A PROJECT REPORT ON

“A Study on Financial Statement Analysis of Tata Motors Ltd "

A project submitted to

University of Mumbai for partial completion of the degree of

M.COM (Accountancy) Semester III the faculty of Commerce

By

MINAL ARVIND PANDEY

Under the Guidance of

MR. RAJIV MISHRA

N.E.S RATNAM COLLEGE OF ARTS, SCIENCE & COMMERCE

NES COMPLEX, NHS MARG, BHANDUP (W), MUMBAI-400078
ACADEMIC YEAR 2023-2024
 A PROJECT REPORT ON

“A Study on Financial Statement Analysis of Tata Motors Ltd "

A project submitted to

University of Mumbai for partial completion of the degree of

M.COM (Accountancy) Semester III the faculty of Commerce

By

MINAL ARVIND PANDEY

Under the Guidance of

MR. RAJIV MISHRA

N.E.S RATNAM COLLEGE OF ARTS, SCIENCE & COMMERCE

NES COMPLEX, NHS MARG, BHANDUP (W), MUMBAI-400078
ACADEMIC YEAR 2023-2024
 NES RATNAM COLLEGE OF ARTS,
SCIENCE & COMMERCE
BHANDUP (W) , MUMBAI – 400078

CERTIFICATE

This is to certify that Ms. Minal Arvind Pandey Of M.COM

(Accountancy) Semester III (2023-24) has successfully completed the
Project on A Study on Financial Statement Analysis of Tata Motors
Ltd under the guidance of Mr. Rajiv Mishra.

COURSE COORDINATOR PRINCIPAL

Mr. Rajiv Mishra Mrs.Dr Vinita Dhulia

PROJECT GUIDE / INTERNAL EXAMINER

Mr. Rajiv Mishra

External examiner Date

 Declaration by learner

I the undersigned Ms. Minal Arvind Pandey here by, declare that the
work embodied in this project work titled “A Study on Financial
Statement Analysis of Tata Motors Ltd ", forms my own contribution
to the research work carried out under the guidance of Mr. Rajiv Mishra
is a result of my own research work and has not been previously submitted
to any other University for any other Degree/ Diploma to this or any other
University.

Wherever reference has been made to previous works of others, it has been
clearly indicated as such and included in the bibliography.
I, here by further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical
conduct.

Name and Signature of the learner

Certified by
Mr. Rajiv Mishra
 Acknowledgment

To list who all have helped me is difficult because they are so numerous
and the depth is so enormous.
I would like to acknowledge the following as being idealistic channels and
fresh dimensions in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me
chance to do this project.
I would like to thank my Principal, Mrs.Dr Vinita Dhulia for providing
the necessary facilities required for completion of this project.
I take this opportunity to thank our Coordinator Mr. Rajiv Mishra for his
moral support and guidance.
I would also like to express my sincere gratitude towards my project guide
Mr. Rajiv Mishra whose guidance and care made the project successful.
I would like to thank my College Library. For having provided various
reference books and magazines related to my project.
Lastly, I would like to thank each and every person who directly or
indirectly helped me in the completion of the project especially my
Parents and Peers who supported me throughout my project.
 CONTENTS

Sr.no PARTICULARS PAGE NO.

1 INTRODUCTION

2 REVIEW OF LITERATURE

3 RESEARCH METHADOLOGY
o Objectives of the Study
o Research Hypothesis
o Scope of the Study
o Limitation of the study

4 DATA REPRESENTATION AND ANALYSIS

5 RESULTS AND CONCLUSION

o Major Findings
o Discussions and Suggestions
o Conclusion

6 REFERENCES

7 ANNEXURE
 1

INTRODUCTION

1. Rationale of study

2. Introduction to automobile industry

3. Indian Automobile Industry

4. Major companies

5. Introduction to Company

6. Background

7. Joint ventures

8. Justification of the topic

 2

INTRODUCTION

“A promise is promise and I kept my promise”- this is the historical statement

which Mr. RATAN TATA said when he launched his ambitious TATA
NANO; the people’s car in India on 23 rd march 2009. Tata has always given
value products in the Indian Car Market whether it is path breaking recently
launched TATA NANO or TATA INDICA (which created great brand into the
car industry in the diesel segment).
Not only is the passenger car, even into the heavy vehicle segment TATA is the
only sole leader in India.

TATA has created its brand value not only in India but even outside India it has
created its brand by acquiring Jaguar-Land Rover, Corus Steel during 2007-08.
TATA has been named among top 10 brand companies by Fortune Magazine in
the year 2008. It has got into top 100 companies in the survey of Standard &
Poor Mody’s research in the year 2008.

Being into most valued brand in world the consumer satisfaction to its
customers is very important for TATAS and thus they are continuously
working into this area where their objective is to provide best products with full
value of the money of their customers.
 3

The TATA INDICA VISTA has been one of those products you just cannot
ignore. While it got media coverage around the world, the reactions, though
mixed, flowed easily. On the one hand there has been pride in the “World’s
mid size small car” tag, as a great achievement for Indian industry.

The “World’s mid size small Car” tag has been well received with the hope that
a whole new category of people can look to buy a car now.
 4

RATIONALE OF STUDY

Financial Analysis is a process of evaluating the relationship between

component parts of a financial statement to obtain a better understanding of a
firm’s position and performance. The analysis of the balance sheet of a
company, income statement, and cash flow statement, as well as the
interpretation of trends and identification of weaknesses and strengths, may
provide enough information for management to make sales and profit
projections for the next three to five years.

They can make a reasonable estimate of how well the company will fare in the
coming years based on knowledge of general economic and industry trends.
Businesses that need to plan equipment purchases and other initiatives can
benefit from such analyses.

Financial analysis aids in evaluating whether an organization's investment is

adequate, whether its management is competent, and whether its employees are
effective. Finally, organization can identify its progress, profits and growth.
Profitability is critical to any organization. Growth, expansion, and
diversification are all required for survival. Profit is necessary to satisfy
investors, repay debts or loans, pay wages and salaries to employees, and cover
other day-to-day costs. Profit is a strong indicator of a company's overall
performance. (Crawford)
 5

INTRODUCTION TO AUTOMOBILE INDUSTRY

The automobile industry is a major contributor to the global economy. The

automobile industry is mainly comprised of the world's largest passenger car
and light truck suppliers. Most members of the industry sell vehicles in the
global market, including both developed and developing countries, through
vast dealership networks. Automobile manufacturers offer a wide range of
makes and models, but brand integration is often limited at the marketing,
advertisement, and dealership levels. The bulk of these companies operate
production facilities in multiple geographic regions. (Ferro, 2015)

• INDIAN AUTOMOBILE INDUSTRY

India became the fourth largest auto market in 2019 surpassing Germany
with approximately

3.99 million passenger and commercial vehicles sold in 2019. By2021, India is
predicted to overtake Japan and become world's third largest auto market. The
Government of India encourages foreign investment in the automobile sector
and has allowed 100% foreign direct investment (FDI) under the automatic
route. (2020) The Indian automobile industry is a major economic engine,
accounting for nearly half of the country's manufacturing GDP and 7.5 percent
of its total GDP. The value chain of the sector employs roughly 32 million
people. (Ind)
 6

MAJOR COMPANIES IN THE INDUSTRY

• Tata Motors

• Maruti Suzuki

• Mahindra & Mahindra

• Hyundai Motors

• Hero MotoCorp

• Honda Motor Company

• Kia Motors

• Bajaj Auto

• Ashok Leyland

• Eicher Motors
 7

INTRODUCTION TO COMPANY

Tata Motors is an Indian multinational car manufacturer that was founded in

1945. It’s head-quarter is situated in Mumbai, Maharashtra, India. Tata Motors
is among the world’s leading manufacturers of automobiles, producing buses,
trucks, sports cars, and coaches. It is also a manufacturer of military vehicles.
The company makes one of India's safest vehicles, with excellent safety
features and high quality. The price range is between 4.70 lakhs and 16.25
lakhs. Tata Motors, a $35 billion organization and a subsidiary of the USD 113
billion Tata group, has operations in the, South Korea, United Kingdom
,Thailand, ,Indonesia and South Africa through a solid worldwide network of
113 subsidiary and associate companies, including Tata Daewoo in South
Korea and Jaguar Land Rover in the United Kingdom. (TAT) With 9 million
cars on Indian streets, Tata Motors is the market leader in commercial vehicles
and one of the largest passenger vehicle manufacturers. Tata Motors strives to
pioneer new technologies that spark the interest of GenNext consumers, with
design and R&D centres in India, the United Kingdom, Italy, and Korea.

