income statement of tata motors

8/17/2019 Income Statement of Tata Motors

1/101

EXECUTIVE SUMMARY

The purpose the dissertation is driven by the

goal of examining the financial statementsand ratio analysis of

TATA MOTORS

dated 31.03.2015 Financial Year 201!15

The method of the process in thedissertation is primary divided in"!

#trategic analysis$

Financial statement analysis$

%atio analysis$

Financial performance in automobile

industry$

&ar'et performance$

1 | P a g e


2/101

&ar'et position$

(conomic and the industry

environment$and

)ost saving initiatives

Through a thorough financial analysis$ my aimto understand the financial factors

is influencing the company and its decisionma'ing.

*ater$ + try and evaluate the various ratios toappreciate their impact on company,s

performance over the last four years. Thefinancial statements of

last four years areidentified$ studied and interpreted in light of

company,sperformance. )ritical decisions

of distributing dividends$ +ssue of bonus-ebentures and othercurrent nes are analy/ed

and their impact on the bottom line of thecompany is assessed.

2 | P a g e


3/101

Finally$ + study ratio analysis$ profit and lossstatements and balance sheet of the company

to analy/e the financial position of thecompany in the last year.

3 | P a g e


4/101

1.INTRODUCTION

1.1 Introduction

CURRENT CORPORATE STRATE! O" TATA MOTORS

The current strategy of the Tata &otors can bestbe summari/ed as -isruptive

+nnovation,$ herein it has offered loer pric

ed products and surpassed the mar'etexpectations. +ts to latest offeringshave further strengthened the Tata &otors

position as a leading player. hile ce has beena rage in the mar'et$ Tata ano has ta'en the

orld ith ae.

&uch of the practices of Tata &otors$ includingits customer focus$ attributes to the learning and

experience of over six decades. Tata &otors thatstarted ith a huge success and mar'et demand

faced its first product failure in the launch

of 1514. ith the foreign players entering+ndia$ Tata motors that as primarily focusingon igh eight commercial vehicles$ included*)6 in its offering and came up ith Tata 07.Tata &otors in the meanhile as also vying to

4 | P a g e


5/101

develop end to end in!house technical competenceand thus ventured into engine design

by partnering

ith )ummins. Tata motors continuously faced the problem

of overloading by the users and responded byintroducing stronger machines.oever$ a

ma8or change came after a heavy loss of %s 550cr in 1999 here init re!aligned its mar'etingteam and became more sensiti/ed to customer

needs. The revival strategy of Tata motors hadthree phased business plan. Firstly$ it focusedon the cost reduction initiatives for immediate

turnaround. #econdly$ it focused ondomestic and international groth through

ne products and improved sales andservice. Finally$ it lin'ed long term groth

ith increased business in *)6s$ ne productsegments and ne geographies. The strategy andlearnings have gone a long ay ith Tata &otors

earning net profit of more than %s 1000 cr even ina lean FY 201!15.

5 | P a g e


6/101

1.2 CORPORATE GOVERNANCE

Tata &otors being part of the Tata conglomeratehas its philosophy deeply lin'ed to the corephilosophy of the Tata group. +t has fair$ethical and transparent governance practicesalong ith highest standards of professionalism$

honesty$integrity and ethical behaviour. Thecompany gives maximum importance to the valuecreation and sustainability of all the othersta'eholders, vi/. customers$creditors$employees$ vendors$ community and the:overnment. Tata &otors have implemented theTata ;usiness (xcellence model hich is a part

ofTatacode of conduct applicable to all subsidiaries of Tata group. The companyoperatesith a strong social conscience and believein bringing benefit topeople,s lives. Tata&otors strictly follos The histle ;loer r an event he becomesaare of that could affect the business or

6 | P a g e


7/101

reputation of the )ompany. The (thics and)ompliance )ommittee ho monitors thecompliance of the Tata )ode of )onduct for


8/101

1.# MET$O%

The assignment is built by the folloing structure

CONC&USION

1.4 BRIEF DESCRIPTION OF TERMS

8 | P a g e


9/101

Introduction

The introduction ill contain introduction$ problemstatement$limitation and method.

Presentation

The presentation of TT &>T>%# ill provide the

reader insight into the company. Thepresentation contains among history$ onership$products and development in the mar'etprice.

Strate'ic analysis

The meaning of the strategic analysis is to get an

overvie of the external and internal factors.The conclusion of the strategic analysis is to befurther used in the valuation.The strategic analysis ill consist of three levels" #ociety level +ndustry level )ompany level

The analysis on the perspective of society is tosho hich factors in society hich effects

9 | P a g e


10/101

TT &>T>%#. This analy/e ill be done throughthe T analysis$ hich also or'sas a tool to gather the content of the strategy soe can conclude on the strategic analysis.

F+)+* #TT(&(T *Y#+#

The ;alance #heet


11/101

time in terms of the revenues obtained and thecost incurred during the year. Thus the financialstatement provides a summari/ed vie of financial

position and operations of a firm.

Meanin' of "inancial Analysis

The first tas' of financial analysis is to select theinformation relevant to the decision underconsideration to the total information contained inthe financial statement. The second step is to

arrange the information in a ay to highlightsignificant relationship. The final step isinterpretation and draing of inference andconclusions. Financial statement is the process ofselection$ relation and evaluation.

"eatures of "inancial Analysis

11 | P a g e


12/101

• To present a complex data contained in the

financial statement in simple and

understandable form.

• To classify the items contained in the financial

statement inconvenient and rational groups.

• To ma'e comparison beteen various groups

to dra various conclusions.


13/101

• To 'no the trend of business.

• To 'no the efficiency of mgt.

• To provide useful information to mgt.

Procedure of "inancial Statement Analysis

The folloing procedure is adopted for the analysisand interpretation of financial statements "!

• The analyst should ac=uaint himself ith

principles and postulated of accounting. eshould 'no the plans and policies of the

managements that he may be able to find outhether these plans are properly executed ornot.

• The extent of analysis should be determined so

that the sphere of or' may be decided. +f theaim is find out. (arning capacity of theenterprise then analysis of income statementill be underta'en. >n the other hand$ iffinancial position is to be studied then balancesheet analysis ill be necessary.

13 | P a g e


14/101

• The financial data be given in statement should

be recogni/ed and rearranged. +t ill involvethe grouping similar data under same heads.

;rea'ing don of individual components ofstatement according to nature. The data isreduced to a standard form. relationship isestablished among financial statements iththe help of tools ? techni=ues of analysis suchas ratios$ trends$ common si/e$ fund flo etc.

• The information is interpreted in a simple and

understandable ay. The significance andutility of financial data is explained for helpindecision ma'ing.

• The conclusions dran from interpretation are

presented to the management in the form ofreports. naly/ing financial statementsinvolves evaluating three characteristics of acompany" its li=uidity$ its profitability$ and itsinsolvency. short!term creditor$ such as aban'$ is primarily interested in the ability ofthe borroer to pay obligations hen they

come due. The li=uidity of the borroer isextremely important in evaluating the safety of a loan. long!term creditor$ such as abondholder$ hoever$ loo's to profitability andsolvency measures that indicate the company,s

14 | P a g e


15/101

ability to survive over a long period of time.*ong!term creditors consider such measures asthe amount of debt in the company,s capital

structure and its ability to meet interestpayments. #imilarly$ stoc'holders areinterested in the profitability and solvency ofthe company. They ant to assess theli'elihood of dividends and the groth potentialof the stoc'.

2. COMPANY PRESENTATION

15 | P a g e


16/101

The presentation ill serve as an introduction tothe strategic analysis and financial statement

analysis.

