tata motors- ratio analysis

A STUDY ON FINANCIAL PERFORMANCE ANALYSIS

TATA MOTORS LIMITED

A Project report submitted to

Prof: Lisha Dawan

Submitted By

Deepa Chandirrasekar

IIPM GURGAON – SS09-11

Profitability Ratios

------- Management Accounting ---- Ratio Analysis – TATA Motors Limited ------- 1

1. Return on Investment (ROI)/Return on Capital Employed

[Operating Profit/Capital Employed]

ROI = Operating Profit x 100

Share Capital + Reserves & Surplus + Long Term Loans

Year 2008 2007 2006 2005

ROI 25.88% 32.43% 33.78% 35.32%

Return On Investments

2. Return On Share Holders Funds

ROSF = Net Profit after Tax & Interest x 100

Share Holders Funds

Year 2008 2007 2006 2005

ROSF 25.88% 27.85% 27.61% 30.09%


Return On Shareholders Funds

3. Return On Total Assets

ROTA = Net Profit after Tax & Interest x 100

Total Assets

Year 2008 2007 2006 2005

ROTA 14.37% 17.59% 18.04% 18.72%

4. Return On Gross Capital Employed


ROGC = Net Profit before Tax & Interest x 100

Total Assets Excluding Fictitious Assets

Year 2008 2007 2006 2005

ROGC 21.26% 27.04% 27.63% 28.51%

5. Earning Per Share

EPS = Net Profit after Tax – Preference Divident x 100

No.Of Equity share

Year 2008 2007 2006 2005

EPS 52.63 49.65 39.93 34.19


6. Price Earning Ratio

PER = Market Price Per Equity Share x 100

Earning Per share

Year 2008 2007 2006 2005

PER 7.60 8.06 10.02 11.70

7. Gross Profit Ratio


GPR = Gross Profit x 100

Net Sales

Year 2008 2007 2006 2005

GPR 29.61% 30.47% 32.01% 32.34%

8. Net Profit Ratio

NPR = Net Profit x 100

Net Sales

Year 2008 2007 2006 2005

NPR 12.72% 12.84% 13.89% 13.40%


9. Operating Cost Ratio

OCR = Operating Cost x 100

Net Sales

= 100 – Net Profit Ratio

Year 2008 2007 2006 2005

OCR 89.94% 88.49% 87.84% 87.92%

10. Pay Out Ratio


POR = Dividend Per Equity Share x 100

Earning Per Share

Year 2008 2007 2006 2005

POR 28.51% 30.20% 32.35% 34.31%

11. Retained Earning Ratio

RER = Retained Earning Per Share x 100

Earning Per Share

= 1 – Dividend Pay Out Ratio

Year 2008 2007 2006 2005

RER 52.63 49.65 39.93 34.19


12. Dividend Yield Ratio

DYR = Dividend Per Share x 100

Market Price Per share

Year 2008 2007 2006 2005

DYR 3.75% - - - Market Price - Not Available for the year 2007 2006 2005

Coverage Ratios


1. Fixed Charge Cover Ratio

FCCR = Income before Interest & Tax

Interest Charges

Year 2008 2007 2006 2005

FCCR 7.05 7.98 7.98 8.65

2. Debt Service Coverage Ratio

DSCR = Net Profit before Interest & Tax

Interest + Principal Repayment 1- Tax Rate

Year 2008 2007 2006 2005

DSCR Principal Amount is not available.

TurnOver Ratios

1. Fixed Asset Turnover Ratio


FATR = Net Sales Times

Net Fixed Asset

Year 2008 2007 2006 2005

FATR 5.33 7.08 5.77 5.52

2. Working Capital Turnover Ratio

FATR = Net Sales Times

Current Assets – Current Liabilities

Year 2008 2007 2006 2005

WCTR -105.30 9.87 8.09 31.94


3. Debtor Turnover Ratio

DTR = Credit Sales

Average Receivable Accounts

Year 2008 2007 2006 2005

DTR 29.27 40.68 33.54 25.25

4. Debt Collection Period Ratio


DCPR = 12 or 365

Debtors Turnover Ratio

Year 2008 2007 2006 2005

DCPR 0.41 0.29 0.36 0.48

5. Creditor Turnover Ratio

CTR = Total Purchase

Accounts Payable( Raw Material Cost – Sundry Creditors)