BACKGROUND

Tata Motors was established as Tata Engineering and Locomotive Co. Ltd. in
1945 to manufacture locomotives and other engineering products. It is a
leading global automobile manufacturing company. It is the market leader in
commercial vehicles in all segments, and it ranks among the top three in
passenger cars, with winning products in the compact, midsize, and utility
vehicle segments. (Tat) In the year 1954 they made collaboration with Daimler
Benz AG West Germany for manufacturing medium commercial vehicles. It
started producing passenger vehicles in 1988. Over 4 million Tata vehicles
have been sold in India since the first model was launched.
 8

Lucknow (Uttar Pradesh),Pune (Maharashtra), Jamshedpur (Jharkhand),

Dharwad (Karnataka) and Pantnagar (Uttarakhand) are the company's
manufacturing bases in India. It has established an industrial joint venture with
Fiat Group Automobiles in Ranjangaon (Maharashtra) to manufacture both
Fiat and Tata vehicles as well as Fiat powertrains, following a strategic
alliance with Fiat in 2005. Tata Motors became the first company from
engineering sector of India to be listed on the New York Stock Exchange in
September 2004.

Tata Motors produced India's first indigenously manufactured Light

Commercial Vehicle, India's first Sports Utility Vehicle, and India's first
entirely indigenous passenger vehicle, the Tata Indica, in 1998. Tata Indica
became India's best-selling vehicle in its segment just two years after its
launch. Tata Motors launched the Tata Ace, India's first indigenously
constructed mini–truck, in 2005, starting a new segment. In 2008, Tata Motors
acquired Jaguar Land Rover, the English car manufacturer that produces the
Land rover and Jaguar, from Ford

Tata Motors revealed its People's Car, the Tata Nano , the world's cheapest car,
in January 2008. In March 2009, the Tata Nano was officially unveiled in
India. The Nano is a world-first for the automotive industry, bringing the
comfort and safety of a vehicle within reach of tens of thousands of
households. The standard version was priced at Rs.1,00,000 in India. In March
2017, Tata Motors and Volkswagen signed a Memorandum of Understanding
to collaborate on car development for India's domestic market.

Tata Motors is traded on the New York Stock Exchange, the National Stock
Exchange of India, and Bombay Stock Exchange. It is a part of the BSE
SENSEX index. As of 2019, the company is ranked 265th on the Fortune
Global 500 list of the world's most powerful companies.
9
 10

In India there are 100 people per vehicle, while this figure is 82 in China. It is expected
that Indian automobile industry will achieve mass motorization status by 2014.

Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898,
the Automobile Industry of India has come a long way. During its early stages
the auto industry was overlooked by the then Government and the policies
were also not favorable. The liberalization policy and various tax reliefs by the
Govt. of India in recent years has made remarkable impacts on Indian
Automobile Industry. Indian auto industry, which is currently growing at the
pace of around 18 % per annum, has become a hot destination for global auto
players like Volvo, General Motors and Ford.

A well developed transportation system plays a key role in the development of

an economy, and India is no exception to it. With the growth of transportation
system the Automotive Industry of India is also growing at rapid speed,
occupying an important place on the 'canvas' of Indian economy.

Today Indian automotive industry is fully capable of producing various kinds

of vehicles and can be divided into 03 broad categories : Cars, two-wheelers
and heavy vehicles.

• The first automobile in India rolled in 1897 in Bombay.

• India is being recognized as potential emerging auto market.

• Foreign players are adding to their investments in Indian auto industry.

• Within two-wheelers, motorcycles contribute 80% of the segment size.

• Tata Motors dominates over 60% of the Indian commercial vehicle

market.
 11

• 2/3rd of auto component production is consumed directly by OEMs.

• India is the largest three-wheeler market in the world.

• India is the largest two-wheeler manufacturer in the world.

• India is the second largest tractor manufacturer in the world.

• India is the fifth largest commercial vehicle manufacturer in the world.

• The number one global motorcycle manufacturer is in India.

• India is the fourth largest car market in Asia - recently crossed the 1
million mark. 40% of the three-wheelers are used as goods transport purpose.
Piaggio holds 40% of the market share. Among the passenger transport, Bajaj
is the leader by making 68% of the three-wheelers. Cars dominate the
passenger vehicle market by 79%. Maruti Suzuki has 52% share in passenger
cars and is a complete monopoly in multi purpose vehicles. In utility vehicles
Mahindra holds 42% share.

In commercial vehicle, Tata Motors dominates the market with more than 60%
share. Tata Motors is also the world's fifth largest medium & heavy
commercial vehicle manufacturer.
 12

HISTORY OF TATA MOTORS

1) (Company’s profile)

The Company was incorporated on 1st September 1945 at Mumbai to

manufacture diesel vehicles for commercial use, excavators, industrial shunter,
dumpers, heavy forgings and machine tools. The commercial diesel vehicles
which were known `Tata Mercedes Benz' (TMB) are now called `Tata' vehicles
after the expiry of the collaboration agreement with Daimler-Benz AG, West
Germany. The company also used to manufacture pulp and paper making
machinery. In 1960 the company's name, which was Tata Locomotive &
Engineering Company Ltd. was changed to Tata Engineering & Locomotive
Company Ltd. In the year 1987 the company undertook to set up a new forge
shop, a high output foundry line, a new paint shop as well as augmentation of
engine and gearbox manufacturing facilities, all at Jamshedpur
In 1991 During the year the company entered into a collaborative agreement
with an internationally renowned engine research and development
organisation to jointly develop higher horsepower, fuel efficient diesel and
petrol engines to meet the future requirements of the company. The last quarter
saw the company launching two new passenger vehicles, the SIERRA and the
ESTATE totally designed and manufactured in India. The company acquired a
BIFR company, M/s Noduron Founders Maharashtra Ltd. The total cost for
Telco worked out to Rs.18 crores as against setting up of similar critical
castings foundry. During the year company launched a new earth moving
equipment TWK-3036 Tata Front End Wheel Loader. Two new models in the
EX series of hydraulic excavators were launched. A 10 tonne pick and carry
articulated crane, designed and developed in-house was also introducedDuring
the year company entered into an agreement with Nachi-Fujikoshi Corporation,
Japan to manufacture arc and spot welding robots suitable for automobile
 13

manufacturing applications. During the year, company undertook to set up a

joint venture with Asian Glass Co. Ltd., Japan to manufacture float glass to be
used as wind shields for automobiles. ACC along with Tata Exports Ltd.,
participated in the joint venture. The joint venture named as Floathlass India
Ltd., the Company would have a stake of 16.33%. Tata Cummins Ltd.,
Mercedes-Benz (India) Ltd., Tata Holset Ltd., Tata Precision Industires,
Singapore and Nita Company Ltd., are the joint Ventures of the Company

Taking advantage of the broad banding policy announced by the Government

of India, the Company entered into a collaboration agreement with Honda
Motor Co. Ltd., Japan, for the manufacture of their `ACCORD' model of cars
in India.
On 22nd April, an agreement was entered into between Daimler-Benz AG and
Mercedes Benz AG, Germany to setup a joint venture company Mercedez-Benz
India to manufacture `E' class paneyer cans and engines in India.
During the year 1995 a new double pick-up and Army Version of various
Telco-Vehicles were developed. A new petro engine and turbo diesel engine, an
up-graded 709 LCV, new sports utility vehicle Safari expected to be launched
shortly. A 25 tonne 6 X 2 truck and a bus with cummins engine were launched.
Tata Engineering and Locomotive Company (TELCO), has acquired a second
hand paint shop, machine line and cylinders from the Australian unit of the
Japanese auto giant, Nissan. TELCO is believed to have picked up the unit for
Rs. 70 crore. The total cost of import duty would be Rs 100 crore. During the
year a machine tool division was expanded so as to double its machine building
capacity and significantly reduce production times.

The Company has launched "TATA SAFARI" in its Multi utility vehicle
segment. Tata Holset's turbo charger plant inaugurated on November 25, 1996.
In 1997, the Tata Engineering and Locomotive Company Ltd. (TELCO) has
emerged as numero uno in the Review 200 survey conducted by the Far
 14

Eastern Economic Review in association with Citi Bank. The Company

introduced a 9-tonne vehicle which was well received in the market. A 40
tonne tractor trailer powered by a Tata Cummins Engineering was introduced.
The Company developed a low floor bus chassis to meet the specific needs of
urban transport. The Company signed a new agreement with Hitachi for
manufacture of upgraded versions of existing range of excavators.

The year 1998- Tata Engineering and Locomotive Company Ltd (Telco)
announced a tie-up with Tata Finance Ltd and ANZ Grindlays Banks as the
official financiers for its small car "Indica" to be launched in December. Tata
Engineering Locomotive Company Ltd (Telco) sold its construction equipment
business into a new subsidiary company, Telco Construction Equipment
Company Ltd. The Company in its small car segment has launched "Tata
Indica" which evoked an overwhelming response in the Indian market. A new
range of cummins engine powered vehicle which include a 35 tonne and a 40
tonne articulated truck and two variants of buses.
To make substantial improvement in the quality of bus bodies available with
TATA vehicles, the Company encouraged collaboration between Fuji Heavy
Industries of Japan and the Automobile Corporation of Goa. The new project
undertakes production of bodies on TATA chassis, conforming to the most
exacting international standards. Concorde Motors Ltd., a Joint Venture
between Tata Engineering and Jardine International Motors (Mauritius) Ltd.
was appointed as dealer for the Company's passenger cars in several cities
across the country, in Feb 1998.

