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VISHISHT SCHOOL OF MANAGEMENT, INDORE
TOPIC: A STUDY ON FINANACIAL STTEMENT
ANALYSISOF TATA MOTORSL.T.D
A Dissertation Sub...
VISHISHT SCHOOL OF MANAGEMENT, INDORE
Undertaking of Originality by the Student
This is to certify that is a regular stude...
–––Certificate by the Supervisor
This is to certify that the project titled “A STUDY ON FINANCIAL STATEMENT
OF TATA MOTORS...
ACKNOWLEDGEMENT
Research Project is an important milestone in the completion of any Professional
Course. As a student of B...
PREFACE
As a part of the B.Com Tax and in order to gain practical Knowledge in the field of
management. we are required to...
Contents
i. Undertaking of Originality by the Student
ii. Certificate by the Supervisor
iii. Acknowledgement
iv. Preface
1...
INTRODUCTION:
 Project Title
 Objectives Of Project
 Methodology
 Background
 Advantages & Limitations
INTRODUCTION:
To study the progress is very important. Through this study, organization can recognize its
strengths and we...
Estatein1992(astationwagonbasedontheearlier'TataMobile'in1989),TataSumoin1994(LCV)andTata
Safariin1998(India'sfirstSUV).Af...
OBJECTIVES OF THE PROJECT:
 To analyze the financial statement of TATA Motors Ltd. from the Year 2011to2016.
 To interpr...
METHODOLOGY
Soherearevariousmethodsortechniquesthatareusedinanalyzingfinancialstatements,suchascomparative
statement,sched...
BACKGROUND:
DefinitionofFinancialStatementAnalysis
Financialstatementanalysisisdefinedastheprocessofidentifyingfinancialst...
AdvantagesofFinancialStatementAnalysis:
Thedifferentadvantagesoffinancialstatementanalysisarelistedbelow.
•Themostimportan...
5.Proponentsofthestrongeroftheefficient-markethypothesis,technicalanalyst,andbehavioraleconomist
arguethefundamentalanalys...
COMPANYPROFILE:
 The Indian Automobile Industry.
 Tata Group.
 Tata Motors.
 Policies of Tata Motors.
HISTORY OF INDIAN AUTOMOBILE INDUSTRY
Indian market before independence was seen as a market for imported vehicles while
a...
THE INDIAN AUTOMOBILE SECTOR
AlthoughIndiaisthefifthlargestautomobilemanufacturerintheworld,penetrationlevelinthecountryis...
SEGMENT WISE MARKET SHARE IN 2015-16
Domestic & Export Share
 Passenger Car -- 25468121478
 Multi Utility Vehicles -- 26...
TOP & MAJOR MANUFACTURERS IN AUTOMOBILES INDUSTRY
 TATA Motors Ltd.
 Maruti Udyog Ltd.
 General Motors India.
 Force M...
Market Size
The sales of PVs, CVs and 2Ws grew by 9.17 per cent, 3.03 per cent and 8.29 per cent
respectively, during the ...
internet of things (IoT) device for cars that is based on the company’s smart vehicle
technology (SVT).
 Ford Motor Co. p...
Government Initiatives
The Government of India encourages foreign investment in the automobile sector and
allows 100 per c...
Mr Joachim Drees, Global CEO, MAN Trucks & Bus AG, has stated that India has the
potential to be among the top five market...
SHOWCASE:
Established in 1945, Tata Motors Limited is India's largest
automobile company with over 60,000 employees. It is...
Force Motors is a fully, vertically integrated automobile
company, with expertise in design, development and manufacture o...
Eicher Motors Ltd (EML), incorporated in 1982, is the flagship company of the Eicher Group
in India and a leading player o...
TATA GROUP
ORIGIN OF TATA MOTORS
TATAMOTORS,formerlyknownasTELCO(TataEngineering&LocomotiveCompany)isamultinational
corporationheadqu...
TATA GROUP
MISSION
 Vendors&Servicesproviders:-Tofosteralong-termrelationshipformutualgrowth.
 Employees:-Tocreateseamlessorganizat...
TATA MOTORS
Tata Motors Limited, a USD 42 billion organization, is a leading global automobile
manufacturer with a portfol...
Policies of Tata Motors
Safety & Health Policies:
Environmental Policies:
Quality Control Policies:
PEST & RATIO ANALYSIS
 POLITICAL
 ECONOMIC
 SOCIAL
 TECHNOLOGICAL
 Analysis of Profitability
 Ratio Analysis
PEST ANALYSIS:
• PEST Analysis is a simple and widely used tool that helps you analyze the Political,
Economic, Socio-Cult...
ECONOMIC FACTORS
Operating in numerous countries across the world, Tata Motors functions with a global
economic perspectiv...
TECHNOLOGICAL FACTORS
• Technological factors and innovations, Research & development plays a most important
role as they ...
ANALYSIS OF PROFITABILITY
The present study has been made in order to analysis profitability through ratio of the
automobi...
6. From the table it can be said that, the null hypothesis of return on capital employed ratio
(company wise as well as ye...
RATIO ANALYSIS
• Ratio analysis is quantitative analysis of information contained in a company's financial
statements.
• R...
EBT Margin
• Tata Motors Performance
FY -2012 FY -2013 FY -2014 FY -2015
2.46% 0.39% -2.99% -10.95%
• Competitors Performa...
Net Profit Margin
• Tata Motors Performance
FY- 2012 FY- 2013 FY- 2014 FY-2015
2.28% 0.67% 0.97% -13.05%
• Competitors Per...
Return on Assets (ROA)
• Tata Motors Performance
FY- 2012 FY- 2013 FY- 2014 FY-2015
4.05% 0.90% 0.99% -13.57%
• Competitor...
Return on Equity (ROE)
• Tata Motors' Performance
FY- 2012 FY- 2013 FY- 2014 FY-2015
6.33% 1.57% 1.74% -31.93%
• Competito...
Total Assets Turnover
• Tata Motors' Performance
FY- 2012 FY- 2013 FY- 2014 FY-2015
1.99 1.48 1.12 1.16
• Competitors' Per...
Current Ratio
• Tata Motors' Performance
FY- 2012 FY- 2013 FY- 2014 FY-2015
0.50 0.42 0.43 0.42
• Competitors' Performance...
Debt to Equity Ratio
• Tata Motors' Performance
FY- 2012 FY- 2013 FY- 2014 FY-2015
0.56 0.75 0.76 1.35
• Competitors' Perf...
Price to Earnings Ratio (P/E)
• Tata Motors Performance
FY- 2012 FY- 2013 FY- 2014 FY-2015
339.17 1823.13 2739.68 -112.21
...
Price to Sales Ratio (P/S)
• Tata Motors' Performance
FY- 2012 FY- 2013 FY- 2014 FY-2015
7.74 12.34 26.74 14.64
• Competit...
BALANCE SHEET & P&L
BALANCE SHEET OF TATA MOTORS __________in Rs. Cr.________
Mar’15 Mar,14 Mar’13 Mar’12
12mnths 12mnths 12mnths 12mnths
Sour...
Debtors
Cash and
Bank
Balance 944.75 226.15 462.86 1,840.96
Total Current
Assets 6,861.31 5,305.38 6,735.93 9,137.51
Loans...
P&L OF TATA MOTORS
INTERNATIONAL MARKET,
AWARDS & CLAUSES
AFRICA
In the continent of Africa, Tata Motors has significant presence in South Africa, Angola,
Algeria, Democratic Repub...
EUROPE
Europe is the home of great automobile engineering and Tata Motors is proud to have a
strong presence here, through...
APAC
Tata Motors first ventured into other Asia Pacific markets with its foray into Sri Lanka in
1961. In addition, Tata M...
AWARDS & ACHIEVEMENTS:
Jaguar Land Rover
 Jaguar Land Rover was handed the Queen's Award for Sustainable
Development by t...
GDP & BUSINESS
OVERVIEW
BUSINESS OVERVIEW
India's GDP growth continues to remain weak, at 4.7% in FY 2013-14 (advance estimates)
after growing at ...
Growth rate in GDP
Source: Ministry of Statistics and Programme implementation
On the back of tight monetary policy, limit...
On the global economy front, it was still a struggle, with the Euro zone in recession for
much of 2013. However, in the de...
CONTIBUTION &
SOCIAL RESPONCBILITY
As a responsible corporate citizen, our Corporate Social Responsibility (CSR) Strategy
complements our business philosophy...
SUGGESTIONS
These suggestions are based on ratio analysis and this through company may improve their
financial stability, liquidity po...
profitability. Hence, try to sustain this ratio at higher level because this ratio reflects the
operating efficiency and p...
SWOT ANALYSIS
SWOT Analysis
Strengths
• Excellent brand equity and strengths in Indian Market
• Legacy Dignity of Tata brand heritage wh...