Year 2008 2007 2006 2005

CTR 4.34 4.75 5.03 5.26


6. Debt Payment Period

DPP = Average Accounts Payable

Average Monthly Credit Purchase(units in months)

Year 2008 2007 2006 2005

DPP 1.69 1.54 1.42 1.33

7. Stock/ Inventory Turnover Ratio

STR = Cost of Goods Sold During the Year

Average Inventory


Year 2008 2007 2006 2005

STR 3.51 3.35 3.28 3.52

Financial Ratios

1. FIXED ASSET RATIO

FAR = Fixed Assets of the company

Long Term Funds

2. Current Ratio

CR = Current Asset CA

Current Liabilities CL


3. Liquidity Ratio

Quick Ratio = CA – Inventory

Current Liabilities

4. Debt Equity Ratio

DER = Total Long Term Fund

Shareholders funds


Profit & Loss Statement

Particulars Mar 2008 Mar 2007 Mar 2006 Mar 2005 Mar 2004No of Months 12 12 12 12 12Gross Sales 330939.3 318194.8 240041.2 204825.7 154935.2 Sales 325218.3 310647 234394.1 202174.2 152087.4

Job Work / Contract receipts 0 0 0 0 0

Prcessing Charges / Service Income 0 0 0 0 0

Others operational income 5721 7547.8 5647.1 2651.5 2847.8

Less :Inter divisional transfers 0 0 0 0 0Less: Sales Returns 0 0 0 0 0Less: Excise 43631.1 43494.5 34019.2 30634.4 22703 Net Sales 287308.2 274700.3 206022 174191.3 132232.2EXPENDITURE :

Increase/Decrease in Stock 330 -2736.9 -2569.1 -1458.2 1419.8Opening Balances Work In Progress 3013.2 2863.1 2644.6 1766.4 1182.2 Finished Goods 0 0 0 0 0

Shares, Units and Bonds 0 0 0 0 0 Other 11030.2 8443.4 5332.9 4752.9 6756.9Less : Work In Progress 2960 3013.2 2863.1 2644.6 1766.4 Finished Goods 0 0 0 0 0

Shares, Units and Bonds 0 0 0 0 0 Other 10753.4 11030.2 7683.5 5332.9 4752.9

Raw Materials Consumed 201901.9 193749.3 142638.6 119313 83413.9

Opening Raw Materials 8725.9 7326.9 6300.6 3497.2 2380.7


Purchases Raw Materials 184980.6 180556.3 133677.5 115447 79850.6

Closing Raw Materials 7785.7 8725.9 7326.9 6300.6 3497.2

Other Direct Purchases / Brought in cost 0 14592 9987.4 6651.2 4679.8 Others 15981.1 0 0 18.2 0Power & Fuel Cost 3251.9 3274.1 2585.1 2378.1 2145.2Employee Cost 15260.1 13556.3 11332.5 10295.1 8745.6

Other Manufacturing Expenses 22395.1 19651.3 14852.1 12666.4 9172.6

General and Administration Expenses 1695 1584.4 1354.6 810.3 755.4

Selling and Distribution Expenses 9939.5 12330.5 9919.1 8665.8 7809.3

Miscellaneous Expenses 3631.1 1669.9 850 481.1 468.8

Less: Pre-operative Expenses Capitalised 0 0 0 0 0Total Expenditure 258404.6 243078.9 180962.9 153151.6 113930.6

Operating Profit (Excl OI) 28903.6 31621.4 25059.1 21039.7 18301.6Other Income 7640.3 3658.4 3562.5 2297.5 1001.2 Interest 1432.4 554.4 671.4 636.6 412.2 Dividend 1318.9 869.4 414 198.7 30.8

