Session – 2014-15

INTRODUCTION

Tata Motors Limited is India's largest automobile company. It is the

leader in commercial vehicles in each segment, and among the top three in
passenger vehicles with winning products in the compact, midsize car and utility
vehicle segments. The company is the world's fourth largest truck manufacturer,
and the world's second largest bus manufacturer.
The company's 24,000 employees are guided by the vision to be "best in
the manner in which we operate, best in the products we deliver, and best in our
value system and ethics."

Analysis is the process of critically examining in detail accounting

information given in the financial statements. For the purpose of analysis,
individual items are studied; their interrelationship with other related figures
established, the data is sometimes rearranged to have better understanding of
the information with help of different techniques or tools for the purpose.
Analyzing financial statements is a process of evaluating relationship between
component parts of financial statements to obtain a better understanding of
firm’s position and performance. In the words of Myer, “ Financial statements
analysis is largely a study of relationship among the various financial factors
in a business as disclosed in a series of statements”. The analysis of financial
statements thus refer to the treatment of the information contained in the
financial statements in a way so as to afford a full diagnosis of the profitability
and financial position of the firm concerned. For this purpose financial
statements are classified methodically, analyzed and compared with the
figures of previous years or other similar firms.
OBJECTIVES OF THE STUDY

The objectives of the study are to evaluate the financial position and
performance of the “Tata Motors Ltd.”. The purpose of the study mainly
centers on the critical analysis of the financial statements of the Company. And
makes attempt to get better in sight about the financial strength and weakness
of the organisation by analyzing and interpreting the data for a period of 2
years i.e. 2013 and 2014.

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 To study the financial performance of “Tata Motors Ltd.”.
 To determine the profitability or earning capacity and progress of the
concern
 To judge the financial position of the concern and also analyze the strength
and weakness of the organisation
 To find out the solution to the unfavorable financial conditions and financial
performance
 To involve comparison for a useful interpretation of the financial statement
 To act of analysis may also reveal areas where control is deficit and
desirable for the efficient operating of the organisation which in turn
help to achieve organizational goals.
 To know the solvency of the company.
 To make comparative study with other year performance.
 To know the capability of payment of dividend and interest.
 To know the profitability of the company in the form of ratios.

RESEARCH DESIGN OF THE STUDY

 Research design means a search of facts, answers to question and

solution to the problems. It is a prospective investigation. Research
is a systematical logical study of an issue or problem through
scientific method. It is a systematic and objective analysis and
recording of controlled observation that may lead to the
development of generalization, principles, resulting in prediction
ultimate control of events.
 Research design is the arrangement of conditions for the collection
and analysis of data in manner that aims to combine relevance to the
research purpose with relevance to economy. There are various
designs, which are descriptive and helpful for analytical research.
METHODOLOGY :
Sources:
The investigation relied on books, documents, annual report, financial
assessments, literature, files and personal observation to have an idea about
the organizational set up, functions of financial department and other
groups.
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Tools used for analysis of financial Statements:
The numbers given in the financial statement are not of much use to the
decision maker. These numbers are to be analysed over a period of time or
relation to other numbers so that significant conclusions could be drawn
regarding the strengths and weakness of a business enterprise. The tools of
financial analysis help in this regard. These tools include:
Comparative Statements;
Common-size Statements;
Comparative Balance Sheet;
Common Size Balance Sheet;
Ratio Analysis;
Cash flow Statements;
Changes in Financial Position.
In this project we show or discuss:
1. Comparative Statements.
2. Common-size Statements &
3. Comparative Balance Sheet;
4. Common Size Balance Sheet;
5. Ratio Analysis of “TATA Motors Ltd.”
LIMITATION OF THE STUDY:

Every work has its own limitation. During the process of conducting the
research study the following limitations may be faced:-

 Due to non-availability of sufficient time and money a detailed study

could not be made.

 Due to insufficient time I have analyzed only two years financial

analysis of this company.

 Statistical tools used limits the testing and findings

 Findings are general.