WEAKNESS
 Perceived as too Indian in cheap & low quality car maker, definitely it will take them
along time to establish ...
THREATS
 In the coming years, Tata motors predominance in commercial vehicles will be
challenged by the entry of internat...
CONCLUSION
CONCLUSION
I would like to conclude that the prosperity of Tata Motors Ltd., is wealthy for the last 2
years period. But t...
Financial Statment Analysis of TATA MOTORS
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Financial Statment Analysis of TATA MOTORS

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Financial Statment Analysis of TATA MOTORS

  1. 1. VISHISHT SCHOOL OF MANAGEMENT, INDORE TOPIC: A STUDY ON FINANACIAL STTEMENT ANALYSISOF TATA MOTORSL.T.D A Dissertation Submitted in Partial Fulfillment Of the Requirement for the Degreeof BACHELORS OF COMMERCE To DEVI AHILYA VISHWAVIDHYALAYA, INDORE Under the Supervisionof: Submittedby Vishisht School of Management, Indore.
  2. 2. VISHISHT SCHOOL OF MANAGEMENT, INDORE Undertaking of Originality by the Student This is to certify that is a regular studentof VishishtSchool of Management, Indore and worked under my supervision for this project on “A STUDY ON FINANACIAL STTEMENT ANALYSIS OF TATA MOTORS L.T.D”to the best of my knowledge the above dissertation is his own work and it has not been submitted to this institute or any other institute or university earlier. Date: Student Name: Place: Indore (MP) B.Com, Tax VI Sem
  3. 3. –––Certificate by the Supervisor This is to certify that the project titled “A STUDY ON FINANCIAL STATEMENT OF TATA MOTORS L.T.D”. is a piece of research work has been done by B.Com Tax, VI Sem. under my guidance and supervision towards the partial fulfillment of Degree of Bachelor of Commerce. I recommend that the project to be submitted to Devi Ahilya University, Indore. Date: (Signature of External Examiner Director
  4. 4. ACKNOWLEDGEMENT Research Project is an important milestone in the completion of any Professional Course. As a student of B.Com Tax, got golden opportunity to do the research work. It gives me immense pleasure to express my feelings of deep gratitude towards the subjects without the support of whom it would have been very difficult to accomplish this project. I wish to express my thank to my parents, my Principal my Project guide Dr./Prof. my seniors, friends, classmates and everyone Who inspired me to pursue this project in the best possible way. I would like to thank all those who have helped provide direction, information and advice at all stages in this Research Project. Place: Indore Students Name: Date: B.Com Tax VI -SEM
  5. 5. PREFACE As a part of the B.Com Tax and in order to gain practical Knowledge in the field of management. we are required to make a report on A STUDY ON FINANCIAL STATEMENT RATIO ANALYSIS OF TATA MOTORS L.T.D. The Basic Objective behind doing this project report is to get knowledge About the Financial statements that How it works. This project report attempts to bring under one cover the entire hard work and dedication put in by me in the completion of this project work. Financial Statement Analysis is a method of reviewing and analyzing a company’s accounting reports (financial statements) in order to gauge its past, present or projected future performance. This process of reviewing the financial statements Ratio allows for better economic decision making. Doing this Project report helped us to enhance our knowledge regarding A STUDY ON FINANCIAL STATEMENT RATIO ANALYSIS OF TATA MOTORS L.T.D. we doing undergo many experiences related with our topic concepts. ..
  6. 6. Contents i. Undertaking of Originality by the Student ii. Certificate by the Supervisor iii. Acknowledgement iv. Preface 1. Introduction 2. Company profile 3. PEST Analysis& RatioAnalysis 4. B/S & P&L 5. International Market & Clauses. 6. GDP & Business Overview 7. Contribution & Social Responsibilities 8. Suggestions 9. SWOT Analysis 10.Conclusion
  7. 7. INTRODUCTION:  Project Title  Objectives Of Project  Methodology  Background  Advantages & Limitations
  8. 8. INTRODUCTION: To study the progress is very important. Through this study, organization can recognize its strengths and weaknesses, so that they can be properly analyzed. Profitability analysis helps to the organization to identify whether investment is sufficient or not, management is capable or not, organization has efficient workers or not. Finally, organization can identify its progress, profits and growth. Profit is important for any business. For surviving, growth, expansion and diversification it is necessary. Profit is important to satisfy the investors, to repay the debt or loans, to pay wages and salaries to staff and other day-to- day expenses. Profit is the most useful measure of overall efficiency of a business. This study aims at analyzing the overall financial study of the Tata Motors by using various financial tools. The study is based on the accounting information of Tata Motors. This study covers a period of 2011 to 2015, for analyzing the financial statements such as income statements and balance sheet. The data of the past five years are taken into account for the study. The performance is compared with in those periods. FINANCIALANALYSISOFTATA MOTORS ABOUT TATA MOTORS: TataMotorshavequitethehistoryundertheirbelt,startingwiththecompany'sfoundationin1945asa locomotiveproducer.TataMotorsisjustonepartofthebusinessgroupTata.TheotherventuresofTataGroup includeTataSteel,TataConsultancyServices,TataTechnologies,TataTea,TitanIndustries,TataPower,Taj Hotels,andsoon. HeadquarteredinMumbai,India,TataMotorsisamultinationalcorporationamountingfor70%cumulative marketshareinthedomesticcommercialvehiclesegmentToday,thecompanyistheworld'ssecondlargest manufacturerofcommercialvehicles,world'sfour.Largesttruckmanufacturerandworld'ssecondlargestbus manufacturer.Itisadual-listedcompany,whichistradedonboththeBombayStockexchangeaswellasthe NewYorkStockExchange. Tatagotintothemotoringbusinessin1954whenitstartingproducingheavytrucks.inajointventurewith Daimler-BenzAG.Soin1960.Thefirsttruckrolledoutofthefactory'sdoorinPune,India,acopyofaGerman Daimlertruck. THESIGNIFICANTRECENTEVENTS: Intheearly1990s,thecompanybeganitsexpansionintothecarmarketfirstpassengervehiclewasTataSierra, amultiutilityvehiclethatwaslaunchedin1991.Tatacameupwiththreeotherautomobiles,namely,Tata
  9. 9. Estatein1992(astationwagonbasedontheearlier'TataMobile'in1989),TataSumoin1994(LCV)andTata Safariin1998(India'sfirstSUV).Afterthoroughlyananalyzingthedemandoftheconsumers,thechairmanof TataGroupatthattimeMr.RatanTata,decidedtobuildasmallcar,whichwaspracticallyanewventure.Thus, in1998,India'sfirstfullyindigenouspassengercar,TataIndicawaslaunched.TheirfirstcarwastheTataIndicaa modelthatenjoyedanunexpectedsuccessboth.InIndiaandEurope(UKandItaly).TheIndicawonpeople overwithitslowfuelconsumptionandpowerfuIengine.Alsoitwasinexpensiveandrelativelyeasytobuild maintain.ThesecondgenerationofIndica,V2wasevenmoresuccessfulItwassosuccessfulthatRoverbegan sellingitintheUKunderthenameofCityRover. indica’shighsuccessgaveTataMotorsthefinancialpowertotakeoverDaewooMotorsin2004.Thisgavethe companyanopportunitytogivetheirbrandinternationalexposure.Today,Daewoo'strucksaresoldasTata DaewooCommercialVehicleinSouthKorea.In2005,thecompanyacquired21%shareinHispanoCarrocera SA,earningthecontrollingrightsofthecompany.InJanuary2008,theglobalautomobilesectorshowcased theworld'scheapestcarintheformofTataNano.LaunchedbyTataMotors,thecarcostonly.RS100,000. OthersurprisingacquisitionsbytheTataGroupincludejaguarandLandRoverasofMarch26,2008foranet$2 billionUSdollars.Lately,Tatahasmadeknownitsaggressivenesswhenitcomestogainingexposureand acquiringnewbrands.TataMotorsacquiredthejaguarLandRover(JLR)businessfromtheFordMotor Company,whichincludedtheDaimlerandLanchesterbrands. TataMotorsformed51:49jointventurewithMarcopoloofBrazilandcameupwithmanufacturingand assemblingfully-builtbusesandcoachestargetingthedevelopingmassrapidtransportationsystems.Tataand Marcopolojointlyhavelaunchedlow-floorcitybusesthatarewidelyusedbyDelhi,Mumbai,Lucknowand Bangaloretransportcorporations.TataMotorshasbeencontinuouslyacquiringforeignbrandstoincreaseits globalpresenceTheCompanyoperatesintheUKSouthKorea,ThailandandSpain.Today,TataMotorshasits automanufacturingandassemblyplantsinJamshedpur,Pantnagar,Lucknow,AhmedabadandPuneinIndia, andinArgentina,SouthAfrica,SouthKoreaandThailand.Itisfurtherplanningtosetupmoreplan.InTurkey, IndonesiaandEasternEurope. TataMotors'financialpowercomesfromthefactthatitslaborcostsamounttoonly9%oftheprofit,areason forwhichmanyothercarproducers,includingVolvodecidedtomoveoperationstoIndia.Anotherimportant factorinTata'ssuccessisthefactthatthegroupholdsseveralmachinetoolsandmetalproducingplan,Further reducingproductioncosts.
