores, reinforcing the
company's commitment to marketing.
PROFITABILITY: Despite rising costs, the company’s profitability has remained robust,
reflecting its ability to manage operational expenses effectively.
2019-20: Profit after costs was ₹1,400.00 Crores.
2020-21: Profit increased to ₹1,500.00 Crores, supported by increased sales and efficient cost
management.
2021-22: Profit up by ₹ 1,832.02 Crores
2022-23: Profit at All-Time High - ₹ 11,011.33 Crores due to cost discipline and strong sale
2023-24: Profit down at ₹ 122.51 Crores could be on account of rising input prices and
market intensity.

OVERALL TREND:The analysis of the five fiscal years (2019-2024) holds significant
insights regarding the company's growth in terms of operations and its financial management.
Here is a deeper look into the overall trends:

Growth and Expansion: The company has been able to grow at a steady pace as reflected by
the increase in raw material consumption and direct labor costs, meaning the production
capacity and operations are expanded. It is seen that the scale of production has scaled up
gradually as investments in raw materials, labor, and factory overheads increased from FY
2021-2022 onward.

Cost Control and Operational Efficiencies: Though raw material costs have increased,
especially in FY 2021-2022, the company has been able to control its direct wages and
production costs better over time. Prime costs peaked in FY 2021-22 but have since stabilized
and even decreased in FY 2023-24, indicating a focus on cost control measures such as more
efficient raw material procurement and labor management.

Profitability Peaks and Slumps: The company witnessed a significant peak in profitability
in FY 2022-23, which could be due to strategic cost management, economies of scale, and
possibly improved market conditions or pricing strategies. However, profitability declined in
FY 2023-24 to ₹122.51 Crores. This may be linked to external market factors such as
increased competition, rising material costs, or an inability to fully pass on rising costs to
consumers.

Fluctuating Selling & Distribution Expenses: While advertising and selling expenses
increased over these years, this reflects a focus on increased market share and product
visibility on the part of the company. Year-over-year consistency in the cost of advertising
also reflects sustained investment in branding and customer contact even as the company's
profit margin fluctuates.
Cost of Production and Goods Sold: The cost of production and COGS was high in the
initial periods, FY 2021-22. Nevertheless, the company was able to reduce the levels of these
costs in FY 2023-24 through improved manufacturing processes, optimized raw material
sourcing, and better cost management in general.

Strategic Adaptation: Altogether, the company has demonstrated the ability to adapt
strategically. The reduction in direct wages and raw material costs over the last year indicates
a move towards a more efficient way of manufacturing or perhaps a downsizing of
workforce, which could have been required to offset the market conditions faced in FY 2023-
24.
 CONCLUSION
An analysis of the financial performance of the company for the five fiscal years from 2019
to 2024 would reveal critical insights into its operational growth, financial management, and
adaptability in the face of changing market dynamics. The company has shown a clear trend
of growth by having an upward trajectory in raw material consumption and direct labor costs.
These metrics indicate growth in the overall production capacity by the company along with
increased operations, especially going into FY 2021-22. On the way towards FY 2021-22, the
major investments of raw materials and labors were accounted for by this company, an
aggressive scale up in operations at the time while market demand would be growing more.

Even if the costs had risen due to expansion, there has been very good control from the
company concerning operational expenses. Prime costs that include direct material and labor
cost have consistently risen in the first years but had stabilized in FY 2022-23 and declined
further in FY 2023-24. It indicates that strategic cost control through optimization of
procurement of raw materials and labour practices was put into place. The reduction in direct
wages and raw material costs in FY 2023-24 reflects an intentional effort toward improving
operational efficiencies and achieving better control over variable expenses.

Factory overheads, including depreciation, fuel, and power costs, have gradually increased
over the years, in line with the expanded production scale of the company. However, these
costs remained relatively stable in FY 2022-23 and FY 2023-24, suggesting that the company
successfully mitigated the impact of rising indirect manufacturing expenses. Notably, the
stabilization of depreciation costs at ₹500 Crores in FY 2022-23 reflects a more predictable
expense structure for the company’s long-term assets, contributing to a more sustainable
financial model.

With respect to production costs, both raw material and labor costs have followed that trend;
in the early years of expansion, it surged notably and then declined year over year in FY
2022-23 and FY 2023-24. This reduction shows how the company is trying its best to
smoothen the production process, streamline supply chains, and implement cost-effective
manufacturing techniques. The cost of goods sold, directly representing the manufacturing
cost of finished products, further decreased in FY 2023-24. This is reflected in the ability of
the company to use raw materials for finished goods better while controlling expenses
associated with those activities.

The profitability of the company has, however, been relatively good during the period under
discussion, considering its vulnerability to volatility in costs and market conditions. The
highest profitability the company had in FY 2022-23 is at ₹11,011.33 Crores. It depicts a peak
mark after considering successful cost control measures, economies of scale, and other
market advantages. The profitability significantly fell in FY 2023-24, with profits falling to
₹122.51 Crores. There are numerous reasons why it could be because of high input costs, the
intense level of competition, or an inability to transfer these costs to customers. Sharp decline
in profitability indicates the need for the company to revisit its pricing strategies, cost
management practices, and market positioning to regain its financial strength.

The company's commitment to expanding its market share and customer engagement is
reflected in the trends of selling and distribution expenses. Advertising and promotional
activities have remained a significant focus, with expenses increasing consistently over the
years. This continued investment in brand awareness and customer outreach is a testament to
the company's commitment to staying ahead of the competition in the market. However, the
increasing cost of advertising in FY 2023-24, even as profitability declined, calls into
question the efficiency of these expenses in generating revenue growth. The company may
need to reevaluate its marketing strategies to ensure a better return on investment.

Overall, the company's financial performance during this five-year period showcases its
ability to deal with the intricacies of scaling up, managing costs, and responding to shifting
market conditions. The growth pattern of raw material consumption, labor cost, and
production capacity reflects a healthy expansion plan. However, stabilization and subsequent
reduction in costs in the later years point to operational efficiency and strategic adaptation by
the company.

While the company has demonstrated resilience and adaptability, the decline in profitability
in FY 2023-24 serves as a hard lesson about the difficulties in sustaining growth and financial
performance. Over and above, the company should embrace new technologies, improve
supply chain efficiencies, and pursue other revenue streams. This will enable the company to
maintain its competitive position in a rapidly evolving market landscape by using a more
dynamic pricing strategy and deeper understanding of consumer behavior.

The analysis of the company's financial performance from 2019 to 2024 reveals a story of
growth, adaptation, and resilience. The company's ability to expand its operations, manage
costs, and achieve significant profitability during the earlier years is commendable. Although
it has encountered some rough patches in recent times in terms of profitability, there is a need
for sustainable innovation and strategic decision-making. The company would move along
with the future trends and capitalize on market opportunities if it builds on its strength and
addresses areas of improvement.