CHAPTER 1

INTRODUCTION AND DESIGN OF THE STUDY

1.1 INTRODUCTION
The Indian automobile industry has emerged as a 'sunrise sector' in the
Indian economy. India is being deemed as one of the world's fastest growing passenger
car markets and second largest two wheeler manufacturer. It is also home for the largest
motor cycle manufacturer and the fifth largest commercial vehicle manufacturer.
India is expected to become the third largest automobile market in the world. Ford
is looking at India as a major export hub, as per Mr. Joginder Singh, President and
Managing Director, Ford India.
By 2020, the luxury car segment is estimated to be around three per cent of the
over all passenger car market in India. So, there is huge opportunity for growth. India is
going to be one of the biggest markets for us, worldwide, according to Tomas Ernberg,
Managing Director, Volvo Auto India.
India is the largest base to export compact cars to Europe. Moreover, hybrid and
electronic vehicles are new developments on the automobile canvas and India is one of
the key markets for them. Global and Indian manufacturers are focusing their efforts to
develop innovative products, technologies and supply chains.
In

2007

manufacturing

plant

in

more

than

25

countries

produced

73.2 million passenger cars .The automobile is built around an origin various systems
supply tearing in with fuel, cool it daring operation, lubricate its moving
parts and removeexhaust gases it creates. The origin produces mechanical power that
is transmittedto the automobiles wheels through adverting which includes a
transmission. Oneor more dive shafts, a differential gear and axles. Suspension system
which includes sparing and shock absorbers, customs the ride and help protect
the vehicle from being damaged by bumps heavy loads and other sherries. Wheel and
tares support vehicles on the road way and when rotated by powered axles,
propel the vehicle forward or backward. Steering speed.An electrical system
1

start and operate the engine monitor and control many aspects of the vehicle
operation and powers suchcomponents as head light and radios. Safety features such as
bumpers air bugs andseat bells help protect occupants in an accident.
1.2 STATEMENT OF PROBLEM
The Indian automotive industry has made rapid strides since delicensing and
opening up of the sector in 1991. It has witnessed the entry of several new manufacturers
with the state-of-art technology, thus replacing the monopoly of few manufacturers. At
present, there are 15 manufacturers of passenger cars and multi-utility vehicles, 9
manufacturers of commercial vehicles, 16 of two/ three wheelers and 14 of tractor,
besides 5 manufacturers of engines. The norms for foreign investment and import of
technology have also been liberalised over the years for manufacture of vehicles. At
present, 100% foreign direct investment (FDI) is permissible under the automatic route in
this sector, including passenger car segment. The import of technology for technology
upgradation on royalty payment of 5% without any duration limit and lump sum payment
of USD 2 million is also allowed under automatic route in this sector. The Indian
automotive industry has already attained a turnover of Rs. 1,65,000crore (34 billion
USD) and has provided direct and indirect employment to 1.31 crore people in the
country. The growth of Indian middle class, with increasing purchasing power, along with
strongmacro-economic fundamentals have attracted the major auto manufacturers to
Indian market.The automobile industries are very competitive and the quantities of
automobiles users are increasing every year.The industry is one of the key drivers of
economic growth of the nation. Present study concentrates on studying the financial
position of Tata Motors which plays major role in automobile industry in India.

1.4 OBJECTIVES OF THE STUDY

To study the problems of Automobile industry in India.

To analyse the profitability position of TATA Motors Ltd.
To find the liquidity position of TATA Motors Ltd.
To study the financial position of TATA Motors Ltd.

1.5 METHODOLOGY OF THE STUDY

Analytical methods were adopted for carrying out the study. The secondary data
are collected from published annual report of TATA MOTORS LTD company subject to
detailed analysis comparison have been made by using ratios.

PERIOD OF THE STUDY

The data for this study has been taken from the website for 5 years. i.e., from

2008-09 to 2011-2012.

SOURCES OF DATA
The source of data for the study is secondary data. The related information are

collected from published annual reports TATA MOTORS Ltd. The annual reports
containing the results of past performance are considered to be the most important
and most reliable source of financial data of the concern. The data from the
reportshave been analyzed by using various tools and techniques with a view the
financial position of the company.

1.6 LIMITATIONS OF THE STUDY

The study is based on the secondary data collected from the TATA ltdcompanyThe
study limited to a period of 5years (2008 to 2012). During the limited period the
study may not be full-fledged and utilization in all aspects.

1.7 CHAPTER SCHEME

The first chapter deals with Introduction and design of the study
The second chapter provides review of literature.
The third chapter present profile of the TATA motors ltd
The fourth chapter discusses the analysis and interpretation

The fifth chapter indicates the conclusion

CHAPTER II

2.1 INTRODUCTION
The purpose of the literature review is to provide supporting evidence that is
related to the research. This chapter discusses the relevant literature dominant to the
expansion of the conceptual model. Specifically, this literature review related to the
perception and purchase intention.
2.2 REVIEW OF LITERATURE
G S Levitz , PP Brooke, Jr(1993), Independent versus system-affiliated
hospitals: a comparative analysis of financial performance, cost, and productivity
analyzed differences in the financial performance, cost, and productivity between systemaffiliated and independent hospitals. Data for the study were obtained from the 1981
American Hospital Association (AHA) Annual Survey of Hospitals for the State of Iowa
and included 94 nonstate or nonfederal short-term hospitals without long-term care units.
An interpretation of the results indicated that system-affiliated hospitals are more
profitable, have better access to capital markets, are more effective price setters, and
experience higher costs per case which are related to longer lengths of stay and less
productive use of plant and equipment in generating revenues.
Agrawal& Teas,Singhapakdi, Rawwas, Marta & Ahmed, Agrawal& Teas,
(2002).Most of the consumers will judge based on the price, store name, and brand name,
to incriminate product quality perceptions has been demonstrated. Study is an important
build for investigative ethics-relevant feature of situational element in decision making
and the relationship between quality cues and perceived quality across different cultural
groups
Abraham (2004), A Model of Financial Performance Analysis Adapted for
Nonprofit Organizations Measurement of financial performance by ratio analysis
helps identify organizational strengths and weaknesses by detecting financial anomalies
and focusing attention on issues of organizational importance. Given that the mission of a
nonprofit organization is the reason its existence, it is appropriate to focus on financial
resources in their relationship to mission.. They suggest that such a framework provides
an appropriate analysis for past performance which will help an organization chart its
5

future direction. This paper analyses financial performance by considering ratio analysis
in order to identify anomalies and focus attention on matters of significant concern to
NPOs. The paper also identifies the limitations of such analysis and suggestions for now
the model can be applied to individual nonprofit organizations.

