A STUDY ON

“CASH FLOW STATEMENT ANALYSIS”

WITH SPECIAL REFERENCE TO

TATA MOTORS

SUBMITTED BY

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 ABSTRACT
Cash Flow Statement deals with flow of cash which includes cash equivalents as well
as cash. This statement is an additional information to the users of Financial Statements. The
statement shows the incoming and outgoing of cash. The statement assesses the capability of the
enterprise to generate cash and utilize it. Thus a Cash-Flow statement may be defined
as a summary of receipts and disbursements of cash for a particular period of time. It also
explains reasons for the changes in cash position of the firm. Cash flows are cash inflows and
outflows. Transactions which increase the cash position of the entity are called as inflows of
cash and those which decrease the cash position as outflows of cash. Cash flow Statement traces
the various sources which bring in cash such as cash from operating activities, sale of current
and fixed assets, issue of share capital and debentures etc. and applications which cause outflow
of cash such as loss from operations, purchase of current and fixed assets, redemption of
debentures, preference shares and other long-term debt for cash. In short, a cash flow statement
shows the cash receipts and disbursements during a certain period.

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 INDEX

CH. NO. CONTENTS PAGE NO.

CHAPTER -1 INTRODUCTION

OBJECTIVES OF THE STUDY

NEED FOR THE STUDY

SCOPE OF THE STUDY

RESEARCH METHODOLOGY

LIMITATIONS OF THE STUDY

CHAPTER -3 COMPANY PROFILE

CHAPTER-4 DATA ANALYSIS & INTERRETATION

CHAPTER -5
FINDINGS , SUGGESTIONS AND CONCLUSION

BIBLIOGRAPHY

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 CHAPTER - I
INTRODUCTION

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 INTRODUCTION
Studying cash flows of an entity helps us to know financial statements with a
basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the
entity to utilize those cash flows. The economic decisions that are taken by managers require an
evaluation of the ability of an entity to generate cash and cash equivalents and the specific
timing of their generation.
Transactions that increase cash and cash equivalents are inflows of cash and cash equivalents
and transactions that decrease cash and cash equivalents are outflows of cash and cash
equivalents. Cash and cash equivalents include cash, bank balance, marketable securities, etc.
unless specified otherwise, current investments are considered as marketable securities. Hence,
are included in cash and cash equivalents.
Recording of both inflows and outflows for a specific period in a standard format is known as
‘Cash Flow Statement’. Cash Flow Statements are prepared in compliance with Indian
Accounting Standards 7.
Through this project an attempt is being made to understand the meaning and purpose of Cash
Flow Statement maintained by Finance Managers of TATA MOTORS Limited.
Financing Activities:
Financing Activities are the activities that result in changes in the size and distribution of the
owner’s equity (including preference share capital in the case of a company) and borrowings of
the enterprise. Some examples of such flows are given below:
Cash proceeds from issuing shares,
Cash proceeds from issuing debentures, bonds, notes etc.
Cash proceeds from taking short or long-term loans,
Cash repayments of amounts borrowed,
Cash repayments to redeem preference shares, and
Cash payments to buy-back equity shares.

Pay is controlled by rolling out specific improvements as per all out remuneration by
incorporating or subtracting contrasts in pay expenses and credit trades (appearing on the
financial record and pay verbalization) coming about in light of trades that happen to begin with
one period then onto the following. These alterations are made in light of the fact that non-cash
things are resolved into all out remuneration (compensation enunciation) and hard and fast
assets and liabilities (resource report). So in light of the way that not all trades incorporate
authentic cash things various things must be reevaluated when determining pay from errands.

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For example, weakening isn't commonly a cash cost it is a whole that is deducted from the total
estimation of a favorable position that has as of late been spoken to. That is the reason it is
incorporated again into net arrangements for processing pay. The primary time pay from
preferred position is spoken to in CFS tallies vulnerabilities when the advantage is sold.
A comparative method of reasoning stays steady for evaluations payable pay payable and
prepaid security. In case something has been fulfilled, by then, the qualification in the value
owed beginning with one year then onto the following must be subtracted from net increase. If
there is a total that is still owed, by then any refinements ought to be added to net benefit. (For
all the more understanding see Operating Cash Flow: Better Than Net Income?)
Contributing
Switches in gear assets or theories relate to cash from contributing. As a general rule, cash
changes from contributing are cash out things since cash is used to buy new rigging structures
or transient assets, for instance, alluring securities. In any case, when an association pieces of a
favorable position, the trade is seen as cash in for registering cash from contributing.
Financing
Changes satisfying indebted individuals credits or benefits are spoken to in genuine cash from
financing. Changes in genuine cash from financing are cash in when capital is collected and
they're cash out when benefits are paid. As such if an association issues a connect to the open
the association gets cash financing at any rate when premium is paid to bondholders the
association is lessening its money. Difference between CASH FLOW MANAGEMENT and

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Income Statement
CASH FLOW MANAGEMENT
1. It is revealing the reasons behind the
change in working capital for instance
wherefrom the working capital cash has
been associated.
2. Pay Statement helps the arranging of
CASH FLOW MANAGEMENT in as
much as one wellspring of cash for
instance cash from the assignment is
found from the compensation
announcement
3. The cash collected is composed with
the cash used. No capability is made
among capital and pay things
DIFFERENCE BETWEEN CASH FLOW MANAGEMENT AND
POSITION STATEMENT: -
CASH FLOW MANAGEMENT
1. It is a Statement of changes in budgetary
position.
2. It exhibits the quantity of changes
during a particular time allotment.
3. It doesn't explore the modification in
current assets and current commitments.
4. It is a logical decree exploring structure
where they have been used in this manner
dynamically important.
CENTRALITY OF CASH FLOW MANAGEMENT:
Income Statement
1. The Statements depicts the thing of
cost and pay to connect at the figures of
advantage and setback earned/achieved
during a particular time allotment
2. Pay MANAGEMENT doesn't help the
arranging of pay clarification
3. Expenses are facilitated with
compensation to find the delayed
consequence of the action. Just pay
things are considered
Position Statement
1. It is an announcement of budgetary
position
2. It shows the quantity of benefits and
liabilities at a specific purpose of time
3. It demonstrates all the bookkeeping
liabilities whether current or non-current
4. It's anything but a logical articulation
henceforth not so much helpful for basic
leadership as the CASH FLOW
MANAGEMENT
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The information which is given with CASH FLOW MANAGEMENT is neither available to be
resolved sheet nor in the compensation clarification and from now on its hugeness. The
movements which have happened between two accounting dates are included with CASH
FLOW MANAGEMENT. A layman can't understand the major centrality of achievements and
headway of the association just by a person of the bookkeeping report and pay explanation of
different years. The close and consistent examination presented by the declaration giving the
nuances of sources and vocations of cash during a given time of gigantic help to the customers
of information. It is an amazingly accommodating device in the informative unit of the
organization moreover near the untouchables in order to have at first assessment of the financial
and working execution of an association. Since the declaration exhibits how much the
functioning capital has been sufficiently put to use the organization's endeavor of taking system
decision concerning adventure benefits, etc is exceptionally energized.
The foreseen CASH FLOW MANAGEMENT can in like manner be orchestrated and a short
time later budgetary control and capital utilization control can be drilled to the upside of the
entire affiliation.
Occupations of CASH FLOW MANAGEMENT:
Pay MANAGEMENT of an association is of uncommon motivating force to the board
speculators leasers merchants money crediting foundations, etc.
 Informative worth:- The money related result of business action are obviously explained
in nuances by a CASH FLOW MANAGEMENT a part of the issues which yield up in the
cerebrums of budgetary pros are especially handled by a clear assessment of this declaration for
instance
1. Where have the advantage going?
2. Why does an abnormality exist between liquidity position and benefit position of the
endeavor?
 Forecasting regard:- A foreseen CASH FLOW MANAGEMENT can be prepared and
resources can be properly assigned after an examination of the present circumstance. The
perfect utilization of available cash in significant for the general improvement of the endeavor.
The CASH FLOW MANAGEMENT orchestrated early gave a sensible direction to the
organization in this fumed.
 Testing regard:- Whether the working capital has been effective is used or not by the
organization can well be attempted with CASH FLOW MANAGEMENT. On account of
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working capital has been kept up at the most ideal level, and whether it is attractive or deficient
can be known by an examination of the declaration. The organization is forewarned against the
unwise vocations of cash.
STATEMENT OF CHANGES IN WORKING CAPITAL

PARTICULARS Previous Current

Year Year CHANGES IN WORKING CAPITAL

INCREASE DECREASE

Current assets:
Inventories:
*********** *********
Raw material
Consumable stores *********** *********
Finished goods *********** *********
Sundry debtors *********** *********
Cash in hand *********** *********
Balance with bank *********** *********
Other current assets:
Deposits *********** *********
Income tax (advance tax) *********** *********
Sales tax *********** *********

Total current assets *********** *********

Current liabilities
Trade creditors ** *********
Dealers deposits ** *********
Expenses payable *** *********

Totalurrent liabilities *********** *********

Working capital (current ***********
Assets-current liabilities)
Net Increase/decrease
working capital **
***********
*********** ********* ***********

The bookkeeping report pay clarification and CASH FLOW MANAGEMENT are the
three by and to a great extent recognized spending outlines used by most associations for cash
related declaring. All of the three clarifications is set up from comparative accounting data yet
every declaration fills its own one of a kind need. The inspiration driving the CASH FLOW

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MANAGEMENT is to report the sources and occupations of cash during the declaring time
span.