The year 1999-Telco became the first Indian manufacturer to offer commercial
vehicles meeting euro-I emission norms, a year before they are due to be
introduced in the country. It is proposed to make TCECL a one-stop shop for
construction equipment and earthmoving machinery. In Oct 1999, the
Company won the National award for R&D Efforts in Development of
 15

Indigenous Technology in the Mechanical Engineering Industries Sector

instituted by Department of Scientific and Industrial Research, Ministry of
Science and Technology for the year 1999. SKF Bearings India Ltd has signed
an agreement with Telco to supply hub bearings for its latest model

Tata Indica.
2000 saw the Company working towards introducing two new petrol-driven
variants of its small car Indica, powered by a multi-point fuel injection engine.
The Company launched the Indica 2000, the Euro II Complaint, 75 BHP
multi-point fuel injection (MPFI) version of Indica. The Company has won
the National Technology Award for indigenous development and
commercialization of the Tata Indica car. The Company has launched its new
hi-tech Indica 2000 car with MPFI petro engine in Guwahati.
Tata Engineering & Locomotive Co. is renamed as Tata Engineering Ltd. It
replaced its three-shift production line with a one-shift daily schedule starting
from 26th June. In the same year FICCI-SEDF- Businessworld-Compaq award
for social responsiveness was awarded to the company. The Central Pollution
Control Board for Environmental Technology award has been presented to
Tata Engineering in recognition of its contribution towards efforts to conserve
the environment. TATA Engineering on September 10 announced the addition
of MPFI petrol version to the Indica V2 range.

In year 2002 Foreign Institutional Investors (FII) hike stake in the company to
13.34% Launches six new products in light, medium and heavy vehicles
segments on Jan 15 during Auto Expo . Announces financial restructuring .
Displays its Tata Sedan car at the Geneva Motor Show . Indica adjudged top
selling B-segment car in 2002.Launches two new motorsport cars (The Zero
and Double Zero Pace cars). High Court Approves Tata Engineering's
Financial Restructuring. Tata Engg, BPCL tie up to market co-branded
lubricants.Tata Steel's investment in Tata Engineering has been hiked to Rs
 16

117.98 crore over the last year. Telco names Sedan as Tata Indigo.Unveils
'EX' series of medium and heavy commercial vehicles. Indica sales cross two-
lakh mark .Collaborates with Nippon-Arcelor for technical knowhow on CR
steel. Receives Teri's (The Energy and Resources Institute) CoRE-BCSD
(Corporate roundtable on development of strategies for sustainable
development and
environment-business council for sustainable development) corporate social
responsibility (CSR) awards for '01-02. Unleashes Safari's petrol version;
priced at Rs 9.35 lakh.

The year 2003- Tata Unveils CityRover .Tata Motors Ltd signed a binding
Memorandum of Understanding (MoU) with Deawoo Commercial Vehicle
Company Ltd (DWCV), Korea for the acquisition of this company. It
introduces Tata SFC 407 EX Turbo Light Commercial Vehicle (LCV). The
Company changed from 'TELCO ' to 'TATAMOTORS' w.e.f December 24,
2003. In the same year Tata Safari ranks No 1 in MUV/SUV segment.
2004:- The year of glory. Tata Motors launch an upgraded version Indica on
January 15, 2004, in a bid to shore up sales of the small car.
Auto Expo: Tata unveils new version of Indica. Tata Motors unveils Indica
V2. Tata Motors launches new Indica V2 in Kerala. Tata Motors introduces
new 'Indicab' for tour operators. The much hyped Rs one lakh passenger car
project of Tata Motors was going ahead as planned. Tata Motors enters
agreement with Ukraine bus building firm. Tata Motors enters into agreement
with Etalon. In a move to consolidate its presence in the light commercial
vehicles segment, Tata Motors has launched a new variant of its 407 series
with increased pay load capacity called SFC 407EX. Tata Motors buys
Daewoo truck unit for Rs 465 crore. Tata Motors unveils Tata SFC 407 EX.
Tata Motors inks agreement with Austrian, French companies. Acquires
Daewoo Commercial Vehicle Company Ltd (DWCV), Korea. Tata Motors
 17

launches most anticipated new 6-tn truck in India.

Tata Motors, the country's largest commercial vehicles manufacturer unveiled
the new LPT 909EX Turbo Truck in Tamil Nadu. Tata Motors and Tata Africa
unveiled a range of passenger cars, utility vehicles, pick-ups, trucks and buses
for the South African market. Tata Motors has launched a face lifted version of
its multiutility vehicle, Tata Sumo. Tata motors rolls out Tata SFC 407EX BS
II turbo light commercial vehicle.

Tata Motors unveils Tata Safari DICOR in Kerala market on August 11,
2005. Tata Motors rolls out 2 luxury variants of Indigo. Tata Motors unveiled
new Indica V2 Turbo with a price tag of Rs 4.10 lakh for DLG variant and Rs
4.31 lakh for DLX. Tata Motors ropes in CVTech to make parts for its small
car. Tata Daewoo inks pact with Pakistan co.
Tata Motors has been presented the Golden Peacock Global Award for
Corporate Social Responsibility (CSR) in the Large Business category by the
Institute of
Directors in 2007. Tata Motors buys Nissan facility in S. Africa. Tata Motors
has got a prestigious order from the Delhi Transport Corporation (DTC) for
500 non-AC, CNG-propelled buses. Tata Motors Ltd has appointed Mr. P M
Telang as Executive Director (Commercial Vehicles).
 18

2) Current Scenario

PERFORMANCE OF COMPANY DURING 2008-09

Company Performance in Domestic CV Segment

Q4 FY08- Q4 FY07- Change FY08-09 FY07-08 change

09 08
M/HCVs 17,971 43,882 (59.0)% 86,704 112,440 (22.9)%
LCVs 31,575 38,686 (18.4)% 108,488 102,873 5.5%
Total CVs 49,546 82,568 (40.0)% 195,192 215,313 (9.3)%

Impacted by severe liquidity crunch and slowing economy CV domestic sales

volumes decreased by 40% y-o-y to 49,546 units in Q4FY2008-09 as compared
to 82,568 units in Q4FY2007-08.

CV market share increased by 420 basis point at 67.0% for the quarter; from
62.8% in Q4FY2007-08.
 19

CV industry registered a substantial volume decline of 43.9% during

Q4FY2008-09. In a challenging environment of non-availability of vehicle
financing, high interest rates and, lower industrial growth and contraction of
freight traffic, MHCV market recorded a decline of 61.3% y-o-y during the
quarter and LCV’s declined by 24.3%. Truck market recorded a decline in
sales in Q4FY2008-09 over corresponding period of last year. The industry
volumes in the MHCV truck segment declined by 65.2% y- o-y, while industry
volumes in the LCV truck segment declined by 31.7% y-o-y during
Q4FY2008-09.
TML’s volume in MHCV truck market declined by 62.8% during the quarter
(Oct- Dec’08) compared to the corresponding period in the previous year.
However TML’s market share in the MHCV truck market increased from
65.6% in Q4 FY2007-08 to 69.9% Q4 FY2008-09.
TML performance in MHCV bus market saw a decline of 19.0% in Q3FY09;
however, on the other hand LCV bus market saw growth of 44.9% in Q3FY09
compared to corresponding period last year driven by the success of ACE
Magic and Winger. Tata Motors’ market share increased substantially from
68.5% in Q4FY2007- 08 to 86.3% in Q4FY2008-09 in LCV passenger carrier
segment.
During an extremely challenging quarter Tata Motors has improved its market
share position across every CV category on the back of its product network
strength as well as the financing support of TMF and Tata Capital.
Government’s fiscal stimulus package, RBI’s easy monetary policy and the
diesel price reduction are expected to moderately help demand generation
 20

Passenger Vehicle Segment

Q4 Q4 Change FY2008- FY2007- change

FY2008- FY2007- 09 08
09 08
Small Car 25,273 31,643 -20.1% 74,829 100,110 -25.3%
Entry Mid- 9,765 5,746 69.9% 36,453 20,059 81.7%
size
Car
UV 6138 11,269 -45.5% 27,821 30,967 -10.2%
Fiat 1,011 626 61.5% 3,404 2,339 45.5%
Total PV 42,187 49,284 -14.4% 142,507 153,475 -7.1%

Passenger Vehicle Market Shares (India)

Q4 FY2008-09 Q4 FY2007-08 FY2008-09 FY2007-08

Small Car 12.6% 13.6% 11.8% 15.2%
Entry-level 29.6% 29.9% 34.3% 30.4%

Mid-size Car
UV 15.8% 18.6% 17.3% 18.2%
Total PV 13.2% 12.9% 13.2% 13.9%

Domestic passenger vehicle sales stood at 42,187 (including 1,011 Fiat

vehicles) during Q4FY2008-09; down by 14.4% y-o-y. Market share of Tata
Motors vehicles stood at 12.9% in Q4FY2008-09. The passenger vehicle
industry registered a volume decline of 16.5% during Q4FY2008-09, primarily
due to, unavailability of finance, and high interest rates and high fuel prices.
 21

Utility vehicle segment declined the most

by 35.8%, Impacted by the ad-hoc duty imposed on this segment in July. In this
scenario the Company tried to arrest the decline through new products and
increased support of the captive financing entity. In Passenger vehicle industry,
Tata Motors’ (including FIAT) market share increased
from 12.9% in Q4 FY2007-08 to 13.2% in Q4FY2008-09 In the Small car
segment, following the successful launch of Indica Vista in August FY2008-
09 and increasing sales of FIAT vehicles, Tata Motors’ (including FIAT)
market share improved from 11.4% in H1 FY2008-09 to 12.6% in Q3.
However, TML growth in this segment was limited by the ramp up capability
of production. The entry-mid size car segment continued to clock a healthy
growth. TML maintained its strong market position due to continued positive
response to Indigo CS and TATA INDICA VISTA.