Karen Ritchie, Rebecca Fuhrer(2005), A comparative study of the

performance of screening tests for senile dementia using receiver operating
characteristics analysis made on the study was discriminability of three types of test
for the detection of senile dementia was assessed within a French sample of 155 normal
elderly and 120 persons with mild or moderate senile dementia using Receiver Operating
Characteristics (ROC) analysis. Results suggest that despite differences in the content of
the three instruments, they are equally discriminant. Methods involving direct cognitive
examination were found to lose discriminability in relation to milder forms of dementia,
whereas an informant questionnaire was found to perform equally as well on cases of
mild and moderate dementia. The informant questionnaire was also found to produce
lower refusal rates and to be less influenced by the place of residence of the elderly
person. The problem of selecting cut-off points according to the range of predicted
prevalence rates of dementia for the general population is also discussed.

KaushikSengupta, Daniel R. Heiser,Lori S. Cook(2006), Manufacturing and

Service Supply Chain Performance: A Comparative

Analysis explained as the

economy evolves from manufacturing to services, it is important to understand whether

the lessons learned in the manufacturing sector can be directly extrapolated to service
supply chains. Unfortunately, the majority of existing supply chain research focuses
exclusively on the manufacturing sector. To address this deficiency, this article compares
the effect of traditional manufacturing-oriented supply chain strategies on the operational
and financial performance of firms in both service and manufacturing sectors. The results
highlight similarities and differences between the two sectors demonstrating that
effective supply chain strategies in one sector may not be appropriate in the other sector.
This suggests that practicing managers should identify appropriate benchmarks and
6

competitive priorities before pursuing specific supply chain strategies. The insights
provided by this research should help guide companies toward strategies that may
positively affect their specific organization's operational and financial performance.
Shawnee

Vickery, , JayanthJayaram,CorneliaDroge, Roger

Calantone(2006), The effects of an integrative supply chain strategy on customer

service and financial performance: an analysis of direct versus indirect
relationships study examines the performance implications of an integrated supply
chain strategy, with customer service performance followed by financial performance as
performance constructs. Two major components of an integrated supply chain strategy
are identified and defined: integrative information technologies, which is modeled
antecedent to supply chain integration. The research model was tested using data from a
sample (n=57) of the top 150 independent first tier automotive suppliers to the Big 3 in
North America. The results showed positive direct relationships between integrated
information technologies and supply chain integration, supply chain integration and
customer service, and customer service and firm performance. The relationship of supply
chain integration to financial performance was indirect, through customer service; i.e.,
customer service was found to fully (as opposed to partially) mediate the relationship
between supply chain integration and firm performance for first tier suppliers in the
automotive industry.

MabweKumbirai, Robert Webb (2010),This paper investigates the

performance of South Africas commercial banking sector for the period 2005- 2009.
Financial ratios are employed to measure the profitability, liquidity and credit quality
performance of five large South African based commercial banks. The study found that
overall bank performance increased considerably in the first two years of the analysis. A
significant change in trend is noticed at the onset of the global financial crisis in 2007,
reaching its peak during 2008-2009. This resulted in falling profitability, low liquidity
and deteriorating credit quality in the South African Banking sector.
SuvarunGoswami,AniruddhaSarkar(2011),

Analysis

Of

Financial

Performance Of Tata Steel A Case Study emphasis of the study is to measure &
7

analyze the operating risk, financial risk, and total risk by way of computing the Degree
of Operating Leverage (DOL), Degree Of Financial Leverage (DFL), and Degree Of
Total Leverage (DTL) of the selected company viz. Tata Steel for the accounting period
from 2000-01 to 2009-10.objective of the study to measure, test and evaluate the liquidity
position of Tata Steel..
Vinodramanii(2011), A Comparative Study Of Financial Performance Of
Indian Banking Sector In Post-Reform Period explained after liberalization the
Indian banking sector developed very appreciate. The RBI also nationalized good amount
of commercial banks for proving socio economic services to the people of the nation. The
Indian banking sector has shown very good performance as far as the financial operations
are concerned. If we look to the glance of the financial operations, she find that deposits
of banks have been increased. The total incomes of the banks have also shown good
performance since the last few years. The gross profit and the net profit also increased
very rapidly.
Ruhaii(2011), Financial Performance of Get Bank explained financial performance
of banks is very important. Banks provide capital for most business especially small
businesses. Their performance therefore is important not only to the banks shareholders
but the business community as well. In evaluating the performance of the banks ratio
analysis will be used. Ratios help in understanding the financial statement as it helps to
simplify the comprehensive financial statement for the year and the financial position for
the period under review. Financial ratios are classified under five categorize namely,
profitability, liquidity, efficiency, gearing and investment. Each category has a number of
ratios.
Sagayaglory (2012) A Study On Financial Performance Using Ratio
Analysis At Emami Ltd in a simple expressive manner. This aim is to analysis the
liquidity and profitability position of the company using the financial tools. This study
based on financial statements such as Ratio Analysis, Comparative balance sheet. By
using this tools combined it enables to determine in an effective manner. The study is
made to evaluate the financial position, the operational results as well as financial
8

progress of a business concern. This study explains ways in which ratio analysis can be of
assistance in long-rang planning, budgeting and asset management to strengthen financial
performance and help avoid financial difficulties. The study not only throws on the
financial position of a firm but also serves as a stepping stone to remedial measures for
Emami Limited. This project helps to identify and give suggestion the area of weaker
position of business transaction in EMAMI LTD. He earnestly hopes that the project
will provide added utility to the reader and will serve his purpose.
Maryam Mohammad, Afghan Malek(2012), An Empirical Study of
Financial Performance Evaluation Of A Malaysian Manufacturing Company tells
about accounting principles are useful tools in executing and improving a successful
practice management plan. In todays competitive environment, evaluating the financial
performance is crucial for companies in manufacturing sector. The analysis of financial
performance reflects the financial position of the company, the level of the
competitiveness in the same sector, and a thorough knowledge about the cost and profit
centers within the firm. Managers, investors, and creditors can then apply this accounting
information provided by financial analysis in their strategic planning and investment
decisions. This study investigates the financial performance of an investment company in
Malaysia for a three-year period from 2009 to 2011, which is assessed using financial
ratios.
SathyaVarathan,PraiaKalyanasundaram and S.Tamilenthi(2012), Credit
policy and credit appraisal of canara bank using ratio analysis deals in banking such
as working capital and its management, working capital methods of assessment,
compilation of credit reports. The study included working capital, working capital cycle
and working capital management of Canara Bank. The methods that are used by the
banks in order to calculate the loan limits are Turnover method, MBPF system and Cash
budget system. The financial statements were taken for a period of five years from 1st
April 2007 to 31st March 2012. The Profit and loss account and Balance sheet were
analyzed. The firms financial performance is analyzed through ratio analyses. The study