2.1 Company h!"o#y

Tata entered the commercial vehicle sector in 195after forming a 8oint venture ith -aimler!;en/ of

:ermany. fter years of dominating thecommercial vehicle mar'et in +ndia$ Tata &otorsentered the passenger vehicle mar'et in 1991 bylaunching the Tata #ierra$ a multi utility vehicle.

Tata subse=uently launched the Tata (state @1992A

a station agon design based on the earlierBTata&obileB @19C9D$ a light commercial vehicleD$the Tata #umo @199A *)6D and the Tata #afari

@199CA +ndiaBs first sports utility vehicleD.

Tata launched the +ndica in 199C$ the first fullyindigenous +ndian passenger car. lthough initially

critici/ed by auto analysts$ its excellent fueleconomy$ poerful engine$ and an aggressive

mar'eting strategy made it one of the best!sellingcars in the history of the +ndian automobile

industry. neer version of the car$ named +ndica

16 | P a g e

https://en.wikipedia.org/wiki/Daimler-Benzhttps://en.wikipedia.org/wiki/Tata_Estatehttps://en.wikipedia.org/wiki/Station_wagonhttps://en.wikipedia.org/wiki/Tata_Sumohttps://en.wikipedia.org/wiki/Tata_Estatehttps://en.wikipedia.org/wiki/Station_wagonhttps://en.wikipedia.org/wiki/Tata_Sumohttps://en.wikipedia.org/wiki/Daimler-Benz


17/101

62$ as a ma8or improvement over the previousversion and =uic'ly became a mass favourite. Tata&otors also successfully exported large numbers of

the car to #outh frica. The success of the +ndicaplayed a 'ey role in the groth of Tata &otors.

+n 200$ Tata &otors ac=uired -aeooBs #outhEorea!based truc' manufacturing unit$ -aeoo

)ommercial 6ehicles )ompany$ later renamed Tata-aeoo.

>n 27 #eptember 200$ Tata &otors rang theopening bell at the e Yor' #toc' (xchange to

mar' the listing of Tata &otors.

+n 2005$ Tata &otors ac=uired a 21 controllingsta'e in the #panish bus and coach

manufacturer ispano )arrocera. Tata &otors

continued its mar'et area expansion through theintroduction of ne products such as buses@#tarbus and :lobus$ 8ointly developed ith

subsidiary ispano )arroceraD and truc's @ovus$ 8ointly developed ith subsidiary Tata -aeooD.

+n 2004$ Tata formed a 8oint venture ith the;ra/il!based &arcopolo$ Tata &arcopolo ;us$ to

manufacture fully built buses and coaches.

+n 200C$ Tata &otors ac=uired the ;ritish carma'er Gaguar *and %over$ manufacturer of the

17 | P a g e

https://en.wikipedia.org/wiki/Hispano_Carrocerahttps://en.wikipedia.org/wiki/Hispano_Carrocera


18/101

Gaguar$ *and %over$ and -aimler luxury car brands$from Ford &otor )ompany.

+n &ay 2009$ Tata unveiled the Tata orld Truc'range 8ointly developed ith Tata -aeooA the

range ent on sale in #outh Eorea$ #outh frica$the #%) countries$ and the &iddle (ast at the

end of 2009.

Tata ac=uired full onership of ispano )arrocerain 2009.

+n 2009$ its *uc'no plant as aarded the H;estof llH %a8iv :andhi ational Iuality ard.

+n 2010$ Tata &otors ac=uired an C0 sta'e in the+talian design and engineering company Trilix forJ1.C5 million. The ac=uisition formed part of thecompanyBs plan to enhance its styling and design

capabilities.

+n 2012$ Tata &otors announced it ould investaround 4 billion in the development of Futuristic

+nfantry )ombat 6ehicles in collaborationith -%->.

+n 2013$ Tata &otors announced it ill sell in +ndia$the first vehicle in the orld to run on compressedair @engines designed by the French company &-+D

and dubbed H&ini )TH.

18 | P a g e

https://en.wikipedia.org/wiki/SAARChttps://en.wikipedia.org/wiki/Rajiv_Gandhi_National_Quality_Awardhttps://en.wikipedia.org/wiki/DRDOhttps://en.wikipedia.org/wiki/SAARChttps://en.wikipedia.org/wiki/Rajiv_Gandhi_National_Quality_Awardhttps://en.wikipedia.org/wiki/DRDO


19/101

+n 201$ Tata &otors introduced first Truc' %acingchampionship in +ndia HT1


20/101

#outh frica$ Thailand$ and the Knited Eingdom. +thas research and development centres in


21/101

manufacturer -aeoo )ommercial 6ehicles)ompany in 200 and purchased Gaguar *and

%over from Ford in 200C.

Tata &otors is listed on the @;#(D ;ombay #toc'(xchange$ here it is a constituent of the ;#(#(#(L index$ the ational #toc' (xchange of +ndia$ and the e Yor' #toc' (xchange. Tata

&otors is ran'ed 2C7th in the 201 Fortune :lobal500 ran'ing of the orldBs biggest corporations.

*.* TATA motors mar+et

Tata &otors @;#( !0.17 D ants to regain themar'et share it lost in passenger vehicles$ as it seta target to double segment sales to more than

la'h units a year by the end of the decade.

The company had a 10 mar'et share more thana decade ago$ hen its +ndica hatchbac' as a

favourite for personal use and as a taxi. Themar'et share has no fallen to 5.7. +f it

manages to achieve the target$ it ill return to

about 10 of the estimated mar'et in 2020.

Tata &otors is pro8ecting the personal vehiclemar'et to reach .1 million units by that time$

hile the forecast of global research firm G-


22/101

is .5 million. ;ut it ill miss late managingdirector Earl #lymBs vision to become one of the

top to players by 2020.

Tata &otors unveiled the target before its vendorslast ee'. )hairman )yrus &istry urged suppliersto improve their =uality and scale to global levels

so that the company can compete moreaggressively ith multinational auto ma'ers$ said

people ho attended the meeting in


23/101

oever$ gaining bac' the lost ground ill be

tough as rivals such as French auto ma'er %enault$local utility vehicle ma8or &ahindra ? &ahindra$mar'et leader &aruti #u/u'i ;#( !0.19 andyundai &otor have all lined up several models forlaunch in +ndia.

The target is too ambitious$ said :aurav 6angaal$

senior analyst for forecasting at consultancy +#utomotive. ;ut he said the focus given by the topmanagement can act as a strong driving force.HTata has the ability to cla bac' in the mar'et.The product pipeline seems to be in place$ it all

23 | P a g e

http://www.zigwheels.com/newcars/Renaulthttp://economictimes.indiatimes.com/maruti-suzuki-india-ltd/stocks/companyid-11890.cmshttp://economictimes.indiatimes.com/maruti-suzuki-india-ltd/stocks/companyid-11890.cmshttp://www.zigwheels.com/newcars/Hyundaihttp://www.zigwheels.com/newcars/Renaulthttp://economictimes.indiatimes.com/maruti-suzuki-india-ltd/stocks/companyid-11890.cmshttp://economictimes.indiatimes.com/maruti-suzuki-india-ltd/stocks/companyid-11890.cmshttp://www.zigwheels.com/newcars/Hyundai


24/101

no depends on timely launches of ne products.H

+t has lined up at least four passenger vehicles forlaunch in the coming 1C months. These are theEite! hatchbac'$ Eite!5 sedan$ (agle )rossover orexa$ and a sub! meter compact #K6 M exon or>sprey as it is internally called.

Tata &otors spo'esperson said as a policy$ it

does not comment on future products or grothpro8ections$ but added that company is committedto build strong products for the future.

The company is strengthening its position in thecommercial vehicle front as ell. To ta'e onincreasing competition from global truc' giant

-aimler and sho' *eyland ;#( 1.03 $ Tata&otors is coming out ith a ne range ofaffordable truc's$ called #igna. Than's to a pic'!upin mining and infrastructure activity$ the companyis aiming 25!30 groth in medium and heavytruc' sales over the next 12!2 months.