  10. 10. OBJECTIVES OF THE PROJECT:  To analyze the financial statement of TATA Motors Ltd. from the Year 2011to2016.  To interpret the analysis and the trend of the financial results.  To use various activity ratios and liquidity ratios to find out the activity of assets and liabilitiesandtofindouttheliquiditypositionofthecompany.  Standardizefinancialinformationforcomparisons.  Evaluate current operations.  Compare performance with past performance.  Compare performance against other firms or industry standards.  Studytheefficiencyofoperations.  Study the risk of operations.  To know about Liquidity Position.  To Know about Operating Efficiency.  To know about Over-All Profitability.  To Know About Inter Firm Comparison.
  11. 11. METHODOLOGY Soherearevariousmethodsortechniquesthatareusedinanalyzingfinancialstatements,suchascomparative statement,scheduleofchangesinworkingcapital,commonsizepercentages,fundsanalysis,trendanalysis, andratiosanalysis.Followingarethemostimportanttoolsandtechniquesoffinancialstatementanalysis. HorizontalandVerticalAnalysis HorizontalAnalysis: Comparisonoftwoormoreyear’sfinancialdataisknownashorizontalanalysisortrendanalysis.Horizontalis facilitatedbyshowingchangesbetweenyearsinbothdollarandpercentageform. Vertical Analysis: Verticalanalysisistheprocedureofpreparingandpresentingcommonsizestatements,Commonsize statementsisonethatshowstheitemsappearingonitinpercentageformuswellasindollarform.Eachitem isstatedasapercentageofsometotalofwhichthatitemisanapart.Keyfinancialchangesandtrendscanbe highlightedbytheuseofcommonsizestatements. RatioAnalysis: Theratiosanalysisisthemostpowerfultooloffinancialstatementanalysis.Ratiossimplymeanonenumber expressedintermsofanotherratioisastatisticalyardstickbymeansofwhichrelationshipbetweentwoor variousfigurescanbecomparedormeasured.Ratioscanbefoundoutbydividingonenumberbyanother number.Ratiosshowhowonenumberisrelatedtoanother. FinancialAnalysis: Financialratioanalysisinvolvescalculatingcertainstandardizedrelationshipbetweenfiguresappearinginthe financialstatementsandthenusingthoserelationshipscalledratiostoanalyzethebusiness'financialposition andfinancialperformance. Duetovaryingsizeofbusinessesdifferentcomparisonoftwobusinessesisnotpossible.Certaintechniques havetobeappliedinsimplifyingthefinancialstatementsandmakingthemcomparable.Theseinducefinancial ratioanalysisandcommon-sizefinancialstatements.Ratiosaredividedintodifferentcategoriessuchas liquidityratios,profitabilityratios,etc.
  12. 12. BACKGROUND: DefinitionofFinancialStatementAnalysis Financialstatementanalysisisdefinedastheprocessofidentifyingfinancialstrengthsandweaknessesofthe firmbyproperlyestablishingrelationshipbetweentheitemsofthebalancesheetandtheprofitandloss account Financialstatements,whichareaaccountingreports,serveastheprincipalmethodofcommunicatingfinancial informationaboutabusinessentityOran individualtooutsidepartiessuchasbanksandinvestors.Ina technicalsense,financialstatementssummary. Theaccountingprocessandprovideatabulationofaccount titlesandamountsofmoney.Furthermore,financialstatementsreportthefinancialpositionorfinancialstatus ofabusinessorindividualaswellasfinancialchangesataparticulartimeorduringaperiod Generalpurposefinancialstatementsaredesignedtomeettheneedsofmanydiverseusers,particularly presentandpotentialowners,shareholdersandcreditors.Financialstatementsresultfromsimplifying, condensing,andaggregatingmassesofdataobtainedprimarilyfromthefinancialsystem.Theyareanoutput oftheaccountingsystem.Companiesreleasefinancialstatementsatleastonceayearfortheiraccounting period.Companieseitherfollowthecalendar-yearaccountingperiods(January1throughDecember31),or theyfollowtheirownfiscalyear,whichcanbeanycomplete12-monthperiod. PurposeofFinancialStatementAnalysis Financialstatementsarepreparedtomeetexternalreportingobligationsandalsofordecisionmaking purposes.Theyplaydominantroleinsettingtheframeworkofmanagerialdecisions.Buttheinformation providedinthefinancialstatementsisnotanendinitselfasnomeaningfulconclusionscanbedrawnfromthis statementalone.However,theinformationprovidedinthefinancialstatementsisofimmenseuseinmaking decisionsthroughanalysisandinterpretationoffinancialstatements. Fewnumbersappearingonfinancialstatementsmaynothavemuchsignificancestandingbythemselves.Itis therelationshipofonefiguretoanotherandtheamountanddirectionofchangeovertimethatareimportant infinancialstatementanalysis.Howdoestheanalystkeyinonsignificantrelationship,Howdoestheanalystdig outtheimportanttrendsandchangesincompany?ThreeanalyticalTechniquesarewidelyused;Dollarand percentagechangesonstatement,commonsizestatements,andfinancialratiosandformulas.
  13. 13. AdvantagesofFinancialStatementAnalysis: Thedifferentadvantagesoffinancialstatementanalysisarelistedbelow. •Themostimportantbenefitiffinancialstatementanalysisisthatitprovidesanideatotheinvestorsabout decidingoninvestingtheirfundsinaspecificcompany. •MeritsoffinancialratioanalysisisAnotheradvantageoffinancialstatementanalysisisthatregulatory authoritiescanensurethecompanyfollowingtherequiredaccountingstandardsornot. •Financialstatementanalysisishelpfultothegovernmentagenciesinanalyzingthetaxationowedtothefirm. •Financialstatementsanalysiscanhelpthegovernmentagenciestoanalyzethetaxationduetothecompany. •Aboveall,companycananalyzeitsownperformanceovertheperiodthroughfinancialstatementsanalysis. Throughfinancialstatementanalysisyoucandetermineandidentifyfinancialstrengths,weaknessesand relationshipsthatexistinacompany. •ComparingthefinancialstatementanalysisnumbersovertimetospottrendsandchangesthatAffect companybusiness. LimitationsofFinancialStatementAnalysis: Althoughfinancialstatementanalysisishighlyusefultool,ithastwolimitations.Thesetwolimitationsinvolve thecomparabilityoffinancialdatabetweencompaniesandtheneedtolookbeyondratios. 1.Differentcompaniesoperateindifferentindustrieseachhavingdifferentenvironmentalconditionssuchas regulation,marketstructure,etcsuchfactorsaresosignificantthatacomparisonoftwocompaniesfrom differentindustriesmightbemisleading. 2.Financialaccountinginformationisaffectedbyestimatesandassumptions.Accountingstandardsallowe differentaccountingpolicies,whichimpairscomparabilityandhenceratioanalysisislessusefulinsuch situations. 3.RatioAnalysisexplainsrelationshipsbetweenpastinformationwhileusersaremoreconcernedabout currentfutureinformation. 4.RatioAnalysisIshamperedbypotentiallimitationswithaccountingandthedatainthefinancialstatements themselves.Thiscanincludeerrorsaswellasaccountingmismanagement,whichinvolvesdistortingtheraw datausedtoderivefinancialratios.
  14. 14. 5.Proponentsofthestrongeroftheefficient-markethypothesis,technicalanalyst,andbehavioraleconomist arguethefundamentalanalysisislimitedusastockvaluationtool,allforthereondistinctreasons. 6.Ratioanalysiscanalsoomitimportantaspectsofafirm’ssuccess,suchaskeyintangible,likebrand, relationships,skillsandculture.
  15. 15. COMPANYPROFILE:  The Indian Automobile Industry.  Tata Group.  Tata Motors.  Policies of Tata Motors.
