A Project Report on

A STUDY ON RATIO ANALYSIS OF TATA MOTORS

Submitted to
Savitribai Phule Pune University

In Partial Fulfillment of the Requirements for Award of the Degree

of
MASTER OF BUSINESS ADMINISTRATION
BY
ROMI RAJKUMAR SADH
MBA (FINANCE)
Under the guidance of
Prof. Manisha Badgujar

SINHGAD INSTITUTE OF BUSINESS ADMINISTRATION

AND
COMPUTER APPLICATION, LONAVALA
ACADEMIC YEAR (2016-2018)

1
 DECLERATION

I, the undersigned, hereby declare that the Project Report entitled “RATIO ANALYSIS” Written
and submitted by me to the Savitribai Phule Pune University, Pune in partial fulfillment of the
requirements for the award of degree of MASTER IN BUSINESS ADMINISTRATION under the
guidance of Prof. Manisha Badgujar is my original work and the conclusions drawn therein are
based on the material collected by myself.

DATE: ROMI RAJKUAMR SADH

PLACE:

2
 TABLE OF CONTENT

Pg.
Sr.No. CONTENT
No.

1 ACKNOWKEDGEMENT 1

2 LIST OF TABLES 2

3 LIST OF FIGURES 3

4 EXECUTIVE SUMMARY 4

5 CHAPTER I: INTRODUCTION 5

6 CHAPTER II: PROFILE OF THE ORGANIZATION 14

7 CHAPTER III: RESEARCH METHODOLOGY 21

CHAPTER IV : DATA ANALYSIS

8 27
AND INTERPRETATION

9 CHAPTER V: FINDINGS AND SUGGESTIONS 45

10 CHAPTER VI: CONCLUSION 48

11 BIBLIOGRAPHY 50

12 ANNEXURE 51

3
 ACKNOWLDGEMENT

I take this opportunity and privilege to express my deep sense of gratitude to Professor
M.N.Navale, Honorable Founder President, Dr. (Mrs.) S.M.Navale, Founder Secretary, The
Sinhgad Technical Education Society, Pune and Dr. Sachin Borgave, Director SIBACA. They
have been a source of inspiration to me and I am indebted to them for initiating me in the field of
research.

I am deeply indebted to Faculty Member, SIBACA Prof Manisha Badgujar my research guide at
Sinhgad Institute of Business Administration & Computer Application, Lonavala without whose
help completion of the project was highly impossible.

I take this opportunity and privilege to articulate my deep sense of gratefulness to the Managing
Director, and the staff of the TATA MOTORS for their timely help and positive encouragement.

I wish to express a special thanks to all teaching and non-teaching staff members of Sinhgad
Institute of Business Administration & Computer Application, Lonavala for their continuous
support. I would like to acknowledge all my family members, relatives and friends for their help
and encouragement.

Place: SIBACA, LONAVALA

Date: … ROMI.RAJKUMAR.SADH

4
 LIST OF TABLES

Table
Title of the Table Pg. No.
No.

1 Current Ratio 28

2 Quick Ratio 30

3 Capital Gearing Ratio 32

4 Debt Equity Ratio 34

5 Gross Profit Ratio 36

6 Operating Ratio 38

7 Net Profit Ratio 40

8 Stock Turnover Ratio 42

9 Return on Total Asset 43

5
 LIST OF FIGURES

Table
Title of the Table Pg. No.
No.

1 Current Ratio 28

2 Quick Ratio 30

3 Capital Gearing Ratio 32

4 Debt Equity Ratio 34

5 Gross Profit Ratio 36

6 Operating Ratio 38

7 Net Profit Ratio 40

8 Stock Turnover Ratio 42

9 Return on Total Asset 43

6
 Executive Summary

Tata Motors is among the top multinational companies in India. It is operating subsidiary of the
Tata Group. Tata Motors was established in the year 1945 and since then it has become the
country’s largest automotive producers. It is listed on both the Bombay Stock Exchange and
New York Stock Exchange. In 2005 this multinational company featured alongside the top ten
firms in India procuring annual revenue of Rs 320 billion. Tata Motors is ranked amongst the top
employers of the country. The current strength of employees is the company stands as 79,558.

In the year 2017 the total revenue earned by Tata Motors was Rs 2.697 trillion (US$42 billion).

7
 CHAPTER-I

INTRODUCTION

8
 CHAPTER 1: INTRODUCTION
Ratio Analysis
The term ‘accounting ratio is used to describe significant relationships which exist between
figures shown in a balance sheet, in a profit and loss account, in a budgetary system or in any
other part of the accounting organization. The accounting ratio indicate a quantitative
relationship which is used for analysis and decision making. It provides basis for interfirm, as
well as, intra-firm comparisons. The ratio will be effective only when they are compared with
ratios of base period or with standards or with the industry ratios. The financial statements viz,
Income statement, and Balance sheet report what has actually happened to earnings during a
specified period and present a summary of financial position of the company at a given point of
time. The statement of retained earnings between the start and end of the financial year under
study. The statement of changes in financial position provides summary of funds flow during the
period of financial statements.