In the Utility Vehicle segment, Tata Motors market share declined from 18.6%
in Q4FY2007-08 to 15.8% in Q4FY2008-09 due to competitive pressures. Fiat
volumes for FY2008-09 were 3,404 a growth of about 45.5%. Combined Tata-
Fiat market share in the overall PV industry stood at 13.2% for the nine month
period Apr- Dec’08. Tata Motors celebrated the 10th anniversary of the launch
of the Indica on December 30, 2008. To mark this milestone, a 10th
Anniversary Limited Edition Indica Vista was launched.
 22

Porter's five forces analysis is a framework for the industry analysis and
business strategy .It uses concepts developed in Industrial Organization
economics to derive five forces, which determine the competitive intensity and
therefore attractiveness of a market.
The Five Forces:

1. The threat of substitute products-As we know the Indian customers

choices range from mileage, pick-up, power steering to various other things so
substitute is very important aspect in this industry as other product available in
the market may act as the substitute to the brands own existing product.
2. The threat of t5he entry of new competitors-New completion from the new
entrant or from existing company is also highly potent force which a company
must have to take care of for its market share and growth.
3. The intensity of competitive rivalry-The very effective way of putting
competitor out of track is pitching new vibrant products in the market so a
company must be aware of this tactics by its rival company so that it can cater
the effect.
4. The bargaining power of customers-Another important aspect for a car
or auto company where they have to manage the pricing control of their
product to spurt the sales in the market.
5. The bargaining power of suppliers- The distribution channel is very
important in country like India where the demand is highly different with
all across its dimension so, supply is very much required in the industry for a
company.
 23

Organization Structure

The Board: No separate office is maintained for the Non-Executive Chairman.

Being the Group Chairman, the Company does not reimburse expenses
incurred by the Non-Executive Chairman for maintenance of a separate
Chairman’s office.
No specific tenure has been specified for the Independent Directors. Mr Setna
and Mr S A Naik, Independent directors, have tenures, in the aggregate,
exceeding a period of nine years.
 24

Remuneration Committee: Details are given under the heading

‘Remuneration Committee’. Shareholder Rights: A half yearly declaration of
financial performance, including summary of significant events in the last six
months, is sent to all the shareholders. The Financial Results are also put up on
the Company’s website, besides being available on the SEBI’s website
www.sebiedifar.nic Audit Qualifications: During the year under review, there
was no audit qualification in the Company’s financial statements. The
Company continues to adopt best practices to ensure a regime of unqualified
financial statements.

Training of Board Members: The Directors interact with the management in

a very free and open manner on information that may be required by them on
orientation and factory visits. The independent Directors are encouraged to
attend training programmes that may be of relevance and interest to the
Directors in discharging their responsibilities to the Company’s stakeholders
under the emerging business environment.

Mechanism for evaluation of non-executive Board members: The

performance evaluation of non-executive members is done by the Board
annually based on criteria of attendance and contributions at Board/ Committee
Meetings as also role played/ contributions other than at Meetings.
 25

Whistle Blower Mechanism: The Audit Committee had, at its Meeting held
on August 9, 2004, framed a Whistle-Blower Policy and the same was
reviewed and amended by the Audit Committee on January 19,2009. The
Policy provides a formal mechanism for all employees of the Company to
approach the Management of the Company (Audit Committee in case where
the concern involves the Senior Management) and make protective disclosures
to the Management about unethical behaviour, actual or suspected fraud or
violation of the Company’s Code of Conduct or ethics policy. The Whistle
Blower Policy is an extension of the Tata Code of Conduct, which requires
every employee to promptly report to the Management any actual or possible
violation of the Code or an event he becomes aware of that could affect the
business or reputation of the Company.
 26

JOINT VENTURES

Fiat-Tata
Fiat Group Automobiles and Tata Motors formed an industrial joint venture in
Ranjangaon, Maharashtra, India, to produce passenger vehicles, engines, and
transmissions for the Indian and international markets.

Tata Marcopolo
Tata Marcopolo Motors Limited (TMML) is a 51:49 joint venture between
Tata Motors Ltd. (TML) India and Marcopolo S.A., a Brazillian company for
bus production in India.The joint venture develops mass rapid transportation
systems by manufacturing and assembling fully constructed buses and coaches.
It relies on Tata Motors' technology and expertise in chassis and aggregates, as
well as Marcopolo's expertise in bodybuilding and bus body design processes
and systems. Tata Marcopolo has introduced a low-floor city bus that is already
in use by many Indian cities' public transportation systems. The company's
manufacturing facility is in Dharwad, Karnataka, India.

Tata Hitachi Construction Machinery

It is a venture between Tata Motors and Hitachi for manufacturing excavators
and other construction equipment. The company was formerly known as
Telcon Construction Solutions.

Hyundai-Tata
Tata Motors partnered with Hyundai to develop the transmission for the Tata
Harrier.
 27

Tata Motors European Technical Centre

Tata Motors European Technical Centre PLC (TMETC), headquartered in

Coventry, UK, is a wholly owned subsidiary of Tata Motors. TMETC is an
active participant in a number of collaborative ventures in low carbon
technology, as well as electric and hybrid vehicle technologies for future
passenger and light commercial vehicles, as a centre of excellence for
automobile design and engineering.

JUSTIFICATION OF THE TOPIC

Tata Motors is chosen for this study because it is an indigenous company with a
global presence and is one of the best car manufacturing companies in India.
Furthermore, as a result of the global economic slowdown in the automotive
market, the company is currently operating at a loss.

REVIEW OF LITERATURE

• National Reviews
• International Reviews
 28

TITLE AUTHOR DESCRIPTION

A Study on Financial A. Moses Joshuva Daniel Using a variety of financial instruments, this study examined
Status of Tata Motors Ltd TATA MOTORS LTD's overall financial situation. The research
was carried out over a five-year period, from 2006-07 to 2010-11.
Various accounting ratios have been used to measure financial
status in terms of profitability, solvency, operation, and financial
stability. (Daniel, 2013) found that that the company’s financial
performance is satisfactory. The business is growing steadily and
has a higher status in all of the markets where it operates.

Financial Analysis Suman

of Tata
RanaMotors & Maruti Suzuki
In this study the financial statement of Tata Motors & Maruti
Suzuki was examined using ratio analysis from 2013-14 to 2017-
18. In comparison to Maruti Suzuki, Tata Motors had a greater
capacity to pay liabilities. Maruti Suzuki has a high debt-to-equity
ratio, indicating the company's poor performance. Maruti Suzuki
has a higher inventory turnover ratio, indicating that stock is
selling quickly.
Tata Motors has lower earnings per share than
 29

REVIEW OF LITERATURE

National Reviews

Profitability Analysis Of Dr. K. Gandhi They discovered that Tata Motors' net profit decreased during the study
Select Companies In period, while Mahindra and Mahindra's profit increased significantly.
India – With Special The operating profit ratio and return on investment of the sample
Reference To Tata companies did not show any major variations in the ANOVA test.
Motors And Mahindra
And Mahindra (Gandhi, 2017)

A Study on Profitability Dr.M.S.Ranjithkumar This research aims to determine the determinants of profitability in the
Analysis of Indian C.Eahambaram Indian automotive industry by examining a sample of all automobile
Selected Automobile firms from different segments of the industry. They discovered that
Industry in India improvements could be made to the industries' liquidity positions in
order to boost profitability. As a result, liquidity has an effect on
profitability.