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 NEED FOR AND IMPORTANCE OF THE STUDY

Economic activity of TATA MOTORS Limited consists of manufacturing in India

and distribution of AUTO PRODUCTS in both domestic and overseas markets. With the firm
being in its growth phase of business life-cycle, it is observed that effective and efficient
computation and preparation of cash flow statement is vital for understanding both the inflows
and outflows of cash and cash equivalents.
It is observed that Cash comprised of cash on hand and clear bank balances. Cash
equivalents comprised of short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
Thus, it can be said that cash flows are inflows and outflows of both cash and cash equivalents.
Cash inflows and outflows are predominantly arising out of three activities of the said firm.
They are as follows:
Operating Activities: Revenue producing activities
Investing Activities: Acquisition and disposal of assets
Financing Activities: Changes in contributed equity & borrowings
An attempt is made to understand the above three aspects with the help of cash flow statements
of the company.

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 OBJCTIVE OF THE STUDY

 The core objective of the study through this project is as follows:

 To know the movement of cash in TATA MOTORS Limited
 To determine the sources (receipts) of cash and cash equivalents under operating,
investing, and financing activities of TATA MOTORS Limited
 To determine the applications (payments) of cash and cash equivalents under operating,
investing, and financing activities of TATA MOTORS Limited
 To determine net changes in cash and cash equivalents being the difference between
sources and applications under operating, investing and financing activities between the
dates of two balance sheets

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 SCOPE OF THE STUDY

To evaluate and analyze the basic financial performance of MOTHER DAIRY Limited
To arrive at conclusions and offer suggestions for improvement of the financial performance of
the organization in the light of finding of the study To study the resources pattern and their
utilization with a view to analyses the cash flow of the company To find the sources of funds
and their application by using cash flow techniques of financial statements To analyze
profitability and capital structure of company.

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 RESEARCH METHODOLOGY

The data collection of the study consists of:

Primary source of data:
 Obtained data by interacting with the finance department of the said company. The
different teams that have helped in providing the data are as follows:
 Management and staff of finance and accounts department
 Personal observation

SECONDARY DATA:
 The secondary data is compiled with the help of below sources obtained through online
content available about the company:
 Financials of the company
 Journals and magazines and newspapers
ANALYTICAL TOOLS:
The analysis is based on below tools:
 Cash flow statement
 Ratio Aalysis with reference to cash flows
CURRENT RATIO
 Cash flow coverage ratio
 Cash flow margin ratio
 Current liability coverage ratio
 Price to cash flow ratio
 Cash flow to income

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 LIMITATIONS OF THE STUDY

Below are the list of limitations of the study:

 Cash flow statement shows inflows and outflows of cash. It does not show non-cash
transactions such as purchase of building by issue of shares and debentures to the public
 Cash flow statement shows only cash inflows or outflows; these do not represent net
profit earned or loss incurred by TATA MOTORS Limited.
 It does not show financial status of the TATA MOTORS Limited
 The assessment doesn’t deal with all the units of TATA MOTORS Limited
 It rearranges information available in the income statement and the balance sheet of
TATA MOTORS Limited. So, it is historical in nature
 Liquidity of the TATA MOTORS Limited cannot be determined from cash flow
statement alone because it depends on other factors also such as current assets and
current liabilities.
 Cash and cash equivalents are few components of current assets
 Dependent of financial statements - if balance sheet is incorrect then cash flow will also
be incorrect

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 CHAPTER-2
REVIEW OF LITERATURE

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 REVIEW OF LITERATURE
1.ARTICLE TITLE: The Role of Cash Flow in Explaining the Change in Company

Liquidity

AUTHORS NAME : Mahmoud Nour Isra University, Jordan Abdulnaser Ibrahim

Nour An-Najah National University

YEAR OF PUBLISHING: June 2012

ABSTRACT: In recent years, the rise in corporate bankruptcy has led to an increased

interest in the examination of company's liquidity. Credit analysts and other users of

accounting data involved in the evaluation of a firm's financial position are often concerned

with both the measurement of current liquidity. This study focused on the need for analyzing

the accounting information in the reports by listed companies in ASEM to help decision

makers especially those related to the variables affecting liquidity. This study replicates and

extends prior research on the relationship between changes in accounting flow variables and

company liquidity. Accounting flow measures include earning (E), working capital from

operations (WCFO), and cash flows from operations (CFFO). , cash flow from operations is

significant in explaining the variation of current and quick ratio but it is not significant in

explaining the variation in cash conversion cycle. LJJ found that cash flow from operations is

significant in explaining changes in the current ratio and cash conversion cycle but it is not

significant in explaining changes in quick ratio. Also LJJ found that cash flows from

operations has a negative relationship with Current ratio. He argued that higher current assets

(uses of cash) and lower current liabilities (uses of cash) lead to higher current ratios but lower

cash flows from operations. The results of this study indicate that cash flows from operations

have a positive relationship with current ratio

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2.TITLE: The information content of the cash flow statement

AUTHOR NAME: Hadri Kusuma Universitas Islam Indonesia

YEAR: June 2014

Abstract

The general objective of the present study is to investigate and assess the information content of

cash flow disclosures as required by the AASB 1026 "Statement of Cash Flows". The

information content is measured in terms of the degree of the relationship between cash flow

variables and security returns. In examining the information content of cash flows, two

objectives are then developed: to investigate the ability of the cash flow component in

predicting future cash flows, and to compare the ability of cash flows and earnings in

predicting future cash flows.

Many researchers have concluded that earnings and cash flow play the important role, however,
results are mixed. The study by Greenberg et al (1986) provides evidence which supporting
FASB‘s assertion regarding the superiority of earnings over cash flow from operations on
future cash flows. The study concluded that earnings are more powerful in
predicting future operating cash flows. Similarly, Kim and Kross (2005) used similar regression
model previously used by Dechow et al (1998) and cross-sectional approach and concluded
earnings is more powerful than cash flow from operations in predicting future cash flows and
coefficients on earnings increased over the time period. In contrast,
Bowen, Burgstahler, and Daley (1986) showed that earnings are weak in predicting future cash
flows, instead of working capital from operations and earnings plus depreciation and
amortization are more powerful. The results are in line with the general conclusions of
Murdoch and Krause (1990) and Percy and Stokes (1992).However, Jordan and

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Waldron (2010) concluded that earnings plus depreciation and amortization achieve superior
results than other predictor variables used in the study.
Many studies concluded that working capital from operations and net income before
extraordinary items and discontinued operations plus depreciation and amortization are
powerful than other cash flow measures (Arnold, Clubb,
Manson & Wearing, 1991; Quirin, O’Bryan, Wilcox & Berry,1999; Quirin, O’Bryan &
Berry,2000) Study by Jordan, Waldron, and Clark (2007) in USA compared ability of cash
flow from operations, earnings and sales in predicting future cash flow of 100 companies of the
Fortune 1000 companies and finds that sales are a better
predictor of future cash flow than cash flow from operations and earnings.
Al Attar and Hussein (2004) predicted future cash flow of UK firms by using cash flow from
operations, earnings, and its components and reported that the cash flow from operations alone
outperform earnings in predicting future cash
flows.Mc Beth (1993) findings rejected the above conclusions and claimed that neither earnings
nor cash flows provide a better power in predicting future cash flows of USA listed firms.
These results do not support FASB's assertion of the
superiority of earnings as a predictor of future cash flow.
Finger (1994) presents findings suggesting that cash flow from operations appear to be the best
predictor of future cash flow than earnings. Lorek and Willinger (1993) also predicted future
cash flow of USA firms by using quarterly cash flow data. They developed their own model
and compared with Wilson’s model and other time series model. They
concluded that their model which was based on quarterly cash flow data is more powerful than
other models. Lorek and Willinger (1996) also predicted future cash flow of USA firms from
1990 to 2004 and found that cash flow from operations outperforms earnings. Similar results
reported by Lev, Li, and Sougiannis (2010) in the USA.
Farshadfar et al.(2008) and Habib (2010) predicted future cash flows by using a sample of listed
Australian firms and found that cash flow from operations has more power in predicting future
cash flows compared to other predictor variables used in their study.Al Debie (2011) also
provide evidence for the superior ability of cash flow from operations in predicting future cash
flows of listed firms at Amman stock exchange. Similar conclusions were drawn in
India, Iran, and Malaysia by Mulenga (2015); A.Ahmadi and V.Ahmadi (2012); Mooi (2007)
respectively. On the other hand, the conclusion is in line with the findings of Shubita (2013),
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who reports that earnings plus depreciation and amortization are a better predictor of future
cash flow.
Another study by Takhtae and Karimi (2013) and Moeinaddin, Ardakani, & Akhoondzadeh
(2013) predicted future cash flow of Iranian firms and report different results. A study by
Takhtae and Karimi (2013) find that earnings outperform cash flow from operations which
support FASB assertion on the superiority of earnings in predicting future cash flows. While
Moeinan et al (2013) concluded that earnings and earnings plus depreciation and amortization
outperform other predictor variables in the prediction of future cash flows.

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 THEORETICAL FRAMEWORK

A typical cash flow statement is divided into three parts: cash from operations (from
daily business activities like collecting payments from customers or making payments to
suppliers and employees); cash from investment activities (the purchase or sale of assets); and
cash from financing activities (the issuing of stock or borrowing of funds). The final total shows
the net increase or decrease in cash for the period.