shows Canara bank has sound system for credit appraisal and the bank has good
parameters to appraise the project.
SuvitaJha, XiaofengHui (2012), A comparison of financial performance of
commercial banks A case study of Nepal objective of this study was to compare the
financial performance of different ownership structured commercial banks in Nepal based
on their financial characteristics and identify the determinants of performance exposed by
the financial ratios, which were based on CAMEL Model. Eighteen commercial banks for
the period 2005 to 2010 were financially analyzed. In addition, econometric model
(multivariate regression analysis) by formulating two regression models was used to
estimate the impact of capital adequacy ratio, non-performing loan ratio, interest
expenses to total loan, net interest margin ratio and credit to deposit ratio on the financial
profitability namely return on assets and return on equity of these banks. The results
show that public sector banks are significantly less efficient than their counterpart are;
however domestic private banks are equally efficient to foreign-owned (joint venture)
banks. Furthermore, the estimation results reveal that return on assets was significantly
influenced by capital adequacy ratio, interest expenses to total loan and net interest
margin, while capital adequacy ratio had considerable effect on return on equity.
Prof. Vijay s patel,prof. Chandresh b. Mehta(2012), A Financial Ratio
Analysis of Krishakbharati Cooperative Limitedexplored Financial Statements are
generally prepared for the measurement of financial position of a particular company for
a particular period of time. The financial statements i.e. Profit and loss account and
Balance sheet provide useful information regarding financial situation of company. The
information has its own value, but if some one wants to have better judgment of the
concern, he has to analyse them. This paper provides the guidelines about analysis of
profitability ratio of KrishakBharati Co-operative Ltd. located at Kawas-Hazira in Surat
District.

2.3 REFERENCES
10

 G S Levitz , PP Brooke, Jr(1993), Independent versus system-affiliated

hospitals: a comparative analysis of financial performance, cost, and
productivity New England Economic Review, Vol. 1, pp. 23-38.

Agarwal, S. and Teas R.K. (2002). "Cross-national applicability of a

perceived quality model", Journal of Product and Brand Management,
Vol. 11, No. 4, pp. 213-236.

A. Abraham (2004), A Model of Financial Performance Analysis Adapted for

Nonprofit Organisations, Journal of Finance Services Research, March, pp. 524.

Karen Ritchie, Rebecca Fuhrer(2005)A comparative study of the performance

of screening tests for senile dementia using receiver operating characteristics
analysis, Journal of Business & Policy Research, Vol. 4, No. 2, pp. 189-211.

KaushikSengupta, Daniel R. Heiser,Lori S. Cook(2006), Manufacturing and

Service Supply Chain Performance: A Comparative Analysis, The International
Business & Economics Research Journal, Vol. 4, No. 1, pp. 1-10.

Shawnee

Vickery, , JayanthJayaram,CorneliaDroge, Roger

Calantone(2006) The effects of an integrative supply chain strategy on

customer service and financial performance: an analysis of direct versus indirect
relationships, Journal of Finance, Vol. 29, No. 2, pp. 449-470.

11

 MabweKumbirai, (2010) , This paper investigates the performance of South

Africas African Review of Economics and Finance, Applied Financial
Economics, Vol. 8, pp. 591-597.

Ruhaii(2011) Financial Performance of Gt Bank explained financial performance of

banks are very important, Working paper 02.04, Swiss National Bank.

SuvarunGoswami,AniruddhaSarkar(2011)

Analysis

Of

Financial

Performance Of Tata Steel A Case Study, Taylor and Financis Journals, Vol.
18, No. 16, pp. 1541-1543.

VinodramaniRamani(2011), A Comparative Study Of Financial Performance

Of Indian Banking Sector In Post-Reform Period, Journal of Money, Credit and
Banking, Vol. 20, No. 2, pp. 203-211.
sagayaglory (2012) A Study On Financial Performance Using Ratio Analysis
At Emami Ltd. Journal of Finance, Vol. No. 4,pp. 589-609.

Maryam Mohammadi, AfaghMalek(2012), An Empirical Study Of Financial

Performance Evaluation Of A Malaysian Manufacturing Company

SathyaVarathan ,PriyaKalyanasundaram and S.Tamilenthi(2012), Credit

policy and credit appraisal of canara bank using ratio analysis, Journal of
Banking & Finance, Vol. 17, No. 1, pp. 43-63.

12

 SuvitaJha, XiaofengHui (2012), A comparison of financial performance of

commercial banks A case study of Nepal, Journal of Financial Services
Research, Vol. 7, No. 2, pp. 127-150.

Prof. Vijay s patel,prof. Chandresh b. Mehta(2012), A financial ratio analysis

of krishakbharati cooperative limited, International Research Journal Finance
and Economics, No. 38, pp. 7-12.

CHAPTER-III
AUTOMOBILE INDUSTRYIN INDIA
3.1 INTRODUCTION
The automobiles sector is divided into four segments two-wheelers (mopeds,
scooters, motorcycles, electric two-wheelers), passenger vehicles (passenger cars, utility
vehicles, multi-purpose vehicles), commercial vehicles (light and medium-heavy
vehicles), and three wheelers (passenger carriers and good carriers).
The industry is one of the key drivers of economic growth of the nation. Since the
deli censing of the sector in 1991 and the subsequent opening up of 100 percent FDI
through automatic route, Indian automobile sector has come a long way. Today, almost
every global auto major has set up facilities in the country.
The world standings for the Indian automobile sector, as per the Confederation of Indian
Industry, are as follows:

Largest three-wheeler market

Second largest two-wheeler market

Tenth largest passenger car market

Fourth largest tractor market

13

Fifth largest commercial vehicle market

Fifth largest bus and truck segment

The auto sector reported a robust growth rate of 26 percent in the last two years
(2010-2012). The BSE AUTO Index outperformed the benchmark Nifty by 79%, 12%
and 19% in FY10, FY11 and FY12, respectively.
However, the sector has shown a sluggish growth of 12 percent in 2012. The trend is
likely to stay with a 10 percent growth outlined for 2013 citing high ownership costs (fuel
costs, cost of registration, excise duty, road tax) and slow rural income growth. Solid but
cautious growth is expected over the next few years. However, from a long-term
perspective, rising incomes, improved affordability and untapped markets present
promising opportunities for automobile manufactures in India. According to Macquarie
equities research, sale of passenger vehicles is expected to double in the next four years
and growth anticipated is higher than the 16 percent achieved in the past 10 years. Twowheeler vehicle segment is expected to show slow growth of 10 percent CAGR over the
period of 2012-2016, suggests the report.
The Government recognizes the impact of the sector on the nations economy, and
consequently, the Automotive Mission Plan 2016 launched by it seeks to grow the
industry to a size of US $145bn by 2016 and make it contribute 10 percent to the nations
GDP.
3.2 ROLE OF AUTOMOBILE INDUSTRY IN THEECONOMIC GROWTH
In India, automotive is one of the largest industries showing impressive growth
over the years and has been significantly making increasing contribution to overall
industrial development in the country. Presently, India is the world's second largest
manufacturer of two wheelers, fifth largest manufacturer of commercial vehicles as well
as largest manufacturer of tractors. It is the fourth largest passenger car market in Asia as
well as a home to the largest motor cycle manufacturer. The installed capacity of the
automobile sector has been 9,540,000 vehicles, comprising 1,590,000 four wheelers
(including passenger cars) and 7,950,000 two and three wheelers. The sector has shown