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COMPANY PROFILE

Introduction

Established in 1945, Tata Motors' presence indeed cuts across the length
and breadth of India. Over 4 million Tata vehicles ply on Indian roads, since
the first rolled out in 1954. The company's manufacturing base in India is
spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow
(Uttar Pradesh), Pantnagar (Uttarakhand) 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 company is
establishing a new plant at Sanand (Gujarat). The company's dealership,
sales, services and spare parts network comprises over 3500 touch points;
Tata Motors also distributes and markets Fiat branded cars in India.

Tata Motors is also expanding its international footprint, established

through exports since 1961. The company's commercial and passenger
vehicles are already being marketed in several countries in Europe, Africa,
the Middle East, South East Asia, South Asia and South America. It has
franchisee/joint venture assembly operations in Kenya, Bangladesh,
Ukraine, Russia, Senegal and South Africa.
In January 2008, Tata Motors unveiled its People's Car, the Tata Nano,
which India and the world have been looking forward to. The Tata Nano
has been subsequently launched, as planned, in India in March 2009. A
development, which signifies a first for the global automobile industry, the
Nano brings the comfort and safety of a car within the reach of thousands
of families. The standard version has been priced at Rs.100,000 (excluding
VAT and transportation cost).

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In May 2009, Tata Motors introduced ushered in a new era in the Indian
automobile industry, in keeping with its pioneering tradition, by unveiling
its new range of world standard trucks called Prima. 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. With the foundation of its rich heritage, Tata Motors
today is etching a refulgent future.

MANUFACTURING

Tata Motors owes its leading position in the Indian automobile industry to
its strong focus on indigenisation. This focus has driven the Company to set
up world-class manufacturing units with state-of-the-art technology. Every
stage of product evolution-design, development, manufacturing, assembly
and quality control, is carried out meticulously. Our manufacturing plants
are situated at Jamshedpur in the East, Pune in the West and Lucknow in
the North. 

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Financial Statement
Analysis
&
Interpretation

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COMPARATIVE STATEMENT:

It refers to the comparison of financial statements of an enterprise for

two consecutive periods. It measures the efforts of the farm by giving a clear
sight of the performance.
Comparative statements are of two types.
 Comparative Income Statement
 Comparative Balance Sheet.

The comparative income statements.

The comparative income statements reflect the operating activities

of the business where as the comparative. Balance Sheet reflects the finance &
investing activities of the enterprise. In such statement the figures are shown
as.

1) In terms of absolute monetary value.

2) Increase/Decrease in absolute value.
3) Proportionate changes by way of Percentage.

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PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED As At 31ST MARCH, 2014
Rs. in Crores
For the year For the year
ended on ended on
31.03.2014 31.03.2013
I. REVENUE FROM OPERATIONS 59220.94 51183.95
Less: Excise duty -4914.38 -4095.51
54306.56 47088.44
II. OTHER INCOME 574.08 422.97
III. TOTAL REVENUE (I+II) 54880.64 47511.41
IV. EXPENSES :
(a) Cost of material consumed 33894.82 27058.47
(b) Purchases of products for sale 6433.95 7363.13
(c) Changes in inventories of finished goods, work-
in-progress and products for sale -623.84 -354.22
(d) Employee cost / benefits expense 2691.45 2294.02
(e) Finance costs 1218.62 1383.7
(f) Depreciation and amortisation expense 1606.74 1360.77
(g) Product development / engineering expenses 234.25 141.23
(h) Other expenses 8405.51 6738.35
(i) Expenditure transferred to capital and other accounts -907.13 -817.68
TOTAL EXPENSES 52954.37 45167.77
V. PROFIT BEFORE EXCEPTIONAL AND EXTRA ORDINARY
ITEMS AND TAX (III-IV) 1926.27 2343.64
VI. EXCEPTIONAL ITEMS
(a) Exchange loss / (gain) (net) on revaluation of foreign
currency borrowings, deposits and loans 455.24 147.12
(b) Provision for loan given to a subsidiary 130 0
585.24 147.12
VII. PROFIT BEFORE EXTRA ORDINARY ITEMS AND TAX
(V-VI) 1341.03 2196.52
VIII. Extraordinary items 0
IX. PROFIT BEFORE TAX FROM CONTINUING OPERATIONS
(VII-VIII) 1341.03 2196.52
X. Tax expense / (credit) 98.8 384.7
XI. PROFIT AFTER TAX FROM CONTINUING OPERATIONS
(IX-X) 1242.23 1811.82
XII. EARNINGS PER SHARE
A. Ordinary shares
a. Basic 3.9 6.06
b. Diluted 3.77 5.78
B. 'A' Ordinary Shares
a. Basic 4 6.16
b. Diluted 3.87 5.88

