7/31/2019 fm indiv

1/13

Automobile industry in India

The automobile industry in India is one of the largest in the world and one of the fastest

growing globally India manufactures over 11 million vehicles(including 2 wheeled and 4wheeled ) and exports about 1.5 million every year . it is the world second largest

manufacturer of motorcycles with annual sales exceeding 8.5 million in 2010 India

passengers car and commercial vehicle manufacturing industry is the seventh largest in the

world with an annual production of more than 2.6 million units in 2009 .in 2010 India

emerged as Asias fourth largest exporter of passenger car. Behind japan south Korea and

Thailand

As of 2010 India is home to 40 million passengers vehicles and more than 2.6 million cars

were sold in India in 2010 (an increase of 26%), making the country the second fastest

growing automobile market in the world .according to the society of Indian automobile

manufacturers, annual car sales are projected to increases up to 5 million vehicles by 2015

and more than 9 million vehicles on the nation roads

Background of Tata motors

Tata Motors Limited (NSE: TATAMOTORS, BSE: 500570, NYSE: TTM) is an

Indian multinational automotive corporation headquartered in Mumbai, India. It is

the eighteenth largest motor vehicle manufacturing company in the world by volume. Part of

the Tata Group, it was formerly known as TELCO (TATA Engineering and Locomotive

Company). Its products include passenger cars, trucks, vans and coaches.

Tata Motors is South Asias largest automobile company; it is the leader in commercial

vehicles and among the top three in passenger vehicles. Worldwide it is the world's fourth-

largest truck manufacturer and second-largest bus manufacturer.[2]It has auto manufacturing

and assembly plants in Jamshedpur, Pantnagar , Lucknow, Sanand, Dharwad and Pune, India,

as well as in Argentina, South Africa, Thailand and the United Kingdom. Tata Motors has

produced and sold over 6.5 million vehicles in India since 1954.

http://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=TATAMOTORS&section=7http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500570http://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://www.nyse.com/about/listed/quickquote.html?ticker=ttmhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Automotive_industry#Top_vehicle_manufacturing_groups_.3Cby_volume.3Ehttp://en.wikipedia.org/wiki/Tata_Grouphttp://en.wikipedia.org/wiki/Commercial_vehicleshttp://en.wikipedia.org/wiki/Commercial_vehicleshttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-10K-1http://en.wikipedia.org/wiki/Tata_Motors#cite_note-10K-1http://en.wikipedia.org/wiki/Tata_Motors#cite_note-10K-1http://en.wikipedia.org/wiki/Jamshedpurhttp://en.wikipedia.org/wiki/Pantnagarhttp://en.wikipedia.org/wiki/Lucknowhttp://en.wikipedia.org/wiki/Sanandhttp://en.wikipedia.org/wiki/Dharwadhttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Dharwadhttp://en.wikipedia.org/wiki/Sanandhttp://en.wikipedia.org/wiki/Lucknowhttp://en.wikipedia.org/wiki/Pantnagarhttp://en.wikipedia.org/wiki/Jamshedpurhttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-10K-1http://en.wikipedia.org/wiki/Commercial_vehicleshttp://en.wikipedia.org/wiki/Commercial_vehicleshttp://en.wikipedia.org/wiki/Tata_Grouphttp://en.wikipedia.org/wiki/Automotive_industry#Top_vehicle_manufacturing_groups_.3Cby_volume.3Ehttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://www.nyse.com/about/listed/quickquote.html?ticker=ttmhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500570http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=TATAMOTORS&section=7http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India

7/31/2019 fm indiv

2/13

Originally a manufacturer oflocomotives, the company manufactured its first commercial

vehicle in 1954 in a collaboration with Daimler-BenzAG, which ended in 1969. In 2010, Tata

Motors surpassed Reliance to win the coveted title of 'India's most valuable brand' in an

annual survey conducted by Brand Finance and The Economic Times.[5]

Tata Motors is a cross-listed company; its stock trades on the Bombay Stock Exchange and

the New York Stock Exchange.

Acquisitions

In 2004 Tata Motors acquired Daewoo's truck manufacturing unit, now known as TataDaewoo Commercial Vehicle, in South Korea.[7]

In 2005, Tata Motors acquired 21% ofAragonese Hispano Carrocera giving it controllingrights of the company.

