About Poddar Pigments Ltd.

Poddar Pigments Ltd., incorporated in the year 1991, is a Small Cap company (having a
market cap of Rs 148.54 Cr.) operating in Paints and Pigments sector.
Poddar Pigments Ltd. key Products/Revenue Segments include Speciality Masterbatches
which contributed Rs 342.15 Cr to Sales Value (98.94% of Total Sales), Export Incentives
which contributed Rs 3.57 Cr to Sales Value (1.03% of Total Sales), Other Operating
Revenue which contributed Rs 0.04 Cr to Sales Value (0.01% of Total Sales), Others which
contributed Rs 0.03 Cr to Sales Value (0.00% of Total Sales), for the year ending 31-Mar2015.
For the quarter ended 31-Dec-2015, the company has reported a Standalone sales of Rs.
83.84 Cr., up 6.16% from last quarter Sales of Rs. 78.98 Cr. and up 2.73% from last year
same quarter Sales of Rs. 81.62 Cr. Company has reported net profit after tax of Rs. 4.86 Cr.
in latest quarter.
The companys management includes Mr.B K Bohra, Mr.Navin Jain, Mr.Kishore Rungta,
Mr.M K Sonthalia, Mr.N Gopalaswamy, Mr.R K Sureka, Mr.S S Poddar, Mrs.Mahima P
Agarwal, Mr.Navin Jain.
Company has K N Gutgutia & Co. as its auditors. As on 31-Dec-2015, the company has a
total of 10,610,000 shares outstanding.

Poddar Pigments
For the Financial year ranging from 2013-2015, it is seen that Poddar Pigments did not raise
any capital through long term borrowings but only raised it through secured short-term
borrowings from Banks for its Working Capital Requirements.
It can be seen that the companys dependence on heavy borrowings from banks to meet its
working capital requirements reduced considerably over the three-year period, from Rs
744.87 lacs in FY2012-13 to Rs 75.42 lacs in FY2014-15.
(Rs. in lac)

Sources of Debt (Rs. in lac)

FY2012-13

FY 2013-14

FY2014-15

744.87

637.23

75.42

Secured Loans
Loans payable on Demand
from Bank
Working Capital Borrowings

Unsecured Loans
Loans payable on Demand
from Bank
Buyers Credit in Foreign
Currency

344.81

Promoters stake and detailed break-up of Equity

From the Companys Annual Report, it can be seen that the Promoters stake consisted of
60.2% of the shareholding. The total number of shares allocated to the Promoters amounted
to 6387566 shares. Moreover, the Promoters consisted of Domestic companies as well as
Resident Individuals, each holding 19.74% and 40.46% of the total shareholdings.

As we can we from the data below, reserves and surplus consisted of 88.79% of the total
Shareholders Equity.

Shareholders Equity

FY2012-13

FY 2013-14

FY2014-15

Share Capital

1061.00

1061.00

1061.00

Reserves and Surplus

6055.24

7122.77

8402.81

FY 2015

FY 2014

FY 2013

3.10

2.05

1.59

Comparative Analysis
Liquidity And Solvency Ratios
Current Ratio

Quick Ratio

1.85

1.68

1.40

Debt Equity Ratio

0.01

0.08

0.15

--

--

--

Long Term Debt Equity Ratio

We can see that the companys debt relative to the shareholders equity is very low in all the
three years. This shows that the company is not dependent on borrowings for meeting its
financial needs. A high Debt Equity Ratio is generally seen when firms go for an aggressive
expansionary strategy. Thus, it can be inferred that the firm is no longer seeking investment
for growth purposes.
Also, the firm clearly has a healthy Current Ratio, enabling it to meet its current liabilities
with the current assets it presently possesses. And, the liquidity aspect, the ability of the firm
to pay off its current liabilities has been increasing over the years which clearly is a good
sign.
The Quick Ratio, being more than 1, also shows the sound health of the firm.
Thus the increase in the Current Ratio and the Quick Ratio form the liquidity aspect, and
the increase in the Debt Equity Ratio from the solvency aspect shows that the firm is highly
liquid and healthy from a financial perspective.

Capital Structure
A capital structure is a mix of a company's long-term debt, specific short-term debt, common
equity and preferred equity. The capital structure is how a firm finances its overall operations
and growth by using different sources of funds.

Break up of Capital Structure ( Rs in Lac)

10.61

84.03

10.61

10.61

71.23

60.55
Shareholders Equity
Total Debt

0.75

6.37

10.9
Reserves and Surplus

Break up of Capital Structure ( in %)

0.75

84.03

10.61
6.37
10.61
10.9
10.61
Shareholders Equity

71.23

60.55
Reserves and Surplus

Total Debt

A healthy proportion of equity capital, as opposed to debt capital, in a company's capital

structure is an indication of financial fitness.
We can see from the above chart that the capital structure of Poddar Pigments is mainly
dominated by its Equity Capital (84.03% for FY 2014-15) as opposed to Debt Capital
(.75% for FY 2014-15) which mainly comprises of Long and Short term borrowings.
Poddar Pigments management clearly prefers the company to be debt free.
On the other hand, as Poddar Pigments stands to have only .75% Debt Capital, it looses the
benefit of tax shields which it receives on payment of interest on debt, which is tax deductible
whereas paying dividends or buying back stock is not. The tax shield mentioned which
results from deduction of interest on corporate debt from corporate taxes is the
largest(hidden) corporate subsidy in an economy.
Cost of Equity using CAPM Approach (Beta of the company can be taken
from the Ace Equity Database pertaining to a period of 1 year)

Notes to Accounts related to Debt and Equity Learnings from Comments