Cash flow statements facilitate decision making by providing a basis for judgments concerning
the profitability, financial condition, and financial management of a company. While historical
cash flow statements facilitate the systematic evaluation of past cash flows, projected (or pro
forma) cash flow statements provide insights regarding future cash flows. Projected cash flow
statements are typically developed using historical cash flow data modified for anticipated
changes in price, volume, interest rates, and so on.

To enhance evaluation, a properly-prepared cash flow statement distinguishes between

recurring and nonrecurring cash flows. For example, collection of cash from customers is a
recurring activity in the normal course of operations, whereas collections of cash proceeds from
secured bank loans (or the purchase of certain investments or capital assets) is typically not
considered a recurring activity in the normal course of operations.

In contrast to nonrecurring cash inflows or outflows, most recurring cash inflows or outflows
occur (often frequently) within each cash cycle (i.e., within the average time horizon of the cash
cycle). The cash cycle (also known as the operating cycle or the earnings cycle) is the series of
transactions or economic events in a given company whereby:

1. Cash is converted into goods and services.

2. Goods and services are sold to customers.

3. Cash is collected from customers.

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 To a large degree, the volatility of the individual cash inflows and outflows within the cash
cycle will dictate the working-capital requirements of a company. Working capital generally
refers to the average level of unrestricted cash required by a company to ensure that all
stakeholders are paid on a timely basis. In most cases, working capital can be monitored
through the use of a cash budget.

Cash Flows are inflows and outflows of cash and cash equivalents. The statement of cash flow
shows three main categories of cash inflows and cash outflows, namely: operating, investing
and financing activities.
(a) Operating activities are the principal revenue generating activities of the enterprise.
(b) Investing activities include the acquisition and disposal of longterm assets and other
investments not included in cash equivalents.
(c) Financing activities are activities that result in change in the size and composition of
the owner’s capital (including Preference share capital in the case of a company) and
borrowings of the enterprise.

As per AS-3 the inflow and outflow of cash are :

Operating Activities
Inflows Outflows
Cash sale Cash purchases
Cash received from debtors Payment to creditors
Cash received from commission and fees Cash operating expenses
Royalty and other revenues Payment of wages
Income tax

Investing Activities
Inflows Outflows
Sale of fixed assets Purchase of fixed assets
Sale of investment Purchase of investment
Interest received
Dividend received

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Financing Activities
Inflows Outflows
Issue of shares Cash repayments of amounts borrowed
Issues of debentures in cash Interest paid on loans/debentures
Proceeds from long term short term borrowings Dividends paid on equity and preference share
capital

Cash flow is the movement of money into or out of a business, project, or financial product. It
is usually measured during a specified, finite period of time. Measurement of cash flow can be
used for calculating other parameters that give information on a company's value and situation.
Cash flow can e.g. be used for calculating parameters:
 To determine a project's rate of return or value. The time of cash flows into and out of
projects are used as inputs in financial models such as internal rate of return and net
present value.

 To determine problems with a business's liquidity. Being profitable does not necessarily
mean being liquid. A company can fail because of a shortage of cash even while
profitable.

 As an alternative measure of a business's profits when it is believed that accrual

accounting concepts do not represent economic realities. For example, a company may
be notionally profitable but generating little operational cash (as may be the case for a
company that barters its products rather than selling for cash). In such a case, the
company may be deriving additional operating cash by issuing shares or raising
additional debt finance.

 Cash flow can be used to evaluate the 'quality' of income generated by accrual
accounting. When net income is composed of large non-cash items it is considered low
quality.

 To evaluate the risks within a financial product, e.g. matching cash requirements,
evaluating default risk, re-investment requirements, etc.

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Cash flow is a generic term used differently depending on the context. It may be defined by
users for their own purposes. It can refer to actual past flows or projected future flows. It can
refer to the total of all flows involved or a subset of those flows. Subset terms include net cash
flow, operating cash flow and free cash flow.
How to Analyze a Company's Cash Flow Statement
Although reported earnings (or losses) per share most often take the spotlight in the financial
headlines, cash flow can be an even more valuable measure of a company's long-term financial
health.
Cash flow is exactly what it sounds like. It is cash generated and used by a company's business.
It is reported in a financial statement showing three years of data in the company's annual 10-K
filing with the Securities and Exchange Commission (SEC). It is also reported quarterly in a
company's 10-Q filings with the SEC.
Here is one method to quickly evaluate a company's cash flow statement.
The cash flow statement has three sections, cash flow generated by or used by operations, cash
flow generated by or used by investing activities, and cash flow generated by or used by
financing activities.
Cash flow generated by or used by operations reflects the cash produced by (or used by) the
company's ongoing operations. It excludes noncash items such as depreciation, amortization
and stock-based compensation that are expensed on the profit and loss statement. In addition, it
takes into account cash generated by or used by working capital. Cash flow generated by (or
used by) operations is one of the most important numbers on the cash flow statement, because it
is the cash available from ongoing operations to reinvest in the business, repay debt, pay
dividends, etc.
Now look at cash generated by or used by investing activities. This category includes capital
expenditures (often called additions to property and equipment), acquisitions or sales of
businesses or property for cash, and other investing activities. Most often it will be a negative
number dominated by spending on capital projects but, depending on the nature of the business,
that is not always the case.
Finally, take a look at the impact of financing activities on cash. Cash inflows in this category
could come from, among other things, bank borrowings, debt issuance, and the sale of equity.
Uses of cash for financial purposes include principal payments on debt, share repurchases and
cash dividend payments.
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The total of the cash generated by or used by these three categories is shown on the cash flow
statement (after the effect of exchanges rates, if any, on cash) as the year's net change in cash
and cash equivalents. This figure, when added to cash at the beginning of the reporting period,
will result in the cash and cash equivalents held by the company at the end of the reporting
period.
In evaluating a company's three year cash-flow performance consider the following.
First, do its operations consistently generate cash and what is the trend of this figure? Ideally,
you would like to see solidly positive cash flow generated by operations. If this number is
growing each year, that's even better.
Second, to what extent is cash generated by operations sufficient to pay annual capital
expenditures and cash dividends? This figure (cash flow from operations net of capital
expenditures and dividends) is sometimes called free cash flow. This is a very useful measure
because it tells you how much cash a company has left over each year, after reinvesting in its
business and paying its shareholders, to take advantage of additional growth opportunities,
increase the dividend, repurchase stock, or just put away for a rainy day. As a result, this figure
can give you an idea of a company's ability to weather a slowdown or a downturn, to grow its
business long term, and to maintain and grow its dividend.
The free cash flow number discussed above excludes cash used to make acquisitions or from the
sale of businesses. However, if acquisitions are a key part of a company's long-term growth
strategy and, therefore, it regularly purchases other businesses, you may want to factor this into
your cash flow analysis.
This article only summarizes how to evaluate the cash flow statement in a rudimentary way
based on historical numbers. A more sophisticated dissection of a company's cash flow
statement, taking into account the specific characteristics of its business and its industry, would
often be more revealing. In addition, the cash flow statement does not tell you what cash
requirements a company faces, such as a large principal payment on debt coming due or the
need to build a new plant. Nevertheless, analyzing free cash flow, even in a basic way, can help
you identify public companies worthy of further analysis and provide valuable insights into the
financial health of companies in which you already own shares.
Advantages of Cash Flow Statement:
1. It helps the newly formed companies to know their inflow and outflow of cash.
2. It helps the investors to judge whether the company is financially sound or not.
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 3. It helps the company to know whether it will be able to cover the payroll and other
expenses.
4. It helps the lenders to know the company’s ability to repay.
5. A cash flow statement is provided on monthly basis or quarterly basis or six monthly
basis or yearly basis.
6. These statements help to have an accurate analysis of the firm’s ability to meet its
current liabilities.
7. A cash flow statement is helpful for planning and managing future financial
commitments.
8. A cash flow statement summarizes the company’s cash receipts and cash payments over
a period of time.
9. It is useful for determining the short term ability of the concern to meet its liabilities as
it does not include non cash items.
10. A cash flow statement gives vital information not only about the company’s
performance but also about its major activities during the year.

Disadvantages of Cash Flow Statement:

1. By itself, it cannot provide a complete analysis of the financial position of the firm.
2. It can be interpreted only when it is in confirmation with other financial statements and
other analytical tools like ratio analysis.

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Cash Flow Indicator Ratios:
Introduction
This section of the financial ratio tutorial looks at cash flow indicators, which focus on the cash
being generated in terms of how much is being generated and the safety net that it provides to
the company. These ratios can give users another look at the financial health and performance
of a company.

At this point, we all know that profits are very important for a company. However, through the
magic of accounting and non-cash-based transactions, companies that appear very profitable
can actually be at a financial risk if they are generating little cash from these profits. For
example, if a company makes a ton of sales on credit, they will look profitable but haven't
actually received cash for the sales, which can hurt their financial health since they have
obligations to pay.
The ratios in this section use cash flow compared to other company metrics to determine how
much cash they are generating from their sales, the amount of cash they are generating free and
clear, and the amount of cash they have to cover obligations. We will look at the operating cash
flow/sales ratio, free cash flow/operating cash flow ratio and cash flow coverage ratios.
Cash Flow Indicator Ratios: Operating Cash Flow/Sales Ratio
This ratio, which is expressed as a percentage, compares a company's operating cash flow to its
net sales or revenues, which gives investors an idea of the company's ability to turn sales into
cash.
It would be worrisome to see a company's sales grow without a parallel growth in operating
cash flow. Positive and negative changes in a company's terms of sale and/or the collection
experience of its accounts receivable will show up in this indicator.
Formula:

Cash Flow Coverage Ratios

This ratio measures the ability of the company's operating cash flow to meet its obligations -
including its liabilities or ongoing concern costs.