(Ranjithkumar, et al., 2018)

Liquidity and Vikas Garg Pooja (Garg, 2018) found out that in terms of operating profit ratio, net profit
Profitability Analysis of Tewari Shalini Srivastav ratio, and gross profit ratio, Maruti Suzuki India was doing
Selected Automobile exceptionally well. Mahindra and
Companies Mahindra's return on net worth and long-term
 30

Financial Performance Of Kanagavalli G. Using ratio analysis, the paper analyses the
Selected Automobile Companies financial results of major selected automobile
companies over a five-year period from 2013
Saroja Devi Rajendran
to 2017. The study's aim is to assess and
compare the financial results of three
companies in order to rank their financial
performance. After examining all of the
factors relevant to this study, they concluded
that TVS Motors and Bajaj Auto are
satisfactory, while Hero Motocorp maintains
a strong market position.

(Kanagavalli, et al., 2018)

Financial Analysis Of Indian Dr. Nishi Sharma (SHARMA, 2011) examines the
financial

Automobile Industry performance of selected units

using 11

financial variables that reflect four

different

parameters of the organization:

liquidity,

profitability, activity, and long-term solvency.

The paper also tries to figure out if

the

success of different firms is identical

or

whether there is a major difference

between

them. It also assigns various companies ranks

based on their results and recommends some

steps for the sector's further progress.

 31

A Study On Comparative Financial T.Bhargavi K.S.G.Chandravath Dr.
Statement Analysis On Hero Motor K.Veeraiah
Crop.
(BHARGAVI, et al., 2020) found that the
companies passivities are more than their
assets and that the business has a good
working capital position and can meet its
contractual obligations.

A Study on Financial Statement Dr. Ashok Kumar Rath The objective of this paper is to evaluate the
Analysis of Tata Steel Odisha Project, financial strength and weaknesses of the
Kalinga Nagar Tata Steel Orissa project using various
financial statement analysis methods and
techniques during the study period, which is
from 2010- 11 to 2014-15.

(Rath, 2016)

A Study On Financial Performance Dr. M. Ravichandran This study aims to identify the individual
Analysis Of Force Motors Limited ratios that influence market profitability and
to categorize the financial ratios into a small
M. Venkata Subramanian
number of latent variables that represent a
compact view of financial performance over
time. The financial performance is fair,
according to the study. It has maintained
strong financial results and can gain more if
the business focuses on its operating,
administrative, and marketing expenses, as
well as on cutting costs.

(Ravichandran, et al., 2016)

 32

A Study On Financial Analysis Of J.Pavithra, Dilip Gurukrishnan The project's goals are to identify BSNL's
BSNL various assets in relation to the company's
annual reports.

To investigate the finance department's

operations through a comparison of past
two- year annual reports.

(J.Pavithra, et al., 2018)

A Study On Financial Performance S.Saigeetha and Dr.S.T.Surulivel This paper took the analysis of Bharat
Using Ratio Analysis Of BHEL, Trichy Heavy Electricals Limited’s financial
performance to assess the cash fluctuations
in profitability and BHEL's liquidity status.

(S.Saigeetha, et al., 2017)

A Study On Financial Analysis Of Tata Dr. G. Prabhakaran Miss. J. Nazirin (Prabhakaran, et al., 2014) looked at
Motors Ltd., Navi Mumbai India Banu TATA Motors' entire financial picture,
including liquidity, financial ratios, activity,
profitability and solvency. The research
only spans seven years, from 2006–07 to
2012–13.

the study has been conducted
considering the various vehicle
Study on investment purpose
the author tries to examine the qualities Kaur Harpreet (2016)
& quantities performer of maruti Suzuki
co.
33
Shinde Govind P. & Dubey
Manisha (2011)
the study has been conducted
considering the segments such as
passenger vehicle, commercial vehicle,
utility vehicle, two and three wheeler
vehicle of key players performance and
also analyze SWOT analysis and key
factors influencing growth of automobile
industry.
• Investing the impact of price
Dhole Madhavi (2013)
movement of share on selected company
performance. It advise due investors
consider various factors before choosing
the better portfolio. Sentimental factors
do play a role in price movement only in
short term but in long run annual
performance is sole factor responsible
for price movement.
the author tries to examine the qualities
& quantities performer of maruti Suzuki
co. & how had both impact on its market
share in India, For this study secondary
data has been collected from annual
reports, journals, report automobile sites.
Result shows that MSL has been
successfully leading automobile sector
in India for last few years.
 34

International Reviews

TITLE PARTICULARS DESCRIPTION

Financial Statements Analysis On Anupam Mehta Ganga Bhavani (Mehta, et al., 2018) found that while the
Tesla company's Gross Profit was rising in
absolute terms, when measured as a
percentage of revenue, it had declined
from 23 percent in 2015 and 2016 to 19
percent in 2017. Higher maintenance,
research and development, general, selling
and administrative expenditures have all
contributed to the company's Net Loss.

Financial Analysis Of A Dušan BARAN, Andrej PASTÝR, (BARAN, et al., 2016) revealed that
Selected Company Daniela BARANOVÁ financial analysis is an important tool for
supporting the decision-making of
different stakeholder groups and is an
important part of monitoring the company
subject. It also provides a picture or input
on the overall state of the company subject
and its growth, as well as the state of
individual activity areas.

Role of Ratio Analysis in Business Mohammed Nuhu The aim of this study was to determine the
Decisions: A Case Study NBC role of ratio analysis in business decisions.
Maiduguri Plant They came to the conclusion that ratio
analysis aids in the discovery, comparison,
and interpretation of key features of
financial statements. They aid in
determining a
company's strengths and weaknesses. It
aids
 35

Liquidity-Profitability Relationship in Afia Akter , Khaled Mahmud The relationship between liquidity as
Bangladesh Banking measured by the current ratio and
Industry profitability as measured by the return
on assets in Bangladesh's banking
industry was investigated in this report,
which looked at twelve banks from four
different sectors. They concluded that
there is no significant relationship
between liquidity and profitability in
Bangladeshi banks of various sectors
based on their sample and category.

(Akter, et al., 2014 )

Relationship Between Working Capital Ioannis Lazaridis and Dimitrios (Lazaridis, et al., 2006) Investigated the
Management And Profitability Of Listed Tryfonidis relationship of corporate profitability
Companies In The Athens Stock and working capital management for
Exchange firms listed at Athens Stock Exchange.
They reported that there is statistically
significant relationship between
profitability measured by gross
operating profit and the Cash
Conversion Cycle. Furthermore,
Managers can create profit by correctly
handling the individual components of
working capital to an optimal level.
 36

Trade-Off between Liquidity and A. Nishanthini, J. Meerajancy (A. Nishanthini, 2015) Found that both
Profitability: A Comparative Study State Banks and Private Banks had an
between State Banks and Private Banks insignificant correlation between liquidity
in Sri Lanka and profitability. In addition, regression
shows that liquidity has a negative effect
on profitability in a few Sri Lankan banks.

Liquidity and Profitability Analysis on Georgeta Vintilă, Elena Alexandra The emphasis of this paper was not on
the Romanian Listed Companies Nenu testing a specific model, but rather on
examining the relationships between the
variables. Accounting metrics such as
return on assets and return on equity were
used to assess financial results. The
findings showed a negative relationship
between liquidity and financial
performance.

(Nenu, et al., 2016)

 37

RESEARCH METHODOLOGY

➢ Objectives of the Study

➢ Research Hypothesis
➢ Scope of the Study
➢ Limitation of the study
 38

RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY

▪ To analyze the financial position of the company.

▪ To make comparative study of financial statements of different years.

▪ To compare the Impact of ratios on the performance of company.

▪ decisions. This information can be used by a variety of stakeholders,

including investors, creditors, and management.

▪ Investors can use financial statement analysis to assess the profitability,

liquidity, and solvency of a company. This information can be used to make
informed decisions about whether to invest in a company.

▪ Creditors can use financial statement analysis to assess the

creditworthiness of a company. This information can be used to make informed
decisions about whether to extend credit to a company.

▪ Management can use financial statement analysis to identify areas for

improvement in the company's financial performance. This information can be
used to develop strategies to improve the company's profitability, liquidity, and
solvency.
 39

RESEARCH HYPOTHESIS

The following hypothesis was framed to conduct the analysis:-

H1 - Performance of Tata Motors Ltd. is not satisfactory.

SCOPE OF THE STUDY

This study aims at analyzing the overall financial position of the Tata Motors
by using accounting ratios. The analysis covers the years 2016-2017, 2017-
2018, 2018-2019 and 2019- 2020 for examining financial statements such as
income statements and balance sheets. The study's scope includes the
numerous variables that influence the company's financial position. The
research takes into account data from the previous four years.

LIMITATION OF THE STUDY

This study has the following limitations:

• We only analyzed last four years’ financial statements which does not
represent the whole profitability of the company.
• The data used in the analysis is based on the company's own published
past results. As a result, ratio analysis metrics are not always indicative of
future company performance. (Lim)
• Financial statements used for financial analysis are prepared based
on a going concern concept, so they do not always reflect the current
situation. (Sta)
 40

The financial statements of Tata Motors Ltd. are prepared in accordance with
Indian Accounting Standards (Ind AS) as issued by the Institute of Chartered
Accountants of India (ICAI). These standards are based on International
Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB).