14

great advances in terms of development, spread, absorption of newer technologies and

flexibility in the wake of changing business scenario.
The Indian automotive industry has made rapid strides since delicensing and
opening up of the sector in 1991. It has witnessed the entry of several new manufacturers
with the state-of-art technology, thus replacing the monopoly of few manufacturers. At
present, there are 15 manufacturers of passenger cars and multi-utility vehicles, 9
manufacturers of commercial vehicles, 16 of two/ three wheelers and 14 of tractor,
besides 5 manufacturers of engines. The norms for foreign investment and import of
technology have also been liberalised over the years for manufacture of vehicles. At
present, 100% foreign direct investment (FDI) is permissible under the automatic route in
this sector, including passenger car segment. The import of technology for technology
upgradation on royalty payment of 5% without any duration limit and lump sum payment
of USD 2 million is also allowed under automatic route in this sector. The Indian
automotive industry has already attained a turnover of Rs. 1,65,000crore (34 billion
USD) and has provided direct and indirect employment to 1.31 crore people in the
country. The growth of Indian middle class, with increasing purchasing power, along with
strongmacro-economic fundamentals have attracted the major auto manufacturers to
Indian market. The market linked exchange rate, well established financial market, stable
policy governance work and availability of trained manpower have also shifted new
capacities and flow of capital to the auto industry of India.

3.3 GROWTH DRIVERS FOR AUTOMOBILE INDUSTRY IN INDIA

Indian Auto industry is growing at 7-9% growth rate. There are many factors that
forcing such industry to the higher growth rate but three major growth drivers are1). Driving these ambitious plans are three major factors. First, the reduction in
excise duty on small-cars, effected in the last Budget, which has clearly given a leg-up to
sales in that category. The concession extended to small-cars has been the catalyst for
Honda and Toyota has to take a serious look at the options available for them in small-car
market.

15

2). Second, the Free Trade Agreement India signed with Thailand two years ago.
As per the agreement, the so-called 82 early harvest items, which include a range of auto
components, will be subject to zero duty when imported from Thailand into India from
September 1. Both Toyota and Honda have major operations in Thailand and the FTA will
help them integrate their Thai operations into their India plans. The option of importing
critical components from their own operations/suppliers in Thailand confers a twin
advantage for the Japanese majors. First, the time to market can be crashed as they do not
have to wait for Indian component suppliers to invest in production capacities and,
second, it confers a big price advantage as they can import duty-free.
3).And the final factor is that India is now reckoned as a low-cost global
manufacturing base for small cars; Hyundai has already taken the lead in this respect. The
Korean company's Indian unit is a major exporter of cars. Exports accounted for 39 per
cent of total sales in 2005-06 and the stated plan is to take this to 50 per cent once the
co/mpany's second plant goes on stream in the next couple of years.
4). The companies recorded increase in their sales even after the recent increase in
prices despite the fact that some of the models have been discontinued in the 13 big cities
due to the recent BS 4 implications.
3.4 NEED FOR AUTOMOBILE INDUSTRY
The growth rate of the automobile industry at the beginning of this decade was
around 13 percent. In 2010, it is likely to exceed 31 percent. During the next 10 years, it
would grow at a higher pace than the last decade and touch a size of $175200 billion by
2022.
A number of new players, OEMs and component manufacturers have invested in
India. Not only has thecore industry changed but support and allied industries like
logistics, design, R&D, sales and service,finance, and insurance have scaled up and
adopted new business practices. Bus transport companies arenow looking at a complete
solution of vehicle, driver and maintenance and that too with close to 98percent up time.
A pickup and drop facility would soon be the norm rather than the exception.

16

During the last decade, one of the industrys key competitive advantages was the
availability of skilledmanpower. SIAM estimates industry employment at around 13
million. However, the recent trendsindicate that this advantage may not be sustainable
unless remedial steps are taken.
What are these trends? First, there is the Quantity Challenge. The number of
people required to sustaingrowth is an additional 35 million by 2022. Next, there is the
Qualification Challenge. An IMaCS study,for the National Skill Development
Corporation (NSDC), has identified a number of skill gaps that exist invarious sections of
the value chain in the supply industry, OEMs and component manufacturers and inthe
sales, service and support functions.

3.5GOVERNMENT POLICIES ON INDIAN AUTOMOBILE INDUSTRY

The Indian Automobile Industry plays a major role in the economic scenario of
the country. The automobile sector in India, record sales of more than one million
passenger cars per year. The percentage of automobile exports has risen significantly
during the last few years. The government policies on Indian automobile industry have
been framed in order to aid in the expansion of the automobiles sector in India.
During the early stages, the automobile industry was not accorded much
importance by the Indian Government. However, the attitude changed during the 1990's.
A number of reforms were initiated in 1991. Liberal policies affected during this period,
proved to be beneficial to the automobile industry. The fiscal measures, tax reliefs and
reforms in equity regulations and foreign exchange led to significant growth in the
automobile sector. A reduction in the percentage of tariffs imposed on exports and a
change in the banking policies was instrumental in the expansion and growth of the
banking sector.
Prior to the mid 1990's, the Indian automobile sector comprised of indigenous
companies. The automobile market in India was however, opened up to foreign investors
in 1996. International names like Ford, Hyundai, Toyota, Volvo, Daimler Chrysler and
17

GM Honda were thus, able to make their foray into the Indian automobile sector.
Furthermore, the auto emission rules issued by the government in recent years ensured
that the vehicles manufactured in India, catered to international standards. At present, the
automobiles sector contributes 4 % to the GDP. About 9.7 million automobiles were
manufactured in 2005-2006. Export figures had crossed the magic figure of one billion
during 2003-2004.
A reduction in the tariff imposed on car exports has been effected by the Indian
government. There has also been a removal of the minimum capital investment required
from new investors. The new policy is also in favor of reduction in excise duty for small
automobiles and low emission and multi utility cars. The tariff policy is also to be
reviewed on a regular basis in order to affect a balance between domestic industry and
international trade. There has also been a proposal for tax relaxation on investment of
more than Rs. 500 Crore.
The government has recently proposed for an infrastructure that will provide one
stop clearance for any kind of proposal for foreign direct investment in the automotive
sector. This will include the local clearance system also for the same purpose. There are
also plans for imposing a 100 % tax deduction on export profits. The government has also
proposed for a concession in import duty for the establishment of new manufacturing
units and industrial holdings.
The Indian government is also urging the state governments to ensure continuous
power supply to the automotive manufacturing units as well as granting them with the
preferred plots of land. Captive Generation for the automobile sector has also been
proposed. The auto policy of the Indian government also includes the promotion of
vehicles which are run on alternative energy resources. Talks are also on for extensive
research, development and designing facilities that would effect modernization in the
automotive sector.
The policies adopted by the Indian government for the growth and development
of the automobile sector, has led to a large number of foreign investments. It has also
given rise to an increased sales rate for two wheelers and other automobiles. India is also
becoming the ultimate outsourcing destination for global automobile companies like
Ford, Mitsubishi, Toyota, Hyundai etc.
18