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BALANCE SHEET
FOR THE YEAR ENDED As At 31ST MARCH, 2014
Rs. in Crores

As on As on
31.03.2014 31.03.2013
I. EQUITY AND LIABILITIES
1. SHAREHOLDERS' FUNDS
(a) Share Capital 634.75 637.71
(b) Reserves and Surplus 18991.26 19375.59
19626.01 20013.30

3. NON-CURRENT LIABILITIES
(a) Long-term borrowings 8004.50 9679.42
(b) Deferred tax liabilities (net) 2105.41 2023.16
(c) Other long-term liabilities 1959.63 2221.05
(d) Long-term provisions 646.26 1253.25
12715.80 15176.88
4. CURRENT LIABILITIES
(a) Short-term borrowings 3007.13 4958.77
(b) Trade payables 8744.83 8817.27
(c) Other current liabilities 7470.95 3210.37
(d) Short Term provisions 2954.56 2013.86
22177.47 19000.27
TOTAL 54519.28 54190.45
II. ASSETS
1. NON-CURRENT ASSETS
(a) Fixed Assets
(i) Tangible Assets 11746.47 10911.96
(ii) Intangible assets 3273.05 2505.11
(iii) Capital work-in-progress 1910.30 1719.86
(iv) Intangible assets under development 2126.37 2079.17
19056.19 17216.10

(b) Non-current investments 17903.29 22538.21

(c) Deffered tax assets (net) 3488.11 3429.64
(d) Other non-current assets 100.42 34.84
40548.01 43218.79

2. FOREIGN CURRENCY MONETARY ITEM

TRANSLATION DIFFERENCE ACCOUNT (NET) 258.35 0.00
3. CURRENT ASSETS
(a) Current investments 2590.26 86.00
(b) Inventories 4588.23 3891.39
(c) Trade receivables 2708.32 2602.88
(d) Cash and bank balances 1840.96 2428.92
(e) Short term loans and advances 1871.74 1850.62
(f) Other current assets 113.41 111.85
13712.92 10971.66
TOTAL 54519.28 54190.45

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COMPARATIVE INCOME STATEMENT

A Comparative Income Statement gives the reader a frame of
reference for comparing the current year amounts. Comparative income
statement presents both the current period (typically current month or
current year to date) compared to normally a prior year same period.
comparative income statement consist of two columns of amounts (one
is of current year and another is of prior year) appearing to the right of
the account titles or descriptions. The amounts are shown side by side to
make it easy to compare the two periods presented. Comparative income
statement may also refer to this same type of comparison for current
period to budget for the same period.