  16. 16. HISTORY OF INDIAN AUTOMOBILE INDUSTRY Indian market before independence was seen as a market for imported vehicles while assembling of cars manufactured by General Motors and other brands was the order of the day. Indian automobile industry mainly focused on servicing, dealership, financing and maintenance of vehicles. Later only after a decade from independence manufacturing started. India's Transportation requirements were met by Indian Railways playing an important role till the 1950's. Since independence the Indian automobile industry faced several challenges and road blocks like manufacturing capability was restricted by the rule of license and could not be increased but still it lead to growth and success it has achieved today. The Indian Automobile industry includes two-wheelers, trucks, cars, buses and three- wheelers which play a crucial role in growth of the Indian economy. India has emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads by 2050.The Economic progress of this industry is indicated by the amount of goods and services produced which give the capacity for transportation and boost the sale of vehicles. There is a huge increase in automobile production with a catalyst effect by indirectly increasing the demand for a number of raw materials like steel, rubber, plastics, glass, paint, electronics and service. 1. The second largest Two Wheeler manufacturer. 2. The Largest Tractor Manufacturer. 3. 4th largest Passenger Vehicle market in Asia. 4. 5th largest Commercial Vehicle manufacturer in the world. 5. The largest three wheeler market. 6. India has the fourth largest car market in the world
  17. 17. THE INDIAN AUTOMOBILE SECTOR AlthoughIndiaisthefifthlargestautomobilemanufacturerintheworld,penetrationlevelinthecountryisvery low,especiallyinthecaseofpassengercars.Thisopensahugeopportunityfortheautomobilecompaniesto exploretheIndianmarket.Changingdemographyalsoaddstotheincreasingdemandforthevehicles.The IndianautomobileindustryhasalsomadeasubstantialeffortindevelopingtheR&Dinfrastructure.Thishas helpedinupgradingthetechnologyandatthesametime,reducedproductioncost.Thisprovidesgoodexport opportunitiesforIndianmanufacturers,whicharebeingdulyexploitedbyTatamotors,AshokLeyland,Maruti intheAfrican,andSouthAmerican markets. Thefastgrowthofthisindustryisevidentbythespurtin demandforautomobilesinthelastfewyears. Thisiswellsupportedbytheeconomicreformsthathavebeenputinplace, particularly in the financial sector and in foreign direct investment. During the last decade, conscious efforts have been made to fine-tune state policy to enable the Indian automobile industry to realize its potential to the fullest. Abolitionoflicensingandremovalofquantitativerestrictionscoupledwithin iterative to bring the policy framework in step with WTO requirements have set the industry onaprogressivepath. Thefreeingoftheindustryfromthisrestrictiveenvironment has helped it to restructure, absorb new technologies and align itself to globaldevelopment.Increasingcompetitionasaresultof liberalizationhasledtocontinuousmodernization as well as substantial price reduction keeping pace with the international standards. Moreover, auto finance with aggressive marketing strategies has played a big roleinboostingtheautomobiledemand.
  18. 18. SEGMENT WISE MARKET SHARE IN 2015-16 Domestic & Export Share  Passenger Car -- 25468121478  Multi Utility Vehicles -- 26543892  Commercial Vehicles – 1010819931  Two Wheelers -- 100002256765  Three Wheelers -- 2113851535  Percentage Growth -- 16.632.8 Two wheeler 76% Passenger vehicle 16% Three wheeler 4% Commercial vehicle 4% Sales
  19. 19. TOP & MAJOR MANUFACTURERS IN AUTOMOBILES INDUSTRY  TATA Motors Ltd.  Maruti Udyog Ltd.  General Motors India.  Force Motors.  Ford India.  Ashok Leyland.  Bajaj Auto.  Hero MotoCorp.  Honda Motors.  Hindustan Motors.  Hyundai Motor India Ltd.  Royal Enfield.  TVS Motors.  Swaraj Mazda Ltd.  Eicher Motors.  Mahindra & Mahindra.
  20. 20. Market Size The sales of PVs, CVs and 2Ws grew by 9.17 per cent, 3.03 per cent and 8.29 per cent respectively, during the period April-January 2017. Investments In order to keep up with the growing demand, several auto makers have started investing heavily in various segments of the industry during the last few months. The industry has attracted Foreign Direct Investment (FDI) worth US$ 15.79 billion during the period April 2000 to September 2016, according to data released by Department of Industrial Policy and Promotion (DIPP). Some of the major investments and developments in the automobile sector in India are as follows:  Electric car maker Tesla Inc. is likely to introduce its products in India sometime in the summer of 2017.  South Korea’s Kia Motors Corp is close to finalising a site for its first factory in India, slated to attract US$1 billion (Rs 6,700 crore) of investment. It is deciding between Andhra Pradesh and Maharashtra. The target for operationalising the factory is the end of 2018 or early 2019.  Several automobile manufacturers, from global majors such as Audi to Indian companies such as Maruti Suzuki and Mahindra & Mahindra, are exploring the possibilities of introducing driverless self-driven cars for India.  BMW plans to manufacture a local version of below-500 CC motorcycle, the G310R, in TVS Motor’s Hosur plant in Tamil Nadu, for Indian markets.  Honda Motorcycle and Scooter India (HMSI) has inaugurated its 900th Honda Authorised Exclusive Dealership in India, thereby taking its total dealership network to 4,800 across the country and further plans to increase its network to 5,300 by end of 2016-17.  Hero MotoCorp Ltd seeks to enhance its participation in the Indian electric vehicle (EV) space by pursuing its internal EV Programme in addition to investing Rs 205 crore (US$ 30.75 million) to acquire around 26-30 per cent stake in Bengaluru-based technology start-up Ather Energy Pvt Ltd.  JustRide, a self-drive car rental firm, has raised US$ 3 million in a bridge round of funding led by a group of global investors and a trio of Y Combinator partners, which will be utilised to amplify JustRide’s car sharing platform JustConnect and Yabber, an
  21. 21. internet of things (IoT) device for cars that is based on the company’s smart vehicle technology (SVT).  Ford Motor Co. plans to invest Rs 1,300 crore (US$ 195 million) to build a global technology and business centre in Chennai, which will be designed as a hub for product development, mobility solutions and business services for India and other markets.  Cummins has plans to make India an export hub for the world, by investing in top components and technologies in India.  Suzuki Motor Corporation, the Japan-based automobile manufacturer, plans to invest Rs 2,600 crore (US$ 390 million) for setting up its second assembly plant in India and an engine and transmission unit in Mehsana, Gujarat.  Mr Masayoshi Son, Chief Executive Officer, SoftBank Group, has stated that Ola Cabs may introduce a fleet of one million electric cars in partnership with an electric vehicle maker and the Government of India, which could help reduce pollution and thereby transform the electric mobility sector in the country.  China’s biggest automobile manufacturer, SAIC Motor, plans to invest US$ 1 billion in India by 2018, and is exploring possibilities to set up manufacturing unit in one of three states – Maharashtra, Andhra Pradesh and Tamil Nadu.  Suzuki Motorcycle India Pvt Ltd has started exports of made-in-India flagship bike Gixxer to its home country of Japan, which will be in addition to current exports to countries in Latin America and surrounding countries.  General Motors plans to invest US$ 1 billion in India by 2020, mainly to increase the capacity at the Talegaon plant in Maharashtra from 130,000 units a year to 220,000 by 2025.
  22. 22. Government Initiatives The Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under the automatic route. Some of the major initiatives taken by the Government of India are:  The Government of India plans to introduce a new Green Urban Transport Scheme with a central assistance of about Rs 25,000 crore (US$ 3.75 billion), aimed at boosting the growth of urban transport along low carbon path for substantial reduction in pollution, and providing a framework for funding urban mobility projects at National, State and City level with minimum recourse to budgetary support by encouraging innovative financing of projects.  Government of India aims to make automobiles manufacturing the main driver of ‘Make in India’ initiative, as it expects passenger vehicles market to triple to 9.4 million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26.  The Government plans to promote eco-friendly cars in the country i.e. CNG based vehicle, hybrid vehicle, and electric vehicle and also made mandatory of 5 per cent ethanol blending in petrol.  The government has formulated a Scheme for Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission 2020 to encourage the progressive induction of reliable, affordable and efficient electric and hybrid vehicles in the country. Road Ahead India’s automotive industry is one of the most competitive in the world. It does not cover 100 per cent of technology or components required to make a car but it is giving a good 97 per cent, as highlighted by Mr Vicent Cobee, Corporate Vice-President, Nissan Motor’s Datsun. Leading auto maker Maruti Suzuki expects Indian passenger car market to reach four million units by 2020, up from 1.97 million units in 2014-15. Mr Young Key Koo, Managing Director, Hyundai Motor India Ltd, has stated that India is a key market for the company, not only in terms of volumes but also as a hub of small products for exports to 92 countries.