26
The operating cash flow is simply the amount of cash generated by the company from its
main operations, which are used to keep the business funded.
The larger the operating cash flow coverage for these items, the greater the company's
ability to meet its obligations, along with giving the company more cash flow to expand its
business, withstand hard times, and not be burdened by debt servicing and the restrictions
typically included in credit agreements.

Formulas:

Free Cash Flow/Operating Cash Flow Ratio

The free cash flow/operating cash flow ratio measures the relationship between free cash flow
and operating cash flow.
Free cash flow is most often defined as operating cash flow minus capital expenditures, which,
in analytical terms, are considered to be an essential outflow of funds to maintain a company's
competitiveness and efficiency.

The cash flow remaining after this deduction is considered "free" cash flow, which becomes
available to a company to use for expansion, acquisitions, and/or financial stability to weather
difficult market conditions. The higher the percentage of free cash flow embedded in a
company's operating cash flow, the greater the financial strength of the company.

27
IMPORTANT OF FINANCIALS

Financial analysis is very important for the management, shareholder, investers

and general public. Following are important points in this regard.

1. It simplifies, summarize and systematizes a long arise of accounting figures, which prove
very useful to the interested parties as it helps these in arriving at valuable decisions.

2. Financial analysis is invaluable aid to the management in discharge of its basic function
of fore, planning, co-ordinatinon, communication and control.

3. It identifies the financial health of enterprises the evaluating important aspects of business
like liquidity, solvency, profitability, capital gearing, extra, such an evaluation enables
conclusion to be drawn regarding financial health of business.

4. The proTATA MOTORS of analysis financial statements involves the preparation and
interpretation of meaning device such as ratios and trend percentages. So with the
preparation of meaning devices the data become easy to establish its relationship and other
data can be easily ranked in terms of its relative significance.

5. Without analysis of financial statement it is impossible to interpret the financial

statements figures. Therefore interpretation requires analysis.

6. Owing to the increasing demand for analytical information by business executive,

bankers and other it is neULTRATECH PVTary to have analysis and interpretation of
financial and operatintg data.

The financial statements are a mirror, which reflect the financial position and operating
strength are weakness of the business enterprise.

28
 TOOLS OF FINANCIAL ANALYSIS

The analysis of financial statements consists of relationship and trends, top

determine whether the financial position of the company is satisfactory or not. The
analytical methods or devices, listed below are used to ascertain or measure the
relationships among the financial stetements items.
Analysis methods and devices used in analyzing financial statements are as
follows:
Comparative financial statements.
Common size financial statements.
Trend ratios
Ratio Analysis
Cash Flow Statements

They may be discussed as under:

Comparative financial statements:-
Statements prepared in a form the reflects data for two or more periods are know as
Compared with similar data for a previous period or a number of prior period. Annual data
can be compared with similar data for prior years. Comparative statements can be prepared
for both types for financial statements balance sheet shows the effect of operations on the
assets and liabilities i.e., change in the financial position during the period under
consideration. The comparative profit and loss account will present a review of operating
activities of the business.
Common Size financial Statements:-
Comparative statements that give only the vertical percentage of ratios for financial data
without giving rupee values are known as Common Size Financial statements. They are also
known as 100% statements. A common size statements show the relation of each
component to the whole. It is useful in vertical financial analysis and comparison of two
business enterprise at a certain date.

Trend Analysis:-
29
Under the technique of trend analysis the ratio of different items for various periods are
calculated and then a comparison is made. An analysis of the ratios over the past few years
may well suggests the trend or direction in which the concern is going-upward or
downward.
Ratio Analysis:-
Ratio analysis is the most widely used tool of financial analysis. It is essentially an attempt
to develop meaningful relationship between individual items or groups of items in the
balance sheet or profit and loss account. The objects and utility of ratio
analysis is confined not only to the internal parties but to the credit suppliers, bans and
leading institution also. Ratio analysis tells about the financial position of the enterprise as
to whether the capital structure of the business is in proper order, whether the capital
structure of the enterprise is satisfactory, whether the credit policy in relation to sales and
purchase is sound and whether the company is creditworthy. Thus, ratio analysis highlights
the liquidity, solvency, profitability and capital gearing position.

CASHFLOW ANALYSIS:-
Cash flow analysis is a valuable aid to the financial executive and creditors for evaluating
the uses of funds by the firm and in determining how these uses were financed. A cash flow
statement indicates where funds came from and where it was used during the period under
review. They are important tools for communication and very helpful for financial
executives in planning the intermediate and long-term financing of the firm.

When it is desired to explain to management the source of cash and its uses during a
particular period of time, a statement know as cash flow statement is prepared. A statement
of cash flow reports the inflows (receipts) and outflow (payments) of cash and its equivalent
of an organization during a particular period. It provides important information that
compliments profit and loss account and balance sheet. A statement of cash flow report cash
receipts and payments classified according to the entities major activities- operating,
investing and financial during the period.
The main object of cash flow analysis is to show the causes of changes in cash balance
during the period under consideration. Cash flow analysis also provides the information to

30
the management regarding movement of cash and the availability of cash. This analysis is
not only concerned with the good or bad management of cashes but also the liquidity
position of the concern. It also helps the management in short-term financial decision
relating to liquidity.
UTILITY OF CASH FLOW ANALYSIS:
A cash flow statement is very important for financial management. It is an essential tool of
short-term financial analysis, as a business enterprise needs sufficient cash to meet its
various obligations in the near future such as payments for purchase of fixed assets,
expanses of business etc., A historical analysis of the different source and application cash
will enable the management to make reliable cash flow projections for the immediate future.
It may then plan out for investment of surplus or meeting the deficit, if any.
The main uses of cash flow analysis are as follows:-
Help in efficient cash management: Cash flow analysis helps in evaluating financial polices
and cash position, as the cash is the basis for all operations. A projected cash flow statement
will enable the management to plan and coordinate the financial operations.

Help in internal financial management: Cash flow analysis provides information

about funds, which will be available from operations. This will help the management in
determining polices regarding internal financial management, e.g., dividend policies,
possibility of repayment of long-term debt, etc.
Disclose the movement of cash: Cash flow statements disclose the complete story of cash
movement. The increase in, or decrease of, cash and the reason thereof can be know. It
discloses the reason for low cash balance in spite of low profit. The comparison of original
forecast with the actual result highlight the trends of management of cash, which may
otherwise go undetected.
Discloses sucTATA MOTORS or failure of cash planning: The extent of sucTATA
MOTORS or failure of cash planning can be known by comparing the projected cash flow
statement with the actual cash flow statement and ne ULTRATECH PVTary remedial can
be taken.

31
LIMITATIONS OF CASH FLOW ANALYSIS: -
Cash flow analysis is a useful tool of financial analysis, but it has its own limitations. Of
cash flow analysis are as follows:
The cash balance as disclosed by the cash flow statement may not represent the real liquid
position of the business it can be easily influenced by postponing purchase and other
payments. Cash flow statements cannot replace the income statement or the funds flow
statement or the fund flow statement. Each of them has a separate function to perform.

CASH FLOW ANALYSIS AND STATEMENT:

Cash flow analysis is a method of analyzing the financing, investing, and operating
activities of a company. The primary goal of cash flow analysis is to identity, in a timely
manner, cash flow problems as well as cash flow opportunities. The primary document used
in cash flow analysis is the cash flow statement. Since 1988, the Securities and Exchange
Commission (SEC) has required every company that files reports to include a cash flow
statement with its quarterly and annual reports. The cash flow statement is useful to
managers, leaders, and investors because it translates the earnings reported on the income
statement—which are subject to reporting regulations and accounting decisions—into a
simple summary of how much cash the company has generated during the period in
question. “Cash flow measures real money flowing into, or out of, a company’s bank
account,” Harry Domash notes his Web site, WinningInvesting.com. “Unlike reported
earnings, there is little a company can do to overstate its bank balance.”

THE CASH FLOW STATEMENT:

A typical cash flow statement is divided into three parts: cash from operations (from daily
business activities like collecting payments from customers or making payments to
suppliers and employees); cash from investment activities (the purchase or sale of assets);
and cash from financing activities (the issuing of stock or borrowing of funds). The final
total shows the net increase or decrease in cash for the period.
Cash flow statements facilitate decision making by providing a basis for judgments
concerning the profitability, financial condition, and financial management of a company.
While historical cash flow statements facilitate the systematic evaluation of past cash flows,
projected (or pro forma) cash flow statements provide insights regarding future cash flows.

32
Projected cash flow statements are typically developed using historical cash flow data
modified for anticipated changes in price, volume, interest rates, and so on.
To enhance evaluation, a properly-prepared cash flow statement distinguishes between
recurring and nonrecurring cash flows. For example, collection of cash from customers is a
recurring activity in the normal course of operations, where as collections of cash proceeds
from secured bank loans (or issuances of stock, or transfers of personal assets to the
company) is typically considered a recurring activity. Similarly, cash payments to vendors is
a recurring activity, whereas repayments of secured bank loans (or the purchase of certain
investments or capital assets) is typically not considered a recurring activity in the normal
course of operations. In contrast to nonrecurring cash inflows or outflows, most recurring
cash inflows or outflows occur (often frequently) within each cash cycle (i.e., within the
average time horizon of the cash cycle). The cash cycle (also known as the operating cycle
or the earnings cycle) is the series of transactions or economic events in a given company
whereby:
Cash is converted into goods and services.
Goods and services are sold to customers.
Cash is collected from customers.
To a large degree, the volatility of the individual cash inflows and outflows within the cash
cycle will dictate the working-capital requirements of a company. Working capital generally
refers to the average level of unrestricted cash required by a company to ensure that all
stakeholders are paid on a timely basis. In most cases, working capital can be monitored
through the use of a cash budget.