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COMPARATIVE INCOME STATEMENT
For the Year 2013 & 2014
In comparison to Absolute Change
Rs. in Crores
Particulars Absolute Absolute Absolute %
Amount 2014 Amount 2013 Change Change
I. REVENUE FROM OPERATIONS 59220.94 51183.95 8036.99 15.70
Less: Excise duty (4914.38) (4095.51) (818.87) 19.99
54306.56 47088.44 7218.12 15.33
II. OTHER INCOME 574.08 422.97 151.11 35.73
III. TOTAL REVENUE (I+II) 54880.64 47511.41 7369.23 15.51
IV. EXPENSES :
(a) Cost of material consumed 33894.82 27058.47 6836.35 25.27
(b) Purchases of products for sale 6433.95 7363.13 (929.18) (12.62)
(c) Changes in inventories of finished
goods, work-in-progress and
products for sale (623.84) (354.22) (269.62) 76.12
(d) Employee cost / benefits expense 2691.45 2294.02 397.43 17.32
(e) Finance costs 1218.62 1383.70 (165.08) (11.93)
(f) Depreciation and amortisation expense 1606.74 1360.77 245.97 18.08
(g) Product development / engineering
expenses 234.25 141.23 93.02 65.86
(h) Other expenses 8405.51 6738.35 1667.16 24.74
(i) Expenditure transferred to capital and
other accounts (907.13) (817.68) (89.45) 10.94
TOTAL EXPENSES 52954.37 45167.77 7786.60 17.24
V. PROFIT BEFORE EXCEPTIONAL AND
EXTRA ORDINARY ITEMS AND TAX (III-IV) 1926.27 2343.64 (417.37) (17.81)
VI. EXCEPTIONAL ITEMS
(a) Exchange loss / (gain) (net) on
revaluation of foreign currency borrowings,
deposits and loans 455.24 147.12 308.12 209.43
(b) Provision for loan given to a subsidiary 130.00 0.00 130.00 0.00
585.24 147.12 438.12 297.80
VII. PROFIT BEFORE EXTRA ORDINARY
ITEMS AND TAX (V-VI) 1341.03 2196.52 (855.49) (38.95)
VIII. Extraordinary items 0.00 0.00 0.00
IX. PROFIT BEFORE TAX FROM
CONTINUING OPERATIONS (VII-VIII) 1341.03 2196.52 (855.49) (38.95)
X. Tax expense / (credit) 98.80 384.70 (285.90) (74.32)
XI. PROFIT AFTER TAX FROM CONTINUING
OPERATIONS (IX-X) 1242.23 1811.82 (569.59) (31.44)
XII. EARNINGS PER SHARE
A. Ordinary shares
a. Basic 3.90 6.06 (2.16) (35.64)
b. Diluted 3.77 5.78 (2.01) (34.78)
B. 'A' Ordinary Shares
a. Basic 4.00 6.16 (2.16) (35.06)
b. Diluted 3.87 5.88 (2.01) (34.18)

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COMPARATIVE BALANCE SHEET
A comparative balance sheet presents side-by-side information about an
entity's assets, liabilities, and shareholders' equity as of multiple points in time.
For example, a comparative balance sheet could present the balance sheet as of
the end of each year for the past three years. Another variation is to present the
balance sheet as of the end of each month for the past 12 months on a rolling
basis. In both cases, the intent is to provide the reader with a series of snapshots
of a company's financial condition over a period of time, which is useful for
developing trend line analyses (though this works better when the reader has the
entire set of financial statements to work with and not just the balance sheet).
COMPARATIVE BALANCE SHEET
For the Year 2013 & 2014
In comparison to Absolute Change
Rs. In Crores
Particulars Amount Amount Absolute %
2014 2013 Change Change
I. EQUITY AND LIABILITIES
1. SHAREHOLDERS' FUNDS
(a) Share Capital 634.75 637.71 (2.96) (0.46)
(b) Reserves and Surplus 18991.26 19375.59 (384.33) (1.98)
19626.01 20013.30 (387.29) (1.94)
3. NON-CURRENT LIABILITIES
(a) Long-term borrowings 8004.50 9679.42 (1674.92) (17.30)
(b) Deferred tax liabilities (net) 2105.41 2023.16 82.25 4.07
(c) Other long-term liabilities 1959.63 2221.05 (261.42) (11.77)
(d) Long-term provisions 646.26 1253.25 (606.99) (48.43)
12715.80 15176.88 (2461.08) (16.22)
4. CURRENT LIABILITIES
(a) Short-term borrowings 3007.13 4958.77 (1951.64) (39.36)
(b) Trade payables 8744.83 8817.27 (72.44) (0.82)
(c) Other current liabilities 7470.95 3210.37 4260.58 132.71
(d) Short Term provisions 2954.56 2013.86 940.70 46.71
22177.47 19000.27 3177.20 16.72
TOTAL 54519.28 54190.45
II. ASSETS
1. NON-CURRENT ASSETS
(a) Fixed Assets
(i) Tangible Assets 11746.47 10911.96 834.51 7.65
(ii) Intangible assets 3273.05 2505.11 767.94 30.65
(iii) Capital work-in-progress 1910.30 1719.86 190.44 11.07
(iv) Intangible assets under development 2126.37 2079.17 47.20 2.27
19056.19 17216.10 1840.09 10.69
(b) Non-current investments 17903.29 22538.21 (4634.92) (20.56)
(c) Deffered tax assets (net) 3488.11 3429.64 58.47 1.70
(d) Other non-current assets 100.42 34.84 65.58 188.23
40548.01 43218.79 (2670.78) (6.18)
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COMMON SIZE INCOME STATEMENT
Common size income statements are basically used for analysis purposes
where each item on the face of income statement is expressed in relation to
revenue so that users can easily understand that how different expenses and
other incomes and gains adds up to gross profit and net profit. This is widely
used in ratio analysis and serve as a vital tool start up a financial analysis of the
key areas of performance and then detailed ratios are applied on each item
afterwards.