The company has seen groth momentumreturning to the commercial vehicle mar'et$ thespo'esperson said. Hith our mar'et!definingproducts$ such as


25/101

in our netor'$ e expect to continue ith ourstrong leadership position.H

t last ee'Bs meeting$ Tata &otors informedvendors that the company is focussing ondeveloping future!ready technology and may beready ith ;# 6 and ;# 6+ engines much beforethese stricter emission regulations come into force.+t expects the dvanced &odular


26/101

scale and in introducing ne products at a =uic'erpace.

The company has already got board approval toinvest in the future modular platform. +n the firsthalf of fiscal 2014$ Tata &otors passenger car salesgre 27 to about 55$000 units$ even as theutility vehicle segment posted a similar level ofdecline.

#ales of passenger vehicles$ including vans$totalled more than 74$000 in the first half and thecompany is expecting this to reach to la'h for theyear.

>n the commercial vehicle front$ it has seengroth of almost 30 in the medium and heavy

commercial vehicle space to 4$279 units.oever$ the small commercial vehicles segmentcontinues to remain sluggish.

Through its 66( @6alue ddition and 6alue(ngineeringD initiative$ the company is aiming tosave up to %s 500 crore this year and %s 900 crore

next year. nd interestingly$ a senior executive toldvendors that the company is studying the=uadricycle space$ and not ruling out the possibilityof entering it.

26 | P a g e

http://economictimes.indiatimes.com/topic/investhttp://economictimes.indiatimes.com/topic/invest


27/101

27 | P a g e


28/101

,#ource" economic timesD

28 | P a g e


29/101

,#ource" ndtvprofitsD

29 | P a g e


30/101

#ource"cnbc

30 | P a g e


31/101

*.# Shareholders

31 | P a g e


32/101

32 | P a g e


33/101

#ource"tata motors annual report

33 | P a g e


34/101

#ource" economic times

34 | P a g e


35/101

#ource" ndtv profits

35 | P a g e


36/101

#. STRATEIC ANA&!SIS

#.1 Macro analysis

#.1.1 PEST Analysise ill go through the T>%#, strategic position. Thestrategic analysis focuses on the nonfinancialvalue drivers. The non! financial value drivers

ma'es an important part of thebudget$ hich later ill be used for valuation$ this

is due to the value drivers hich arenNtfinancial$ but is a basis for the financial drivers$

hich are used in the budget.The strategic analysis ill contain the folloingthree levels" #ociety!$ industry! and company

36 | P a g e


37/101

level. First e ill analy/e the society level$ thenthe industry level and at last the company

level.

#.* S-OT Analysis

37 | P a g e


38/101

38 | P a g e


39/101

39 | P a g e


40/101

The &a8or #;K,s of Tata &otors in hich they havedivided their business are"

O)ommercial 6ehicles @*ight eight truc's tomulti!axle 0 ton vehiclesD

O


41/101

41 | P a g e


42/101

#.# Structural analysis of industry

3.3.1 En"$#p#!$ P#o%$!! Mo&$' (EPM) *

P#o%$!! Mana+$m$n" a" Ta"a Mo"o#!

hen Tata &otors made a huge loss of 500

crores in the year 2000!01$ analysts had all butritten off Tata &otors fortunes. ;ut T&* asdetermined to bounce bac' and hence startedthe process of serious introspection. Three 'eyreasons ere identified for the massive lossMaD *ac' of customer focusbD lac' of process management

cD lac' of ne products and variants. T&* haddecided the threee l emen t s i n a s y s t ema t i c manne r$t he ma8or emphasis being processmanagement.Tata &otors hence started to adopt the


43/101

nce of individual employees, inrunning theoperations. This also entailed thedocumentation of the processes$hich brought

about lot of clarity in terms of roles andresponsibilities ofprocessoners$ inputs and outputs o f the processes$ in process and end processmeasures$ entities involved and its lin'age ith the +#>and T# standard system. The (nterprise


44/101

3.3.2 ># - -K)T+>&:(&(T

Inbound logistics

Procurement

44 | P a g e


45/101

,.,., Man-a%"-#n+

+n an automotive industry$ the main emphasis on =uality ould be on themanufacturingprocess. There ould be about fifteen thousandaccessories and component parts to assembleand activate hile e manufacture a car.

Tatamotors believes in the indigenousdevelopment of manufacturing process anddevelopment of technology. Knless manyautomobile companies$ the strategy of the firm isnot to blindly adopt any ne successfultechnology. +t believes in state!of!the!arttechnology. ith reference to the product

mar'et matrix @ithp r oduc t d eve l opmen t $ ma r 'e t d eve l opment $ mar'et penet ra t ion andd ivers i f i cationD hich composes the merging o f product ion and mar'et ingstrategies Tata motors isseen to follo the diversification strategyherein it produces ne products and gets into

ne mar'et to target ith the product.

45 | P a g e


46/101

,.,.4 P#o&-%" &$/$'opm$n"

e


47/101

motors. ;esides this centre the%esearch anddevelopment of Tata motors has becomeinternational ith centresin #pain$ KE and #outh

Eorea also.

,.,.0 Co!" C-""n+ T$%hn-$!

fter a rough fiscal year in 2001$ Tata

&otors rea li/ed that the only ay to survive

this mar'et as to cut don on costs. They startedpracticing an entirely ne ay of procuring

their supplies and hence gave rise to a

uni=ue ay of managing supplier relationship.

The earlier traditional method that Tata

&otorsgave the technical speci fications to t

he supplier and the supplier ho assuccessful in ac=uiring the bid filled up the

orders. oever under the ne system Tata

&otors simply provided the output they

expected$ and alloed the

suppliers to be as creative and innovative it

h their designs$ materials$ and prices.+n other ords Tata &otors ould simply

describe the goal that they anted to achieve

ith certain part and the suppliers ould

supply the parts

47 | P a g e


48/101

according their on convenience. For exam

ple instead of giving technica l specifications

for the ind shield of Tata +ndica$ it ould 8ust

describe the goal of cleaning the indshield$ and

let the suppliers come up ith ideas to

meet those goals in the most cost effective

manner$ ithout compromising on =uality. This

practice led to huge cost savings in ra materials

and the Tatas could deliver the cheapest car of

the orld at 8ust 2500P. ;y leveraging localdesign capabilities and avoiding the dependency

on high end design systems$ Tata &otors has been

able to provide lo cost solutions in a continuous

and efficient manner. lso Tata &otors tried the

innovative method of Qero ;ased )osting. For

exampleinitially T&* paid for forged components on a co

st plus basis$ in the ne system it paid a price

depending on the eight of the forgings.

#.#. /uality Mana'ement

48 | P a g e


49/101

The sh i f t ingof focus on T I& @Tota l Iual i ty &anagem

entD and #ix #igmaprinciples by Tata&otors has been a gradual one since the year2000. >ne =uarter of the or' force undergotraining to maintain and create high =ualityproducts every year. The personnel are evensent to foreign manufacturer,s locations$henever a ne machine ould be imported$ to

undergo training.

O(erations

49 | P a g e


50/101

,.,. O-"3o-n& o+!"%!

50 | P a g e


51/101

,.,.5 Sa'$! 6 Ma#7$"n+ a" Ta"a Mo"o#!

P#o&-%" an& B#an& S"#a"$+y

Tata &otors follos a su0 0rand strate'y.lthough there is no separate ;rand for TT

motors as such but the TT brand is used

as a mother brand. ll the products of

benefit from the association ith the TT

brand$ hich in +ndia stands for trust andreliability. TT motors products can be

categorised into four ma8or categories"


52/101

shos the different product lines of each category

and the launch periods as ell. @#ource" )ompany

ebsiteD.