As a result, the financial statements of Tata Motors Ltd. may not be directly
comparable to the financial statements of companies that prepare their financial
statements in accordance with other accounting standards. Additionally, the
financial statements of Tata Motors Ltd. are subject to inherent limitations of
financial reporting, such as the use of estimates and the recognition of events
and transactions on the basis of accrual accounting. The use of historical data:
Financial statement analysis is based on historical data, which may not be
indicative of future performance. The automotive industry is subject to rapid
changes in technology, consumer preferences, and economic conditions, which
can make it difficult to predict future performance based on past results.

• The use of estimates: Financial statements include a number of

estimates, such as the value of inventory and the depreciation of assets. These
estimates can be subjective and may be based on assumptions that are not
always accurate.

• The use of accrual accounting: Financial statements are prepared on the

basis of accrual accounting, which means that revenues are recognized when
they are earned, regardless of when cash is received, and expenses are
recognized when they are incurred, regardless of when cash is paid. This can
make it difficult to assess the company's true financial position at any given
point in time.
 41

• The lack of consideration of non-financial factors: Financial statement

analysis does not take into account non-financial factors, such as the company's
management team, its competitive position, and its reputation. These factors
can also be important in making investment decisions.

• In addition to these general limitations, there are also some specific

limitations of financial statement analysis of Tata Motors Ltd.:

• The company's complex structure: Tata Motors Ltd. is a multinational

company with a complex structure. This can make it difficult to analyze the
company's financial performance on a consolidated basis.

• The company's exposure to foreign currency risk: Tata Motors Ltd. has
operations in a number of countries, which exposes it to foreign currency risk.
This can make it difficult to predict the company's future earnings.

• The company's reliance on the Indian market: Tata Motors Ltd. is

heavily reliant on the Indian market, which is subject to economic and political
risks. This can make the company's financial performance more volatile than
that of companies that are more diversified geographically.
 42

DATA REPRESENTATION & ANALYSIS

➢ Data representation and Interpretation

➢ Hypothesis testing
 43

DATA REPRESENTATION & INTERPRETATION

2019-2020 2018-2019 2017-2018 2016-2017

Item/Year

Current Assets 1,195,835,700 1,228,275,200 1,362,648,300 1,163,336,400

Current Liabilities 1,397,398,500 1,447,750,600 1,427,782,700 1,152,886,200

Inventories 374,527,800 390,015,900 424,296,200 352,953,800

Cash 441,588,100 410,723,400 492,394,200 509,206,700

Receivables 111,726,900 189,961,700 198,933,000 140,755,500

3,140,802,100
Total Assets 2,987,119,900 3,235,937,200 2,666,646,000

Total Liabilities 2,542,767,400 2,429,052,500 2,321,989,900 2,127,803,800

Total Equity 589,801,200 552,738,700 908,589,800 534,197,000

 44

Sales 2,594,251,200 2,993,662,400 2,882,951,100 2,656,495,100

1,651,970,900
Cost of Goods Sold 1,978,855,800 1,869,682,900 1,670,895,400

-201,422,500 -203,091,700 -115,737,500 -63,956,100

EBIT

72,553,100 57,586,000 46,365,000 42,365,700

Interest

-113,940,300 -293,142,700 66,660,800 61,210,500

Net Income/Loss

*Amounts in Thousands

LIQUIDITY ANALYSIS

Liquidity analysis aims to determine the ability of a business to meet its

financial obligations during the short-term and to maintain its short-term debt
paying ability. (Thakur) The liquidity ratios answer the question of whether a
business firm can meet its current debt obligations with its current assets.
(CARLSON, 2020)

1. Current Ratio

The Current ratio is also known as working capital ratio or banker’s ratio. It
expresses the relationship of a current asset to current liabilities.

Current Ratio = Current Assets / Current Liability

 45

Current Assets Current

Financial Year Liabilities Current ratio

2020 1,195,835,700 1,397,398,500 0.85

2019 1,22,82,75,200 1,44,77,50,600 0.85

2018 1,36,26,48,300 1,42,77,82,700 0.95

2017 1,16,33,36,400 1,15,28,86,200 1.01

Current ratio
1.05

1.00

0.95

0.90
Current ratio
0.85

0.80

0.75
2020 2019 2018 2017

INTERPRETATION: Out of the four years, 2016-2017 had the highest

current ratio. As shown in the graph, it has fallen at a constant rate to 0.85. It
demonstrates how liquidity has dropped significantly since 2017, with a ratio
difference of 0.169.
 46

2. Quick Ratio

Quick ratio is also known as the Acid test ratio. The quick ratio measures
whether the firm can meet its short-term debt obligations without selling any
inventory. (CARLSON, 2020)

Quick Ratio = Current assets – Inventories / Current liabilities

Financial Current assets – Current Quick

Year Inventory Liabilities Ratio

2020 82,13,07,900 1,397,398,500 0.58

2019 83,82,59,300 1,44,77,50,600 0.58

2018 93,83,52,100 1,42,77,82,700 0.65

2017 81,03,82,600 1,15,28,86,200 0.7

Quick Ratio
0.8
0.7
0.6
0.5
0.4
Quick Ratio
0.3
0.2
0.1
0
2020 2019 2018 2017
 47

INTERPRETATION: This diagram shows the drastic fall of quick ratio of

the corporation from 0.7 to 0.28 since 2016-2017. It means that the company's
ability to meet its short-term obligations is deteriorating.
3. Cash Ratio

This ratio gives a more conservative view of the firm's liquidity since it uses
only cash and cash equivalents, such as short-term marketable securities, in the
numerator. It indicates the ability of the firm to pay off all its current liabilities
without liquidating any other assets. (CARLSON, 2020)

Cash Ratio Formula = Cash + Marketable Securities / Current Liability

Year end Total Cash Current Total

Liabilities

2020 44,15,88,100 1,39,73,98,500 0.31

2019 41,07,23,400 1,44,77,50,600 0.28

2018 49,23,94,200 1,42,77,82,700 0.34

2017 50,92,06,700 1,15,28,86,200 0.44

 48

Cash Ratio
0.5
0.45
0.4
0.35
0.3
0.25
Cash Ratio
0.2
0.15
0.1
0.05
0
2020 2019 2018 2017

INTERPRETATION: This graph shows that liquidity has declined over time
from 0.44 to 0.28, which can cause problems with bill repayment, but it has
marginally recovered in 2020.

EFFICIENCY ANALYSIS

Efficiency analysis measures activity or turnover ratios to assess how

effectively a company's assets are being used to produce revenue and increase
profit or shareholder capital. They assess the internal and short-term efficiency
of a company's operations.

Inventory Turnover Ratio

This ratio indicates how easily inventory is sold, restocked, or turned over
during the year. The inventory turnover ratio helps to see if the company is
running out of stock or has obsolete inventory.

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

 49

Financial COGS Inventory Inventory turnover

2020 1,65,19,70,900 37,45,27,800 4.41

2019 1,97,88,55,800 39,00,15,900 5.07

2018 1,86,96,82,900 42,42,96,200 4.4

2017 1,67,08,95,400 35,29,53,800 4.73

Inventory turnover Ratio

5.2

4.8

4.6
Inventory turnover Ratio

4.4

4.2

4
2020 2019 2018 2017

INTERPRETATION: In this graph, the company's operations are seen to be

inconsistent. With a rate of 4.40 in 2017-2018, it fell slightly before rapidly
rising to 5.07 and then dropping to 4.41 in 2019-2020. It demonstrates that the
company's operation has been volatile and that consistency is needed.
 50

RECEIVABLES TURNOVER RATIO

The Receivable turnover ratio also called the Debtor’s turnover ratio shows
how many times the receivables were turned into cash during the period.

Receivable Turnover Ratio = Net Credit Sales / Average Accounts

Receivable

Receivable Turnover
Year Sales Receivables
Ratio

2020 2,59,42,51,200 23.22

11,17,26,900

2019 2,99,36,62,400 18,99,61,700 15.75

2018 2,88,29,51,100 19,89,33,000 14.49

2017 2,65,64,95,100 14,07,55,500 18.87

Receivable TO Ratio
25

20

15

Receivable TO Ratio
10

0
2020 2019 2018 2017
 51

INTERPRETATION: This figure shows the average amount of time needed

to collect accounts receivables for the company has increased. The ratio fell
from 18.87 in 2016-2017 to 14.47 in 2017-2018, the lowest in the last four
years, and has since improved dramatically to 23.22 in 2019-2020, indicating
that the business is handling credit more efficiently.

PROFITABILITY ANALYSIS

Profitability ratios are the summary ratios for the business firm. When
profitability ratios are calculated, they sum up the effects of liquidity
management, asset management, and debt management on the firm.
(CARLSON, 2020)

4. Return On Equity Ratio

This ratio indicates how much money shareholders make on their investment in
the business firm. The ROE ratio is most important for publicly traded firms.