Although common size income statements do not provide a detailed

financial analysis of income statement and its items but it does help in comparing
the financial performance of the company with the preceding accounting periods
known as trend-analysis or time-series analysis. We can also compare financial
information of one company with other companies in the industry which is
known as cross-sectional analysis. The good thing about common-size analysis is
that it is really easily to do and also interpreting the results is not so difficult.
Even the users who are not proficient in analysis techniques can gain insight of
company’s financial performance to some extent from common size financial
statements i.e. income statement and statement of financial position.
COMMON SIZE INCOME STATEMENT
FOR YEAR 2013 & 2014
Rs. in Crores.
Amount Amount % of % of %
2014 2013 Sales Sales Change
2014 2013
Income from operation 54306.56 47088.44 100 100 0
(-) Operating Expenses 41723.5 35684.95 76.83 75.78 1.05
Operating Profit 12583.06 11403.49 23.17 24.22 (1.05)
(-) Non Operating Expenses 9624.13 8122.05 17.72 17.25 0.47
(+) Non Operating Income 574.08 422.97 1.06 0.90 0.16
Net Profit Before Tax &
Depreciation 3533.01 3704.41 6.51 7.87 (1.36)
(-) Depreciation 1606.74 1360.77 2.96 2.89 0.07
Net profit before tax and
extraordinary item 1926.27 2343.64 3.55 4.98 (1.43)
(-)Extraordinary item 585.24 147.12 1.08 0.31 0.77
Net Profit Before Tax 1341.03 2196.52 2.47 4.66 (2.20)
(-)Tax expenses 98.8 384.7 0.18 0.82 (0.64)
PAT 1242.23 1811.82 2.29 3.85 (1.56)
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COMMON SIZE BALANCE SHEET
A common size balance sheet presents not only the standard information
contained in a balance sheet, but also a column that notes the same information as a
percentage of the total assets (for asset line items) or as a percentage of total liabilities
and shareholders' equity (for liability or shareholders' equity line items).
It is extremely useful to construct a common size balance sheet that itemizes the
results as of the end of multiple time periods, so that you can construct trend lines to
ascertain changes over longer time periods. The common size balance sheet is also
useful for comparing the proportions of assets, liabilities, and equity between different
companies, particularly as part of an industry analysis or an acquisition analysis.
COMMON SIZE BALANCE SHEET
For the Year 2013 & 2014
In comparison to Capital Employed
Rs. in Crores
Particulars Amount Amount 2013 % of capital % of capital %
2014 Employed 2014 Employed 2013 Change
SOURCES OF FUNDS
1. SHAREHOLDERS' FUNDS
(a) Share Capital 634.75 637.71 1.96 1.81 0.15
(b) Reserves and Surplus 18991.26 19375.59 58.72 55.06 3.66
NON CURRENT LIABILITIES
LOAN FUND 8004.50 9679.42 24.75 27.51 (2.76)
OTHER LONG TERM LIABILITIES 4711.30 5497.46 14.57 15.62 (1.05)
Capital Employed 32341.81 35190.18 100.00 100.00 0.00
CURRENT LIABILITIES
TRADE PAYABLES 8744.83 8817.27 27.04 25.06 1.98
OTHER CURRENT LIABILITIES 13432.64 10183.00 41.53 28.94 12.60
22177.47 19000.27 68.57 53.99 14.58
TOTAL Sources of funds 54519.28 54190.45
APLICATION OF FUNDS
NON CURRENT ASSETS
(a) Fixed Assets
(i) Tangible Assets 11746.47 10911.96 36.32 31.01 5.31
(ii) Intangible assets 3273.05 2505.11 10.12 7.12 3.00
(iii) Capital work-in-progress 1910.30 1719.86 5.91 4.89 1.02
(iv) Intangible assets under
development 2126.37 2079.17 6.57 5.91 0.67
19056.19 17216.10 58.92 48.92 10.00
(b) Non-current investments 17903.29 22538.21 55.36 64.05 (8.69)
(d) Long-term loans and advances 3488.11 3429.64 10.79 9.75 1.04
(e) Other non-current assets 100.42 34.84 0.31 0.10 0.21
40548.01 43218.79 125.37 122.81 2.56
2. FOREIGN CURRENCY MONETARY
ITEM TRANSLATION DIFFERENCE
ACCOUNT (NET) 258.35 0.00 0.80 0.00 0.80
2. CURRENT ASSETS
(a) Current investments 2590.26 86.00 8.01 0.24 7.76
(b) Inventories 4588.23 3891.39 14.19 11.06 3.13
(d) Trade receivables 2708.32 2602.88 8.37 7.40 0.98
(e) Cash and bank balances 1840.96 2428.92 5.69 6.90 (1.21)
(f) Short term loans and advances 1871.74 1850.62 5.79 5.26 0.53
(g) Other current assets 113.41 111.85 0.35 0.32 0.03
TOTAL Current assets 13712.92 10971.66 42.40 31.18 11.2218
Total Application of Funds 54519.28 54190.45