In 2007, Formed a joint venture with Marcopolo of Brazil and introduced low-floor busesin the Indian Market.[8]

In 2008, Tata Motors acquired British Jaguar Land Rover (JLR), which includes theDaimler and Lanchester brand names.[9][10][11][12]

In 2010, Tata Motors acquired 80% stake in Italy-based design and engineering companyTrilix for a consideration of 1.85 million. The acquisition is in line with the companys

objective to enhance its styling/design capabilities to global standards.[13]

http://en.wikipedia.org/wiki/Locomotiveshttp://en.wikipedia.org/wiki/Daimler-Benzhttp://en.wikipedia.org/wiki/Brand_Financehttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-top10-4http://en.wikipedia.org/wiki/Tata_Motors#cite_note-top10-4http://en.wikipedia.org/wiki/Tata_Motors#cite_note-top10-4http://en.wikipedia.org/wiki/Cross_listinghttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Tata_Daewoo_Commercial_Vehiclehttp://en.wikipedia.org/wiki/Tata_Daewoo_Commercial_Vehiclehttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-htanna-6http://en.wikipedia.org/wiki/Tata_Motors#cite_note-htanna-6http://en.wikipedia.org/wiki/Tata_Motors#cite_note-htanna-6http://en.wikipedia.org/wiki/Arag%C3%B3nhttp://en.wikipedia.org/wiki/Hispano_Carrocerahttp://en.wikipedia.org/wiki/Marcopolo_S.A.http://en.wikipedia.org/wiki/Tata_Motors#cite_note-autogenerated2-7http://en.wikipedia.org/wiki/Tata_Motors#cite_note-autogenerated2-7http://en.wikipedia.org/wiki/Tata_Motors#cite_note-autogenerated2-7http://en.wikipedia.org/wiki/Jaguar_Land_Roverhttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-media.ford.com-8http://en.wikipedia.org/wiki/Tata_Motors#cite_note-media.ford.com-8http://en.wikipedia.org/wiki/Tata_Motors#cite_note-communications1-10http://en.wikipedia.org/wiki/Tata_Motors#cite_note-communications1-10http://en.wikipedia.org/wiki/Tata_Motors#cite_note-autogenerated1-12http://en.wikipedia.org/wiki/Tata_Motors#cite_note-autogenerated1-12http://en.wikipedia.org/wiki/Tata_Motors#cite_note-autogenerated1-12http://en.wikipedia.org/wiki/Tata_Motors#cite_note-autogenerated1-12http://en.wikipedia.org/wiki/Tata_Motors#cite_note-communications1-10http://en.wikipedia.org/wiki/Tata_Motors#cite_note-communications1-10http://en.wikipedia.org/wiki/Tata_Motors#cite_note-media.ford.com-8http://en.wikipedia.org/wiki/Tata_Motors#cite_note-media.ford.com-8http://en.wikipedia.org/wiki/Jaguar_Land_Roverhttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-autogenerated2-7http://en.wikipedia.org/wiki/Marcopolo_S.A.http://en.wikipedia.org/wiki/Hispano_Carrocerahttp://en.wikipedia.org/wiki/Arag%C3%B3nhttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-htanna-6http://en.wikipedia.org/wiki/Tata_Daewoo_Commercial_Vehiclehttp://en.wikipedia.org/wiki/Tata_Daewoo_Commercial_Vehiclehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Cross_listinghttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-top10-4http://en.wikipedia.org/wiki/Brand_Financehttp://en.wikipedia.org/wiki/Daimler-Benzhttp://en.wikipedia.org/wiki/Locomotives

7/31/2019 fm indiv

3/13

Expansion

After years of dominating the commercial vehicle market in India, Tata Motors entered

the passenger vehicle market in 1991 by launching theTata Sierra, a multi utility vehicle.

After the launch of three more vehicles, Tata Estate (1992, a stationwagon design based

on the earlier 'TataMobile' (1989), a light commercial vehicle), Tata Sumo (LCV, 1994)

and Tata Safari (1998, India's first sports utility vehicle). Tata launched the Indica in

1998, the first fully indigenous passenger car of India. Though the car was initially

panned by auto-analysts, the car's excellent fuel economy, powerful engine and

aggressive marketing strategy made it one of the best selling cars in the history of the

Indian automobile industry. A newer version of the car, named Indica V2, was a major

improvement over the previous version and quickly became a mass-favorite. Tata Motors

also successfully exported large quantities of the car to South Africa. The success of

Indica in many ways marked the rise of Tata Motors.[14]

Tata Motors - 2010 Market Performance

The FY 2009-10 witnessed the highest sale of Tata Motors vehicles registering at 642,686

units. In March 2010, Tata Motors' total sales were recorded at 75,151 against 54,452

units vended in March 2009. Collective sales of Tata Motors commercial vehicles in the

Indian market for 2010 are 373,615 units. The company registered a growth of 41%

considering its previous year's sales while the collective sales of Tata Motors passenger

vehicles for 2010 are 234,930 units and are estimated the highest ever for the firm. The

firm's trade from exports for March 2010 was at 4,105 units against 1,799 units in the

previous fiscal.