3.6 PROBLEMS OF AUTOMOBILE INDUSTRY

Last weeks Conference on Automotive Communities and Workforce Adjustment,
sponsored by the Federal Reserve Bank of Chicago and held at the banks Detroit branch,
understandably focused a lot on Detroit and southeastern Michigan. In my talk at that
conference, though, I pointed out that the metropolitan areas that depend most heavily on
the auto industry (including assembly and parts, foreign companies as well as the Detroit
Three) arent just in Michigan, and most arent anywhere near the size of Detroit.
There are actually 62 metropolitan areas (shown on slide three of the attached
PowerPoint file) where motor vehicle and parts manufacturing make up at least 1.12
percent of all jobs, which is at least double the nationwide percentage. That may not
sound like very much, but remember that lots of other jobs, in car dealerships, dentists
offices, restaurants, and a host of other local service companies, depend on the autorelated jobs. If a metro area with 1.12 percent of its employment in motor vehicles and
parts lost all those jobs, it could lose more than 3 percent of all its jobs (maybe more in
small metro areas and less in big ones). Thats a big hit.
Some of these 62 highly auto-dependent metro areas are located in Michigan and
nearby Great Lakes states. But others are in the south-central states (Kentucky,
Tennessee, Alabama, Mississippi) and parts of the southeast (Virginia, the Carolinas,
Georgia), and there are a few auto parts manufacturing centers located in the Western
states.
Some of the 62 auto-dependent metro areas are more auto-dependent than metro
Detroit, where 5.3 percent of all jobs were in motor vehicle and parts manufacturing as of
the end of 2007. In Morristown, TN, that figure was 5.5 percent. It was 6.6 percent in
Mansfield, OH, 7.0 percent in Battle Creek, MI, 8.1 percent in Columbus, IN, and an
astounding 19.6 percent in Kokomo, IN, the nations most auto-dependent metro area.
Just below Detroit, with 3 to just over 5 percent of their jobs in motor vehicles and parts,
are 20 metro areas, virtually all with populations of less than a million.
3.7 TATA MOTORS LIMITED
19

Tata Motors Limited is Indias largest automobile company, with consolidated

revenues of INR 1,65,654crores (USD 32.5 billion) in 2011-12. It is the leader in
commercial vehicles in each segment, and among the top in passenger vehicles with
winning products in the compact, midsize car and utility vehicle segments. It is also the
worlds fourth largest truck and bus manufacturer.
The Tata Motors Groups over 55,000 employees are guided by the mission to be
passionate in anticipating and providing the best vehicles and experiences that excite our
customers globally.
Established in 1945, Tata Motors presence cuts across the length and breadth of
India. Over 7.5 million Tata vehicles ply on Indian roads, since the first rolled out in
1954. The companys manufacturing base in India is spread across Jamshedpur
(Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand),
Sanand (Gujarat) and Dharwad (Karnataka). Following a strategic alliance with Fiat in
2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon
(Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The companys
dealership, sales, services and spare parts network comprises over 3,500 touch points.
Tata Motors, also listed in the New York Stock Exchange (September 2004), has emerged
as an international automobile company. Through subsidiaries and associate companies,
Tata Motors has operations in the UK, South Korea, Thailand, Spain, South Africa and
Indonesia. Among them is Jaguar Land Rover, acquired in 2008. In 2004, it acquired the
Daewoo Commercial Vehicles Company, South Koreas second largest truck maker. The
rechristened Tata Daewoo Commercial Vehicles Company has launched several new
products in the Korean market, while also exporting these products to several
international markets. Today two-thirds of heavy commercial vehicle exports out of
South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in
Hispano Carrocera, a reputed Spanish bus and coach manufacturer, and subsequently the
remaining stake in 2009. Hispanos presence is being expanded in other markets. In 2006,
Tata Motors formed a 51:49 joint venture with the Brazil-based, Marcopolo, a global
leader in body-building for buses and coaches to manufacture fully-built buses and
coaches for India - the plant is located in Dharwad. In 2006, Tata Motors entered into
20

joint venture with Thonburi Automotive Assembly Plant Company of Thailand to

manufacture and market the companys pickup vehicles in Thailand, and entered the
market in 2008. Tata Motors (SA) (Proprietary) Ltd., Tata Motors joint venture with Tata
Africa Holding (Pty) Ltd. set up in 2011, has an assembly plant in Rosslyn, north of
Pretoria. The plant can assemble, semi knocked down (SKD) kits, light, medium and
heavy commercial vehicles ranging from 4 tonnes to 50 tonnes.
Tata Motors is also expanding its international footprint, established through
exports since 1961. The companys commercial and passenger vehicles are already being
marketed in several countries in Europe, Africa, the Middle East, South East Asia, South
Asia, South America, CIS and Russia. It has franchisee/joint venture assembly operations
in Bangladesh, Ukraine, and Senegal.
The foundation of the companys growth over the last 66 years is a deep
understanding of economic stimuli and customer needs, and the ability to translate them
into customer-desired offerings through leading edge R&D. With over 4,500 engineers,
scientists and technicians the companys Engineering Research Centre, established in
1966, has enabled pioneering technologies and products. The company today has R&D
centres in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Spain,
and the UK.
It was Tata Motors, which launched the first indigenously developed Light
Commercial Vehicle in 1986. In 2005, Tata Motors created a new segment by launching
the Tata Ace, Indias first indigenously developed mini-truck. In 2009, the company
launched its globally benchmarked Prima range of trucks and in 2012 the Ultra range of
international standard light commercial vehicles. In their power, speed, carrying capacity,
operating economy and trims, they will introduce new benchmarks in India and match the
best in the world in performance at a lower life-cycle cost.
Tata Motors also introduced Indias first Sports Utility Vehicle in 1991 and, in
1998, the Tata Indica, Indias first fully indigenous passenger car.
In January 2008, Tata Motors unveiled its Peoples Car, the Tata Nano. The Tata Nano has
been subsequently launched, as planned, in India in March 2009, and subsequently in
2011 in Nepal and Sri Lanka. A development, which signifies a first for the global
21