The products also reflects the commitment of

TT &otors to customer needs and

ne product innovation. The company has

also exported its vehicles aftercreating

customised variants hich have higher payloadand engine capacity. +t

has also customised its domestic products by

introducing passenger option$higher payloads$

bigger engines etc.+n broad terms the folloing

sums up the TT motors mar'eting philosophy"

52 | P a g e


53/101

,.,.8 P#%n+

TT motors have a pricing advantage due toits lo cost leans manufacturing abilities. The in!house steel company acts as a shoc' absorberagainst steel pricefluctuations. The pricing methodology adopted is that of a perceived value pricing. +t asdemonstrated by the %s 1 *a'h price of TT ano$

here the cost of producing the car left a verysmall margin for TT.

,.,.19 P#omo"on

TT &otors uses extensive promotion for itspassenger car segment. The Ktility vehicle andcommercial passenger carrier follo this segmentbased on #hare of 6oice.

,.,.11 D!"#3-"on

TT &otors has a large netor' of dealersand #toc'yards$ all across the globe and usesthe - technology for efficient cooperationbeteen these dealers. +ts distribution netor'includes operations in +ndia$ epal$ ;hutan$

53 | P a g e


54/101

:hana$ +taly$


55/101

focus more on the core business. This inturn has provided flexibility to Tata &otors interms of delivering the right product at the right

time at the right place. Therefore$ today$Tata &otors is a fully integrated automobilemanufacturer ith a portfolio hich covers truc's$ buses$ utility vehicles ? passengervehiclesScars. The dealers and suppliers arebound by a #upplier %elationship&anagement


56/101

4. Fnan%a' S"#a"$+y o TATA MOTORS

4.1 Co!" %-""n+ an& #$%o/$#y !"#a"$+$!:

The transformation of Tata &otors into a highly successful$

ell!diversified$ and globally ambitious automobile giant

represents one of +ndia,s most remar'able corporate!success

stories in recent

t imes.+n 2001 after a decade of strong revenue and m

arg in groth$ Tata &otorsplunged into a financial crisis

hen demand for its truc's suddenly collapsed. The lost salescompounded by heavy investment for its entry into the

passenger car business$ the cost of complying ith ne

emissions standards$ and an increasing threat from overseas

competitors caused Tata &otors to shoc' the mar'ets ith a

5 billion rupee @P110 millionD loss for the fiscal year ending &arch

2001.(ven in late 90,s Tata &otors as predominantly a

manufacturer of commercial vehicles$ and that is a very

cyclical business. t the time it as ma'ing huge

investments in car manufacturing to move aay from that

cyclicality. ;ut hile itas in the middle of this diversification$

the commercial!vehicle mar'et in +ndia shran' by more than

0 percent$ ith massive conse=uences for both the to

expand$ more particularly$ the bottom lines of the company. The

5 billion rupee loss

i n 2 0 0 1 a s t h e f i r s t t im e s o m e t h i ng o n t h i s s c a l

e h ad happened i n t h e company,s history hich really

shoo' everybody ithin the organi/ation. #o in 2001 Tata &otors

decided on a recovery strategy that had three distinct phases$

each of hich as intended to last for around to yearsMsix

years in all.


57/101

to as to be about consolidating our position in +ndia$ and

phase three as to involve going outside +ndia and expanding our

operations internationally. The 'ey ob8ectives ere to move to a

system of mar'et pricing and to reduce our brea'!even point$

both of hich called for ma8or reductions in costsMvariable

costs$ fixed costs$ and interest costs. +t used many approaches to

cost reduction$ including bench!mar'ing its rivals. For example$ it

too' apart vehicles to see hat they could do to modi fy their

products and to loer costs . They ent in for e!sourcing$

hich as then very ne$ but today it is the largest

company doing e!

s o u r c i ng i n + nd i a a nd o ne o f t h e l e ad i ng o ne s i n t

h e au t o mo b i l e i n dus t r yorldide. +n to and a half

years$ it reduced our brea'!even from nearly to!thirds of

capacity utili/ation to around one!third$ hich meant that

even if the mar'et shran' by close to 40 percent$ it

ould still be profitable. The hole organi/ation really got

together to ensure that the bleeding

stopped.For ph as e t o$ th e c on ce nt ra t i on a s o n i

mpr ov i ng p r odu c t =u a l i t y and upgrading product featuresso as to ma'e the products more competitive. +t also started

or' on ne products that ould be re=uired by the mar'et after

three to five years and strengthened its position in the

mar'etplace by setting up a nesales!

planning process$ tightening credit norms$ improving the

l i=uidity andprof itab i l i t y of th e dealer s$ reor ient i ng to

ard customer sat is fa ct ion$ andex t en d i n g t h e r ea c

h o f i t s d i s t r i b u t i o n n e t o r ' . F o r p h a s e t h r e e $t h e concentration as on starting or' on international

mar'ets by identifying 'ey mar'ets and segments and

developing a comprehensive plan to improve its

competitive position so as to get a respectable mar'et

57 | P a g e


58/101

share. +t also started loo'ing at opportunities for inorganic

groth.

4.2 Ta"a Mo"o#! Fnan%$ "& (TMF)

The auto financing arm for Tata &otors as established in1957 in the name of ;


59/101

4.2.2 Strategy defned

T&F came into existence for the prime reason of easyfinancing the Tata )ar or )ommercial vehicles. Throughthese ne initiatives$ T&F aimed to reach small tons andvillages$ here they could find buyers for their products$such as the ce and$ going forard$ for their small car. +nthe competitive orld$ there is an existing demand forcars$ and along ith it$ it i s important to ma'e financeavailable to the potential buyers to help them buy thevehic les. ith the lo availability of conventional ban'ingservices in rural areas$ it as necessaryfort h e m t o o f f e r f i n a n c e t o t h e i r b u y e r si n s u c h f a r ! f l u n g m a r ' e t s . Tata &otors hasdealers in nearly every district in +ndia. This helps them to build agood database of the financial credibility and orthiness oftheir customers across the country$ hich ill be valuableinformation for the entire Tata :roup. #imi larly$ thisperspective ould be deployed in their global operationsM in #outh frica$ #outh sia$ #outh Eorea and the &iddle (astR here they can adopt. The partnering strategy could

ell involve a local ban' in the respective country as theindividual countries have their on financial regulatoryre=uirements. +n other cases e could partner ith +ndianban's hich have operations in foreign countries.The #tate ;an' of +ndia$ for example$ is already presentin many frican countries. #o it can be loo'ed upon as aprospective partner.

59 | P a g e


60/101

0. Fnan%a' !"a"$m$n" ana'y!!

0.1 In"#o&-%"on"inancial statement analysis @or financial analysisD is theprocess of revieing and analy/ing a companyBs financialstatements to ma'e better economic decisions. These statementsinclude the income statement$ balance sheet$ statement of cashflos$ and a statement of retained earnings. Financial statementanalysis is a method or process involving specific techni=ues forevaluating ris's$ performance$ financial health$ and future

prospects of an organi/ation.+t is used by a variety of sta'eholders$ such as credit and e=uityinvestors$ the government$ the public$ and decision!ma'ersithin the organi/ation. These sta'eholders have differentinterests and apply a variety of different techni=ues to meet theirneeds. For example$ e=uity investors are interested in the long!term earnings poer of the organi/ation and perhaps thesustainability and groth of dividend payments. )reditors ant toensure the interest and principal is paid on the organi/ations debtsecurities @e.g.$ bondsD hen due.

ori/ontal analysis compares financial information over time$typically from past =uarters or years. ori/ontal analysis isperformed by comparing financial data from a past statement$such as the income statement. hen comparing this past

information one ill ant to loo' for variations such as higher orloer earnings.

