INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

Post Graduate Program

PRACTICAL #3

WC ANALYSIS - TATA ADVANCED MATERIALS LTD

Done by

Harsh Jadhav PGP/25/275

WC Analysis Report – TATA Advanced Materials Limited

1. BORROWERS PARTICULARS AND PROPOSAL

Present Proposal: For sanction of Fresh () / Renewal / Enhancement of credit Facilities as follows:
Ref .no Date Branch Date of receipt of proposal Credit Risk code Zone Asset class
CBM/Practical 3 Mar 2 2022 IIM Kozhikode Mar 02 2022 xx Kerala Standard

Name of the Borrrower: TATA ADVANCED MATERIALS LIMITED

Nature of Facility Existing Limits Limits Applied Limits Proposed
Secured Overdraft
- 106.5 Cr 106.5 Cr
(Cash Credit) (Fund based: 29 cr/ non-Fund based: 77.50 cr) (Fund based: 29 cr/ Non Fund based : 77.50 cr)
Note: It is assumed that the Working capital loan is a fresh Application and there are no existing limits

Borrowers Particulars
No
Particulars Borrowers Details
.
1. Constitutions Limited Company
No.10 Jigani Industrial Area, Jigani, Anekal Taluk, Bangalore, Karnataka
2. Address of Registered office 562106
No.10 Jigani Industrial Area, Jigani, Anekal Taluk, Bangalore, Karnataka
3. Address of Factory/Unit 562106
Group to which the company TATA Group
4.
belong
5. Date of Incorporation 10/11/1989

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 6. Sector Private

7. Line of Activity /Business Manufacture and Sale of Composite products

Composite products for applications in Defence, Aerospace, Personal
8. Products Manufactured Armor, Vehicle Armor, and other industrial products

2. ACTIVITY:
Tata Advanced Materials Limited (TAML) makes and sells composite materials that are used in
Defense, Aerospace, Personal Armor, Vehicle Armor, and other Industrial applications. In 1992,
the company went from being called M/s Matrix Material Limited to being called M/s Tata
Advanced Materials Limited (TAML). The business started out in 1989 as M/s Matrix Material
Limited. In 2003, the company started doing business for real. Through international bidding, the
business has won repeat contracts from the Ministry of Defense to deliver armour and bulletproof
jackets. The company has also started making Vehicle Armor, which is mostly used by the
military and police but is still in its early stages. The company thinks that the aerospace industry
will grow in a good way over the next few years. However, the business takes a long time to
grow, so it started making a lot of investments when the aerospace industry first came to the
Indian market.MANAGEMENT

As of now, TATA ADVANCED Materials LIMITED has 3 signatories and 6 directors who are still in charge.

No
Management DESCRIPTION
.
Sukaran has worked in the Tata Group since 2003 when he joined the office of the Group Chairman of
Sukuran Singh Tata Sons to work on 'globalisation'. Working for Tata Sons Chairman, Sukaran led a range of new
1. (CEO & MD) business opportunities that required leveraging cross-linkages between multiple Tata companies in
industries such as metals, mining and energy.
Banmali Agrawala is the President of Infrastructure, Defence & Aerospace at Tata Sons Limited since
Banmali Agrawala October 1, 2017. Prior to this, he was President and CEO of GE South Asia, a position he held since
2. (President – Infrastructure) February 2013. Earlier, Mr. Agrawala was the Executive Director on the Board of Tata Power and he has
over 30 years of global experience.
Mrs. Maya Swaminathan Sinha is an ex-IRS officer who took voluntary retirement from Government in
2010. During her 28-year tenure with Government of India, she served for 21 years with the Income Tax
3. Mrs. Maya Department and 7 years on various deputations. In addition to her entrepreneurial responsibilities, she
(Independent Director)
serves as an Independent Director on the Boards of companies in Aviation, Defence, Financial Services,
Infrastructure, Retail, Shipping and Travel
Kesava Menon Chandrasekhar entered the Indian Administrative Service in 1970. He was ranked third in
Mr. Kesav Menon the list in the batch. Prior to that he secured B.A. (Honours) in Economics and M.A. in History from St.
4. (BOD) Stephen's College, University of Delhi. After entering Government service, he did his M.A. in
Management Studies from the University of Leeds in UK. 
Mr. Nak Browne Air Chief Marshal NAK Browne, also known as "Charlie" Browne, was the Chief of the Air staff (CAS)
5. (BOD) of the Indian Air Force (IAF) from 31st July 2011 to 31st December 2013.
Vijay Singh, a retired IAS officer of Madhya Pradesh cadre (1970 batch) was a non-executive director of
6. Mr. Vijay Singh Tata Sons. Mr. Singh has handled several important assignments both in Madhya Pradesh and at the
(Non-Exe Director)
Centre during his 37-year career