  23. 23. Mr Joachim Drees, Global CEO, MAN Trucks & Bus AG, has stated that India has the potential to be among the top five markets, outside of Europe, by 2020 for the company, which is reflected in the appointment of its most experienced managers to India for increasing volumes and exports out of India. The Indian automotive aftermarket is estimated to grow at around 10-15 per cent to reach US$ 16.5 billion by 2021 from around US$ 7 billion in 2016. It has the potential to generate up to US$ 300 billion in annual revenue by 2026, create 65 million additional jobs and contribute over 12 per cent to India’s Gross Domestic Product#. According to Mr Guillaume Sicard, president, Nissan India Operations, the income tax rate cut from 10 per cent to 5 per cent for individual tax payers earning under Rs 5 lakh (US$ 7,472) per annum will create a positive sentiment among likely first time buyers for entry level and small cars. Exchange Rate Used: INR 1 = US$ 0.015 as on February 9, 2017. The automobile industry in India is expected to be the world's third largest by 2016, with the country currently being the world's second largest two-wheeler manufacturer. Two- wheeler production is projected to rise from 18.5 million in FY15 to 34 million by FY20. Passenger vehicle market in India is expected to cross the three million unit milestone during FY 2016-17, and further increase to 10 million units in FY 2019-20. The government aims to develop India as a global manufacturing as well as a research and development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) centres as well as a National Automotive Board to act as facilitator between the government and the industry. Alternative fuel has the potential to provide for the country's energy demand in the auto sector as the CNG distribution network in India is expected to rise to 250 cities in 2018 from 125 cities in 2014. Also, the luxury car market could register high growth and is expected to reach 150,000 units by 2020.
  24. 24. SHOWCASE: Established in 1945, Tata Motors Limited is India's largest automobile company with over 60,000 employees. It is guided by the mission "to be passionate in anticipating and providing the best vehicles and experiences that excite customers globally." The company is the leader in commercial vehicles in each segment in India. Maruti Suzuki Maruti Suzuki India Ltd (MSIL), commonly referred to as Maruti and formerly known as Maruti Udyog Ltd, is an automobile manufacturer in India. The company is engaged in the business of manufacture, purchase and sale of motor vehicles, automobile components and spare parts (automobiles). At present. Founded in 1945 as a steel trading company, Mahindra and Mahindra (M&M) entered automotive manufacturing in 1947 to bring the iconic Willys Jeep to Indian roads. Over the years, the company diversified into many new businesses in order to better meet the needs of the customers. With over 65 years of operations.
  25. 25. Force Motors is a fully, vertically integrated automobile company, with expertise in design, development and manufacture of the full spectrum of automotive components, aggregates and vehicles. Its range includes small commercial vehicles, multi-utility vehicles (MUV), light commercial vehicles (LCV), sports utility vehicles (SUV) and agricultural Ashok Leyland is the 2nd largest manufacturer of commercial vehicles in India, the 4th largest manufacturer of buses in the world and the 16th largest manufacturer of trucks globally. With a turnover in excess of US$ 2.3 billion (2012-13) and a footprint that extends across 50 countries, they are one of the most fully- integrated manufacturing companies. The Enfield Cycle Company made motorcycles, bicycles, lawnmowers and stationary engines under the name Royal Enfield out of its works based at Redditch, Worcestershire. The sse of the brand name Royal Enfield was licensed by the Crown in 1890. Royal Enfield, the British brand under Indian ownership since 1949.
  26. 26. Eicher Motors Ltd (EML), incorporated in 1982, is the flagship company of the Eicher Group in India and a leading player of the Indian automobile industry. Its 50-50 joint venture with the Volvo group, VE Commercial Vehicles Limited, designs, manufactures and markets reliable, fuel-efficient commercial vehicles of high quality and modern technology. The Escorts Group, is among India's leading engineering conglomerates operating in the high growth sectors of agri-machinery, construction & material handling equipment, railway equipment and auto components. Having pioneered farm mechanization in the country, Escorts has played a pivotal role in the agricultural growth of India. Bajaj Auto is a part of the Bajaj Group, which was founded by Mr Jamnalal Bajaj in 1926. The Group's footprint stretches over a wide range of industries, spanning automobiles (two-wheelers and three-wheelers), home appliances, lighting, iron and steel, insurance, travel and finance.
  27. 27. TATA GROUP
  28. 28. ORIGIN OF TATA MOTORS TATAMOTORS,formerlyknownasTELCO(TataEngineering&LocomotiveCompany)isamultinational corporationheadquarteredinMumbai,India.Itisalargestautomobile&commercialvehiclemanufacturing company.TheOICArankeditastheworld 20th largest automaker, based on figures for 2006. TATAMOTORSwasestablishedintheyear1945.ItisapartofTATAGROUP.Itpresenceindeedcutsacrossthe lengthandbreadthofIndia.Over3millionTatavehicles run on Indian roads, since the first rolled out in 1954. Jamsetji Nusserwanji Tata starts a private trading firm, laying the foundationoftheTataGroup. TheTataGroupcomprises96operatingcompaniesinsevenbusinesssectors:informationsystemsand communications;engineering;materials;services;energy;consumerproducts;andchemicals.TheGroupwas foundedby Jamsetji Tata in the mid 19th century, a period when India had just set out on the roadtogainingindependencefromBritishrule.Consequently,JamsetjiTataandthosewhofollowedhim alignedbusinessopportunitieswiththeobjectiveofnationbuilding.Thisapproachremainsenshrinedinthe Group'sethostothisday. The Tata family of companies shares a set of five core values: integrity, understanding, excellence, unityandresponsibility.Thesevalues,whichhavebeenpartof the Group's beliefs and convictions from its earliest days, continue to guide and drive thebusinessdecisionsofTata companies.TheGroupanditsenterpriseshavebeensteadfastanddistinctiveintheiradherencetobusiness ethicsandtheircommitmenttocorporate social responsibility.
  29. 29. TATA GROUP
  30. 30. MISSION  Vendors&Servicesproviders:-Tofosteralong-termrelationshipformutualgrowth.  Employees:-Tocreateseamlessorganizationthatinculcatedandpromotesinnovation, excellence, safe and high performance work culture adhering to Tata codeofconduct.  Shareholders:-ToconsistentlycreateshareholdervaluethroughsustainableandProfitablegrowthby continuouslyseekingnewbusinessopportunitiesandemployingbestmethodandpracticesand employingbestinclasstechnologies.  Customers:-Toprovidebestvalueformotettocustomersthroughquality,costeffective & innovative transmissions solutions.  Community:-Toproactivelyparticipateinenvironmentalprotection&welfareofcommunities aroundus.
  31. 31. TATA MOTORS Tata Motors Limited, a USD 42 billion organization, is a leading global automobile manufacturer with a portfolio that covers a wide range of cars, sports vehicles, buses, trucks and defense vehicles. Our marquee can be found on and off-road in over 175 countries around the globe. 1945TATA MOTORS Established 60,000Employee Strength $42 Billion Company Turnover >9 Million Vehicles Sold >6,600Sales & Service Points Tata Motors is part of the USD 100 billion Tata group founded by Jamsetji Tata in 1868. Sustainability and the spirit of ‘giving back to society’ is a core philosophy and good corporate citizenship is strongly embedded in our DNA. Tata Motors is India’s largest automobile company. We bring to the customer a proven legacy of thought leadership with respect to customer- centricity and technology. We are driving the transformation of the Indian commercial vehicle landscape by offering customers leading edge auto technologies, packaged for power performances and lowest life-cycle costs. Our new passenger cars are designed for superior comfort, connectivity and performance. What keeps us at the forefront of the market is our focus on future-readiness and our pipeline of tech-enabled products. Our design and R&D centers located in India, the UK, Italy and Korea strive to innovate new products that achieve performances that will fire the imagination of Gen Next customers. Across the globally dispersed organization that we are today, there is one thing that energizes and drives all our people and our activities – and that is our mission “to be passionate in anticipating and providing the best vehicles and experiences that excite our customers globally''.
  32. 32. Policies of Tata Motors Safety & Health Policies:
  33. 33. Environmental Policies:
  34. 34. Quality Control Policies:
  35. 35. PEST & RATIO ANALYSIS  POLITICAL  ECONOMIC  SOCIAL  TECHNOLOGICAL  Analysis of Profitability  Ratio Analysis
  36. 36. PEST ANALYSIS: • PEST Analysis is a simple and widely used tool that helps you analyze the Political, Economic, Socio-Cultural and Technological changes in your business environment. • It is useful for four main reasons : 1. It helps you to spot business or personal opportunities, and it gives you advanced warning of significant threats. 2. It reveals the direction of change within your business environment. This helps you shape what you're doing, to that you work with change, rather than against it. 3. It helps you avoid starting projects that are likely to fail, for reasons beyond your control. 4. It can help you break free of unconscious assumptions when you enter a new country, region, or market; because it helps you develop an objective view of this new environment. POLITICAL FACTORS Since Tata Motors operates in multiple countries across Europe, Africa, Asia, the Middle East, and Australia, it needs to pay close attention on following political factors in different regions: 1. Political Climate or Stability 2. Laws governing commerce, trade, growth, and investment 3. Labour Laws 4. Tax policy 5. Environmental Rules & Regulations 6. Pricing Regulations 7. Local Markets and Economies
  37. 37. ECONOMIC FACTORS Operating in numerous countries across the world, Tata Motors functions with a global economic perspective while focusing on each individual market. Because Tata is in a rapid growth period, expanding or forming a joint venture in over five countries world-wide since 2004, a global approach enables Tata Motors to adapt and learn from the many different regions within the whole automotive industry. Major economic factors are : • Government taxes on manufacturers. • Inflation Rate • Population figures • Buying capacity of people • Prices of external resources (Ex: price of Steel will increase the price of vehicle) • Level of economic activities • Interest Rates SOCIAL FACTORS There are various socio-cultural factors which affect a company belonging to automotive industry like TATA MOTORS in the market down to consumers. The factors are : • Different segments of Population • Cultural Differences • Social Responsibility • Influence of Consumer Movement • People concerns over the price, mileage, brand of the car, design and style, after sales . service when purchasing a vehicle. • Also, depends on what other people think about their vehicle • Satisfaction of different age groups • Space and Safety • Focus on Corporate Customers.