6ertical analysis is a percentage analysis of financial statements.(ach line item listed in the financial statement is listed as thepercentage of another line item. For example$ on an income

60 | P a g e

https://en.wikipedia.org/wiki/Income_statementhttps://en.wikipedia.org/wiki/Balance_sheethttps://en.wikipedia.org/wiki/Statement_of_cash_flowshttps://en.wikipedia.org/wiki/Statement_of_cash_flowshttps://en.wikipedia.org/wiki/Statement_of_retained_earningshttps://en.wikipedia.org/wiki/Income_statementhttps://en.wikipedia.org/wiki/Balance_sheethttps://en.wikipedia.org/wiki/Statement_of_cash_flowshttps://en.wikipedia.org/wiki/Statement_of_cash_flowshttps://en.wikipedia.org/wiki/Statement_of_retained_earnings


61/101

statement each line item ill be listed as a percentage of grosssales. This techni=ue is also referred to as normali/ation orcommon!si/ing.

0.2 R$%a!"n+ ;nan%a' !"a"$m$n"!

+nvestors typically are attempting to understand ho much cashthe company ill generate in the future and its rate of profitgroth$ relative to the amount of capital deployed. nalysts maymodify @HrecastHD the financial statements by ad8usting theunderlying assumptions to aid in this computation. For example$

operating leases @treated li'e a rental transactionD may be recastas capital leases @indicating onershipD$ adding assets andliabilities to the balance sheet. This affects the financial statementratios.

%ecasting financial statements re=uires a solid understanding ofaccounting theory. >nce the cash flo in future years ispro8ected$ a discount rate or interest rate ill be applied tomeasure the value of the company and its stoc' or debt

0., A%%o-n"n+ po'%y

@aD ;asis of preparation

The financial statements of the )ompany have been prepared under the historical cost convention on an accrual basis of accounting in accordance ith the :enerally ccepted ccounting


62/101

201 and relevant provisions of the )ompanies ct$ 2013 @the2013 ctD.

@bD Kse of estimates The preparation of financial statements re=uires management toma'e 8udgments$ estimates and assumptions$ that affect the

application of accounting policies and the reported amounts ofassets$ liabilities$ income$ expenses and disclosures of contingent liabilities at thedate of these financial statements. ctual results may differ fromthese estimates. (stimates and underlying assumptions are revieedat each balance sheet date. %evisions to accounting estimates arerecognised in the period in hich the estimate is revised and future periods affected. @cD %evenue recognition

The )ompany recognises revenues on the sale of products$ netof discounts and sales incentives$ hen the products are deliveredto the dealer S customer or hen delivered to the carrier for exportsales$ hich is hen ris's and reards of onership pass to the dealerS customer.

#ales include income from services$ and exchange fluctuationsrelating to export receivables. #ales include export and other recurringand non!recurring incentives from the :overnment at the nationaland state levels. #ale of products is presented gross of exciseduty here applicable$ and net of other indirect taxes.

62 | P a g e


63/101

%evenues are recognised hen collectability of the resulting

receivables is reasonably assured. -ividend from investments is recogni/ed hen the right to

receive the payment is established and hen no significant uncertainty as to measurability or collectability exists. +nterest income is recogni/ed on the time basis determined by

the amount outstanding and the rate applicable and here nosignificant uncertainty as to measurability or collectability exists.

@dD -epreciation and amortisation

@iD -epreciation is provided on the #traight *ine &ethod @#*&D

over the estimated useful lives of the assets considering the nature$estimated usage$ operating conditions$ past history of replacement$anticipated

technological changes$ manufacturers arranties andmaintenance support. Ta'ing into account these factors$ the )ompany hasdecided to retain the useful life hitherto adopted for various categories offixed assets$ hich are different from those prescribed in #chedule ++of the ct. (stimated useful lives of assets are as follos "

63 | P a g e


64/101

Type of sset (stimated useful life

U *easehold *and mortised over the period of the

lease U ;uildings$ %oads$ ;ridges

and culverts to 40 years U


65/101

unamortised depreciable amount has been charged over therevised remaining useful life.

@ivD -epreciation is not recorded on capital or'!in!progress until construction and installation are complete and asset is ready forits intended use. @vD )apital assets$ the onership of hich doesnBt vest ith the

)ompany$ other than leased assets$ are depreciated over theestimated period of their utility or five years$ hichever is less.

@eD Fixed assets

@iD Fixed assets are stated at cost of ac=uisition or constructionless accumulated depreciation S amorti/ation and accumulatedimpairment$ if any. @iiD


66/101

date the asset is ready for intended use$ based on borroingsincurred specifically for financing the asset or the eighted average rateof

all other borroings$ if no specific borroings have been incurredfor the asset. The cost of ac=uisition is further ad8usted forexchange differences relating to long term foreign currency borroings attributable to the ac=uisition of depreciable asset .e.f. pril 1$2007. @ivD #oftare not exceeding %s.25$000 and product development

costs relating to minor product enhancements$ facelifts and upgradesare charged off to the #tatement of


67/101

ssets ac=uired under finance leases are recognised as an asset

and a liability at the commencement of the lease$ at the loer of the

fair value of the assets and the present value of minimum leasepayments. The finance expense is allocated to each period during the leaseterm so as to produce a constant periodic rate of interest on theremaining balance of the liability. ssets given under finance leases are recognised as receivables at an amount e=ual to the net

investment in the lease and the finance income is based on a constant rate ofreturn on the outstanding net investment. @iiD >perating lease

*eases other than finance lease$ are operating leases$ and the

leased assets are not recognised on the )ompanyBs ;alance #heet.


68/101

@1D (xchange differences arising on settlement of transactionsand translation of monetary items other than those covered by @2Dbelo are

recogni/ed as income or expense in the year in hich they arise. (xchange differences considered as borroing cost arecapitali/ed to the extent these relate to the ac=uisition S construction of=ualifying assets and the balance amount is recogni/ed in the #tatement of


69/101

depreciable assetsD are amortised over the period till the date of maturity or &arch 31$ 2020$ hichever is earlier. @iiD edge accounting

The )ompany uses foreign currency forard contracts to hedgeits ris's associated ith foreign currency fluctuations relating to highly probable forecast transactions. ith effect from pril 1$200C$ the )ompany designates such forard contracts in a cash flohedging relationship by applying the hedge accounting principles set outin ccounting #tandard 30! Financial +nstruments" %ecognition and &easurement. These forard contracts are stated at fair value at each reporting

date. )hanges in the fair value of these forard and optioncontracts that are designated and effective as hedges of future cash flosare recogni/ed directly in edging %eserve ccount under %eservesand

#urplus$ net of applicable deferred income taxes and theineffective portion is recognised immediately in the #tatement of


70/101

on the hedging instrument recognised in edging %eserveccount is retained there until the forecasted transaction occurs.

+f the forecasted transaction is no longer expected to occur$ thenet cumulative gain or loss recognised in edging %eserve ccount is immediately transferred to the


71/101

+nternal %ate of %eturn method. )onse=uently$ a constant rate of return on the net outstanding amount is accrued over the period ofcontract.