3. BANKING ARRANGEMENTS
No Details The banking arrangements and current bankers were detailed in the annual report and
on the company's website, therefore it is assumed that our bank is the sole present banker.
Credit Facilities:

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Company credit facility details with our bank

Date of Balance as Rate of

Facility Limit Overdues Security
document on ………. Interest
Fund Based Nil
Non-Fund Based
(excluding DPG)

Term credit facilities

(including DPG) Nil

Company credit facility details with Other bank bank

Complexity
Name of Instrument Allotment Date Maturity Date Coupon Rate Issue Size
Levels
Term Loan NA Mar 2025 NA 125 Cr NA
Term Loan NA Mar 2026 NA 1523 Cr NA
Foreign Currency Term loan NA Mar 2025 NA 32.9 Cr NA
Foreign Currency Term loan NA Mar 2026 NA 50.50 Cr NA
Source: Crisil Rating Website (2021 report)

4. SWOT
Strengths: Strong Financials and strong backing from tata group; the whole company's concentration is
on Aerospace and defence industry; hence, TAML is strategically vital to the entire group. Significant
increase in sales from 22.89 cr to 49.08 cr, indicating a high degree of revenue predictability in the
future, taking into account the company's diversification of its commercial activities.
Weakness: Uncertainty in orders, higher competition in the business activities, Lengthy timelines of
getting contracts and making payments
Opportunities: Future business on Aerospace components with international companies, Vehicle Armor
business by collaborating with TATA motors (OEM) – group company.
Threats: High Competition in their business activities, No Guarantee for orders and delayed payments, H
5. FINANCIALS & COMMENTS:
Net sales increased from 22.89 cr to 49.08 cr, but could not surpass the consensus forecast of
74.05 cr. The corporation has sustained losses since its new Aerospace division has greater
expenditures and a lengthy gestation time. If the promoters' unsecured debt (10 million) is
classified as CL, the Current Ratio would be 1.27 and NWC would increase to 14.16 million. The
corporation enjoys additional earnings of $2.92 million through interest income, exchange gains,
etc. The company's total contingent liabilities were around 30,82 cr, which is smaller than the
previous year's value of 47,89 cr.

6. ASSESMENTS
The firm is a member of the composites and polymer-based industry, which is essential for
aerospace and military applications. The firm works in a nonseasonal sector, but there is a prospect of
increased performance in the future owing to its new Aerospace division, which has a significant
potential to penetrate international markets, and there seems to be an increase in demand for its aerospace
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goods. ISRO has also placed orders for cost-effective transportation containers, telecom shelters, and
antennas, which the firm produces. Additionally, the firm intends to diversify its operations with Vehicle
armors. TATA Industries, a subsidiary of the TATA group, owns 99 percent of the company's share
capital. All estimated financial figures are realistic, and the company's fundamentals are solid; hence, the
overall evaluation is good.
7. RECOMMENDATIONS
The company's products seem to have a bright future on the market since the composites industry is
growing and has a lot of potentials to be exported. This is because its aerospace application products and
even its vehicle armour products are expected to bring in a lot of money for defence applications. The
company's board of directors is made up of six people who, on average, are 65.46 years old and have
impressive backgrounds. They include IRS officials, IAS officers, the Defense chief Marshall, and
industry executives. Taking into account that their new aerospace business has a contract value of 53 Cr
for the next fiscal year and an estimated cumulative contract value of 1,873 Cr, of which 555 Cr will be
executed in the next five years, the company may soon have enough cash flows to pay off the loans. The
approval of funds and other conditions meet all RBI requirements, and their financial projections also
meet the MPBF requirement according to Method 1.