  38. 38. TECHNOLOGICAL FACTORS • Technological factors and innovations, Research & development plays a most important role as they improve standards of driving. • Fuel consumption is one of a major problem at the moment, hybrid engines has developed to reduce fuel consumption. • One of a major requirement of the customer is safety. Seat belts, air bags which protect passengers at a collision, ABS brakes to stop the vehicle in short distance even in icy surfaces. • By investing for Research and development and innovating new technologies can gain patented and boost sales. • Technological development is support the driver to control the vehicle more comfortable and easier. Ex: Auto gear, auto parking, Navigation system.
  39. 39. ANALYSIS OF PROFITABILITY The present study has been made in order to analysis profitability through ratio of the automobile of companies in India. The profitability ratios which have been discussed like: (1) Gross profit ratio (2) Operating profit ratio (3) Return on net capital employed (4) Net profit ratio (5) Return on total assets ratio (6) Return on net worth of the company under study has been also made. 1. Gross profit is basically relative term as percent of net sales, which registered in fluctuating trend during the period of study. An average gross profit ratio of Mahindra and Mahindra Motors and Tata motors was high as compared to other selected companies. These companies showed good profitability, whereas other three auto-mobile companies’ profitability condition was not good, this may affect the market reputation as well as investors. 2. The null hypothesis of gross profit ratio (company wise as well as ear wise) is not rejected. It can be concluded that there is no significant difference in Gross Profit Ratio between considered automobile companies as well as between considered years. 3. Operating profit margin ratio is used to measure company's pricing strategy and operating efficiency. This ratio is basically concerned with operating income and net sales. Operating profit margin ratio showed a fluctuating trend during the period of study. Operating profit margin ratio of all selected companies was less than 13%, whereas in the Hind Motors, this ratio marked in negative. This situation indicates that company management was not satisfactory. So, Hind motors did not have to make control over the cost of goods sold and strategy of sales was not properly. 4. The alternative hypothesis is accepted in the case of operating profit margin ratio and this is indicated that there is significant difference in operating ratio between considered automobile companies. Whereas, the null hypothesis of operating profit margin ratio is not rejected and this is indicated that there is no significant difference in operating ratio between considered years. 5. The study shows that return on the capital employed in the selected automobile company has marked fluctuating trend during all the years of study period. All the selected companies have tried to maintain this ratio in range of 20% to 49%. This situation indicates that the each company try to give minimum to shareholders.
  40. 40. 6. From the table it can be said that, the null hypothesis of return on capital employed ratio (company wise as well as year wise) is accepted means that there is no significant difference in Return on capital Employed between considered automobile companies as well as between considered years. 7. An average of Net profit ratio indicated that selected auto-mobile Companies except Hind Motors were quite satisfactory. Hind Motors as marked in negative trend. Net profit ratio was highest marked in Premier Motors that being an average of 16.98% and it was followed by M & M. 8. The alternative hypothesis is accepted in the case of net profit ratio (companies-wise) means that there is significant difference in net profit ratio between considered automobile companies. While the null hypothesis is not rejected in the case of year wise net profit ratio and it can be said that there is no significant difference in net profit ratio between considered years. 9. The return on assets ratio highest marked in M & M Motors means efficient use of fund or efficient management of funds. Whereas lowest marked in Hind Motors which means that inefficient use of funds. For the Hind Motors this lead toward over-capitalization and this situation is harmful. So, it’s advisable to use funds in efficient manner. Mahindra & Mahindra Motors, 171 Premier Motors, Tata Motors and Force Motors have tried to maintain an average 5% to 11% respectively. It means that these companies tried to get minimum return through funds. Here, also above three companies should try to use funds in efficient manner.
  41. 41. RATIO ANALYSIS • Ratio analysis is quantitative analysis of information contained in a company's financial statements. • Ratio analysis is used to evaluate various aspects of a company's operating and financial performance such as its efficiency, liquidity, profitability and solvency. • Ratios are also compared across different companies in the same sector to s. how they stack up, and to get an idea of comparative valuations. • In our analysis, we will evaluate five aspects of the company and its competitors : 1.Operating Performance(EBT margin, Net Profit margin, Return on Assets, Return on equity) 2. Activity Levels(Total Asset turnover) 3. Liquidity Position (Current Ratio) 4. Leverage (Debt to Equity) 5. Stock Valuation Multiples (Price to Earnings Ratio, Price to Sales Ratio.
  42. 42. EBT Margin • Tata Motors Performance FY -2012 FY -2013 FY -2014 FY -2015 2.46% 0.39% -2.99% -10.95% • Competitors Performance in FY-2015 Tata Motors Ford GM Mahindra -10.95% 3.69% 4.79% 7.86% • EBT margin shows company's earnings before tax as a percentage of net sales (revenues). • Tata Motors is performing poorly in current financial year as compared to previous years. Negative EBIT margin indicates that the company isn't selling enough to cover its fixed costs. It's only tolerable in a early stage growth company or a Startup. • As compared to its competitors, it is at the bottom. Mahindra leading in the market
  43. 43. Net Profit Margin • Tata Motors Performance FY- 2012 FY- 2013 FY- 2014 FY-2015 2.28% 0.67% 0.97% -13.05% • Competitors Performance in FY-2015 Tata Motors Ford GM Mahindra -13.05% 2.97% 3.00% 7.74% • The net profit margin takes all costs associated with the firm's continuing operations into account, and so tells us how much it is able to keep as profit for each dollar of sales it makes. Usually, higher is better. • Tata Motors net profit margin has decreased drastically over the years. It has gone negative in FY •2015, which indicates cost of production exceeds net sales. • However, in the market Mahindra is doing outstanding as compared to everyone.
  44. 44. Return on Assets (ROA) • Tata Motors Performance FY- 2012 FY- 2013 FY- 2014 FY-2015 4.05% 0.90% 0.99% -13.57% • Competitors Performance in FY-2015 Tata Motors Ford GM Mahindra -13.57% 1.73% 2.49% 5.67% • The return on assets shows the percentage of how profitable a company's assets are in generating revenue. This ratio tells us how much profit a company is able to generate for each dollar of assets invested. • Tata Motors' ROA is decreasing year by year and has fallen drastically in recent financial year. Negative ROA shows that company is investing a high amount of capital into its production while simultaneously receiving little income. • Mahindra & Mahindra leading the market strongly, with a much better position.
  45. 45. Return on Equity (ROE) • Tata Motors' Performance FY- 2012 FY- 2013 FY- 2014 FY-2015 6.33% 1.57% 1.74% -31.93% • Competitors' Performance in FY-2015 Tata Motors Ford GM Mahindra -31.93% 13.92% 12.29% 21.57% • Return on equity measures the rate of return for ownership interest of common stock owners. It measures the efficiency of a firm at generating profits from each unit of shareholder equity. • High ROES can be caused by the firm taking on excessive leverage, which can prove disastrous for the firm's shareholders in the long run. Hence, high ROE is not always better. • Tata Motors recent financial year ROE shows that its shareholders are losing, instead to gaining value. Investors may avoid placing their money in, but they may also overlook, as the company is well- positioned for long-term growth. • M&M high ROE might be clue to excessive leverage.
  46. 46. Total Assets Turnover • Tata Motors' Performance FY- 2012 FY- 2013 FY- 2014 FY-2015 1.99 1.48 1.12 1.16 • Competitors' Performance in FY-2015 Tata Motors Ford GM Mahindra 1.16 0.66 0.84 0.9 • The asset turnover ratio tells us how many dollars of sales a company is able to generate for each dollar of assets. • A high asset turnover is an indicator of good performance provided the company's assets are not in a state of advanced depreciation. • Tata Motors has a very good asset turnover ratio over its competitors.