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RATIO ANALYSIS:

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as ‘the indicated
quotient of two mathematical expressions’ and “The relationship between two or more
things.”

In financial analysis, a ratio is used as a benchmark for evaluating the financial position
and performance of a firm. The absolute accounting figures reported in the financial
statements do not provide a meaningful understanding of the performance and financial
position of firm.

A. Short term Solvency:-

Current Ratio:
It is an indicator used to measure the Short term Solvency of a company.
The ideal ratio is 2:1
Current ratio =
Current Asset/ Current Liability = 2014 2013
0.618327 0.577448

The current ratio has improved .How eve the same is below industry average
of .33 to 1.5. The short term liquidity although has improved over previous year
the same needs to be improved further.
Long Term Solvency:
Debt equity Ratio:
It is a measure to ascertain the long term financial policies of Company.
The ideal ratio is 1:1
Debt equity ratio=
Debt/Equity
2014 2013
0.407852 0.483649
The debt equity position is strong enough as the industry average is 1:1.

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B. Capital Turnover Ratio:
It shows whether the capital utilization leads to higher profit or not.
Capital Turnover Ratio=

Sales / Capital Employed

2014 2013

1.679144 1.338113

As the capital employed has decreased in the current year the ratio has
strengthened. Investments have yielded the results.
C. Fixed asset Turnover ratio:
It shows the extent to which the investment of the fixed assets contributes to
words sales:

Fixed asset turnover ratio:

Net Sales/Net Fixed Assets

2014 2013
2.849812 2.73514

The same has increased in the current year and is very healthy one. The
additions to fixed assets has depleted the ratio I the current year. The assets
being under progress, the revenue earning capacity is yet to be established.

Net profit Ratio:

Net Profit/ Sales

2014 2013

2.29 3.85

The net profit as a % of sales has decreased by 1.56 %. The same needs to be
improved to sustain the market requirements.