automobile industry, the Nano brings the joy of a car within the reach of thousands of
families.Tata Motors is equally focused on environment-friendly technologies in
emissions and alternative fuels. It has developed electric and hybrid vehicles both for
personal and public transportation. It has also been implementing several environmentfriendly technologies in manufacturing processes, significantly enhancing resource
conservation.
Through its subsidiaries, the company is engaged in engineering and automotive
solutions, automotive vehicle components manufacturing and supply chain activities,
vehicle financing, and machine tools and factory automation solutions.
Tata Motors is committed to improving the quality of life of communities by
working on four thrust areas - employability, education, health and environment. The
activities touch the lives of more than a million citizens. The companys support on
education and employability is focused on youth and women. They range from schools to
technical education institutes to actual facilitation of income generation. In health, the
companys intervention is in both preventive and curative health care. The goal of
environment protection is achieved through tree plantation, conserving water and creating
new water bodies and, last but not the least, by introducing appropriate technologies in
vehicles and operations for constantly enhancing environment care.
3.8 RESEARCH AND DEVELOPMENT OF TATA MOTORS
The foundation of the companys growth is a deep understanding of economic
stimuli and customer needs, and the ability to translate them into customer-desired
offerings through leading edge R&D. The R&D establishment includes a team of 1400
scientists and engineers. The companys Engineering Research Centre was established in
1966, and has facilities in Pune, Jamshedpur and Lucknow. Besides product
development, R&D is also focusing on environment-friendly technologies in emissions
and alternative fuels.
The ERC has enabled pioneering technologies and products. It was Tata Motors,
which developed the first indigenously developed Light Commercial Vehicle, Indias first
Sports Utility Vehicle and, in 1998, the Tata Indica, Indias first fully indigenous

22

passenger car. Within two years of launch, Tata Indica became Indias largest selling car
in its segment.
The pace of new product development has quickened through an organisationwide structured New Product Introduction (NPI) process. The process with its formal
structure for introducing new vehicles in the market brings in greater discipline in project
execution. The NPI process helped Tata Motors create a new segment by launching the
Tata Ace, Indias first mini-truck. The years to come will see the introduction of several
other innovative vehicles, all rooted in emerging customer needs.
The ERC in Pune, among whose facilities are Indias only certified crash-test
facility and hemi-anechoic chamber for testing of noise and vibration, has received
several awards from the Government of India. Some of the more prominent amongst
them are the National Award for Research and Development Efforts in Industry in the
Mechanical Engineering Industries sector in 1999, the National Award for Successful
Commercialization of Indigenous Technology by an Industrial Concern in 2000, and the
CSIR Diamond Jubilee Technology Award in 2004.
3.9 GROWTH HISTORY OF TATA MOTORS LTD
Tata Motors Limited, Indias largest automobile company, is the leader by far in
commercial vehicles in each segment, and the second largest in the passenger vehicles
market withwinning products in the compact, mid-size car and utility vehicle segments.
The company is the worlds fifth largest medium and heavy commercial vehicle
manufacturer.Established in 1945, Tata Motors presence indeed cuts across the length
and breadth of India. Close to 4 million. Tata vehicles ply on Indian roads, since the first
rolled out in 1954. The companys manufacturing base is spread across Jamshedpur, Pune
andLucknow, supported by a nationwide dealership, sales, services and spare parts
network comprising over 2,000 touch points. Their annual turnover last year was Rs.
27,000 crores. The companys 24,000 employees are guided by the vision to be best in
the manner in which they operate, best in the products they deliver and best in their value
system and ethics.
23

They became the first company from Indias engineering sector to be listed in the
New York Stock Exchange in September 2004. They have several international
collaborations and acquisitions including Daewoo of Korea and MarcoPolo of Brazil.
Tata Motors and the Fiat Group have recently signed a Memorandum Of Understanding
to establish an industrial joint venture in India to manufacture passenger vehicles, engines
and transmissions for overseas markets.SAP has a clear superiority in the market. It has
a large presence and good support, so we chose the SAP ERP Solution for our company.
The results have definitely exceeded our expectations, Says ProbirMitra, CIO, Tata
Motors.
Before implementing the SAP ERP Solution, there were several homegrown
applications that managed all of the companys IT requirements. Since they were
developed over long periods of time, they were on multiple platforms and hence difficult
to merge. The biggest drawback of the legacy applications was that they were function
and location specific and were built on local and individual perception of needs. Common
and rationalized processes and practices across all organizational units were not enforced.
Therefore, managing functions like HR, sales and finance across three manufacturing
units spread across the country and their corporate office was tedious and timeconsuming. Integrated functions like materials management and payment processing
were separate entities, causing delays in individual transactions. This led to unnecessary
increase in overhead costs and duplicated efforts at each unit.
Tata Motors soon understood that the need of the hour was a unified real time
database that gave up-to-date information to all their stakeholders - both internal and
external. They had to move from their legacy decentralized platforms into a consolidated
enterprise platform and rationalize the business processes across the various units. This
would give them an enterprise perspective both across process and IT infrastructure. The
company could then serve their customers much better and faster, even while reducing
operational costs and cutting manufacturing cycle times.
They decided to go in for the SAP ERP Solution, which provided them all the
answers and much more. The SAP Solution would enable them to improve business
24

continuity by unifying the database and functions across the country into one single
entity. It would no longer require any location-specific expertise and thus be much easier
to maintain. With the SAP solution, customization and up gradation costs could be
lowered. Risks, which emanate from attrition or change of guard in the company, would
also be minimized.
3.10 IMPLEMENTATIONOF THE SAP ERP SOLUTION IN TATA MOTORS LTD
Tata Motors outsources their IT to Tata Technologies, which is their 100%
subsidiary company. So Tata Technologies became their implementation partner. SAP
India also organized some consulting for them, which had consultants from both India
and abroad. In 1997, when the seed of implementation was sown, the WAN infrastructure
in India did not permit a single server implementation. Hence a distributed server
implementation was done in stages over a period of two years between 1998 and 2000.
The version used was 3.1H. In August 2003, they moved over from SAP 3.1H to SAP
4.6C on a single server platform. There are 3500 users across the country. Once SAP was
implemented, rationalization of several processes was done extensively. Various
business processes like materials, Finance,

logistics, etc. Were stripped down to their

basic components and a lot of re-engineering had to be done, as all these processes
became location-independent. Tata Motors also opted for the standard cost functionality,
which was a significant business process change for them.