  47. 47. Current Ratio • Tata Motors' Performance FY- 2012 FY- 2013 FY- 2014 FY-2015 0.50 0.42 0.43 0.42 • Competitors' Performance in FY-2015 Tata Motors Ford GM Mahindra 0.42 3.03 1.22 1.44 • The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. • A current ratio of 2 or above is usually considered safe. • Tata Motors is in a poor condition to pay back its debts, while Ford is in a very safe situation as compared to its competitors.
  48. 48. Debt to Equity Ratio • Tata Motors' Performance FY- 2012 FY- 2013 FY- 2014 FY-2015 0.56 0.75 0.76 1.35 • Competitors' Performance in FY-2015 Tata Motors Ford GM Mahindra 1.35 4.18 1.11 1.09 • The debt-to-equity ratio (DIE) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. • The most widely used measure of a company's leverage, debt to equity ratios greater than 1 indicate the company may be overleveraged. • Tata Motors having a DIE ratio greater than 1, indicates the company is stretching itself financially. However, Ford as compared to its competitors is most overleveraged.
  49. 49. Price to Earnings Ratio (P/E) • Tata Motors Performance FY- 2012 FY- 2013 FY- 2014 FY-2015 339.17 1823.13 2739.68 -112.21 • Competitors Performance in FY-2015 Tata Motors Ford GM Mahindra -112.21 14.88 11.12 22.01 • P/E tells us how many years a company will need to earn back what investors are currently paying for the stock • It is generally high for companies considered to have huge growth potential and low for mature ('unexciting') companies. • Tata Motors, being a very old company has reached a saturation stage in F, 2104 and not able to make earnings, indicating a very low growth potential. • Mahindra & Mahindra on the other hand, has been able to evolve continuously with the market and shows a huge potential to grow in F, 2015. • However, Tata Motors has done immensely great in previous years, due.
  50. 50. Price to Sales Ratio (P/S) • Tata Motors' Performance FY- 2012 FY- 2013 FY- 2014 FY-2015 7.74 12.34 26.74 14.64 • Competitors' Performance in FY-2015 Tata Motors Ford GM Mahindra 14.64 0.387 0.329 0.176 • The price-to-sales (per share) ratio is more stable than the price-to- earnings ratio. • It is preferred for the relative valuation of companies which are still growing and do not have positive earnings. • As Tata Motors, has negative earrings in the FY-2015, it has a very high price to sales ratio as compared to its competitors, which have positive earnings • However, the P/S ratio has decreased from FY-2014 to FY-2015.
  51. 51. BALANCE SHEET & P&L
  52. 52. BALANCE SHEET OF TATA MOTORS __________in Rs. Cr.________ Mar’15 Mar,14 Mar’13 Mar’12 12mnths 12mnths 12mnths 12mnths Sources Of Funds Total Share Capital 643.78 643.78 638.07 634.75 Equity Share Capital 643.78 643.78 638.07 634.75 Reserves 14,195.94 18,510.00 18,473.46 18,967.51 Networth 14,839.72 19,153.78 19,111.53 19,602.26 Secured Loans 4,803.26 4,450.01 5,877.72 6,915.77 Unsecured Loans 15,277.71 10,065.52 8,390.97 4,095.86 Total Debt 20,080.97 14,515.53 14,268.69 11,011.63 Total Liabilities 34,920.69 33,669.31 33,380.22 30,613.89 Application Of Funds Gross Block 27,973.79 26,130.82 25,190.73 23,676.46 Less: Revaluation Reserves 22.87 22.87 23.31 23.75 Less: Accum. Depreciation 12,190.56 10,890.25 9,734.99 8,656.94 Net Block 15,760.36 15,217.70 15,432.43 14,995.77 Capital Work in Progress 6,040.79 6,355.07 4,752.80 4,036.67 Investments 16,987.17 18,458.42 19,934.39 20,493.55 Inventories 4,802.08 3,862.53 4,455.03 4,588.23 Sundry 1,114.48 1,216.70 1,818.04 2,708.32
  53. 53. Debtors Cash and Bank Balance 944.75 226.15 462.86 1,840.96 Total Current Assets 6,861.31 5,305.38 6,735.93 9,137.51 Loans and Advances 4,270.67 4,374.98 5,305.91 5,832.03 Total CA, Loans & Advances 11,131.98 9,680.36 12,041.84 14,969.54 Current Liabilities 12,282.33 13,334.13 16,580.47 20,280.82 Provisions 2,717.28 2,708.11 2,200.77 3,600.82 Total CL & Provisions 14,999.61 16,042.24 18,781.24 23,881.64 Net Current Assets -3,867.63 -6,361.88 -6,739.40 -8,912.10 Total Assets 34,920.69 33,669.31 33,380.22 30,613.89 Contingent Liabilities 9,882.65 13,036.73 15,090.21 15,413.62 Book Value (Rs) 46.1 59.51 59.91 61.77
  54. 54. P&L OF TATA MOTORS
  55. 55. INTERNATIONAL MARKET, AWARDS & CLAUSES
  56. 56. AFRICA In the continent of Africa, Tata Motors has significant presence in South Africa, Angola, Algeria, Democratic Republic of Congo, Ghana, Kenya, Morocco, Mozambique, Nigeria, Seychelles, Sudan, Tanzania, Tunisia, Uganda, Zambia and Zimbabwe. Africa has been a preferred destination for Tata Motors since 1992. The roads of Africa are home to both left-hand and right-hand drive versions of our cars, buses, SUVs and trucks. We have a manufacturing base in Rosslyn, South Africa, which produces trucks ranging from 7 to 75 tonnes. Algeria Angola Congo Djibouti Ethiopia Ghana Kenya Morocco Mozambique Nigeria Senegal Seychelles South Africa Sudan Tanzania Tunisia Uganda Zambia Zimbabwe LATIN AMERICA Tata Motors has been wooing customers in Latin America since 2009. Our most popular vehicles here are our compact and mid-sized sedans including the Indigo and the Manza, our hatchback Vista, and the Tata Xenon, our bestselling pickup. What our vehicles bring to the market are a winning combination of power-packed performance and lower lifecycle cost of ownership. Bolivia Chile Ecuador Uruguay
  57. 57. EUROPE Europe is the home of great automobile engineering and Tata Motors is proud to have a strong presence here, through our design and development facilities – Trilix, our design and engineering partner in Turin, Italy and the award-winning Tata Motors European Technical Centre in UK. Europe is where our cars and trucks are benchmarked to international standards in styling, design, craftsmanship, quality and reliability. Europe is where we create and fall in love with the next generation of vehicles. Italy Poland Spain RUSSIA Russia and the CIS form a large part of our global expansion strategy. Our manufacturing base in Ukraine gives us access to local geographies and facilitates customisation and speed of delivery. Our wide range of trucks and buses allows us to provide customers with the best fit vehicle. Our local tie-ups with dealers and distributors give us the ability to provide our customers with superior service experience. Russia Turkmenistan Ukraine
  58. 58. APAC Tata Motors first ventured into other Asia Pacific markets with its foray into Sri Lanka in 1961. In addition, Tata Motors has a substantial presence in Bangladesh, Nepal, Myanmar, Bhutan, Afghanistan, Indonesia, Malaysia, Philippines, Thailand and Vietnam. With an established presence in most geographies, and a dominant share of the commercial vehicle segment in various markets, Tata Motors is well on its way to realising its global expansion strategy. Afghanistan Australia Bangladesh Bhutan Indonesia Malaysia Myanmar Nepal Philippines Sri Lanka Thailand Vietnam MIDDLE EAST Tata Motors has been present in the Middle East geography since 1971 when our trucks were first sold in Bahrain. Today, our vehicles are sold in the UAE, Oman, Kuwait, Qatar, Saudi Arabia, Iraq and Turkey. The region accounts for a tenth of our export market. We offer products with the reliability and ruggedness that are necessary for operating in local weather conditions and terrains. We have achieved a leadership position in the medium bus segment, and we are now expanding into the pickup and truck sectors. The Tata Elanza, Xenon and Prima are our latest launches in this region. Abu Dhabi Bahrain Dubai Iraq Kuwait Oman Qatar Saudi Arabia Turkey
  59. 59. AWARDS & ACHIEVEMENTS: Jaguar Land Rover  Jaguar Land Rover was handed the Queen's Award for Sustainable Development by the UK Government  Jaguar Land Rover also won the Gold Award, for its active support of the UK Armed Forces community  The company was ranked Best Employer in the UK by Bloomberg  Range Rover Evoque was declared the 'Best in Compact SUV' by Atonics Design Awards, Germany  Range Rover Sport was awarded the 'Best Large SUV of the Year' by Autocar, South Africa  Discovery Sport was declared 'Family Car of the Year' by Top Gear Magazine, UK  Jaguar XF won the Design Award from Auto Build, Germany  Jaguar XE was awarded the 'Best Large Car' by 2015 Diesel Car Magazine Awards, UK. Plants  Tata Motors' Jamshedpur plant received the Srishti Good Green Governance Award for the sixth consecutive year  The Lucknow plant received the Srishti Good Green Governance Award  The Ahmedabad plant won the CII's Best Kaizen Competition 2015 at Gujarat state level  The Dharwad plant won the First Prize National Energy Conservation Award  The Pantnagar plant won the Golden Peacock Award 2015  The Pune plant won the CII Green Co Best Practice Award in Life Cycle Assessment  The Dharwad and Pantnagar plants received the WCQ Level II certification.