http://en.wikipedia.org/wiki/Tata_Sierrahttp://en.wikipedia.org/wiki/Tata_Estatehttp://en.wikipedia.org/wiki/Stationwagonhttp://en.wikipedia.org/wiki/Tata_Sumohttp://en.wikipedia.org/wiki/Tata_Indicahttp://en.wikipedia.org/wiki/Tata_Motors#cite_note-Tata_Milestones-13http://en.wikipedia.org/wiki/Tata_Motors#cite_note-Tata_Milestones-13http://en.wikipedia.org/wiki/Tata_Motors#cite_note-Tata_Milestones-13http://en.wikipedia.org/wiki/Tata_Indicahttp://en.wikipedia.org/wiki/Tata_Sumohttp://en.wikipedia.org/wiki/Stationwagonhttp://en.wikipedia.org/wiki/Tata_Estatehttp://en.wikipedia.org/wiki/Tata_Sierra

7/31/2019 fm indiv

4/13

TATA MOTORS DIVIDEND POLICY

TATA motors has a very balanced dividend policy since 1955. In all, but two years the

company has paid a healthy dividend. Dividend smoothing has enabled the company so paydividend even at the cost of negative retained earnings. Despite being a growth company

expanding in new sectors the company has continued to strike a balance between retained

earnings and dividend pay-outs. In times when the company has been in crisis they have

looked at others measures of satisfying the needs for liquidity for shareholders like issue of

Bonus shares.

Automobile market is cyclic and the effect can be seen in the earnings of TML as well.

Whenever the profits of the company have exceeded expectations, the company has declared

an interim dividend while continuing with the existing pay-out ratio for regular dividends.

Outside India the company is also listed on the NYSE. The dividend policy of TML has

helped build a special relationship with retail customers who comprise more than 7 per cent

of the shareholders.

2008 - 2009 Crisis

TMs original core business in the passenger car division (small cars in India) was mildly

influenced by the crisis as TMs passenger car sales decreased by only 5%. The company was

much more negatively affected by the decline in sales of its commercial vehicle division

which representednot yet taking into account the JLR acquisitionsome 2/3 of its

turnover. However, the financial crisis had a much more serious impact [in the last quarter of

2008 and the first quarters of 2009] because of the burden of two major strategic initiatives.

The shift of the production site and postponement of the full Nano launch which was

originally scheduled for launch in March 2008 by two years led to unexpected resource needs

(new manufacturing site) and a shortfall of otherwise expected 2008-09 revenues. While this

burden was not caused or much exacerbated by the crisis in the global car industry, the

acquisition of JLR only few months before the onset of the crisis actually affected TM much

more: the dramatic decrease in JLRs

sales (JLR being fully exposed to European and US markets) significantly increased the

heavy losses of the new combined company in FY 2008/09; even more importantly, the

refinancing of the short term bridging loan of $ 3 billion for the acquisition became muchmore complicated and costly in a situation of dried up capital markets. The refinancing

7/31/2019 fm indiv

5/13

difficulties and increasing financing cost contributed to a serious debt overload of TM which

might have led to bankruptcy (and a take-over) if the TM would have been a stand-alone

company and would not have been protected and supported by its affiliation to the Tata group

and its well-connected chairman.

While it is no surprise that the crisis caused (temporary) problems and challenges for TMs

business it seems much more remarkable how little effect it had on the companys strategy.

TM steered through the crisis without much change in its path-changing (Nano) as well as its

path-breaking (JLR) strategy initiatives.

The constancy of purpose as well as a continuous and consistent execution of strategic plans

was maintained despite highly sceptical capital market markets which had temporarily

withdrawn support from TM. The unwavering pursuit of a transformational strategy of TM in

the face of the financial crisis can be ultimately explained only by the affiliation of the

company to a very strong and supportive conglomerate with a particular mode of operation:

TM is one of the few strategic companies of the Tata group; it is guided personally by the

Chairman of the Tata Group who has committed the group to a course of globalization and

innovation while relying on Indias comparative location advantages; it allows the company

to sustain long periods of low profitability and significant investments in resource and

capability accumulation; TM profits from the value and attraction of the TATA brand in its

dealings with suppliers, customers and the Government, as well as in attracting talented staff;

it also profits from various group support services like the groups excellence model, its

acquisition and finance expertise and its training efforts. This inherent affiliation strength

enabled TM to even use the crisis as an accelerator for the i mplementation of its strategies

by legitimizing a more swift course towards cost cutting in the JLR operations (announced

closure of one plant and shift of significant supply sources to India). It may also have

facilitated the far-reaching changes in TMs top management as experienced top managers

were available due to the crisis and a change of top management seemed to be justified in

view of TMs difficulties and temporary low performance. It can therefore be concluded that

the financial crisis has not much affected TMs transformational change or even reinforced

and accelerated it.