25

CHAPTER IV
ANALYSIS AND INTERPREATION
4.1 INTRODUCTION
A ratio is one figure express in terms of another figure. It is a mathematical
yardstick that measures the relationship two figures, which are related to each other and
mutually interdependent. Ratio is express by dividing one figure by the other related
figure. Thus a ratio is an expression relating one number to another. It is simply the
quotient of two numbers. It can be expressed as a fraction or as a decimal or as a pure
ratio or in absolute figures as so many times. As accounting ratio is an expression
relating two figures or accounts or two sets of account heads or group contain in the
financial statements.
4.2 RATIO ANALYSIS
Ratio analysis is the method or process by which the relationship of items or
group of items in the financial statement are computed, determined and presented.

26

Ratio analysis is an attempt to derive quantitative measure or guides concerning

the financial health and profitability of business enterprises. Ratio analysis can be used
both in trend and static analysis. There are several ratios at the disposal of an analyst but
their group of ratio he would prefer depends on the purpose and the objective of analysis.

4.3LIQUIDITY RATIO
Liquidity Ratios the ability of the unit to meet its short-term (generally one year)
Obligations and reveals the short-term financial strength or weakness. The following ratio
analysis is made to analyze the company Liquidity Ratio.

a). Current ratio

b). Gross profit ratio
c). Net profit ratio
d). Operating profit ratio
e). Manufacturing expenses
f). Selling expenses
g). Administrative expenses
h). Personal expenses

27

4.3.1 CURRENT RATIO

The current ratio may be defined as the relationship between current assets and
current liabilities. Theratio known as working capital ratio to measures of general
liquidity and is most widely used to make the analysis of a short term financial position
or liquidity of a firm.
FORMULA
Current Ratio

= Current Assets Current Liabilities

TABLE NO:4.1
CURRENT RATIO
(Rs. In Crores)

YEAR

CURRENT
ASSETS

CURRENT
LIABILITIES

CURRENT
RATIO

2007 2008

10,781,23

12,029.80

0.89

28

2008 - 2009

10,836.58

12,846.21

0.84

2009 2010

12,329.48

19,673.73

0.62

2010 2011

14,775.61

18,963.40

0.77

2011 - 2012

15,538.16

24,872.27

0.62

INTERPRETATION
The above table depicts the current ratio of the Tata Motors ltd. The ratio was
highly during the year 2007-08 and lowest during the year 2011-12. The rule thumb for
current ratio is 2:1
It indicates the firm may not be sufficient fund to pay of liabilities.so the
company improve its position of current ratio.
EXHIBIT NO: 4.1
CURRENT RATIO

29

RATIO
1
0.9
0.8
0.7
0.6

RATIO

0.5
0.4
0.3
0.2
0.1
0
2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

4.3.2 GROSS PROFIT RATIO

Gross profit margin (gross margin) is the ratio of gross profit (gross sales less cost
of sales) to sales revenue. Gross margin is a good indication of how profitable a company
is at the most fundamental level, how efficiently a company uses its resources, materials,
30

and labor. It is usually expressed as a percentage, and indicates the profitability of a

business before overhead costs; it is a measure of how well a company controls its costs.
FORMULA
Gross Profit Ratio = (Gross profit / Net Sales) X 100
TABLE NO: 4.2
GROSS PROFIT RATIO
(Rs. In Crores)

YEAR

GROSS
PROFIT

NET
SALES

GROSS
PROFIT
RATIO

2007 2008

3,160.82

31,884.69

9.9

2008 - 2009

1,953.56

25,660.79

7.6

2009 2010

4,783.86

35,593.05

13.4

2010 2011

3,704.41

47,807.42

7.7

2011 - 2012

3,533.01

54,306.56

6.50

INTERPRETATION
The above table attempted that the Gross profit ratio of the Tata Motors ltd. The ratio was
highly during the year 2009-10 and lowest during the year 2008-09.
The rule thumb for gross profit is companies are able to cover the fixed expenses.
EXHIBIT NO: 4.2
GROSS PROFIT RATIO

31

RATIO
14
12
10
RATIO

8
6
4
2
0
2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

4.3.3 NET PROFIT RATIO

Net Profit Ratio indicates that portion of the sales which is left out with the
owners after considering all types of expenses and costs either operating or non operating
32

or normal or abnormal. It also indicates the firms capacity to face adverse economic
conditions such as low demand, price competition etc. It is expressed in percentage. A
higher net profit ratio will be desirable as it indicates higher profitability of the business.

FORMULA
Net Profit Ratio = (Net profit after taxes/ Net Sales) X 100
TABLE NO: 4.3
NET PROFIT RATIO
(Rs. In Crores)

YEAR

NET
PROFIT

NET
SALES

NET
PROFIT
RATIO

2007 2008

1,913.46

31,884.69

6.00

2008 - 2009

1,001.26

25,660.79

3.90

2009 2010

2,240.08

35,593.05

6.29

2010 2011

1,811.82

47,807.42

3.78

2011 - 2012

1,242.23

54,306.56

2.28

INTERPRETATION
The above table Measured that the Net profit ratio of Tata Motors
ltd. The ratio was highly during the year 2009-10 and lowest during the year 2011-12.
Increases in the net profit ratio indicate the improved efficiency of the companies. So the
net profit ratio is satisfactory in the company.

EXHIBIT NO :4.3
NET PROFIT RATIO

33

RATIO
7
6
5
RATIO

4
3
2
1
0
2007-2008

2008-2009

2009-2010

4.3.4OPERATING PROFIT RATIO

34

2010-2011

2011-2012

Operating net profit ratio is calculated by dividing the operating net profit by
sales. This ratio helps in determining the ability of the management in running the
business.
FORMULA
Operating profit ratio = (Operating profit / Net sales) 100
TABLE NO: 4.4
OPERATING PROFIT RATIO
(Rs. In Crores)

YEAR

OPERATING
PROFIT

NET
SALES

OPERATING
PROFIT
RATIO

2007 - 2008

3,030.52

31,884.69

9.50

2008 - 2009

1,723.10

25,660.79

6.71

2009 - 2010

4,032.83

35,593.05

11.3

2010 2011

4,705.72

47,807.42

9.84

2011 - 2012

4,177.55

54,306.56

7.69

INTERPRETATION
The above table Measured that the operating profit ratio of Tata
Motors ltd. The ratio was highly during the year 2009-10 and lowest during the year
2008-09.
The operating ratio laid down a fluctuating of all increase and
decrease trend in the company.
EXHIBIT NO: 4.4
35

OPERATING PROFIT RATIO

RATIO
12
10
8

RATIO

6
4
2
0
2007-2008

2008-2009

2009-2010

36

2010-2011

2011-2012

4.3.5 MANUFACTURING EXPENSES

Manufacturing cost, defined as the labour, material, and overhead costs in
producing a finished product, are the most significant factor in any manufacturing
business.
FORMULA
Manufacturing Expenses = Manufacturing Expenses / Sales 100