Profits on sale of FA 0 0 0 0 0

Profits on sale of Investments 1518.1 354.8 1776.4 312 39.8

Forex Exchange Gains 1376.1 652.1 0 0 0 Other 1994.8 1227.7 700.7 1150.2 518.4Operating Profit 36543.9 35279.8 28621.6 23337.2 19302.8Interest 4256.1 3685.1 2934.9 2178.1 2024.8PBDT 32287.8 31594.7 25686.7 21159.1 17278Depreciation 6523.1 5862.9 5209.4 4501.6 3826

Profit Before Taxation & Exceptional Items 25764.7 25731.8 20477.3 16657.5 13452


Exceptional Income / Expenses 0 0 56.5 -138.5 -528.6Profit Before Tax 25764.7 25731.8 20533.8 16519 12923.4Provision for Tax 5475.5 6597.2 5245 4149.5 4820

Current Income Tax 1390.1 4760 3633.5 3638.2 960 Deferred Tax 4015.4 1772.2 1421.5 511.3 3860 Fringe Benefit tax 70 65 190 0 0 Others 0 0 0 0 0Profits After Tax 20289.2 19134.6 15288.8 12369.5 8103.4Appropriations 30427.5 26902.2 20945.4 16027.5 9340.5General Reserve 0 0 0 0 0

Proposed Equity Dividend 5784.3 5780.7 4979.4 4521.9 2821.1

Preference Dividend 0 0 0 0 0

Corporate Dividend Tax 812.5 982.5 698.4 634.2 361.4 Statutory Reserve 0 0 0 0 0

Other Appropriation 0 0.7 0 15.4 0

Profit & Loss Balance C/F 13830.7 10138.3 7767.6 5856 3658Equity Dividend % 150 150 130 125 80Earnings Per Share 52.63 49.65 39.94 34.19 22.96Book Value 202.54 177.33 143.58 113.15 101.08


Ratios Analysis

Sr.No: Profitability Ratios 2008 2007 2006 2005

1

Return on Investment (ROI)/Return on Capital Employed [Operating Profit/Capital Employed]

(Operating Profit)/(Share Capital+Reserves & Surplus+Long Term Loans) 25.88% 32.43% 33.78% 35.32%

2 Return on Shareholders Fund

(Net Profit after Income Tax)/(Share Capital + Total Reserves) 25.88% 27.85% 27.61% 30.09%

3Return on Equity Shareholders Fund

(Net Profit after Interest, Tax & Preference Dividend)/(Equity Capital + Total Reserves) 25.88% 27.85% 27.61% 30.09%

4 Return on Total AssetsNet Profit after Tax/(Total Assets) 14.37% 17.59% 18.04% 18.72%

5Return on Gross Capital Employed

Net PBIT/(Net Fixed Assets + Current Assets) 21.26% 27.04% 27.63% 28.51%

6 Earning per Share (EPS)

Net Profit after Tax/(Equity Capital/Face Value of the Share) 52.63 49.65 39.93 34.19

7 Price Earning RatioMarket Price per Equity Share/Earning Per Share 7.60 8.06 10.02 11.70

8 Gross Profit Ratio

(Net Sales - Cost of goods Sold)/Net Sales = (Net Sales - Rawmaterial Cost)/Net Sales 29.61% 30.47% 32.01% 32.34%

9 Net Profit RatioNet Operating Profit/Net Sales 12.72% 12.84% 13.89% 13.40%

# Operating (OR) Expense RatioOperating Cost/Net Sales = (1-Net Operating Ratio) 89.94% 88.49% 87.84% 87.92%

# Pay-Out Ratio

Dividend per Equity Share/Earning per Equity Share 28.51% 30.20% 32.35% 34.31%

# Retained Earnings Ratio

Retained Earnings/Total Earnings = ( 1 - Pay-Out Ratio ) 71.49% 69.79% 67.43% 63.44%