“A ratio analysis is a quantitative analysis of information contained in a company’s financial

statements. Ratio analysis is used to evaluate various aspects of a company’s operating and
financial performance such as its efficiency, liquidity, profitability and solvency.”

Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm's financial performance in several key areas. The ratios are categorized as
Short-term Solvency Ratios, Debt Management Ratios, Asset Management Ratios,
Profitability Ratios, and Market Value Ratios.

Ratio analysis is a useful management tool that will improve your understanding of financial
results and trends over time, and provide key indicators of organizational performance. Managers
will use ratio analysis to pinpoint strengths and weaknesses from which strategies and
initiatives can be formed.

Ratio analysis is the process of determining and interpreting numerical relationships based on
financial statements. A ratio is a statistical yardstick that provides a measure of the relationship
between two variables or figures.

9
This relationship can be expressed as a percent or as a quotient. Ratios are simple to calculate
and easy to understand. The persons interested in the analysis of financial statements can be
grouped under three heads,

Financial
Owners or
Creditors Executives
Investors

Although all these three groups are interested in the financial conditions and operating results, of
an enterprise, the primary information that each seeks to obtain from these statements differs
materially, reflecting the purpose that the statement is to serve.

Investors desire primarily a basis for estimating earning capacity. Creditors are concerned
primarily with liquidity and ability to pay interest and redeem loan within a specified period.
Management is interested in evolving analytical tools that will measure costs, efficiency,
liquidity and profitability with a view to make intelligent decisions.

10
 Classification of Ratios:

Financial ratios can be classified under the following five groups:

1. Structural
Ratio

5. Miscellaneous
Ratio 2. Liquidity Ratio

Classification of
Ratio

4. Turnover Ratio 3. Profitability Ratio

11
 1. Structural Ratio
The following are the ratios structural ratio:

1. Funded Debt 2. Debt to 3. Net fixed 4. Funded

to Equity asset to Debt to Net

Capitalization Funded Working

Debts Capital

1. Funded Debt to Capitalization

The term ‘total’ capitalization comprises loan term debt, capital stock and reserves and surplus.
The ratio of funded debt to total capitalization is computed by dividing funded debt by total
capitalization. It can also be expressed as percentage of the funded debt to total capitalization.
Long term loans

Total capitalization (Share capital + Reserves and surplus + long term

loans)

2. Debt to Equity:
Due care must be given to the; computation and interpretation of this ratio. The definition of debt
takes two foremost. One includes the current liabilities while the other excludes them. Hence the
ratio may be calculated under the following two methods:

Long term loans + short term credit + Total debt to equity = Current
liabilities and provisions Equity share capital + reserves and surplus (or)

Long-term debt to equity =

Long – term debt / Equity share capital + Reserves and surplus

3. Net fixed asset to funded debts:

12
This ratio acts as a supplementary measure to determine security for the lenders. A
ratio of 2:1 would mean that for every rupee of long-term indebtedness, there is a
book value of two rupees of net fixed assets:

Net Fixed assets funded debt

4. Funded (Long-term) Debt to Net Working Capital:

The ratio is calculated by dividing the long-term debt by the amount of the
net working capital. It helps in examining creditors’ contribution to the liquid
assets of the firm. Long term loans Net working capital

2. Liquidity group:

It contains current ratio and Acid test ratio:

1. Current 2. Acid

Ratio Ratio

1. Current ratio:

It is computed by dividing current assets by current liabilities. This ratio is generally an

acceptable measure of short-term solvency as it indicates the extent to which he claims of short
term creditors are covered by assets that are likely to be converted into cash in a period
corresponding to the maturity of the claims. Current assets / Current liabilities and provisions +
short-term credit against inventory

13
2. Acid-test ratio:

It is also termed as quick ratio. It is determined by dividing “quick assets”, i.e., cash, marketable
investments and sundry debtors, by current liabilities. This ratio is a bitterest of financial strength
than the current ratio as it gives no consideration to inventory which may be very a low- moving.

3. Profitability Group:
It has five ratio, and they are calculated as follows:

14
4. Turnover group:
It has four ratios, and they are calculated as follows:

5. Miscellaneous group:
It contains four ratio and they are as follows:

15
Standards for comparison:
For making a proper use of ratios, it is essential to have fixed standards for comparison. A ratio
by itself has very little meaning unless it is compared to some appropriate standard. Selection of
proper standards of comparison is a most important element in ratio analysis. The four most
common standards used in ratio analysis are; absolute, historical, horizontal and budgeted.

Absolute standards are those which become generally recognized as being desirable regardless of
the company, the time, the stage of business cycle, or the objectives of the analyst. Historical
standards involve comparing a company’s own’ past performance as a standard for the present or
future.

In Horizontal standards, one company is compared with another or with the average of other
companies of the same nature.

The budgeted standards are arrived at after preparing the budget for a period Ratios developed
from actual performance are compared to the planned ratios in the budget in order to examine the
degree of accomplishment of the anticipated targets of the firm.