TABLE NO: 4.5

MANUFACTURING EXPENSESRATIO

(Rs. In Crores)

YEAR

MANUFACTUR NET
ING
SALES
EXPENSES

MANUFACTURING
EXPENSES
RATIO

2007 2008

1,230.14

31,884.69

3.85

2008 - 2009

1,171.59

25,660.79

4.56

2009 - 2010

1,652.22

35,593.05

4.64

2010 2011

2,224.74

47,807.42

4.65

2011 - 2012

2,937.80

54,306.56

5.40

INTERPRETATION
The above table measured that the manufacturing expenses ratio of Tata Motors
ltd. The ratio was highly during the year 2011-12 and lowest during the year 2007-08.
EXIBIT NO: 4.5
37

MANUFACTURING EXPENSES RATIO

RATIO
6
5
4

RATIO

3
2
1
0
2007-2008

2008-2009

2009-2010

4.3.6 SELLING EXPENSES

38

2010-2011

2011-2012

Selling expenses is the sum of all direct and indirect selling expenses and all
general and administrative expenses of a company.
FORMULA
Selling expenses = (Selling expenses / Net sales) X 100
TABLE NO :4.6
SELLING EXPENSESRATIO
(Rs. In Crores)

YEAR

SELLING
EXPENSES

NET
SALES

SELLING
EXPENSES
RATIO

2007 - 2008

1,179.48

31,884.69

3.69

2008 - 2009

1,224.15

25,660.79

4.77

2009 - 2010

1,583.24

35,593.05

4.44

2010 2011

2,289.11

47,807.42

4.78

2011 - 2012

2,370.44

54,306.56

4.36

INTERPRETATION
The above table measured that the manufacturing expenses ratio of Tata Motors
ltd. The ratio was highest during the year 2010-11 and lowest during the year 2007-08.

EXIBIT NO:4.6
39

SELLING EXPENSES RATIO

RATIO
5
4.5
4
3.5
3

RATIO

2.5
2
1.5
1
0.5
0
2007-2008

2008-2009

2009-2010 2010-2011

40

2011-2012

4.3.7 ADMINISTRATIVE EXPENSES

The expenses ratios indicate the relationship of various expenses to net sales. The
calculation used by the market to determine if a operating efficiently is the expense ratio.

FORMULA
Administrative expenses = (Administrative expenses / Net sales) X 100
TABLE NO: 4.7
ADMINISTRATIVEEXPENSESRATIO
(Rs. In Crore)

YEAR

ADMINISTRAT NET
IVE EXPENSES SALES

ADMINISTRATIVE
EXPENSES
RATIO

2007 - 2008

1,982.79

31,884.69

6.2

2008 - 2009

1,867.05

25,660.79

7.2

2009 - 2010

2,249.92

35,593.05

6.32

2010 2011

2,568.50

47,807.42

5.37

2011 - 2012

2,489.16

54,306.56

4.58

INTERPRETATION
The above table measured that the manufacturing expenses ratio of Tata Motors
ltd. The ratio was highest during the year 2009-10 and lowest during the year 2011-12.

41

EXIBIT NO: 4.7

ADMINISTRATIVE EXPENSES RATIO

RATIO
8
7
6
5

RATIO

4
3
2
1
0
2007-2008

2008-2009

2009-2010

42

2010-2011

2011-2012

4.3.8 PERSONAL EXPENSES

The ratio calculates the personal expenses of the firm on the basis of net sales. Its
also indicate the relationship of various expenses to net sales.

FORMULA
Personal expenses = (Personal expenses / Net sales) X 100
TABLE NO:4.8
PERSONAL EXPENSES RATIO
(Rs. In Crores)

YEAR

PERSONAL
EXPENSES

NET
SALES

PERSONALEXPEN
SES
RATIO

2007 - 2008

1,544.57

31,884.69

4.84

2008 - 2009

1,551.39

25,660.79

6.04

2009 - 2010

1,836.13

35,593.05

5.15

2010 2011

2,294.02

47,807.42

4.79

2011 - 2012

2,691.45

54,306.56

4.95

INTERPRETATION
The above table measured that the manufacturing expenses ratio of Tata Motors
ltd. The ratio was highest during the year 2008-09 and lowest during the year 2010-11.

43

EXIBIT: 4.8
PERSONAL EXPENSES RATIO

RATIO
7
6
5
4

RATIO

3
2
1
0
2007-2008

2008-2009

2009-2010

44

2010-2011

2011-2012

CHAPTER V
FINDINGS, SUGGESTIONS AND CONCLUSION
5.1 INTRODUCTION
This chapter provides the findings, suggestion and conclusion of the study. The
following are the major findings made based on the analysis and interpretation.
5.2 FINDINGS
The current ratio of the company is satisfactory.
Quick ratio is higher in the year of 2007-08 and lower in the year of 2011-12 and
now its increasing.
Gross profit ratio is higher in the year of 2009-10 and lower in during the year of
2008-2009 and now it is in increasing trend.
Net profit ratio was higher in the year of 2009-10 and lower in during the year of
2011-12. So the net profit ratio is satisfactory in the company.
The operating ratio has fluctuations during the period.
The manufacturing expenses ratio is higher in the year 2011-12 and lowest during
the year 2007-08.
The selling expenses ratio is constant when compared to previous year.
The administrative expenses ratio is higher during the year 2009-10 and lowest
during the year2011-12.
The personal expenses ratio is higher during the year 2008-09 and lowest during
the year 2010-11.
All the expenses ratio shows satisfactory level which confirms that the company
maintains its expenses within a limit.

5.3 SUGGESTIONS

45

Suggestion can be used by the firm for the betterment of the firm after study of
project report on study of financial performance. The suggestions are:
TATA Motors Ltd may raise funds through short term sources for short term
requirement of funds, which comparatively economical as compare to long term
funds.
TATA Motors Ltd may take steps to improve its profitability position.
The current assets should be managed more effectively so as to avoid unnecessary
blocking of capital that could be used for other purposes.
TATA Motors Ltd may reduce its expenses to improve its profitability as well as
financial strength.

5.4 CONCLUSION
The research concludes that A STUDY ON FINANCIAL PERFORMANCE OF
TATA MOTORS LIMITED during this period was very fruitful, because the researcher
was able to get experience apart from the theoretical knowledge. From the analysis the
researcher came to the conclude that, if the company follows the above suggestion given
by the researcher the company could increase the efficient utilization of its resources and
improve profits. The overall financial performance of the TATA MOTORS LIMITED
seems to be satisfactory. The firm should take corrective over all measures to increase the
financial performance.

46

On the basis of ratio analysis, researcher can make conclusion that overall
performance of the company is satisfactory. Majority of the ratio analysis are showing the
efficiency of the management in dealing with finance.

47