The )ompany provides an alloance for hire purchase and loan receivables that are in arrears for more than 11 months$ to theextent of an amount e=uivalent to the outstanding principal andamounts due but unpaid$ considering probable inherent loss includingestimated realisation based on past performance trends. +n respect of loan contracts that are in arrears for more than 4 months but not

more than 11 months$ alloance is provided to the extent of 10 of the outstanding and amount due but unpaid. @'D +nventories

+nventories are valued at the loer of cost and net realisable

value. )ost of ra materials and consumables are ascertained on amoving eighted averageS monthly moving eighted average basis.)ost$ including variable and fixed overheads$ are allocated to or'!in!progress$ stoc'!in!trade and finished goods determinedon full absorption cost basis. et realisable value is estimated sellingprice in the ordinary course of business less estimated cost ofcompletion and selling expenses. @lD (mployee benefits

@iD :ratuity

71 | P a g e


72/101

The )ompany has an obligation toards gratuity$ a definedbenefit retirement plan covering eligible employees. The plan providesfor a

lump sum payment to vested employees at retirement$ deathhile in employment or on termination of employment of an amounte=uivalent to 15 to 30 days salary payable for each completed year of service. 6esting occurs upon completion of five years of service. The)ompany ma'es annual contributions to gratuity fund established as trust.The

)ompany accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation carried out ateach ;alance #heet date using the pro8ected unit credit method. @iiD #uperannuation

The )ompany has to superannuation plans$ a defined benefit

plan and a defined contribution plan. n eligible employee on pril 1$ 1994could elect to be a member of either plan. (mployees ho are members of the defined benefit

superannuation plan are entitled to benefits depending on the years of service andsalary dran. The monthly pension benefits after retirement range from0.75

to 2 of the annual basic salary for each year of service. The)ompany accounts for the liability for superannuation benefits payable in future under the plan based on an independent actuarialvaluation as at ;alance #heet date.

72 | P a g e


73/101

ith effect from pril 1$2003$ this plan as amended andbenefits earned by covered employees have been protected as at &arch31$2003.

(mployees covered by this plan are prospectively entitled tobenefits computed on a basis that ensures that the annual cost ofproviding the pension benefits ould not exceed 15 of salary. -uring the year 201!15$ the employees covered by this plan

ere given a one time option to exit from the plan prospectively. Further$ the

employees ho opted for exit ere given a one time option toithdra accumulated balances from the superannuation plan. The )ompany maintains a separate irrevocable trust for

employees covered and entitled to benefits. The )ompany contributes up to15 or %s. 1$00$000 hichever is loer of the eligible employeesB salaryto the trust every year. The )ompany recogni/es such contributionsas an expense hen incurred. The )ompany has no further obligationbeyond this contribution. @iiiD ;havishya Ealyan Yo8ana @;EYD

;havishya Ealyan Yo8ana is an unfunded defined benefit plan for

employees of the )ompany. The benefits of the plan includepension in certain case$ payable up to the date of normal superannuationhad the employee been in service$ to an eligible employee at the time ofdeath

73 | P a g e


74/101

or permanent disablement$ hile in service$ either as a result ofan in8ury or as certified by the appropriate authority. The monthly payment to dependents of the deceased S disabled employee

under the plan e=uals 50 of the salary dran at the time of death oraccident or a specified amount$ hichever is higher. The )ompany accountsfor the liability for bEy benefits payable in future based on anindependent actuarial valuation as at ;alance #heet date.

@ivD


75/101

employeesB salaryD. The contributions as specified under the laare made to the provident fund and pension fund set up asirrevocable trust

by the )ompany . The )ompany is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return or pension andrecognises such contributions and shortfall$ if any$ as an expense in the year incurred. @viD )ompensated absences

The )ompany provides for the encashment of leave or leave ith

pay sub8ect to certain rules. The employees are entitled toaccumulate leave sub8ect to certain limits$ for future encashment. Theliability is provided based on the number of days of unutilised leave ateach balance sheet date on the basis of an independent actuarialvaluation. @mD +nvestments

*ong term investments are stated at cost less other than

temporary diminution in value$ if any. )urrent investments are stated atloer of cost and fair value. Fair value of investments in mutual funds are determined on a portfolio basis.

@nD +ncome taxes Tax expense comprises current and deferred taxes.

)urrent tax is the amount of tax payable on the taxable income

for the

75 | P a g e


76/101

year as determined in accordance ith the provisions of the+ncome Tax ct$ 1941. )urrent tax is net of credit for entitlement for&inimum

lternative Tax @&TD. -eferred tax is recognised$ on timing differences$ being the

difference beteen taxable income and accounting income that originate inone period and are capable of reversal in one or more subse=uentperiods. -eferred tax assets in respect of unabsorbed depreciation and

carry forard of losses are recognised if there is virtual certainty that there ill be sufficient future taxable income available to realise such losses. >ther deferred tax assets are recognised if there is reasonable certainity that there ill be sufficient future taxable income to reali/e such assets. -eferred tax assets and liabilities are measured based on the tax

rates

that are expected to apply in the period hen asset is realised orthe liability is settled$ based on tax rates and tax las that havebeen enacted or substantively enacted by the balance sheet date. @oD %edemption premium on on )onvertible -ebentures @)-D


77/101

Fees toards structuring S arrangements and underriting andother incidental costs incurred in connection ith borroings areamortised

over the period of the loan. @=D *iabilities and contingent liabilities

The company records a liability for any claims here a potential

loss is probable and capable of being estimated and discloses suchmatters in its financial statements$ if material. For potential losses thatare considered possible$ but not probable$ the )ompany providesdisclosure in the financial statements but does not record a liability in its accounts unless the loss becomes probable. @rD ;usiness segments

The )ompany is engaged mainly in the business of automobile

products

consisting of all types of commercial and passenger vehiclesincluding financing of the vehicles sold by the )ompany. These$ in thecontext of ccounting #tandard 17 on #egment %eporting$ as specified inthe )ompanies @ccounting #tandardsD %ules$ 2004$ are consideredto constitute one single primary segment. Further$ there is no

reportable secondary segment i.e. :eographical #egment.

+)>&( #TT(&(T

77 | P a g e


78/101

n income statement or (rofit and loss account @also

referred to as a profit and loss statement @


79/101

#elling :eneral ?

dmn expenses 30$C11.0 35$134.3%?- (xpenses C50.2 459.5

-epreciation 4$CC0.9 7C20.7>ther >perating (xp 17$50C.5 2$04.4OT'ER O(ER# E)( 5&%5%#& &*&&3#!O(ERAT+N, +N-O.E 3"33/#& 35$5!#"

+nterest (xpense !$450.4 !9$127.2+nterest and +nvst 592.5 1$494.4 NET +NT E)(ENSE 0"%5$#! 0*"3%#&+ncome @*ossD

on (=uity +nvestments 39.2 452.0)urrency (xchange:ains @*ossD 452.1 1374.1>ther on >perating


80/101

1alance seet

+n financial accounting$ a 0alance sheet or statement of financial(osition is a summary of the financial balances of a sole proprietorship$a business partnership$ a corporation or other business organi/ation$ such asan **) or an **f the threebasic financial statements$ the balance sheet is the only statement hichapplies to a single point in time of a businessB calendar year.

standard company balance sheet has three parts" assets$ liabilities$ andonership e=uity. The main categories of assets are usually listed first$ andtypically in order of li=uidity. ssets are folloed by the liabilities. Thedifference beteen the assets and the liabilities is 'non as e=uity or thenet assets or the net orth or capital of the company and according tothe accounting e=uation$ net orth must e=ual assets minus liabilities.X3

nother ay to loo' at the balance sheet e=uation is that total assets e=ualsliabilities plus onerBs e=uity. *oo'ing at the e=uation in this ay shos hoassets ere financed" either by borroing money @liabilityD or by using theonerBs money @onerBs or shareholdersB e=uityD. ;alance sheets are usually

presented ith assets in one section and liabilities and net orth in the othersection ith the to sections HbalancingH.

business operating entirely in cash can measure its profits by ithdraingthe entire ban' balance at the end of the period$ plus any cash in hand.oever$ many businesses are not paid immediatelyA they build upinventories of goods and they ac=uire buildings and e=uipment. +n otherords" businesses have assets and so they cannot$ even if they ant to$immediately turn these into cash at the end of each period. >ften$ thesebusinesses oe money to suppliers and to tax authorities$ and the

proprietors do not ithdra all their original capital and profits at the end ofeach period. +n other ords$ businesses also have liabilities.