33
 PREPARATION OF CASH FLOW STATEMENTS:
Cash flow statement is prepared with the help of balance sheet, income statement, and
surplus appropriations statement and other given information. The measurement of cash
flow is primarily based on income statement as the items in any income statement6 are
shown on actual basis, where as in cash flow statement they are shown cash basis.
Cash flow measurement depends primarily on determining cash receipt and disbursements
over a given period.
The measurement of cash flow constitutes two aspects, determining the inflow of
cash and outflow of cash. The items constitution inflows of cash are the sources of cash
while outflow of cash is the application of cash.
SORCE OF CASH OR CASH INFLOWS:
The transactions, which increase the cash position of the firm, are called as sources of cash
of cash inflows. The main sources of cash inflow are as follows:
Increase in share capital: - Share capital raised whether in the form of preference of equity
capital would constitute inflow of cash. The inflow would be to the extent of actually
received on issue of share. However, issue of share by capitalization of reserves or issue of
share for consideration other that cash or issue of share in conversion of debentures or long-
term loans would not be a cash inflow.
Issue of debenture, loans etc: - The net amount received on the issue of debentures and
rising of loan will constitute inflow of cash. However, if the debentures are issued or loans
raised for consideration other cash, it will not constitution inflow of cash.
Reduction in or sale of assets: - Sale proceeds of fixed assets and long-term investment to
the extent payment being received in cash would be inflow of cash. Similarly, decrease in
debtors and bill receivable will be inflow of cash.
Other receipts: - There may also be some other sources of cash inflows. For example, sale
proceeds of by-products of waste material, cash receipts of dividends and interest, income-
tax refund, compensation received etc.
APLICATION OF CASH OR CASH OUTFLOW:
Operation loss: - If a business is operating at a loss then to that extent it is treated as
application of cash or cash flow.
Reduction of redeemable shares of debentures: - Amount actually paid on the redeemable of
preference share or debentures constitute outflow of cash. While paying back the preference

34
capital, arrears of dividend may also be paid. However, if equality share are allocated in
repayment of preference capital or debentures, there will be no cash outflow.
Decrease in or repayment of loans: - Decrease in the long-term or short-term loans,
creditors and bills payable also constitute outflow of cash.
Increase in or purchase of non-current assets: - The acquisition of fixed assets and
investments also involves the use of cash. For example, if furniture is purchased for cash, it
will constitute an outflow of cash. However, if the acquisition is made on credit or by the
issue of shares or debentures, it will not involve out of cash.
Other payments: - Payments of dividend, income tax, interest, compensation etc., also
constitute outflow of cash.
FORM OF CASH FLOW STATEMENT: -
There is no set format for cash flow statements; it can also be prepared in two forms,
either in report form or in an account form. Under both these form any of the following
types may be adopted: -
Reminder type: - Under this type, the cash flow statement is divided into two parts sources
of cash and application. The difference of the total of the sides would show increase in cash
or decrease in during under study.
Self balance type :- Under this method, cash flow statement is prepared in the same way as
in reminder type but in this method the short side of the statement is balanced by showing
change in the balance of cash. Which the cash balance shown in the current year balance
sheet. This method is most popular and widely used in practice.
Reconciling type: - Under this method opening and closing balances of cash are tallied in it,
the statement starts with the opening balance of cash. In this balance all the inflow of cash
are added and all outflows of cash are
Detected, the resulting figure will be closing balance of cash, which must tally, with the
balance shown in the current year’s balance sheet. This method is most popular and widely
used in practice.

35
 CHAPTER-2
COMPANY PROFILE
INDUSTRY PROFILE

36
 COMPANY PROFILE

Tata Motors Limited is an Indian

multinational automotive manufacturing
company, headquartered in Mumbai, India,
which is part of the Tata Group. The company
produces passenger cars, trucks, vans,
coaches, buses.
Formerly known as Tata Engineering and
Locomotive Company (TELCO), the company
was founded in 1945 as a manufacturer of
locomotives. The company manufactured its
first commercial vehicle in 1954 in a
collaboration with Daimler-Benz AG, which
ended in 1969. Tata Motors entered the
passenger vehicle market in 1988 with the
launch of the TataMobile followed by the Tata
Sierra in 1991, becoming the first Indian
manufacturer to achieve the capability of
developing a competitive indigenous
automobile.[6] In 1998, Tata launched the first
fully indigenous Indian passenger car, the
Indica, and in 2008 launched the Tata Nano,
the world's most affordable car. Tata Motors
acquired the South Korean truck manufacturer
Daewoo Commercial Vehicles Company in
2004. Tata Motors has been the parent
company of Jaguar Land Rover since the
company established it for the acquisition of
Jaguar Cars and Land Rover from Ford in
2008.
Tata Motors' principal subsidiaries include
British premium car maker Jaguar Land Rover
(the maker of Jaguar and Land Rover cars)
and the South Korean commercial vehicle
manufacturer Tata Daewoo. Tata Motors has a
construction-equipment manufacturing joint
venture with Hitachi (Tata Hitachi
Construction Machinery), and a joint venture
with Stellantis which manufactures
automotive components and Fiat Chrysler and
Tata branded vehicles. On 12 October 2021, private equity firm TPG invested $1 billion in Tata
Motors' electric vehicle subsidiary.[7]

37
Tata Motors has auto manufacturing and vehicle plants in Jamshedpur, Pantnagar, Lucknow,
Sanand, Dharwad, and Pune in India, as well as in Argentina, South Africa, the United
Kingdom, and Thailand. It has research and development centres in Pune, Jamshedpur,
Lucknow, Dharwad, India and South Korea, the United Kingdom, and Spain. Tata Motors is
listed on the BSE (Bombay Stock Exchange), where it is a constituent of the BSE SENSEX
index, the National Stock Exchange of India, and the New York Stock Exchange. The company
is ranked 265th on the Fortune Global 500 list of the world's biggest corporations as of 2019.[8]
On 17 January 2017, Natarajan Chandrasekaran was appointed chairman of the company Tata
Group. Tata Motors increased its UV market share to over 8% in FY2019.[9]The total revenue
of Tata companies, taken together, was $96.79 billion (around Rs527,047 crore) in 2014-13,
with 62.7 percent of this coming from business outside India. Tata companies employ over
540,000 people worldwide. The Tata name has been respected in India for more than 140 years
for its adherence to strong values and business ethics.
Every Tata company or enterprise operates independently. Each of these companies has its own
board of directors and shareholders, to whom it is answerable. There are 32 publicly listed Tata
enterprises and they have a combined market capitalisation of about $107.60 billion (as on
January 30, 2016), and a shareholder base of 3.9 million. The major Tata companies are TATA
MOTORS, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata
Global Beverages, Tata Teleservices, Titan, Tata Communications and Indian Hotels.
TATA MOTORS is among the top ten steelmakers, and Tata Motors is among the top five
commercial vehicle manufacturers, in the world. TCS is a leading global software company,
with delivery centres in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata
Global Beverages is the second-largest player in tea in the world. Tata Chemicals is the world’s
second-largest manufacturer of soda ash and Tata Communications is one of the world’s largest
wholesale voice carriers.
In tandem with the increasing international footprint of Tata companies, the Tata brand is also
gaining international recognition. Brand Finance, a UK-based consultancy firm, valued the Tata
brand at $18.16 billion and ranked it 39th among the top 500 most valuable global brands in
their BrandFinance® Global 500 2015 report. In 2012, BusinessWeek magazine ranked Tata
17th among the '50 Most Innovative Companies' list.