# Dividend Yield RatioDividend per Share/Market Price per Share 3.75%

Coverage Ratios

1 Fixed Interest CoverIncome before Interest & Tax/Interest Charges 7.05 7.98 7.98 8.65

2 Fixed Dividend CoverNet Profit after Interest & Tax/Preferred Dividend NA NA NA NA

3 Debt Service Coverage Ratio

Turnover Ratios (Activity (OR) Efficiency Ratios

1 Fixed Asset Turn Over Ratio Net Sales/Net Fixed Assets 5.33 7.08 5.77 5.52

2Working Capital Turn Over Ratio

Net Sales/(Currents Assets - Current Liabilities) -105.30 9.87 8.09 31.94

3 Debtors Turnover RatioTotal Sales/Accounts Receivable 29.27 40.68 33.54 25.25


4 Debt Collection Period Ratio

Accounts Receivables(Debtors)/Monthly Credit Sales (Units in Months) 0.41 0.29 0.36 0.48

5 Creditors Turnover Ratio

Total Purchaces/Accounts Payables = (Rawmaterial Cost/Sundry Creditors) 4.34 4.75 5.03 5.26

6

Debt Payment Period Enjoyed Ratio (Average age of Payable)

Average Accounts Payable/(Average Monthly Credit Purchase) (Units in Months) 1.69 1.54 1.42 1.33

7Stock Turnover (OR) Inventory Turnover Ratio

Costs of Goods Sold during the year/Average Inventory 3.51 3.35 3.28 3.52

Balance Sheet

Balance Sheet

(Rs.in Millions)

Particulars Mar 2008 Mar 2007 Mar 2006 Mar 2005Mar 200

4

SOURCES OF FUNDS

- Share Capital 3855.40 3854.10 3828.70 3617.90 3530.00

Equity - Paid Up 3854.90 3853.60 3828.20 3617.40 3529.50

Adjustments to Equitys 0.00 0.00 0.00 0.00 0.00

Preference Capital Paid Up 0.00 0.00 0.00 0.00 0.00

Unclassified Shares Paid Up 0.00 0.00 0.00 0.00 0.00

Face Value 10.00 10.00 10.00 10.00 10.00

Share warrants & Outstandings 0.00 0.00 0.00 0.00 38.30

- Total Reserve 74539.60 64843.40 51542.00 37496.00 32367.70

Securities Premium 15372.20 19364.00 18287.00 14738.90 16813.40

Capital Reserves 0.00 0.00 0.00 0.00 0.00

Profit & Loss Account Balance 13830.70 10138.30 7767.60 5856.00 3658.00

General Reserves 41164.30 31164.30 21306.20 13536.30 8531.50

Debenture Redemption Reserve 3343.50 3343.50 3343.50 3341.50 3341.50

Capital Redemption Reserve 22.80 22.80 22.80 22.80 22.80

Exchange Fluctuation reserve 0.00 0.00 0.00 0.00 0.00

Statutory Reserves 0.00 0.00 0.00 0.00 0.00

Other Reserves 805.60 810.00 814.40 0.00 0.00

Revaluation reserve 255.10 259.50 263.90 0.00 0.00


Shareholder's Funds 78395.00 68697.50 55370.70 41113.90 35897.70

- Secured Loans 24619.90 20220.40 8227.60

4898.10

9426.50

Non Convertible Debentures 1705.00 755.00 755.00 825.00 1625.00

Term Loans – Banks 0.00 0.00 0.00 0.00 2859.80

Term Loans – Institutions 0.00 0.00 0.00 2217.60 2251.10

Working Capital Loans - Bank 0.00 0.00 0.00 0.00 0.00

Deferred Credit 0.00 0.00 0.00 0.00 0.00

Hire Purchase / Financial Lease 0.00 0.00 0.00 0.00 0.00

Other Secured 24619.90 20220.40 8227.60 2680.50 4315.60

- Unsecured Loans 38185.30 19871.00 21140.80 20056.10 3171.20

Fixed Deposits – Public 0.00 0.00 0.00 0.00 0.00

Commercial Paper 1000.00 0.00 0.00 0.00 0.00

Deferred Tax Loan 0.00 0.00 3.60 1.70 2.90

Other Unsecured Loan 37185.30 19871.00 21137.20 20054.40 3168.30

Total Debts 62805.20 40091.40 29368.40 24954.20 12597.70

Total Liabilities 141200.20 108788.90 84739.10 66068.10 48495.40

APPLICATION OF FUNDS :