Objective:

1. To study and evaluate the ratio analysis.

2. To study the profitability ratio of Tata Motors.
3. To study about past 3 years data.

16
 CHAPTER – II

PROFILE OF THE ORAGNISATION

17
CHAPTER II: PROFILE OF THE ORGANISATION

Name of the company: Tata Motors

Address:-

Registered Office:

Headquarters Bombay House, 24, Modi Street, Fort Mumbai-

400001 (Hutatma Chowk)

Telephone No./ Fax No. +(91)-22-66658282, 22-66158600

Established on 1945; 73 years ago

Chairman Mr. Natarajan Chandrasekaran.

CEO Mr. Guenter Butschek

CFO Mr. P B Balaji

Area Served Worldwide

Revenue Rs 2.697 trillion (US$42 billion) (2017)

18
Operating Income Rs 30,343.5 crore (US$4.7 billion) (2017)

Profit Rs 7,454.88 crore (US$1.2 billion) (2017)

Total Assets Rs 2.725.80 trillion (US$42 billion) (2017)

No. of Employees 79,558 (2017)

Parent Tata Group

Divisions Tata Motors

Subsidiaries Jaguar Land Rover, Tata Daewoo, Tata

Technologies.

Products Automobiles , Sports Car, Commercial Vehicles

Coaches, Buses, Construction equipment’s,
Military vehicles, Automotive Parts.

Services Automotive Design, Engineering and

outsourcing services, vehicle leasing, vehicle
services.

Websites www.tatamotors.com

ORGANISATIONAL STRUCTURE

The structure of an organization has to do with the organizational climate along with knowledge
management. In the case of Tata Motors, the organization has understood the importance of
interactions between employers and workers. The process could be both formal and informal and
the objective is to make employees feel more bound to the organization. Gathering and sharing
knowledge is another way. Tata Motors has a relatively flat structure, thus it facilitates easy
interaction between the different levels in the organization
19
 BOARD OF DIRECTORS

NAME DESIGNATION

Mr. Natarajan Chandrasekaran. Chairman

Mr. Guenter Butschek C.E.O.

Mr. P B Balaji C.F.O.

Mr. Satish Borwankar Executive Director & Chief operating

officer

Mr. Girish Wagh Head Commercial Vehicle Business

Unit

Mr. Mayank Pareek Head Passenger Vehicle Business Unit

Mr. Gajendra Chandel Chief Human Resource Officer

Mr. Shailesh Chandra Head Corporate strategy and Business

Transformation

Mr. Thomas Flack Chief Purchasing officer

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 Vision

As a High Performance Organization, we are by, FY2019

 Among the Top 3 in Global CV and Domestic PV.

 Achieving Sustainable Financial Performance.
 Delivering Exciting Innovations.

Mission

We innovate with passion mobility

solutions to enhance quality of life.

Values

 Integrity.
 Teamwork.
 Accountability.
 Customer Focus.
 Excellence.
 Speed.


21
AWARDS AND ACHIEVEMENT:

1. Jaguar Land Rover was handed the Queen’s Award for Sustainable Development by
the UK Government.
2. General Motor, US : “Supplier of the Year Award – 2009“ to Auto line Industries,
USA Inc in recognition of its performance in brake and clutch pedal product line
3. Tata Motors Ltd : Best performance award for “Excellence in Quality” in sheet metal
business at National Vendor meet – February, 2010
4. “Excellent performance award” in Stamping & Fabrication Business at National
Vendor meet of Cummins ABO – For the Year 2010
5. Tata Motors Ltd : Ranked Chakan plant as number one in sheet Metal family and 4th
in all PCBU (Passenger Car Business Unit) suppliers – July, 2010
6. Best performance award for “Excellence in Cost Saving” in sheet metal business at
National Vendor meet of TATA MOTORS LIMITED – For the Year 2010
7. “Excellent performance award” in Stamping & Fabrication Business at National
Vendor meet of Cummins ABO – For the Year 2009 & 2010
8. “Awarded “Overall Performance-2012-13” at Tata Motors National Vendors’ Meet at
Macau
9. “Quality Performance Award – 2013 ” -Volkswagen

22
23
 CHAPTER-III

RESEARCH METHODOLOGY

24
CHAPTER-III: RESEARCH METHODOLGY

Research methodology is a way to systematically solve the research problem. Research

constitutes of research methods, selection criterion of research methods, used in context of
research study and explanation of using a particular method or technique so that research result
are capable of being evaluated either by researcher himself scientifically. The research
methodology is used in exploratory research method. In this, we study problems along with the
logic behind them, to understand why we are using particular method of techniques so that the
research result are capable of being evaluated. The data to understand the concept of Non-
Performing Assets and what their causes, the data collected was analyzed and then used as
information in project. Maximum exposure and enormous support was provided by the bank
authority. During my project work, I have used a lot of data to understand the concept of NPA
and to study the recovery processes. The data collected was interpreted and used.

Research Design

The Research Design refers to the overall strategy that it choose to integrate the different
components of the study in a coherent and logical way, ensuring you will effectively address the
research problem; it constitutes the blue print for the collection , measurement and analyses of
data.

Data Collection

There are several ways of collecting appropriate data which differ considerably in context of
money, cost, time and other sources at the dispose of researcher. There are two types of data:

A. Primary Data.
B. Secondary Data.

Primary Data:
Primary data are those which are collected afresh and for the first time, and thus happen to be
original in character. The primary data was obtained either through observation and interview
with the staff at the company.