38
Founded by Jamsetji Tata in 1868, Tata’s early years were inspired by the spirit of nationalism.
It pioneered several industries of national importance in India: steel, power, hospitality and
airlines. In more recent times, its pioneering spirit has been showcased by companies such as
TCS, India’s first software company, and Tata Motors, which made India’s first indigenously
developed car, the Indica, in 1998 and recently unveiled the world’s most affordable car, the
Tata Nano.
Tata companies have always believed in returning wealth to the society they serve. Two-thirds
of the equity of Tata Sons, the Tata promoter holding company, is held by philanthropic trusts
that have created national institutions for science and technology, medical research, social
studies and the performing arts. The trusts also provide aid and assistance to non-government
organisations working in the areas of education, healthcare and livelihoods. Tata companies
also extend social welfare activities to communities around their industrial units.
Going forward, Tata is focusing on new technologies and innovation to drive its business in
India and internationally. The Nano car is one example, as is the Eka supercomputer (developed
by another Tata company), which in 2008 was ranked the world’s fourth fastest. Anchored in
India and wedded to traditional values and strong ethics, Tata companies are building
multinational businesses that will achieve growth through excellence and innovation, while
balancing the interests of shareholders, employees and civil society.
Tata Motors Limited is India's largest automobile company, with consolidated revenues of INR
1,88,818 crores (USD 34.7 billion) in 2014-13.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 world's fifth largest truck manufacturer
and fourth largest bus manufacturer.
The Tata Motors Group's over 60,000 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 8
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), 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

39
Tata cars and Fiat powertrains. The company's dealership, sales, services and spare parts
network comprises over 6,600 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, South Africa and Indonesia. Among them is
Jaguar Land Rover, acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles
Company, South Korea's 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 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 joint venture with Thonburi Automotive
Assembly Plant Company of Thailand to manufacture and market the company's 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 2013, 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 company's 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 company's growth over the last 68 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
company's 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, Italy, 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, India's first
indigenously developed mini-truck. In 2009, the company launched its globally benchmarked
40
Prima range of trucks and in 2014 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 India's first Sports Utility Vehicle in 1991 and, in 1998, the Tata
Indica, India's first fully indigenous passenger car.
In January 2008, Tata Motors unveiled its People's Car, the Tata Nano. The Tata Nano has been
subsequently launched, as planned, in India in March 2009, and subsequently in 2013 in Nepal
and Sri Lanka. A development, which signifies a first for the global automobile industry, the
Nano brings the joy of a car within the reach of thousands of families.
Tata Motors is equally focussed 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 environment-friendly 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 company's 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 company's 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.
2015
• Tata Motors’ Jamshedpur plant rolls out its two millionth truck
• Tata Power synchronises fifth 800MW unit and makes its first UMPP of 4,000MW, at
Mundra, fully operational
• Tata Sons announces formation of the Group Executive Council
• Tata Technologies acquires Cambric, a premier US-based engineering services company
• TCS acquires IT services firm Alti to help drive long-term growth in France
41
• Titan Industries is now Titan Company
• Tata Sons and Singapore Airlines to establish new airline in India
• Mount Everest Mineral Water (MEMW) to be merged with Tata Global Beverages
• Jaguar Land Rover celebrates 1,000,000 vehicles built at Halewood operations
• Tata Toyo and Air International enter into a joint venture
• Titan Company celebrates retail milestone with 1,000 stores
2009
• Tata Motors unveils Tata Nano, the People’s Car, at the 9th Auto Expo in Delhi on
January 10, 2008
• Tata Motors acquires the Jaguar and Land Rover brands from the Ford Motor Company
• Tata Chemicals acquires General Chemical Industrial Products Inc (now known as Tata
Chemicals North America)
2010
• Tata Motors announces commercial launch of the Tata Nano; delivers first Tata Nano in
the country in Mumbai
• Tata Teleservices announces pan-India GSM service with NTT DOCOMO
• TRF acquires Dutch Lanka Trailer Manufacturers (DLT), Sri Lanka, a world-class
trailer manufacturing company
• Jaguar Land Rover introduces its premium range of vehicles in India
• Tata Chemicals launches Tata Swach — the world’s most cost-effective water purifier
• Tata Housing makes waves with its launch of low cost housing in Mumbai
2012
• TRF acquires UK-based Hewitt Robins International
• New plant for Tata Nano at Sanand inaugurated
• Advinus Therapeutics announces the discovery of a novel molecule — GKM-001 — for
the treatment of type II diabetes
• Tata Tea announces joint venture with PepsiCo for health drinks
• Tata Tea group rebrands itself as Tata Global Beverages, headquartered in London
• Tata Chemicals acquires 100-per-cent stake in leading vacuum salt producer British
Salt, UK
• Tata Chemicals launches i-Shakti dals, India's first national brand of pulses
2013
42
• Tata Chemicals rebrands its global subsidiaries in the UK, the US and Kenya under the
Tata Chemicals corporate brand
• The Tata brand soars into the top 50 club of global brands
• Tata Medical Center, a comprehensive cancer care and treatment facility established in
Kolkata, was inaugurated by Tata Sons Chairman Ratan Tata
• The Tata Nano begins international journey in Sri Lanka and Nepal
• Jaguar celebrates 50 years of iconic E-Type car
• TATA MOTORS completes centenary of its first blast furnace
• Tata BP Solar becomes wholly owned Tata company (now known as Tata Power Solar
Systems)
2014
• Tata Global Beverages and Starbucks form joint venture to open Starbucks cafés across
India. First outlet launched in October in Mumbai
• Tata Communications completes world’s first wholly-owned cable network ring around
the world
• India’s first iodine plus iron fortified salt launched by Tata Chemicals
• Tata AIG Life Insurance Company to be now called Tata AIA Life Insurance
• Company
• Starbucks opens spectacular flagship store in Mumbai, honouring the dynamic culture of
India
• Tetley Tea celebrates 175th anniversary
• TATA MOTORS expands aerospace activities in China
• Cyrus P Mistry takes over as Chairman, Tata Sons from Ratan N Tata
Board of Directors
Mr. Mistry with the Safari Storme
Mr. Kant with the Ultra
Mr. Wadia with the Range Rover Evoque
Mr. Cyrus P. Mistry
Non-Executive Director and Chairman
Mr. Mistry was appointed as a Director of Tata Motors with effect from May 29, 2014, and as
Deputy Chairman of the Company with effect from November 7, 2014. Mr. Mistry took over as
Chairman from Mr. Ratan N. Tata on his retirement with effect from December 28, 2014.
43
Mr. Mistry was earlier Managing Director of the Shapoorji Pallonji group and was also
responsible for building the infrastructure development vertical in the Shapoorji Pallonji group.
Mr. Mistry is a Graduate of Civil Engineering from the Imperial College London (1990) and
has an MSc in Management from the London Business School (1997). He was recently
bestowed with the Alumni Achievement Award by the London Business School.
Mr. Ravi Kant
Non-Executive Director and Vice Chairman
Mr. Kant has been with the Company since February 1999, joining as Senior Vice President
(Commercial Vehicles), and was inducted on the Board as an Executive Director in July 2000
and became the Managing Director in July 2005. Upon retiring from his Executive position on
June 1, 2009, Mr. Ravi Kant continues to be on the Company’s Board of Directors as Vice-
Chairman.
Prior to joining the Company, he was with Philips India Limited as Director of Consumers
Electronics business and prior to which with LML Ltd. as Senior Executive Director
(Marketing) and Titan Watches Limited as Vice President (Sales & Marketing).
Mr. Ravi Kant holds a Bachelor of Technology degree in Metallurgical Engineering from the
Institute of Technology, Kharagpur and a Master's degree in Science from the University of
Aston, Birmingham, UK.
Mr. Nusli N. Wadia
Non-Executive, Independent Director
Educated in the UK, Mr. Wadia is the Chairman of the Bombay Dyeing & Manufacturing
Company Limited and heads the Wadia Group. He is also the Chairman/ Trustee of various
charitable institutions and non-profit organisations.
Mr. Wadia has been on the Company’s Board since December 1998 as an Independent Director.
Dr. Raghunath A. Mashelkar
Non-Executive, Independent Director
Dr. Mashelkar is an eminent chemical engineering scientist retired from the post of Director
General from the CSIR and is the President of Indian National Science Academy (INSA),
National Innovation Foundation, Institution of Chemical Engineers, UK and Global Research
Alliance. The President of India honoured Dr. Mashelkar with the Padmashri (1991) and the
Padmabhushan (2000). Dr. Mashelkar holds a Ph.D. in Chemical Engineering from the Bombay
University.
44
He was appointed as an Independent Director of the Company w.e.f. August 28, 2007.
2015
• Tata Nano becomes the first Auto Brand in India to cross 3 million fans on Facebook
• The Tata Indigo eCS enters Limca Book of Records
• Tata Motors' Jamshedpur plant rolls out its two millionth truck
• Tata Nano offered industry first phenomenon - Swipe your credit card and drive home a
Nano
• Tata Motors launches the world-class range of Tata PRIMA trucks in Sri Lanka
2014
• Tata Motors enters Bangladesh’s new car market
• Tata Ace races through the one-million mark in just 2,680 days
• Tata Safari Storme, the Real SUV, hits the road
• Launch of PT Tata Motors Indonesia
• Tata Motors plant at Dharwad comes on stream
• Tata Motors enters into distribution agreement in Myanmar
• Launch of Tata Ace in South Africa
2013
• Tata Venture launched
• Launch of Tata Divo Luxury Coach and Tata Starbus Ultra
• Launch of Tata Nano 2014
• Tata Sumo Gold introduced
• Range Rover Evoque launched in India
• New Tata Indica Vista launched
• Tata Magic IRIS and Tata Ace Zip launched
• Tata Indica eV2 introduced with 25 kmpl mileage
• Tata Pixel, a city car concept for Europe, displayed at the Geneva Motor Show
• Refreshed Tata Indigo Manza introduced
• Tata Prima ConsTruck range launched
• Tata Motors unveiled assembly plant in South Africa
• Tata Nano began international journey with Sri Lanka
• Tata Motors completes 50 years of its International Business
• Jaguar Land Rover inaugurated its vehicle assembly plant in Pune
45
• Tata Nano launched in Nepal
• HVTL amalgamates into HVAL renamed as TML Drivelines Ltd.
• Tata Motors (Lucknow) produced & dispatched the first Hybrid Chassis to Spain
• Tata Motors (Dharwad) rolled out the first Tata Ace Zip
• Tata 407 celebrated its silver jubilee year
• Jaguar celebrates 50 years of iconic E-Type
National interest
The Tata group is committed to benefit the economic development of the countries in which it
operates. No Tata company shall undertake any project or activity to the detriment of the wider
interests of the communities in which it operates.
A Tata company’s management practices and business conduct shall benefit the country,

localities and communities in which it operates, to the extent possible and affordable, and shall

be in accordance with the laws of the land.