Gross Block 108308.30 87758.00 79715.50 66119.50 59854.00

Less: Accumulated Depreciation 54435.20 48945.40 44015.10 34542.80 30236.90

Less: Impairment of Assets 0.00 0.00 0.00 0.00 0.00

Net Block 53873.10 38812.60 35700.40 31576.70 29617.10

Lease Adjustment A/c 0.00 0.00 0.00 0.00 0.00

Capital Work in Progress 50649.60 25133.20 9511.90 5388.40 2860.90

Pre-operative Expenses pending 0.00 0.00 0.00 0.00 0.00

Assets in transit 0.00 0.00 0.00 0.00 0.00

- Investments 49102.70 24770.00 20151.50 29120.60 30567.70

Quoted Equity 4896.90 2182.80 2182.80 2772.80 2779.00

Unquoted Equity 10170.50 4133.30 4127.70 3737.30 4142.20

Units 7907.90 519.90 1755.50 10007.50 14909.60

Other Investments 26127.40 17934.00 12085.50 12603.00 8736.90

Market Value of Quoted Investements 25305.50 13230.80 15500.00 12608.50 7327.60


Current Assets, Loans & Advances

- Inventories 24218.30 25009.50 20122.40 16013.60 11474.40

Raw Materials 7785.70 8725.90 7326.90

6300.60

3497.20

Work-in Progress 2960.00 3013.20 2863.10 2644.60 1766.40

Finished Goods 0.00 0.00 0.00 0.00 0.00

Stores and Spare 1111.50 1390.00 1355.00 1423.50 1078.10

Other Inventory 12361.10 11880.40 8577.40 5644.90 5132.70

- Sundry Debtors 11307.30 7821.80 7157.80 8113.20 6149.90

Debtors more than Six months 956.80 883.60 698.60 717.40 1379.20

Debtors Others 10696.50 7256.20 6802.10 7916.80 5801.10

Less : Provisions for Doubtful Debts 346.00 318.00 342.90 521.00 1030.40

Cash and Bank 23973.10 8267.60 11194.30 20050.40 7704.90

Other Current Assets 8402.00 7217.90 353.20 309.40 212.60

Loans and Advances 35937.10 56803.70 57785.40 26975.40 11415.20

Total Current Assets 103837.80 105120.50 96613.10 71462.00 36957.00

Less : Current Liabilities and Provisions

Sundry Creditors 46531.80 40799.40 28384.80 22697.30 22771.40

Acceptances 37385.10 20038.00 26973.90 28072.80 15843.30

Bank Overdraft / Short term credit 0.00 0.00 0.00 0.00 0.00

Unclaimed Dividend 80.40 66.30 54.80 35.40 70.10

Interest Accrued But Not Due 287.50 254.20 190.80 195.90 160.40

Other Liabilities 2387.20 2478.90 3398.90 3746.30 3398.80

- Provisions 19894.30 13643.20 12150.40 11260.60 4306.40

Proposed Equity Dividend 5784.30 5780.70 4979.40 4521.90 1421.60


Provision for Corporate Dividend Tax 812.50 982.50 698.40 634.20 182.10

Provision for Tax 0.00 0.00 0.00 0.00 0.00

Other Provisions 13297.50 6880.00 6472.60 6104.50 2702.70

Total Current Liabilities 106566.30 77280.00 71153.60 66008.30 46550.40

Net Current Assets -2728.50 27840.50 25459.50 5453.70 -9593.40

Miscellaneous Expenses not written off 60.50 100.90 141.20 181.60 221.90

Deferred Tax Assets 3974.50 1766.00 1507.50 1026.90 1350.60

Deferred Tax Liability 13731.70 9634.30 7732.90 6679.70 6492.10

Deferred Tax Assets / Liabilities -9757.20 -7868.30 -6225.40 -5652.80 -5141.50

Total Assets 141200.20 108788.90 84739.10 66068.20 48532.70

Contingent Liabilities 20430.00 14717.50 9928.60 3116.20 2672.80


tata motors- ratio analysis

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