ROE = Net income / Common equity

Return on Equity
Year end Net income Equity
(%)

2020 -11,39,40,300 58,98,01,200 -19.3

2019 -29,31,42,700 55,27,38,700 -53.03

2018 6,66,60,800 90,85,89,800 7.33

2017 6,12,10,500 53,41,97,000 11.4

 52

Return on Equity (%)

20

10

0
2020 2019 2018 2017
-10

-20 Return on Equity (%)

-30

-40

-50

-60

INTERPRETATION: This figure shows that the return on equity rate has had
a massive decline since 2017 from positive 11.4% to negative 19.3%, though it
has risen marginally in 2019-2020. Its equity is performing extremely poorly.

5. Return On Total Assets Ratio

Return on assets is a financial ratio that shows the profit a company earns in
relation to its overall resources. It is commonly defined as net income divided
by total assets. Net income is derived from the income statement of the
company and is the profit after taxes. (Staff, 2021)

ROA = Net income/ Total Assets

 53

Return on assets
Year end Net income Total assets
(%)

2020 -11,39,40,300 3,14,08,02,100 -3.6

2019 -29,31,42,700 2,98,71,19,900 -9.81

2018 6,66,60,800 3,23,59,37,200 2.06

2017 6,12,10,500 2,66,66,46,000 2.2

Return on assets (%)

4
2

0
2020 2019 2018 2017
-2

-4 Return on assets (%)

-6
-8

-10

-12

INTERPRETATION: This graph shows that the company's return on total

assets ratio has deteriorated significantly over the last few years. It was stable
in 2017 and 2018 before it fell to
3.62 percent, indicating that the company's assets are not being used
efficiently to generate profit.
 54

6. Profit Margin Ratio

The net profit margin is a profitability ratio that expresses the profit from
business operations as a percentage of revenue or net sales. It compares a
company's profits to the total amount of money it brings in. It measures how
effectively a company operates. (CARLSON, 2020)

Net profit margin ratio = Net income / Net Sales

Profit margin
Year Net Income Sales
(%)

2020 -11,39,40,300 2,59,42,51,200 -4.3

2019 -29,31,42,700 2,99,36,62,400 -9.7

2018 6,66,60,800 2,88,29,51,100 2.31

2017 6,12,10,500 2,65,64,95,100 2.30

Profit margin (%)

4

0
2020 2019 2018 2017
-2

-4 Profit margin (%)

-6

-8

-10

-12
 55

INTERPRETATION: This figure indicates that the business made a profit in

2017 and 2018, with a consistent rate of 0.023. While they were able to
maintain a consistent profit margin for two years, it plummeted in 2019 to -
0.97, rising slightly in 2020 to -0.043, indicating a significant shift in the profit
margin as seen in the chart.

LEVERAGE ANALYSIS
Here we measure how leveraged the company is and how it is placed with
respect to its debt repayment capacity.

7. Fixed Interest Coverage Ratio

This ratio measures how well a business can service its total debt or cover its
interest payments on debt. It is used to measure business profitability and its
ability to repay the loan.

Interest coverage ratio = Earnings before interest and taxes (EBIT) /

Interest expense

Financial EBIT Interest Interest Coverage

Year Ratio

2020 -20,14,22,500 7,25,53,100 -2.78

2019 -20,30,91,700 5,75,86,000 -3.52

2017 -6,39,56,100 4,23,65,700 -1.5

2018 -11,57,37,500 4,63,65,000 -2.49

 56

Interest Coverage Ratio

0
2020 2019 2018 2017
-0.5

-1

-1.5

-2 Interest Coverage Ratio

-2.5

-3

-3.5

-4

INTERPRETATION: This figure shows that the company’s ability to make

contractual interest payments is massively negative and decreasing. From
negative 1.50 in 2017 to negative 2.78 in 2020 which shows that the company
isn’t in a good position to make payments.

8. Debt Ratio

The debt-to-asset ratio shows the percentage of total assets that were paid for
with borrowed money, represented by debt on the business firm's balance
sheet. It is an indicator of financial leverage or a measure of solvency. It also
gives financial managers critical insight into a firm's financial health or
distress. (CARLSON, 2020)

Debt Ratio = Total Liabilities / Total Assets

 57

Year Total Liabilities Total assets Debt Ratio

2020 2,54,27,67,400 3,14,08,02,100 0.809

2019 2,42,90,52,500 2,98,71,19,900 0.813

2018 2,32,19,89,900 3,23,59,37,200 0.717

2017 2,12,78,03,800 2,66,66,46,000 0.797

Debt Ratio
0.84

0.82

0.8

0.78

0.76

0.74 Debt Ratio

0.72

0.7

0.68

0.66
2020 2019 2018 2017

INTERPRETATION: This figure shows the proportion of total assets

financed by Tata Motor’s creditors. The debt ratio is at its highest in 2019 and
lowest in 2018. It shows that debt- financed is more now.
 58

HYPOTHESIS TESTING

H1 - Performance of Tata Motors Ltd. is not satisfactory.

Ratio 2017 2018 2019 2020 Mean

Current Ratio 0.85 0.85 0.95 1.01 0.915

Quick Ratio 0.58 0.58 0.65 0.7 0.6275

Cash Ratio 0.31 0.28 0.34 0.44 0.3425

Inventory 4.41 5.07 4.4 4.73

Turnover Ratio 4.6525

Receivable 23.22 15.75 14.49 18.87

Turnover Ratio 18.0825

Return On -19.3 -53.03 7.33 11.4

Equity (%) -13.4%

Return On -3.6 -9.81 2.06 2.2

Total -2.2875%
Assets (%)

Profit Margin (%) -4.3 -9.7 2.31 2.3 -2.3475%

Fixed -2.78 -3.52 -2.49 -1.5

Intere -2.5725
st Coverage Ratio

Debt Ratio 0.809 0.813 0.717 0.797 0.784

 59

INTERPRETATION

In general, a current ratio of 2:1 is considered ideal, while a quick ratio of 1:1 is
considered ideal. The fact that the average current ratio is less than one
indicates that the company is unable to meet its short-term obligations. The
company's quick ratio indicates that it is cash-strapped. The company's cash
ratio reflects that too. Overall, the company's liquidity situation is very poor.

The profitability ratios of the company are negative; indicating that the
company’s income is less than its expenditure, implying that the company is
making losses.

Tata Motors has a negative fixed interest coverage ratio, which is concerning
because it indicates that the company is having trouble servicing its debt.
Furthermore, the company's debt ratio is greater than 0.5, implying that debt is
used to fund the company's assets.

From the above findings we can conclude that the performance of the company
is not satisfactory.
 60

RESULTS & DISCUSSION

➢ Major Findings
➢ Discussions and Suggestions
➢ Conclusion
 61

RESULTS & DISCUSSION

MAJOR FINDINGS

At this stage, the financial analysis has been done in order to draw some broad
conclusions about Tata Motors Limited results. One of the most important
things to understand about financial analysis is that the financial statements
provide all of the details needed to make a definitive decision about what is
going on in the business. From the brief explanation and illustrations of four
years, financial statements of Tata Motors have been used to analyze the
financial performance for the years under study (2016-2019).

PROFITABILITY ANALYSIS

• Net profit margin which measures how profitable a company’s sales are
after deducting all expenses interest, taxes & preferred stock dividends
declines from 2.3% to -4.3% during the given period, which implies
lower level of profitability of company.

• Return on total assets is a pure measure of the efficiency of a company in

generating returns from its assets. So here there are declines from 2.2%
to -3.6% during the given period, which shows negativity of the
profitability of the company.

• Return on equity which measures the returns earned on the common

stock holder’s investment in the company which is decrease from 11.4%
to -19.3% within given periods. This indication reflects the bad
performance of the management on the invested financial resources.
 62

• The overall performance of TATA motors regarding profitability was

bad, despite the fact that the company's customer base was increasing.

LIQUIDITY ANALYSIS

• In the year 2017 the company had the current ratio 1.01 which is highest
but since then it has fallen. It demonstrates how liquidity has dropped
significantly since 2017, with a ratio difference of 0.169.

• Since 2016-2017, the corporation's quick ratio has dropped dramatically

from 0.7 to 0.28. It indicates that the firm's ability to fulfill short-term
obligations is declining.

• The company’s cash ratio which measures its ability to cover its short-
term obligations using only cash and cash equivalents has also declined
from 0.44 to 0.31.

Overall the liquidity position of the company is not good.

EFFICIENCY ANALYSIS

In terms of Inventory turnover ratio, the company's operations are seen to be

inconsistent indicating that company's operation has been volatile and that
consistency is needed.

• The receivable turnover ratio fell from 18.87 in 2016-2017 to 14.47 in

2017-2018, the lowest in the last four years, and has since improved
dramatically to 23.22 in 2019-2020, indicating that the business is
 63

handling credit more efficiently.