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FINDINGS
Interpretation of Comparative Income Statement:

From the above it is evident that the revenue from operations has increased by 15.70%
over previous year. Other incomes have also increased by 35.73%. On the whole the total
revenue of the company has increased by 15.51 % over previous Year which is Rs. 7369.23
Crores more than the previous year. Total expenses of the company has increased by
7786.60Crores which is 17.24 % over previous year, major rise being in other expenses to
the tune of Rs. 1667.16 Crores over previous Year. Profit before tax has decreased by
38.95% over previous year and profit after tax has decreased by 31.44 % over previous
year. The Eps has also dropped by 35. % approximately in all categories. Thus it can be said
that the company has fared less than the previous year although it still runs on profit.
Interpretation of Comparative Balance Sheet:
From the above it is observed that the fixed assets of the company has increased by 10.69 %
over previous year. The major rise being in intangible assets. There has been a decrease in
share holders fund by Rs.387.29 Crores which account for 1.94 % decrease over previous
year. The long term borrowings have decreased and so also has the total non-current
Liabilities. The same as whole has decreased by Rs.2401.68 Crores over previous year. The
current Liabilities have increased by 3177.20crores over previous year and current assets
have increased by Rs. 2741.26 Crores over previous year. Non-current investments have
been liquidated to the tune of Rs.4634.92and utilised for capital repayment and repayment
of non term liabilities. The current ratio of the company has been strengthened from 0.57
to 0.62 in the current year. However the same is still under the industry average of 1.5-2.
The same needs to be improved to enhance the short term liquidity of the company.
Interpretation of Common Size Income Statement:
From the above it is evident that the company has almost faired in the same way as in the
previous year. The operating expenses in relation to sales has increased by a mere 1.05%
which has resulted the decrease in operating profit by the same amount in relation to sales
of previous year. The net PBDT has decreased by 1.360% in relation to sales over the
previous year. PBT has also decreased in relation to sales by 2.24% . PAT has also decreased
by 1.56% over previous year in relation to sales. The company has therefore not been able
to hold on to its level of profitability in the current year.
Interpretation of Common Size Balance Sheet:
The capital employed of the company has decreased by 2848.37. crores over previous year.
The non-current assets(Fixed assets) have increased by 10.00 % in relation to capital
employed over previous year. Borrowed funds have decreased by 2.76 % in relation to
capital employed as compared to previous year figures. Reserves have decreased in relation
to capital employed by 3.66 % over previous year. Current assets of the company has
increased in absolute terms and the same as % of capital employed has increased by 11.22
% over previous year. Current Liabilities have increased in absolute terms and also as a %
of capital employed by 14.58 % Over previous Year. The company has in the current year
has gone for repayment of Capital employed and the major source of inflow for the same
has been the liquidating of the non-current assets which has decreased by 8.69 % in
relation to capital employed compared to the previous year. The company now needs to
strengthen the working capital requirement for smooth functioning.

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SUGGESTIONS

The short term solvency of the company needs to be

strengthened. The current ratio in the current year end was 0.61

only. Although the revenues have increased the profits have

decreased. Cost cutting measures needs to be taken to enhance the

profits. The major increase in costs was due to increase in the cost

of raw materials.

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 Session – 2014-15
CONCLUSION
On the whole the company has been below the previous year

level of business. Although the revenue has increased the profit

have decreased in the current year. There has been a fair amount

of repayment of loans and share capital against liquidation of

long term investments. However the company has been able to

operate on profit in the current year and there was also a

dividend payout. The share holders interest has therefore been

held on. A major effort would be required to boost the

profitability in the years to come.

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 Session – 2014-15

References:
1. Fundamental of Accounting
by S PAUL
2. Advanced Accounting
by Paul M. Fischer, William J. Taylor, Rita H. Cheng,
3. Financial Management : R. K. Sharma

4. Management Accounting, Tata McGraw Hill – Khan & Jain

Newspapers & Magazines:

1. Economics Times

2. Business Times

Websites:

1. www.tatamotors.com

2. www.tata.com

3. www.equitymaster.com

4. www.moneycontrol.com

5. www.google.com

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