7/31/2019 fm indiv

6/13

Dividend and stock price snapshot of tata

motors of last 10 years

PAT ,retained earnings and equity dividend

snapshot of tat motors of last 10 years

http://lh3.ggpht.com/_kVwAJZhv82E/TbXryWjAqmI/AAAAAAAAAOs/ybJLe2etHDw/s1600-h/image[29].pnghttp://lh3.ggpht.com/_kVwAJZhv82E/TbXrxjmHMrI/AAAAAAAAAOk/YEUdPe4qWOE/s1600-h/image[24].pnghttp://lh3.ggpht.com/_kVwAJZhv82E/TbXryWjAqmI/AAAAAAAAAOs/ybJLe2etHDw/s1600-h/image[29].pnghttp://lh3.ggpht.com/_kVwAJZhv82E/TbXrxjmHMrI/AAAAAAAAAOk/YEUdPe4qWOE/s1600-h/image[24].png

7/31/2019 fm indiv

7/13

Analysis

2011 2010 2009 2008 2007

DPS 20 15 6 15 15EPS 28.55 39.26 19.48 52.63 49.65

7/31/2019 fm indiv

8/13

Current ratio

The ratio is mainly used to give an idea of the company's ability to pay back its short-term

liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). Thehigher the current ratio, the more capable the company is of paying its obligations Thecurrent ratio can give a sense of the efficiency of a company's operating cycle or its ability to

turn its product into cash. Companies that have trouble getting paid on their receivables or

have long inventory turnover can run into liquidity problems because they are unable to

alleviate their obligations. Because business operations differ in each industry, it is always

more useful to compare companies within the same industry.

2011 2010 2009 2008 2007

Current ratio

0.53 0.44 0.44 0.64 0.83

7/31/2019 fm indiv

9/13

Quick ratio

A measure of a companys liquidity and ability to meet its obligations. Quick ratio ,often

referred to as acid test ratio is obtained by subteracting inventories from current asset and

then dividing by current liability. Quick ratio is viewed as sign of companys financialstrength or weakness.

2011 2010 2009 2008 2007

Quick ratio 0.54 0.44 0.58 0.66 0.92

7/31/2019 fm indiv

10/13

Cash flow indicator ratio

Dividend payout ratio: The dividend payout ratio is the percentage of a company's annual

earnings paid out as cash dividends. Dividend payout ratios vary by industry and are affected

by market conditions and tax law. Moreover, both a low dividend payout ratio and a highdividend payout ratio can have good or bad implications. A low dividend payout ratio can

indicate a fast-growing company whose shareholders willingly forego cash dividends,

because the company uses the extra money to generate higher returns and, in turn, a high

stock price. But a low dividend payout ratio can also point to a company that simply can't

afford to pay dividends. Similarly, a high dividend payout ratio can indicate a blue-chip that

pays high dividends and whose stock price is temporarily depressed. But a high dividend

payout ratio can also point to a mature company with few growth opportunities. Certainly

other conclusions can be drawn from both a low dividend payout ratio and a high dividend

payout ratio, and the dividend payout ratio should thus be considered with other financial

indicators when picking stocks.

Earning retention ratio : he percentage of net earnings not paid out as dividends, but retained

by the company to be reinvested in its core business or to pay debt

2011 2010 2009 2008 2007

Dividend Payout Ratio NetProfit

80.96 44.28 34.52 32.51 35.34

Earning Retention Ratio 22.42 30.22 62.49 60.13 59.9

7/31/2019 fm indiv

11/13

Payout ratio

The amount of earnings paid out in dividends to shareholders. Investors can use the payout

ratio to determine what companies are doing with their earnings.

Payout ratio =dividend per share / earning per shares

A very low payout ratio indicates that a company is primarily focused on retaining its

earnings rather than paying out dividends.

The payout ratio also indicates how well earnings support the dividend payments: the lower

the ratio, the more secure the dividend because smaller dividends are easier to pay out than

larger dividends

2011 2010 2009 2008 2007

payoutratio

0.700525394 0.382068 0.308008 0.285009 0.302115

7/31/2019 fm indiv

12/13

Return on equity

The amount of net income returned as a percentage of shareholders equity. Return on equity

measures a corporation's profitability by revealing how much profit a company generates

with the money shareholders have invested.

ROE is expressed as a percentage and calculated as:

Return on Equity = Net Income/Shareholder's Equity

2011 2010 2009 2008 2007

ROE 9.06 15.15 8.09 25.98 28

7/31/2019 fm indiv

13/13

Return on assests

An indicator of how profitable a company is relative to its total assets. ROA gives an idea as

to how efficient management is at using its assets to generate earnings.

The assets of the company are comprised of both debt and equity. Both of these types of

financing are used to fund the operations of the company. The ROA figure gives investors an

idea of how effectively the company is converting the money it has to invest into net income.

The higher the ROA number, the better, because the company is earning more money on less

investment

2011 2010 2009 2008 2007

ROA 314.93 259.03 240.6 202.54 177.33