LEVERAGE ANALYSIS

• Fixed interest coverage ratio shows that the company’s ability to make
contractual interest payments is massively negative and decreasing.
From negative 1.50 in 2017 to negative 2.78 in 2020 which shows that
the company isn’t in a good position to make payment

• A debt ratio greater than 1.0 tells you that a company has more debt than
assets. A debt ratio less than 1indicates that a company has more assets
than debt. (HAYES, 2021) The debt ratio has increased over the years
indicating that the business now has more debt.

DISCUSSIONS & SUGGESTIONS

From the above findings we can say that the company is making losses or,
more accurately, decreasing its profitability, but it has promising potential
prospects. To avoid meeting tough financial conditions in the future, it must
closely monitor prices, reduce expenditures, and manage its finances.
 64

Conclusion

To conclude, the Tata Motors Company has maintained its influence on the
industry. We can see Tata Motors' downfall, but it is expected to rebound
because it is such a big company. We can see from this study that Tata Motors’
willingness to make contractual payments has been severely harmed. Looking
at all four years, 2016-2017 is regarded as the strongest financial year of the
four. Company had the highest current and quick ratio in 2016-2017, and the
rate has since fallen, indicating that liquidity has declined over time. It is
expected that the company will rebound from the loss if its assets are well
managed and its debts are adequately financed.
 65

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 71

ANNEXURE

INCOME STATEMENT

Consolidated Profit & Loss ------------------- in Rs. Cr. -------------------

account
Mar 20 Mar-19 Mar-18 Mar-17

12 months 12 months 12 months 12 months

INCOME
Revenue From Operations 2,58,594.36 2,99,190.59 2,89,386.25 2,70,298.08
[Gross]
Less: Excise/Service Tax/Other 0 0 790.16 4,799.61
Levies
Revenue From Operations [Net] 2,58,594.36 2,99,190.59 2,88,596.09 2,65,498.47
Other Operating Revenues 2,473.61 2,747.81 6,023.09 4,194.04
Total Operating Revenues 2,61,067.97 3,01,938.40 2,94,619.18 2,69,692.51
Other Income 2,973.15 2,965.31 888.89 754.54
Total Revenue 2,64,041.12 3,04,903.71 2,95,508.07 2,70,447.05
EXPENSES
Cost Of Materials Consumed 1,52,671.47 1,81,009.08 1,71,992.59 1,59,369.55
Purchase Of Stock-In Trade 12,228.35 13,258.83 15,903.99 13,924.53
Operating And Direct Expenses 4,188.49 4,224.57 3,531.87 3,413.57
Changes In Inventories Of
FG,WIP And 2,231.19 2,053.28 -2,046.58 -7,399.92

Stock-In Trade
Employee Benefit Expenses 30,438.60 33,243.87 30,300.09 28,332.89
 72

Finance Costs 7,243.33 5,758.60 4,681.79 4,238.

01
Depreciation And Amortization

Expenses 21,425.43 23,590.63 21,553.59 17,90

4.99
Other Expenses 58,826.20 63,144.03 58,998.93 59,34
0.16
Less: Amounts Transfer To Capital

Accounts 17,503.40 19,659.59 18,588.09 16,87

6.96
Total Expenses 2,71,749.6 3,06,623.30 2,86,328.18 2,62,2
6 46.82
Profit/Loss Before Exceptional,

Extraordinary Items And Tax -7,708.54 -1,719.59 9,179.89 8,200.

23
Exceptional Items -2,871.44 -29,651.56 1,975.14 1,114.
56
Profit/Loss Before Tax - -31,371.15 11,155.03 9,314.
10,579.98 79
Tax Expenses-Continued Operations
Current Tax 1,893.05 2,225.23 3,303.46 3,137.
66
Deferred Tax -1,497.80 -4,662.68 1,038.47 113.5
7
Total Tax Expenses 395.25 -2,437.45 4,341.93 3,251.
23
Profit/Loss After Tax And Before

Extraordinary Items - -28,933.70 6,813.10 6,063.

 73

10,975.23 56

Profit/Loss From Continuing - -28,933.70 6,813.10 6,063.

Operations 10,975.23 56
Profit/Loss For The Period - -28,933.70 6,813.10 6,063.
10,975.23 56
Minority Interest -95.62 -102.03 -102.45 -102.2
Share Of Profit/Loss Of Associates -1,000.00 209.5 2,278.26 1,493.
00
Consolidated Profit/Loss After MI And

Associates - -28,826.23 8,988.91 7,454.

12,070.85 36
OTHER ADDITIONAL

INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) -35 -85 26 22
Diluted EPS (Rs.) -35 -85 26 22
DIVIDEND AND DIVIDEND

PERCENTAGE
Equity Share Dividend 0 0 0 73
 74

BALANCE SHEET

Consolidated Balance Sheet ------------------- in Rs. Cr. ----------------

---
Mar 20 Mar-19 Mar-18 Mar-
17

12 12 months 12 months 12
months mont
hs

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 719.54 679.22 679.22 679.2
2
Total Share Capital 719.54 679.22 679.22 679.2
2
Reserves and Surplus 61,491.4 59,500.34 94,748.69 57,38
9 2.67
Total Reserves and Surplus 61,491.4 59,500.34 94,748.69 57,38
9 2.67
Money Received Against Share Warrants 867.50 0.00 0 0
Total Shareholders’ Funds 63,078.5 60,179.56 95,427.91 58,06
3 1.89
Minority Interest 813.56 523.06 525.06 453.1
7

NON-CURRENT LIABILITIES
 75

Long Term Borrowings 83,315.6 70,817.50 61,199.50 60,62

2 9.18
Deferred Tax Liabilities [Net] 1,941.87 1,491.04 6,125.80 1,174.00
Other Long Term Liabilities 17,780.94 16,871.09 13,904.33 28,802.1
4
Long Term Provisions 14,736.69 11,854.85 10,948.44 9,004.46
Total Non-Current Liabilities 1,17,775.12 1,01,034.48 92,178.07 99,609.7
8

CURRENT LIABILITIES
Short Term Borrowings 16,362.53 20,150.26 16,794.85 13,859.9
4
Trade Payables 63,626.88 68,513.53 72,038.41 57,698.3
3
Other Current Liabilities 50,135.60 46,596.89 46,432.71 38,263.4
9
Short Term Provisions 10,329.04 10,196.75 7,953.50 5,807.76
Total Current Liabilities 1,40,454.05 1,45,457.43 1,43,219.47 1,15,629.
52
Total Capital And Liabilities 3,22,121.26 3,07,194.53 3,31,350.51 2,73,754.
36

ASSETS

NON-CURRENT ASSETS
Tangible Assets 84,158.17 72,619.86 73,867.84 59,594.5
6
Intangible Assets 42,171.91 37,866.74 47,429.57 35,676.2
0
Capital Work-In-Progress 8,599.56 8,538.17 16,142.94 10,186.8
3
 76

Intangible Assets Under 27,022.73 23,345.67 23,890.56 23,512.0

Development 1
Fixed Assets 1,61,952.37 1,42,370.44 1,61,330.91 1,28,969.
60
Non-Current Investments 5,446.94 6,240.89 5,651.65 5,296.77
Deferred Tax Assets [Net] 5,457.90 5,151.11 4,158.70 4,457.34
Long Term Loans And Advances 782.78 407.42 495.41 753.66
Other Non-Current Assets 28,116.96 28,845.64 23,624.55 17,483.9
2
Total Non-Current Assets 2,02,534.01 1,83,763.37 1,95,377.67 1,57,634.
61

CURRENT ASSETS
Current Investments 10,861.54 9,529.83 15,161.10 15,041.15
Inventories 37,456.88 39,013.73 42,137.63 35,085.31
Trade Receivables 11,172.69 18,996.17 28,294.95 20,885.67
Cash And Cash Equivalents 33,726.97 32,648.82 34,613.91 36,077.88
Short Term Loans And 935.25 1,268.70 2,279.66 710.45
Advances
Other Current Assets 25,433.92 21,973.91 13,485.59 8,319.29

Total Current Assets 1,19,583.57 1,22,827.52 1,36,264.83 1,16,119.7

Total Assets 3,22,121.26 3,07,194.53 3,31,350.51 2,73,754.36

OTHER ADDITIONAL

INFORMATION
CONTINGENT
LIABILITIES,

COMMITMENTS
Contingent Liabilities 15,590.75 17,148.64 13,456.66 22,591.70
 77

BONUS DETAILS
Bonus Equity Share Capital 111.29 111.29 111.29 111.29

NON-CURRENT
INVESTMENTS
Non-Current Investments
Quoted Market 316.46 726.53 36.64 285.38

Value
Non-Current Investments
Unquoted Book 711.59 770.98 727.12 405.38

Value

CURRENT
INVESTMENTS
Current Investments Quoted 0 0.92 303.28 0
Market Value
Current Investments Unquoted
Book 10,861.54 8,937.41 14,360.47 15,041.15

Value
78