80 | P a g e

https://en.wikipedia.org/wiki/Financial_accountinghttps://en.wikipedia.org/wiki/Sole_proprietorshiphttps://en.wikipedia.org/wiki/Partnershiphttps://en.wikipedia.org/wiki/Corporationhttps://en.wikipedia.org/wiki/Limited_liability_companyhttps://en.wikipedia.org/wiki/Limited_liability_partnershiphttps://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Liability_(financial_accounting)https://en.wikipedia.org/wiki/Equity_(finance)https://en.wikipedia.org/wiki/Financial_yearhttps://en.wikipedia.org/wiki/Financial_statementhttps://en.wikipedia.org/wiki/Liquidityhttps://en.wikipedia.org/wiki/Net_worthhttps://en.wikipedia.org/wiki/Financial_capitalhttps://en.wikipedia.org/wiki/Accounting_equationhttps://en.wikipedia.org/wiki/Balance_sheet#cite_note-3https://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Liability_(financial_accounting)https://en.wikipedia.org/wiki/Financial_accountinghttps://en.wikipedia.org/wiki/Sole_proprietorshiphttps://en.wikipedia.org/wiki/Partnershiphttps://en.wikipedia.org/wiki/Corporationhttps://en.wikipedia.org/wiki/Limited_liability_companyhttps://en.wikipedia.org/wiki/Limited_liability_partnershiphttps://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Liability_(financial_accounting)https://en.wikipedia.org/wiki/Equity_(finance)https://en.wikipedia.org/wiki/Financial_yearhttps://en.wikipedia.org/wiki/Financial_statementhttps://en.wikipedia.org/wiki/Liquidityhttps://en.wikipedia.org/wiki/Net_worthhttps://en.wikipedia.org/wiki/Financial_capitalhttps://en.wikipedia.org/wiki/Accounting_equationhttps://en.wikipedia.org/wiki/Balance_sheet#cite_note-3https://en.wikipedia.org/wiki/Assethttps://en.wikipedia.org/wiki/Liability_(financial_accounting)


81/101

6A&ANCE S$EET O" TATA MOTORS@currency in millions %s.D


82/101

+nventory 31$449.0 32$94.

ther )urrent ssets 14$4C1.7 20$50.7

TOTAL -URRENT ASSETS !&2**/#2 !/2&*3#5:ross ther *ong!Term ssets ! !!TOTAL ASSETS 25"!&3 353&/*#!ccounts


83/101

dditional


84/101

*1#312 201!151CC$9C.C 127$433.7

-urrent Ratio 62%!"0!57

192$473.5S 1CC$9C.C Z1.1

Current Ratio (2013-14) 142$779.2S 127$433.7 Z1.*7

• uic8 Ratio 62%!"0!57

C.A. 3 In)ent. 8 C.&. 192$473.5! 32$94. S 1CC$9C.C Z.94

Quick Ratio (2013-14)

142$779.2! 31$449.0S127$433.7 Z1.*

• +nterval measure 0

Current assets3in)en. 8 a)'. daily cash o(er. E:(

For 201!15 vg. daily cash oper. (xp !

Total cash exp.S 34547$443.1S 345 Z 1C5.3

Interal measure!

192$473.5! 32$94. S 1C5.3 Z9* days For 2013!1

vg. daily cash oper. (xp!54$050.4S 345 Z 153.5

84 | P a g e


85/101

Interal measure!142$779.2! 31$449.0 S 153.5 Z942 days

Conclusion

+n li=uidity ratio$ e observe that current ratio in 201!15 is lessin comparison of 2013!1. it means companies efficiency

decreases in paying current liability. nd in=uic' ratio$ it alsodecreases. +n 201!15$ regular cash meet as C42 days incomparison of C5 of 2013!1. +t means firms ability to pay itsdaily exp.increases.

&e)era'e Ratio

• Total de0t ratio ; Total de0t 8 ca(ital em(loyed

For 201!15

Total debt ! 43$35.5

)apital employed ! et orth borroing >r

#hare capital debt. C4$975.2 43$35.5Z 150320.7 43$35.5 S 150320.7 Z 0.2

For 2013!1

Total debt ! 3C$493.4

85 | P a g e


86/101

)apital employed !77$214.7 3C$493.4Z 115910.3

3C$493.4 S 115910.3 Z.##

• %e0t e>

• Ca(ital e


87/101

For 2013! 1 R35977 4$CC0.9 S $450.4Z>.*1

+n 201!15$ the long term financial position getting strong than

2013!1.

CONC&USION

)apability of paying long term debt. is increases. s e seen$debt ratio increases. nd the contribution of debt is increases in201!15 than 2013!1 and the part of share capital is alsoincreases in total capital employed than 2013!1 it means$

company is increasing its capital through shares.

Acti)ity Ratio

In)entory Turno)er Ratio@3 Cost of 'oods sold 8

In)entory

@201!15D @2013!1D

)ost of goods sold 25$571.5 23$753.4+nventory 32$94. 31$449.0

87 | P a g e


88/101

For 201!15"!25$571.5 S 32$94. Z7.7* For 2013!1 "!

23$753.4 S 31$449.0 Z7.21

• %e0tor Turno)er Ratio @3 Sales 8 de0tors

For 201!15 "!

35C$0C4.0 @salesD S 97$555.9 @debtorsD Z#.7

For 2013!1 "!325$13.C @salesD S 101$43C.5 @debtorsD Z#.*

!erage collection "eriod (2014-1#) $ 3%0 & 3'% $

>9days !erage collection "eriod (2013-14) $ 3%0 & 3'20$ 11* days

Assets Turno)er Ratio @3 Sales 8 Net assets or ca(ital

em(loyed

For 201!15 "!35C$0C4.0 @salesD S 150320.7 @c.e.D Z*.#9 For 2013!1"!325$13.C @salesD S 115910.3 @c.e.D Z*.9

• -or+in' Ca(ital Turno)er Ratio@3 Sales 8 Net =or+in'

ca(ital

et *orking Ca"ital $ Current assets + Current liabilit,For 2014-1#$

192$473.5 !1CC$9C.C Z372.7 For 2013-14 $ 142$779.2 ! 127$433.7 Z 3515.5

88 | P a g e


89/101

For 201!15 "!35C$0C4.0 @salesD S 372.7 @..).D Z>.1#

For 2013!1 "!

325$13.C @salesD S 3515.5@..)D Z>.*4

Conclusion

s e seen$ company,s efficiency of using its assets is increasingin 201!15 than 2013!1. The inventory turnover ratio hichshos its efficiency of selling product is increasing. veragecollection period is decreasing means company is selling itsproduct more on cash basis in 201!15 than 2013!1 but

company,s assets turnover ratio is decreasing means sales is notgroing according to its capital employed and or'ing capital.