A Tata company, in the course of its business activities, shall respect the culture, customs and

traditions of each country and region in which it operates. It shall conform to trade procedures,

including licensing, documentation and other necessary formalities, as applicable.

Financial reporting and records

46
 INDUSTRY PROFILE
The automobile business has tormented the manner in which people live and work. The
antiquated of vanguard vehicles was counterfeit in the year 1895. In no time the native
realization of the vehicle followed in India. As the age turned, three vehicles were outsider in
Mumbai (India). Inside decade there were outright of 1025 vehicles in the city. The aurora of
auto in reality goes aback to 4000 years if the native caster was adjusted for busline in India. In
the alpha of fifteenth century, Portuguese acclimated in China and the variation of the two
societies prompted a variety of new innovations, including the origination of a caster that
furious underneath its very own capacity. By 1600s child steam-controlled motor models was
grown, however it took expansion age in advance of a full-sized motor fueled vehicle was
created.Brothers Charles and Frank Duryea outsider indisputably the horseless conveying in the
year 1893. It was the Aboriginal inside burning engine vehicle of America, and it was trailed by
Henry Ford's native starting vehicle that previously mentioned year. One of the most elevated
appraised native prosperity autos was the 1909 Rolls-Royce Silver Ghost that included a
peaceful 6-chamber motor, covering inside, collapsing windscreens and hood, and an aluminum
body. Drivers generally accumulation it and emphasize was on wealth and appearance as
opposed to speed. During the 1920s, the vehicles obvious design refinements, for example,
carrier tires, squeezed steel wheels, and Four-wheel brakes.Graham Paige DC Phaeton of 1929
included a 8-chamber motor and an aluminum body.The 1937 Pontiac De Luxe auto had
plentiful autogenous and back pivoted aback opening that badly fitted added to the necessities
of families. In 1930s, autos were underneath boxlike and included mechanized than their
forerunner was. The 1940s saw appearance like computerized transmission, fixed shaft
headlights, and tubeless tires.The year 1957 brought capable elite autos, for example, Mercedes-
Benz 300SL. It was inherent on grouped and august lines, and was capable of 230 kmph (144
mph). This was the Indian auto history, and today cutting edge vehicles are about light,
efficiently makers, dealing vehicle producers or three-wheeler organizations - anyone has all the
earmarks of being in a messiness to knapsack gathering limits. The nation is acknowledged to
attestant over Rs 30,000 crore of venture by 2010.Hyundai will aswell be dread the Verna and a
cast new specialist vehicle. General Motors will be bathing a Mini and might be a grouped
vehicle. The majority of the organizations acknowledge manufactured their aims clear. Maruti

47
Udyog has set up the extra vehicle bulb with an achievement convenience of 2.5 lakh units per
annum for a speculation of Rs 6,500 Crore (Rs 3,200 Crore for operator motors and Rs 2,718
Crore for the vehicle bulb itself). Hyundai and Tata Motors acknowledge show up undertakings
for development an agnate mass throughout the following 3 years. Hyundai will go with in
added than Rs 3,800 Crore to India.Tata Motors will be advance Rs 2,000 Crore in its child
vehicle venture. General Motors will be advance Rs 100 Crore, Ford about Rs 350 Crore and
Toyota seem constrained intensification issues even as Honda Siel has fitting Rs 3,000 Crore
throughout the following decade for India - a copious square of this ought to show up by 2010
back the conglomeration is aswell looking to get to the profitable infant vehicle
segment..Talking about the trading vehicle section, Ashok Leyland and Tata Motors
acknowledge commemoration seem healthy over Rs 1,000 Crore of speculation. Mahindra and
Mahindra's aggregate experience with International Trucks is acknowledged to see a
refreshment of at nuclear Rs 500 Crore.Industry accomplishment in 2008-09.The Indian car
bazaar figured out how to point up to the fancies of the bread-and-butter mishap to appearance
barely progress during budgetary 2008-09. By and large vehicle deals at 97.23 lakh became
0.71 percent from 96.54 lakh units in 2007-08. In the event that above car markets show up a
30-40 percent decrease, alone a dispersing of nations figured out how to appearance
development. A couple of months prior, India was looking at annulling advance yet has furious
around. It is in truth greater than anticipated. Traveler vehicle deals at 15.51 lakh enrolled
crumbled advance while trading vehicle deals demonstrated a 21 percent drop.SIAM has an
outright plot for the acknowledged financial year. While it anticipates a 7-8 percent
development for the dealing vehicle section, the industry physical make-up predicts a 3-5
percent development for passenger vehicles. The three-wheeler enunciation may proliferate 5-8
percent development while bikes may appearance 3-5 percent development. The passenger
vehicle bazaar has asperous the reduction copiously because of bazaar twirly doo Maruti Suzuki
which holds 48 percent of the market. The packed vehicle behemothic timed 7.22 lakh units for
2008-09. Nearest doing combating Hyundai Motor India inundated 2.44 lakh vehicles, a
development of 13 percent. Goodbye Motors' deals became 1.3 percent at 2.30 lakh units while
Mahindra and Mahindra familiarize 2.5 percent advance at 1.06 lakh units. Most outstanding
carmakers saw volumes pack bear monetary. Toyota Kirloskar Motor's numbers fell 15 percent
to 46,892 units while Ford India's deals were down 17 percent to 27,976 units. Honda Siel Cars
India aswell saw a 17 percent dot at 52,420 units while General Motors India was down 8
48
percent to 61,526 units. Among dealing vehicle creators, every above player saw bottomless
decrease in volumes. Bazaar twirly doo Tata Motors with a 60 percent extra offer, demonstrated
22 percent dot in numbers at 2.34 lakh units while Ashok Leyland indicated 37 percent globule
at 47,632. Eicher's business total fell 37 percent at 17,341 units and Force Motors was down 28
percent at 7,819 units. "The parcels development is ridiculous to propel this budgetary which
will appulse trade deals. Bicycle deals became 2.6 percent to 74.38 lakh units. "Saint Honda has
created up for the scraped spot of offers total for included bicycle creators including Bajaj Auto
and TVS Motor Company," said Mr. Matta. Saint Honda timed 36.40 lakh units, a development
of 12.5 percent. Bajaj Auto's volumes alone 23 percent to 12.86 lakh units while TVS saw a
flanking decrease at 11.36 lakh units. Honda Motorcycle and Scooter India's deals flooded 16
percent to 10.15 lakh units. The car business in India is one of the better in the apple and one of
the quickest developing all inclusive. India's passenger vehicle and bargaining vehicle
achievement industry is the seventh better on the planet, with a commemoration amassing of
included than 3.7 entertainer units in 2010.According to contempo reports, India is set to beat
Brazil to turn into the 6th better passenger vehicle represetative on the planet, growing 16-18
percent to promote around three on-screen character units in the development of 2011-12. In
2009, India rose as Asia's fourth better exporter of passenger autos, abaft Japan, South Korea,
and Thailand.. In 2010, India cultivated as Asia's third better exporter of passenger autos, abaft
Japan and South Korea attack Thailand.As of 2010, India is home to 40 entertainer passenger
vehicles. Included than 3.7 entertainer car vehicles were created in India in 2010 (an entrance of
33.9%), legitimate the nation the extra quickest developing auto bazaar in the world] According
to the Society of Indian Auto Manufacturers, commemoration vehicle deals are anticipated to
access to 5 on-screen character by 2015 and included than 9 on-screen character by 2020.[6] By
2050, the nation is acknowledged to top the apple in vehicle volumes with around 611 on-
screen character autos on the country's streets most of India's vehicle achievement industry is
based around three bunches in the south, west and north. The southern exhibit side by side
Chennai is the better with 35% of the procurement share. The western center point side by side
Maharashtra is 33% of the market. The cold exhibit is basically Haryana with 32%.[8] Chennai,
is aswell alluded to as the "Detroit of India"[9] with the India activities of Ford, Hyundai,
Renault and Nissan headquartered in as far as possible and BMW tolerating a gathering bulb on
the edges. Chennai represents 60% of the nation's car exports.[10] Gurgaon and Manesar in
Haryana life structures the cold exhibit broadness the nation's better vehicle maker, Maruti
49
Suzuki, is based.[11] The Chakan passageway side by side Pune, Maharashtra is the western
cluster with organizations like General Motors, Volkswagen, Skoda, Mahindra and Mahindra,
Tata Motors, Mercedes Benz, Land Rover, Fiat and Force Motors[12][13] tolerating gathering
plants in the region. Aurangabad with Audi, Skoda and Volkswagen aswell structures
assignment of the western group. Option emerging exhibit is in the backup of Gujarat with
achievement capacity of General Motors in Halol and included anticipated Tata Nano at
Sanand. Passage, Maruti Suzuki and Peugeot-Citroen plants are aswell set to show up in Gujarat

Kolkatta with Hindustan Motors, Noida with Honda and Product and record division

50
 CHAPTER-3
DATA ANALYSIS &
INTERPRETATIONS

51
 DATA ANALYSIS
DATA ANALYSIS AND INTERPRETATION
Cash Flow Indicator Ratios: TATA MOTORS
Operating Cash Flow/Sales Ratio
Year 2018 2019 2020 2021 2022

Operating Cash Flow/Sales 82.08 20.17 12.48 7.71 5.99

Ratio

INTERPRETATION:
From the above graph the operating cash flow is decreasing trend from the year 2018 to 2019 it
indicates that company sales growth rate is also decreasing which is not favorable to the
company.
This ratio should be as high as possible, which indicates that an organization has sufficient cash
flow to pay for scheduled principal and interest payments on its debt.