25
Secondary Data:
Secondary data are those which have already been collected by someone else and have already
been passed through statistical process.

TYPES OF RESEARCH:
The basic types of research are as follows:
1. Practical Research:
The practical approach consists of the empirical study of the topic under research and chiefly
consists of hands on approach. This involves first hand research in the form of questioners,
surveys, interviews, observations and discussion group.
2. Theoretical Research:
A non-empirical approach to research, this usually involves perusal of mostly published works
like researching through archives of public libraries, court rooms and published academic
journal.
3. Descriptive Research:
Descriptive research includes surveys and fact finding enquiries of different kinds. In this
method researcher has no control over the variables. He too can only report what has happened
and what is happening. In social research it is called as Ex-post factor research.
4. Analytical Research:
In these research facts, information used to make critical evaluation. In analytical research
detailed analysis of facts is given.
5. Qualitative Research:
This research concerned with qualitative phenomenon such as quality or kind. This research aims
at discovering the underlying motives and desires. This research is important in behavioral
science.

6. Quantitative Research:
This kind of research is based on quantity or any kind of measurement carried out.
7. Empirical Research:

26
This research is based on experience or observations. It is database research, in which first hand
facts are main source of information, evidences gathered through empirical studies or
experiment.
8. Historical Research:
This research is based on past facts and figures. Historical research helps in describing future
prospectus.
9. Quasi-Experimental:
This research involves the comparison of two groups, one which is influenced by an external
source and another which is not.
10.Experimental:
Use of random assignment to place participants in two groups; an experimental group which
receives intervention, and another control group without any intervention. It is using a positive
control for you to base it or compare it in your result.
11.Meta-Analysis
This research method is useful for finding out the average impact of several different studies on a
hypothesis.
12. Applied Research:
Applied research aims at finding a solution for an immediate problem facing a society or an
industries or business organization.
13. Fundamental Research:
Fundamental research is mainly concerned with generalization and with the formulation of
theory.

In this project report, both types of data have been used. Secondary data was gathered from
annual reports, internet, IPO prospectus, etc.

27
WHO DOES RESEARCH?
1. Government departments
2. Manufacturing or service companies
3. Research companies
4. Consultancies
5. Advertising agencies
6. Voluntary organizations
7. And of course we students

MOTIVATION IN RESEARCH
I. Desire to get research degree along with its significant benefits.
II. Desire to face challenges in solving the unsolved problem.
III. Desire to get intellectual joy of doing some creative work.
IV. Desire to be of service to the society.
V. Desire to get respect.
IMPORTANCE OF RESEARCH
a) Research identifies the problem areas.
b) Research is an aid to forecasting.
c) Research helps in all managerial functions.
d) Research helps in economic utilization of resources.
e) It is helpful in making policy and strategy.
SOURCES OF DATA COLLECTION:
During my project, I collected data through various sources:
Secondary data:-
The main source of collecting the secondary from internet, website of the company i.e.
www.tatamotors.com , and the balance sheet is collected from moneycontrol.com website.

28
Limitations:

The following are the limitations of ratio analysis:

1. It is always a challenging job to find an adequate standard. The conclusions drawn from the
ratios can be no better than the standards against which they are compared.

2. When the two companies are of substantially different size, age and diversified products,
comparison between them will be more difficult.

3. A change in price level can seriously affect the validity of comparisons of ratios computed for
different time periods and particularly in case of ratios whose numerator and denominator are
expressed in different kinds of rupees.

4. Comparisons are also made difficult due to differences of the terms like gross profit, operating
profit, net profit etc.

5. If companies resort to ‘window dressing’, outsiders cannot look into the facts and affect the
validity of comparison.

6. Financial statements are based upon part performance and part events which can only be
guides to the extent they can reasonably be considered as dues to the future.

7. Ratios do not provide a definite answer to financial problems. There is always the question of
judgment as to what significance should be given to the figures. Thus, one must rely upon one’s
own good sense in selecting and evaluating the ratios.

29
 CHAPTER – IV
DATA ANALYSIS AND INTERPRETATION

30
Table No 4.1. Current Ratio:
Formula: Current Asset
Current Liability
(Rs in Crore)
Particulars 2014-15 2015-16 2016-17
Current Asset 96613.10 105120.50 103837.80
Current Liability 71153.60 77280.00 106566.30
Current Ratio 1.35 1.36 0.97

Fig.4.1. Chart Showing Current ratio

Current Asset
120000 106566.3
105120.5 103837.8
96613.1
100000
77280
80000 71153.6

60000

40000

20000
1.35 1.36 0.97
0
2014-15 2015-16 2016-17

Current Asset Current Liability Current Ratio

31
Explanation:

 Current Asset in the year 2014-15 is Rs 96,613.10, it increased in the year 2015-
16 up to Rs 105,120.50 and again it decreased to Rs 103837.80.
 Current Liability in the year 2014-15 is Rs 71,153.6, it got increased in year 2015-
16 up to Rs 77,280 and then again it increased up to Rs 106,566.3.
 The industry norm value of current ratio is less than 1. However it does not mean
so that higher current ratio means good company profile. It may signify higher unused
cash, inventory which again may result in inventory carrying cost.
 In the year 2014-15 the current ratio is 1.35, in year 2015-16 it increased up to
1.36 and then it decreased to 0.97.