90/101

For 2013!1 Z 21$499.9 S 353C.5 Z.41

• Return on in)estment E6IT 8 Ca(ital em(loyed

For 201!15 Z 39575.5 S 150320.7 Z.*

For 2013!1 Z 35977 S 115910.3Z.#1

• Return on e


91/101

COMPARATIBE 6A&ANCE S$EET O" TATA MOTORS"or the year Ended #1st march *14D

201!15 2013!1 bs.chnge chin&on' term source

Of funds

.#hareholders fund

#hare capital 3C5.5 3C5.1 00.13 00.03%eserve and surplus 753.94 4C.3 949.42 1.95Internal e


92/101

Knsecured 3C1C.53 19C7.10 1C31.3 92.17(xternal e=uity 42C0.52 009.1 2271.3C 54.44

c.deferred tax liab.@netD 975.72 7C4.43 1CC.C9 2.00

d.total fund employed 15095.7 11445.72 330.02 29.0

A((lication of funds*ong term investments

e. fixed assets iD gross bloc' 10C30.C3 C775.C0 2055.03 23.2 iiDless!dep. 53.52 C9.5 5C.9C 11.22

iiiD et bloc' 53C7.31 3CC1.24 1504.05 3C.C0 ivDcapital ip 504.94 2513.32 2551.4 101.5f.investments 910.27 277.00 233.27 9C.2 15342.5 CC71.5C 490.94 73.17

#hort term investments@or'ing capital )!)*D

g.)urrent assets iDint. accrued on invt. 0.C4 5.9 @5.0CD @C5.52D iiD inventories 221.C3 2500.95 @79.12D @3.1DiiiDsundry debtors 1130.73 7C2.1C 3C.55 .54

ivD cash and ban' bal. 2397.31 C24.74 1570.55 1C9.94 vD loans?advances 33.05 4394.22 @1943.17D @30.70D 103C3.7C 10512.05 @12C.17D @01.22D

h. current liabilities iD sundry creditors C447.20 4343.4 2303.52 34.20 iiD provisions 19C9.3 134.3 425.11 5.C2 10454.43 772C.00 292C.43 37.90

et current assets

92 | P a g e


93/101

@g!hD @272.C5D 27C.05 @3054.90D @109.CD

8.misc.exp 4.05 10.09 @0.0D @0.0D

TOTA& ASSETS ,net5 14>4.72 114.7* #2#.**>.2,?I?F5

COMMENTS ON T$E "INANCIA& SOUN%NESS O" T$E TATAMOTORS 6! ANA&!IGIN T$E COMPARATIBE 6A&ANCE S$EETO" T$E COMPAN!

+D +t as observed from the comparative balance sheet that

internal e=uity is comprised of #hare capital and reserve

? surplus $in hich increment as noticed by 1.12.

The ma8or increment as seen in reserve ? surplus by

1.95 and share capital as marginally increased by

00.03 as compared to the previous financial year.++D +t as also observed that the company has increased the

external e=uity by54.44. The company has raised

secured loan by 21.74 and unsecured loan by92.17 as

compared to the previous financial year. >verall the

company has increased its capital structure position by

93 | P a g e


94/101

70.7C as compared to previous financial year $ hich is

a good indication for the company as the company is

increasing its investment and expanding the business.+++D -eferred tax liability as increased by 2.00 as

compared to the previous financial year$ the companyshould try to reduce the deferred tax liability as e 'no

that it is the obligation for the company to pay. #o $

the company should not increase the fund by bloc'ing

deferred tax liability. hich is not a good policy of

the company.+6D +t as observed that total fund employed by the company

as increased by29.0 as compared to the previous

financial year. +n the current year @201!15D$ the

company has increased the employable fund by 29.0

hich is a good sign of groth of the company.6D +nvestment in the fixed assets as noticed by 43.4

and in investment by9C.23 as compared to the previous

financial year. +t as noticed that the total longterm

investment of the company has registered an increment

of 73.17 $ hichindicate that the company is having a

good opportunity of groth and by investing inlong term $

the company is intelligently grapping the opportunity.6+D The or'ing capital of the company as decreased by

109.C0 as compared to the previous financial year $

hich is not a good sign for the company. The company

is not able to manage the or'ing capital sufficiently .thecompany should ta'especial care to manage the or'ing capital

of the company as e 'no that theor'ing capital is the bloodof the company $ithout proper or'ing capital thecompany illnot manage to run its operation successfully.

94 | P a g e


95/101

4. COMPARATIBE PRO"IT AN% &OSSSTATEMENT O" TATA MOTORS

For the year ended 31 march $2015

201!15 2013!1 bs.change change

.:ross revenue #ale of product 33093.93 31C19.C 127.5 0.00and other income

less! excise duty 343.11 39.5 13.44 00.31

;.et revenue 2C730.C2 27270.03 1240.79 0.59).)ogs %a materials 2093.93 227C9.57 130.34 05.72

(mployee cost 15.57 134C.09 174.C 12.902543C.50 2157.44 10C.C 04.13

95 | P a g e


96/101

-.>p.profit@;!)D 3092.32 3312.37 @220.05D @04.4D(.-ividend?other

+ncomes C3.1C 25.19 237.99 97.04F.


97/101

COMMENTS ON T$E "INANCIA& CON%ITION O" T$E

TATA MOTORS 6! ANA&!GIN T$E COMPARATIBE PRO"ITAN% &OSS ACCOUNT O" T$E COMPAN!

+D +t as observed that the sales revenue as increased by0.00 and in terms of absolute figure by %s 127.5crores as compared to the previous financial year.%espectively$ excise duty as increased by 00.31 ascompared to the previous financial year.

++D The net revenue of the company as noticed an

increment of 0.59 as compared to the previousfinancial year and in terms of absolute figure by %s1240.79 crores .;ut the cost of good sold by the companyas increased by 04.13 $ hich as around %s 1C0.Ccrores in absolute figures. hich also cause to decreasethe operating profit of the company by 04.4 ascompared to the previous financial year. The companyshould put special attention to chec' out its directcost @cost of goods sold D as it as 8udged from the

comparative


98/101

year$hich approximately realised %s 115.4 crores inthe hand of the company.

6D +t as also noticed that balance brought forard by thecompany as increased by30.52 $ hich means that in

the previous financial year the company have a goodsurplus amount left in their hand after appropriating theavailable funds . hich increases the bottom line balanceby 13.10

.4 COMMON SIGE 6A&ANCE S$EET O" TATAMOTORS

"or the year ended #1 marchH*14

@%s. in croresD

2013!1 201!15

&on' term sourcesOf funds

.#hareholders funds iD share capital 3C5.5 02.55 3C5.1 03.30 iiD reseves and surplus 4C.3 9.3C 753.94 55.5C

4C49.75 51.93 7C39.50 5C.C9

98 | P a g e


99/101

;. *oan funds iD secured 2022.0 14.31 241.99 17.33 iiD unsecured 19C7.10 17.03 3C1C.53 25.30 009.1 3.37 42C0.52 2.40

).-eferred tax liab.@netD 7C4.43 04.4 975.72 04.7

-.Total Fund (mployed 11445.72 100 15095.7 100

A((lication of funds

*ong term investments

(. Fixed assets iD gross bloc' C775.C0 71.75 10C30.C3 75.23 iiD less!depreciation C9.5 34.04 53.52 1.94 iiiD net bloc' 3CC1.24 35.49 53C7.31 33.29 ivD capital ip 504.94 49.2 439.5C 5.C2

F. +nvestments 277.00 21.23 910.27 32.53

CC71.5C 74.05 15342.5 101.77

#hort term investments@or'ing capital )!)*D

:.)urrent assets iD interest accrued on investments 0.C4 00.01 5.9 00.05 iiD +nventories 221.C3 14.0 2500.95 21.

iiiD sundry debtors 7C2.1C 04.70 1130.73 07.9ivD cash and ban' bal. C24.74 07.0C 2397.31 15.CC

vD loans and advances 33.05 29.34 4394.22 5.C3103C3.7C 4C.9 10512.05 90.11

.)urrent liablities iD sundry creditors 4343.4C 5.55 C447.20 57.1

iiD provisions 134.32 11.70 19C9.3 13.1C

99 | P a g e


100/101

772C.00 44.25 10454.43 70.59

+.et current assets@:!D @272.C5D @01.C0D 27C.05 23.C7

G.&iscellanous exp 4.05 00.0 10.09 00.09

T>T* ##(T# @(TD 11445.72 100 15095.7 100

100 | P a g e


101/101

income statement of tata motors

Documents