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TATA Motors- Financial analysis by sheema farooqi

TATA Motors- Financial analysis by sheema farooqi



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Published by sheema
the financial analysis of tata motors for the year 2006-2008 prepared by sheema farooqi for university of Hull, Business School.
the financial analysis of tata motors for the year 2006-2008 prepared by sheema farooqi for university of Hull, Business School.

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Published by: sheema on Apr 05, 2009
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Student no:
Program of study:
 Module title:
 Assignment Title:
To review the Long Term financing pattern of Tata Motors rationale for its financing mixin the context of relevant long term financing theories.
Submission date:
Word count excluding Index, References & Appendix:
Long Term Finance
BackgroundBalance sheet AnalysisFinancial Analysis of Tata MotorsTheoretical RelevanceCriticismConclusionReferencesAppendix
Annexure 1 - Ratan Tata’s letter to the Tata Group
Annexure 2 - Ratan Tata’s letter to the Tata Group (part 2)
Annexure 3 - Summarized Balance Sheet of Tata Motors
Brief Background
The largest passengerautomobileandcommercial vehiclemanufacturing company of India Tata Motors Limited, was formerly called TELCO (TATA Engineering and LocomotiveCompany), has its headquarters in Bombay, nowMumbai, India. Established in1945, listed on theNew York Stock Exchange in2004has createdRs.320 billion wealth and was one of the top 10 wealth creators in India, With manufacturing facilities in the towns ofJamshedpur,Lucknow,and Pune. This company was founded byJamshetji Tataand is run by Ratan Tata under the flagship company known as Tata and sons group. He commands 22000 employeesworking in three plants as well as other regional and zonal offices across the length andbreadth of India. Tata motor’s passenger cars still need to reachacceptable international requirements. The company commands an imposing 65% share of thedomestic commercial vehicle market and is trying to modernize this segment. The financialbusiness of Tata motors was separated into a subsidiary company in sep. 2006, where itrecorded a strong financial performance during the last 5 year period. From year 2003-2007,the profits of the company went up at a CAGR of 36.4%, to attain Rs. 331, 525 million in 2007from Rs. 95, 731 Million in 2003. By floating two rights issues at the end of Sep 2008 TataMotors Ltd expected to raise Rs 4, 150 crores. They are offering one ordinary share valued atRs. 340 every six shares expecting to net Rs. 2.90 Crores, the so called “A” share would havedifferent voting and dividend rights, for every such 6 shares held at a face value of 305 wouldraise Rs. 1.960 Crores, these proceed would be utilized for an early repayment of the shortterm funding of 2.3 Billion $ (Rs. 10,189 Crores) Borrowed for Acquisition of jaguar and LandRover from their principle “The Ford Motor Companies”. It is also in talks with private equityfunds to offload 25% of stake in each of the following 6 unlisted group units, they are TataDaewoo commercial vehicle company, HV transmissions, Tata motors finance, Tatatechnologies and TELCO construction equipment, the sales of the stakes would possibleconclude by June 2009, helping it to raise further funds for this acquisition, earlier in July it sold24% stake in an Auto component unit to a group firm and booked a profit of Rs. 110 crores, italso sold 10 million shares or 1.36% of Tata steel for RS. 486 crores to Tata Sons, the holdingcompany of whole Tata group firms."The Company aims to monetize a part of its funds through a phased divestment of certaininvestments preferably as inter-group sales wherever possible at current market prices in the

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