32
Table No 4.2. Quick Ratio
Formula: Quick Asset
Quick Liabilities
(Rs in Crore)
Particulars 2014-15 2015-16 2016-17
Quick Asset 76490.7 80111 79619.5
Quick Liability 71153.60 77280.00 106566.30
Liquid Ratio 1.07 1.03 0.74

Fig 4.2. Chart Showing Quick Ratio

Quick Ratio
120000
106566.3
100000
76490.7 80111 77280 79619.5
80000 71153.6

60000

40000

20000
1.07 1.03 0.74
0
2014-15 2015-16 2016-17

Quick Asset Quick Liability Liquid Ratio

33
Explanation:

 Quick Asset for the year 2014-15 is Rs 76,490.7, it got increased in year 2015-16
upto Rs 80,111 and then again it got decreased to Rs 79,619.5.

 Quick Liability for the year 2014-15 was Rs 71,153.60, than it got increased in year
2015-16 to Rs 77,280, and again it got increased in year 2016-17 upto Rs 106,566.30.

 Liquid Ratio for the year 2014-15 was 1.07, then it got decreased in year 2015-16 to
1.03, and again it got decreased in year 2016-17 to 0.74.

 As per the industry norms the Quick Ratio should be 1:1. There is a huge difference
between the Quick Ratios of the company. It also shows the decreasing trend. In the
year 2014-15 there was high unutilized cash. But for the current year the situation is
more balanced.

34
Table No. 4.3. Capital Gearing Ratio

Formula: Pref. Capital + Secured Loan

Eq. Capital & Reserve &Surplus

(Rs in Crore)
Particulars 2014-15 2015-16 2016-17
Secured loan 8227.60 20220.40 24619.90
Eq. Capital & Reserve 51542.00 64843.40 74359.60
&Surplus
Capital Gearing Ratio 15% 31% 33%

Fig 4.3. Chart Showing Capital Gearing Ratio

Capital Gearing Ratio

80000 74359.6
70000 64843.4
60000
51542
50000
40000
30000 24619.9
20220.4
20000
8227.6
10000
15% 31% 33%
0
1 2 3

Secured loan Eq. Capital & Reserve &Surplus Capital Gearing Ratio

35
Explanation:

 Secured loan for the year 2014-15 was Rs 8227.60, then it got increased in year
2015-16 upto Rs 20,220.40, and then again it got increased upto Rs 24,619.90.

 Reserve & Surplus for the year 2014-15 was Rs 51,542, then it got increased upto
Rs 64,843.40, and then it got increased in year 2016-17 upto Rs 74,539.60.

 Capital Gearing Ratio for year 2014-15 was 15%, then in year 2015-16 increased
to 31%, and again it got increased in year 2016-17 to 33%.

 Gearing means the process of increasing the equity shareholders return through
the use of debt. Capital gearing ratio is a leverage ratio, which indicates the
proportion of debt & equity in the financing of assets of a company.

36
Table No 4.4. Debt Equity Ratio

Formula: Total Long Term Debt

Total Shareholders Fund

(Rs in Crore)
Particulars 2014-15 2015-16 2016-17
Long term debt 29368.40 40091.40 62805.20
Shareholders Fund 55370.70 68697.50 73395.00
Debt Equity Ratio 0.53 0.58 0.85

Fig 4.4. Chart Showing Debt Equity Ratio

Debt Equity Ratio

80000 73395
68697.5
70000 62805.2
60000 55370.7

50000
40091.4
40000
29368.4
30000
20000
10000
0.53 0.58 0.85
0
2014-15 2015-16 2016-17

Long term debt Shareholders Fund Debt Equity Ratio

37
Explanation:

 Total Long Term Debt for the year 2014-15 was Rs 29,368.40, then it got increased in
year 2015-16 to Rs 40,091.40 and then again it got increased in year 2016-17 to Rs
62,805.20.
 Total Shareholders Fund for the year 2014-15 was Rs 55,370.70, then it got increased in
year 2015-16 to Rs 68,697.50, and then again it got increased in year 2016-17 to Rs
73,395.
 Debt Equity Ratio for year 2014-15 was 0.53, then it got increased to 0.58, and lastly
again it got increased to 0.85.
 Here we can see that in Debt Equity Ratio has increased for three years. Logically
speaking that when this ratio for any company increase it does not show good
performance of the company.

38
Table No 4.5. Gross Profit Ratio

Formula: Gross Profit X 100

Net Sales
(Rs in Crore)

Particulars 2014-15 2015-16 2016-17

Gross Profit 7767.60 10138.30 13830.70
Net Sales 206022 274700.30 287308.20
Gross Profit Ratio 4% 4% 5%

Fig 4.5. Chart Showing Gross Profit Ratio

Gross Profit Ratio

350000
287308.2
300000 274700.3

250000
206022
200000

150000

100000

50000 13830.7
7767.6 4% 10138.3 4% 5%
0
2014-15 2015-16 2016-17

Gross Profit Net Sales Gross Profit Ratio

39
Explanation:

 Gross Profit for the year 2014-15 was Rs 7,767.60, then it got increased in year
2015-16 upto Rs 10,138.3, and again it got increased in year 2016-17 upto Rs
13.830.7.