52
Short-term debt coverage ratio:

Year 2018
Short-term debt coverage ratio 0.72

INTERPRETATION:
From the above information short-term debt coverage ratio is decreasing trend from the year
2018 to 2019. It shows that the ability of the company to meet its short-term obligations is also
decreasing.

53
Capital expenditure coverage ratio:

Year 2018 2019 2020 2021 2022

Capital expenditure coverage ratio 1.43 0.33 0.18 0.08 0.05

INTERPRETATION:
From the above information capital expenditure ratio is also decreasing trend from the 2018 to
2019. It shows that company is not using the capital effectively which is not in favour of the
company.

54
Dividend coverage ratio:

Year 2018 2019 2020 2021 2022

Dividend coverage ratio 22.3 19.25 11.3 5.8 7.02

INTERPRETATION:
From the above information the dividend coverage ratio is increasing from the year 2018 to
2019. It shows that the payment of dividends to the shareholders is also increasing. Which is
favorable to the shareholders.

55
Capital expenditure + Cash dividends coverage:

Year 2018 2019 2020 2021 2022

Capital expenditure + Cash dividends 1.43 0.34 0.19 0.08 0.07
coverage

INTERPRETATION:
From the above information the capital expenditure and cash dividends coverage ratio are
decreasing from the year 2018 to 2019 which shows that the expenditure of capital is not
maintaining in proper manner.

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Free Cash Flow/Operating Cash Flow Ratio
Formula:

Year 2018 2019 2020 2021 2022

operating cash flow ratio 0.83 0.2 0.13 0.08 5.98

INTERPRETATION:
From the above graph the operating cash flow ratio is increasing from the year 2018 to 2019 it
shows that the usage of cash to operating activities is also increasing. This is not satisfactory to
the company.

57
Dividend Per Share:

Year 2018 2019 2020 2021 2022

Dividend per share ratio 0.5 0.75 0.8 0.85 0.5

INTERPRETATION:
The dividend per share ratios is increasing from the year 2018 to 2022 and it was decreasing in
the year 2018. It shows the decrease in the amount of dividend received by the shareholders for
their shares.

58
Earnings Per Share

Year 2018 2019 2020 2021 2022

Earnings per share ratio 11.8 12.54 23.3 2.33 -3.68

INTERPRETATION:
From the above information the earnings per share ratio is increasing from the year 2019 to
2021 and it was decrease in the year 2015 again it was fall in the negative value. This reflects
that earning capacity of the organization is declining.

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Dividend Payout Ratio

Year 2018 2019 2020 2021 2022

Dividend payout ratio 0.05 0.06 0.04 0.37 -0.14

INTERPRETATION:
From the above information the dividend payout ratio is increasing and decreasing trend and it
the ratio was highest in the year 2018 and it was decrease in year 2019 which shows the
company’s dividend is more compared to its earnings. Negative % at the year -0.14.

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Gross Profit Margin (%)

Gross profit margin=

Year 2018 2019 2020 2021 2022

Gross profit ratio 27.05 26.8 41.6 13.88 -17.53

INTERPRETATION:
From the above graph the gross profit ratio is increasing trend from the year 2018 to 2019 and it
was decrease in the year 2022 finally it was decreasing in 2019. It reflects as organization sales
have decreased.

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Net Profit Margin (%)

Net Profit Margin or Ratio=

Year 2018 2019 2020 2021 2022
Net profit ratio 18.9 17.5 31.9 3.6 -6.25

INTERPRETATION:
From the above graph the net profit ratio was highest in the year 2018 and it was decreasing the
year 2021 finally it was decreased and fall in negative value in the year 2022. It shows that
profit of the organization has decreased.

Cash Flow of MOTHER DAIRY ------------------- in Rs. Cr. -------------- -in

Rs.Cr.-

TATA MOTORS 2018 2019 2020 2021 2022

62
Net Profit Before Tax -859.51 619.47 4815.07 2604.09 2420.85

Net Cash from Operating Activities 725.56 1043.88 1884.87 2982.8 10469.12

Net Cash (used in)/from - 4339.32 - - -4883.86

2800.94 7650.54 11263.9

Investing Activities

Net Cash (used in)/from Financing 5807.12 - 6405.25 6234.75 4645.92

Activities 5868.66

Net (decrease)/increase In Cash and 3731.74 -485.46 639.58 - 10231.18

Cash Equivalents 2046.32

Opening Cash & Cash Equivalents 81.47 567.64 205.57 2240.4 -10162.7

Closing Cash & Cash Equivalents 3813.21 82.18 845.15 192.66 68.45

63
 CHAPTER-4
FINDINGS ,SUGGESTIONS AND CONCLUSION

64
 FINDINGS
 Net profit ratio was highest in the year 2018 and it was decreasing the year 2021 finally
it was decreased and fall in negative value in the year 2022. It shows that profit of the
organization has decreased.
 Short term debt coverage ratio is decreasing trend from the year 2018 to 2019. it shows
that the ability of the company to meet its short-term obligations is also decreasing.
 Capital expenditure ratio is also decreasing trend from the 2018 to 2019. It shows that
company is not using the capital effectively.
 Dividend coverage ratio is increasing from the year 2018 to 2019. It shows that the
payment of dividends to the shareholders is also increasing.
 Earnings per share ratio is increasing from the year 2019-20 and it was decrease in the
year 2018 again it was fall in the negative value in the year 2019. This shows that the
earning capacity of the company is decreasing.
 Gross profit ratio is increasing trend from the year 2018 to 2019 and it was decrease in
the year 2022 finally it was decreasing in 2019. It reflects as organization sales have
decreased.
 dividend payout ratio is increasing and decreasing trend and it the ratio was highest in
the year 2018 and it was decrease in year 2019 which shows the company’s dividend is
more compared to its earnings. Negative % at the year -0.14.
 Gross profit ratio was decreasing in 2019. This shows that the company sales are
decreased.
 Net profit ratio was fall in negative value in the year 2019. It shows that profit position
of the company is not favorable to the company.

65
 SUGGESTIONS:
 The TATA MOTORS need to increase the dividend coverage ratio which will help to get
satisfaction of shareholders.
 In the recent years, the organization is increasing its retained earnings for future purpose.
For this, the organization is decreasing its share for its shareholders which will indirectly
impacts on the revenue of the organisation. Hence the organisation needs to concentrate on
its dividends.
 The organization should increase its gross profit ratio which reveals the efficiency in the
production.
 The organisation need to concentrate on net profit ratio which reveals the profit margin on
each sales dollar.
 The organisation need to increase the operating cash flow which will generate more revenue
to the organisation.
 The financial information obtained was analyzed using the appropriate techniques and it
was found that the both operating cash flow and short-term debt coverage ratio is in
decreasing trend. It is also found that earnings per share and dividend per share is in
increasing trend.
 It is suggested to the organisation to retain the earnings for future purpose. For this, the
organisation is decreasing its share for its shareholders which will indirectly impacts on the
revenue of the organisation. Hence the organisation needs to concentrate on its dividends
and to increase the operating cash flow which will generate more revenue to the
organisation.

66
 CONCLUSION:
The study on the Cash flow analysis at TATA MOTORS was undertaken with an
objective of getting an insight into the concept of cash flow analysis. The study aims to evaluate
the cash inflows and out follows of the TATA MOTORS and to study how much cash is flow
from operating activities. It also helps to study the cash flow fluctuations in investing activities.
Cash flow statement gives information about sources and applications of cash and cash
equivalent for a specific period. It helps in planning investments and assessing the financial
requirements of the enterprise (MOTHER DAIRY Limited). Cash flow statement helps to
assess liquidity.
Cash flow statement gives information relating to surplus or deficit of cash. Therefore, an
enterprise can decide about the short-term investments in case of surplus and can arrange the
short-term credit in case of deficit.
Cash flow statement shows the reasons for lower and higher cash balances with the enterprise.
Sometimes, an enterprise has lower cash balance in spite of higher profits or has higher cash
balance in spite of lower profits. Reasons for such situations can be analysed with the help of
cash flow statement.
Cash flow statement, by providing information relating to company’s investing and financing
activities, gives the investors and creditors information about cash flow which helps them to
evaluate management decisions. A comparison of the actual cash flows with the budgeted cash
flows of the year shows the extent to which cash and cash equivalent were generated and
applied as per the plan.
The study requires Balance sheet, Profit and Loss account and other financial information of
TATA MOTORS. The study is based on partly secondary data and partly primary data. The
analytical tools used for the study are Cash Flow coverage ratios like short-term debt coverage
ratio, capital expenditure ratio, dividend coverage ratio etc. The study is done at Hyderabad for
a period of 45 days. The study has few limitations which are taken care of.

67
 BIBLIOGRAPHY
BOOKS
 Financial Statement - M. Panday
 Financial Statement - Prasanna Chandra
 Financial Statement - M.Y. Khan and P.K. Jain
 Principles of Statement -Man Mohan and Goyals N
 Financial Statement -Maheswari S.N.

WEBSITES
 www.googlefinance.com
 www.financeindia.com
 www.cashflowstatement.com
 www.motherdairy.com
 www.icai.org

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