 Net Sales for the year 2014-15 was Rs 206,022, then it got increased in year
2015-16 upto Rs 274,700.3, and then again it got increased in year 2016-17 to Rs
287,308.2.

 Gross Profit Ratio for the year 2014-15 was 4% and this is same for the year
2015-16, in year 2016-17 GRP is 5%.

 It indicates the Gross Profit over sales of any company. This ratio can be
changed by 1. Change in Sales Volume. 2. Changes in sales price 3. Change in
cost of production.

40
Table No 4.6. Operating Ratio

Formula: Operating Profit X 100

Net Sales

(Rs in Crore)

Particulars 2014-15 2015-16 2016-17

Operating Profit 28621.6 35279.8 36543.9
Net Sales 206022 274700.3 287308.2
Operating Ratio 14% 13% 13%

Fig 4.6. Chart Showing Operating Ratio

Opearting Ratio
350000
287308.2
300000 274700.3

250000
206022
200000

150000

100000

50000 28621.6 35279.8 36543.9

14% 13% 13%
0
2014-15 2015-16 2016-17

Operating Profit Net Sales Operating Ratio

41
Explanation:

 Operating Profit for the year 2014-15 was Rs 28,621.6, then it got increased in
year 2015-16 upto Rs 35,279.8, and then again it got increased in year 2016-17
upto Rs 36,543.9.
 Net Sales for the year 2014-15 was Rs 206,022, then it got increased in year
2015-16 upto Rs 274,700.3, and then again it got increased in year 2016-17 to Rs
287,308.2.
 Operating Ratio for the year 2014-15 was 14%, then it got decreased in year
2015-16 to 13% and also same in the 13%.
 Lower operating profit ratio indicates higher efficiency of the firm.

42
Table No 4.7. Net Profit Ratio

Formula: Net Profit after Tax X 100

Net Sales

(Rs in Crore)

Particulars 2014-15 2015-16 2016-17

Net Profit after tax 15288.8 19134.6 20289.2
Net Sales 206022 274700.3 287308.2
Net Profit Ratio 7.42 6.96 7.06

Fig 4.7. Chart Showing Net Profit Ratio

Net Profit Ratio

350000
287308.2
300000 274700.3

250000
206022
200000

150000

100000

50000 15288.8 19134.6 20289.2

7.42 6.96 7.06
0
2014-15 2015-16 2016-17

Net Profit after tax Net Sales Net Profit Ratio

43
Explanation:

 Net Profit after tax for the year 2014-15 was Rs 15,288.8, then it got increased in
year 2015-16 upto Rs 19,134.6, and then again it got increased to Rs 20,289.2.
 Net Sales for the year 2014-15 was Rs 206,022, then it got increased in year
2015-16 upto Rs 274,700.3, and then again it got increased in year 2016-17 to Rs
287,308.2.
 Net Profit Ratio for the year 2014-15 was 7.42, then it got decreased in year 2015-
16 by 6.96, and then again it got increased in year 2016-17 by 7.06.
 Firstly there was decrease in net profit then it got increased this indicates the good
position for Tata Motors.

44
Table No 4.8. Stock Turnover Ratio

Particulars 2014-15 2015-16 2016-17

Stock Turnover Ratio 3.28 3.35 3.51

Fig 4.8. Chart Showing Stock Turnover Ratio.

Stock Turnover Ratio

3.55
3.51
3.5

3.45

3.4
3.35
3.35

3.3 3.28

3.25

3.2

3.15
2014-15 2015-16 2016-17

Explanation:

 Stock Turnover Ratio for the year 2014-15 was 3.28%, then it got increased in
year 2015-16 by 3.35% and then it got increased in year 2016-17 by 3.51%.

45
Table No 4.9. Return on Total Asset

Formula: Net Profit after Tax X 100

Total Asset

(Rs in Crore)

Particulars 2014-15 2015-16 2016-17

Net Profit after tax 15288.8 19134.6 20289.2
Total Asset 238,657.99 269,297.60 273,754.36
Return on Total Asset 6.40 7.10 7.41

Fig 4.9. Chart Showing Return on Total Asset

Return on Total Asset

300000 269,297.60 273,754.36
238,657.99
250000

200000

150000

100000

50000 19134.6 20289.2

15288.8
6.4 7.1 7.41
0
2014-15 2015-16 2016-17

Net Profit after tax Total Asset Return on Total Asset

46
Explanation:

 Net Profit after tax for the year 2014-15 was Rs 15,288.8, then it got increased in
year 2015-16 upto Rs 19,134.6, and then again it got increased in year 2015-16 to
Rs 20,289.2.

 Total Asset for the year 2014-15 was Rs 238,657.99, then it got increased in year
2015-16 upto Rs 269,294.60, and then again it got increased in year 2016-17 upto
Rs 273,754.36.

47
 CHAPTER-V

FINDINGS AND SUGGESTION

48
 CHAPTER V- FINDINGS & SUGGESTION

FINDINGS

 The industry norm value of current ratio is less than 1. However it does not mean
so that higher current ratio means good company profile. It may signify higher
unused cash, inventory which again may result in inventory carrying cost
 As per the industry norms the Quick Ratio should be 1:1. There is a huge
difference between the Quick Ratios of the company. It also shows the decreasing
trend. In the year 2014-15 there was high unutilized cash. But for the current year
the situation is more balanced.
 Gearing means the process of increasing the equity shareholders return through
the use of debt. Capital gearing ratio is a leverage ratio, which indicates the
proportion of debt & equity in the financing of assets of a company.

 Here we can see that in Debt Equity Ratio has increased for three years.
Logically speaking that when this ratio for any company increase it does not
show good performance of the company.
 It indicates the Gross Profit over sales of any company. This ratio can be
changed by 1. Change in Sales Volume. 2. Changes in sales price 3. Change in
cost of production.

 Lower operating profit ratio indicates higher efficiency of the firm.

 Firstly there was decrease in net profit then it got increased this indicates the good
position for Tata Motors

49
 SUGGESTION

This is overall general suggestions and it may very useful for the companies to get better the
financial position and for the better performance.

1. The company should try to increase the production so as to get economies of large-scale
production. It will assist in raising the rate of return on capital employed.

2. In order to increase the profitability of the companies, it is suggested to control the cost of
goods sold and operating expenses.

3. Improper planning and delays in implementation of projects lead to rise in their cost. So
properly planning should be made.

4. The automobile companies should reduce power and fuel consumption by using low as
content coal (imported coal), lignite, agro waste product especially ground nut husk, and beggars
should be used as coal substitute.

18. Selected automobile companies should try to use properly their operating assets and should
try to minimize their non-operating expenses.

With the help of these suggestions all the selected automobile companies try to improve their
financial performance.

50
CHAPTER-VI
CONCLUSION

51
 CONCLUSION
Tata Motors has been at the forefront of the Indian automobile industry’s anti-pollution efforts
by introducing cleaner engines. Therefore, Tata Motors Limited is always committed to
understanding customer’s needs.

The name of TATA itself says it all:

 Trust.
 Acceptability.
 Transparency.
 Accountability.

52
 BIBLIOGRAPHY
 Financial management by Ravi Kishore.
 Wikipedia.
 Annual Reports of Tata Motors.
2014-15
2015-16
2016-17
 Websites:
1. www.tatamotors.com
2. www.moneycontrol.com

53
 ANNEXURE
Cash Flow Statement of Tata Motors:

(Rs in Crore)

Particulars 2017-16 2016-15 2015-14

Net Profit/Loss Before Extraordinary -2,4799.99 234.23 -4,738.95

Items & Tax
Net Cash flow from Operating Activities 1,381.47 2,346.18 -562.67

Net Cash used in Investing Activities -2,737.98 -2,925.96 601.74

Net Cash used from Financing Activities 1,119.21 -71.14 2,631.53

Foreign Exchange Gains/Losses 0.00 0.71 -7.33

Net Inc/Dec in cash and cash equivalent -237.30 -650.21 663.27

Cash & Cash Equivalent Begin of year 427.07 861.95 198.68

Cash & Cash Equivalent End of year 189.77 211.74 861.95

54
Profit and Loss A/c of TATA MOTORS

(Rs in Crore)

Particulars 2017-16 2016-15 2015-14

INCOME
Revenue From Operations (Gross) 271,228.30 277,181.45 264,283.25
Less: Excise/Service Tax/Other Levels 4,799.61 4,535.61 3,548.92
Revenue From Operations (Net) 266,428.69 272,645.84 260,734.33
Other Operating Revenue 3,263.82 2,915.27 2,062.00
Total Operating Revenue 269,692.51 275,561.11 262,796.33
Other Income 745.54 981.72 898.74
Total Revenue 270,447.05 276,542.83 263,695.07
EXPENSES
Cost of Material Consumed 159,369.55 152,445.39 149,956.54
Purchase of Stock-in Trade 13,924.53 12,850.27 13,293.82
Operating and Direct Expenses 3,413.57 3,480.43 2,875.17
Changes in Inventories of FG, WIP & Stock-in-Trade -7,399.92 -2,876.62 -3,330.35
Employees Benefit Expenses 28,332.89 29,198.89 25,548.96
Finance Costs 4,238.01 4,623.35 4,861.49
Depreciation and Amortization Expenses 17,904.99 17,014.18 13,388.63
Other Expenses 59,340.16 60,424.95 50,617.72
Less: Amount Transfer to Capital A/c 16,876.96 16,718.43 15,404.18
Total Expenses 262,246.82 260,442.41 241,807.80
Profit/Loss Before Exceptional, Extraordinary Item
& Tax 8,200.23 16,100.42 21,887.27
Exceptional Items 1,114.56 -2,119.55 -184.71
Profit/Loss Before Tax 9,314.79 13,980.87 21,702.56
Tax Expenses-Continued Operation
Current Tax 3,137.66 1,961.21 4,558.81
Less: MAT Credit Entitlement 0 0 0
Deferred Tax 113.57 911.39 3,084.10
Total Tax Expenses 3,251.23 2,872.60 7,642.91
Profit/Loss After Tax & Before Extraordinary
Items 6,063.56 11,108.27 14,059.65

Profit/Loss from continuing operations 6,063.56 11,108.27 14,059.65

55
Profit/Loss for the period 6,063.56 11,108.27 14,059.65
Minority Interest -102.20 -105.86 -86.78
Share of Profit/Loss of Associates 1,493.00 21.34 13.42
Consolidated Profit/Loss after MI & Associates 7,454.36 11,023.75 13,986.29
OTHER ADDITIONAL INFORMATION
EARNING PER SHARE
Basic EPS (Rs) 22 33 43
Diluted EPS (Rs) 22 33 43
DIVIDEND & DIVIDEND PERCENTAGE
Equity Share Dividend 73 73 0
Preference Share Dividend 0 0.76 2.27
Tax on Dividend 0 37.52 60.21

56
Balance Sheet of TATA MOTORS

(Rs in Crore)

Particulars 2017-16 2016-15 2015-14

EQUITIES AND LIABILITIES
SHAREHOLDERS FUNDS
Equity Share Capital 679.22 679.18 643.78
Total Share Capital 679.22 679.18 643.78
Revaluation Reserves 0 22.87 22.87
Reserves & Surplus 57,382.67 80,080.62 55,618.14
Total Reserve & Surplus 57,382.67 80,080.62 55,618.14
Total Shareholders’ Funds 58,061.89 80,782.67 56,261.92
Minority Interest 453.17 888.26 433.34
NON-CURRENT LIABILITIES
Long-Term Borrowings 60,629.18 51,876.31 56,071.34
Deferred Tax Liabilities (Net) 1,174.00 3,166.08 1,343.20
Other Long-Term Liabilities 28,802.14 9,946.52 9,141.92
Long-Term Provision 9,004.46 11,817.30 15,134.27
Total Non-Current Liabilities 99,609.78 76,806.21 81,690.73
CURRENT LIABILITIES
Short-Term Borrowings 13,859.94 11,223.63 13,140.14
Trade Payable 57,698.33 63,632.89 57,407.28
Other Current Liabilities 38,263.49 27,261.82 23,688.58
Short-Term Provisions 5,807.76 8,702.12 6,036.00
Total Current Liabilities 115,629.52 110,820.46 100,272.00
Total Capital & Liabilities 273,754.36 269,297.60 238,657.99
ASSETS
NON-CURRENT ASSETS
Tangible Assets 59,594.56 63,107.34 52,326.21
Intangible Assets 35,676.20 38,482.89 31,456.29
Capital Work-in-Progress 10,186.83 7,808.51 9,330.47
Intangible Assets under development 23,512.01 19,451.93 19,309.62
FIXED ASSETS 128,969.60 128,850.67 112,422.59
Non-Current Investment 5,296.77 1,253.15 1,240.50
Deferred Tax Asset (Net) 4,457.34 2,726.43 2,733.20
Long Term Loans & Advances 753.66 13,940.82 14,948.31
Other Non-Current Asset 16,771.81 2,374.88 858.00

57
Total Non-Current Assets 156,922.50 153,982.47 136,899.59
CURRENT ASSETS
Current Investments 15,041.15 19,212.94 14,096.24
Inventories 35,085.31 33,398.98 29,272.34
Trade Receivables 14,075.55 12,989.96 12,579.20
Cash & Cash Equivalents 36,077.88 32,879.98 32,115.76
Short-Term Loans & Advances 710.45 14,757.51 10,746.44
Other Current Assets 15,841.52 2,075.76 2,948.42
Total Current Assets 116,831.86 115,315.13 101,758.40
Total Assets 273,754.36 269,297.60 238,657.99
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 44,108.39 34,026.19 22,345.82
BONUS DETAILS
Bonus Equity Share capital 111.29 111.29 111.29
NON-CURRENT INVESTMENTS

Non-Current Investment Quoted market value 285.38 210.5 210.61

Non-Current Investment Unquoted Book Value 405.38 387.42 395.83

CURRENT INVESTMENTS
Current Investments Quoted Market Value 0 0 0

Current Investments Unquoted Book Value 15,041.15 19,212.94 14,096.24

58
Ratio Analysis

Sr.No Profitability Ratio Formulae 2017-16 2016-15 2015-14

1 Current Ratio Current 0.97 1.36 1.35
Asset/Current
Liability
2 Quick Ratio Quick 0.74 1.03 1.07
Asset/Quick
Liabilities
3 Capital Gearing Ratio Pref.Capital+ 33% 31% 15%
Secured Loan/
Eq. Capital &
Reserve &
Surplus

4 Debt Equity Ratio Total Long Term 0.85 0.58 0.53

Debt/Total
Shareholder
Fund

5 Gross Profit Ratio Gross Profit/ 5% 4% 4%

Net Sales X 100

6 Operating Ratio Operating Profit 13% 13% 14%

/ Net Sales X
100
7 Net Profit Ratio Net Profit After 7.06 7% 7%
Tax / Net Sales
X 100

59
8 Stock Turnover Ratio Cost of goods 4% 3% 3%
sold /Average
Stock

9 Return on Total Asset Net Profit 7.41 7.10 6.40

/Total Asset x
100

60