  60. 60. GDP & BUSINESS OVERVIEW
  61. 61. BUSINESS OVERVIEW India's GDP growth continues to remain weak, at 4.7% in FY 2013-14 (advance estimates) after growing at 4.5% in FY 2012-13. Industrial activity continues to remain weak. Index of Industrial production (IIP) was negative at 0.1% during FY 2013-14. The stagnation in the industrial activity was broad-based. While mining output registered a negative of 1.1%, manufacturing output registered a negative of 0.7% during the same period. FY 2013-14 witnessed a decline in investments in new projects in line with slowdown in overall growth. Tata Motors Business: Consequent to the macro economic factors as explained above, the Indian automobile industry posted a decline of 9.3% in FY 2013-14, as compared to 1.1% growth in the last fiscal. The commercial vehicles declined by 22.4% (last year growth of 1.7%) and passenger vehicles declined by 4.7% (last year growth of 0.9%). The industry performance in the domestic market during FY 2013-14 and the Company's market share are given below:-
  62. 62. Growth rate in GDP Source: Ministry of Statistics and Programme implementation On the back of tight monetary policy, limited Fiscal spending, rising Inflation and slowing investments, over the previous year, FY 2013-14 saw many of the same challenges continuing into the year. FY 2013-14 was marked by the challenge to the Government to contain the fiscal deficit, and the Government expenditure on infrastructure and other key sectors suffered. Current account deficit was brought in control. As a result, the domestic auto industry saw decline after a long time. With the continued high interest rates and inflation, households were forced to spend more on essentials and discretionary spend reduced, leading to deferring of purchase decisions. The consistent stagnation of the industrial growth mainly in the areas of mining and quarrying, manufacturing and infrastructure adversely impacted the domestic auto industry.
  63. 63. On the global economy front, it was still a struggle, with the Euro zone in recession for much of 2013. However, in the developed world which had started as an uneven and patchy, recovery began to strengthen. The US economy, despite having to cope with feuding over its budget, seems to have sped up. It has been creating jobs and its housing market and stock indicator have moved up sharply. By the end of the year 2013, the UK had become, on some counts the fastest growing large developed economy. UK labor market conditions improved as employment increased. Rising consumer and business confidence helped to underpin stronger retail sales and investment spending, while the recovery in house prices helped shore up household wealth. This was led by higher consumption, in turn leading to fears of overheating in the housing market. Germany had a solid year, reducing unemployment and boosting living standards. However, across the Mediterranean the pattern was more disappointing, with Italy, Spain, Portugal and Greece all enduring a year of rising unemployment. Europe and the euro are not out of trouble, but the acute phase of their difficulties may be past. However, there is still a long way to go: deflation risks remain, the sovereign and banking crisis is not fully resolved, and there is a considerable gulf in performance between the core and the periphery. The structural shift from the developed world towards the emerging world continued but at a slightly slower pace than before. Industrial activity picked up pace throughout the year, supporting continued employment growth. With asset prices buoyant and confidence returning, the pillars of support for consumer spending fell back into place during 2013. In the emerging markets due to announcement by the US Federal Reserve in May, that it would soon begin reducing its monthly asset purchases (so-called "tapering"), caused currencies to depreciate, stock markets to fall and borrowing costs to rise. Countries with large current account and fiscal deficits were worst affected. Growth in China was at 7.5% and Africa, encouragingly, grew by more than 5%.
  64. 64. CONTIBUTION & SOCIAL RESPONCBILITY
  65. 65. As a responsible corporate citizen, our Corporate Social Responsibility (CSR) Strategy complements our business philosophy and objectives. We have adopted the Tata Group Affirmative Action (AA) Policy attempting to voluntarily address the prevailing social inequities in India by encouraging positive discrimination for the Scheduled Castes and Scheduled Tribes (SC/ST) communities. Every year, we participate in TAAP (Tata Affirmative Action Programmed) Assessment, developed on the lines of TBEM (Tata Business Excellence Model). Proximity-linked CSR investments are implemented across locations where we serve communities in the vicinity of our manufacturing plants and office locations. We encourage collaboration with all our stakeholders and cascade sustainable initiatives across the company ecosystem, both upstream and downstream, including inter alia subsidiaries and associate companies, channel partners – dealers and service stations and supply chain. VIDYADHANAM  Scholarship programme.  Special Coaching classes.  School infrastructure improvement.  Co-curricular activities.  More than 37,000 children were benefited in 2013-2014 AAROGYA  Addressing malnutrition.  Preventive and curative health care services.  Creating health awareness.  More than 2,84,000 persons were benefited in 2013-14. KAUSHALYA  Driver training programme.  Training in automotive & technical trades.  Training in agriculture & allied activities.  ITI adoption programme, training 137 youth across INDIA.  More than a20000 youth were benefited in 2013-14. VASUNDHARA  Tree plantation programs.  Creating environmental awareness.  Soil & water conservation.  1,64,000 trees were planted in 2013-14.  More than 18500 people participated in our environmental awareness programmes.
  66. 66. SUGGESTIONS
  67. 67. These suggestions are based on ratio analysis and this through company may improve their financial stability, liquidity position, operating efficiency and may restructure finance. 1. As current ratio was less than standard ratio 2:1 in all the selected automobile companies. Therefore these companies need to increase current ratio by investing in current assets or by decreasing current liabilities and try to maintain standard norm of this ratio. 2. Super Quick ratio of all companies found very negative therefore all the selected automobile companies required to improve quick ratio immediately to improve its quick ratio. Automobile companies need to maintain the proper level of cash, bank balance and short-term investment in current 176 assets. At the same way try to increase reserves by investing profit or decreasing level of current liabilities. 3. As liquid ratio found that liquidity ratio was less than the standard ratio 1:1 in all the selected automobile companies. Hence these companies should increase liquid ratio by investing in liquid assets or by decreasing liquid liability. All the companies should try to maintain standard norm (1:1) of this ratio as know well without liquid assets very difficult meet with current obligation. For the trust of creditors and investor, companies need to make proper planning about short-term funds and its utilization. 4. Gross profit ratio thus reflects the margin of profit that a concern is able to earn on its trading and manufacturing activity. All the selected companies should have to maintain this ratio at high level as it’s indicates operating efficiency. Moreover companies should have to make the plan about inventory or try to reduce cost of goods sold and increase the sales. 5. Operating margin is used to measure company's pricing strategy and operating efficiency. It gives an idea of how much a company makes (before interest and taxes) on each rupees of sales. All the selected companies should try to maintain this ratio at high level. For the maintaining high level of this companies need to increase operating income by net sales or increase operating efficiency and also reduce the external funds. 6. Return on capital employed ratio measures the profitability of a company by expressing its operating profit as a percentage of its capital employed. From the analysis it is to be found that return on capital employed below than 50% in all the selected automobile companies. Accordingly, all the selected companies should try to maintain this ratio up to 50% because its point to well-organized use of funds. 7. Net profit ratio indicates the company’s capacity to face adverse economic conditions such as price competition, low demand, etc. Obviously, higher the ratio the better
  68. 68. profitability. Hence, try to sustain this ratio at higher level because this ratio reflects the operating efficiency and performance of the company. As we know this ratio is very useful for the investors. 177 8. Return on assets ratio should to be maintained at higher level because it’s beneficial for the company. 9. Return on net worth should try to preserve at higher level as it’s indicates that efficient use of equity capital and reserves. If this ratio is to be found at higher level means company has to be invested funds in profitable manner. 10. All the selected automobile companies should have to increase proportion of net worth by reinvesting profit in the business. Net worth ratio high means companies have sufficient internal fund and less depends on external funds. 11. Lowe value of debt-equity ratio are favourable because it’s indicates less risk and less depends of external. Hence, all the selected automobile companies should try to maintain at lower level as it’s favourable for the companies. 12. Companies should have to maintain interest coverage ratio at higher level because it indicates greater ability of the company to handle fixed charge liabilities. Also try to obtain funds at low interest or less use of external funds. 13. Companies should try to sustain total assets turnover ratio at highest level as it’s indicates well-organized use of funds. 14. As far concerned of capital turnover ratio, companies can be preserved up to 20 times but consistency is to be required per year. 15. For maintain inventory turnover ratio company can be decided purchasing policy. If purchasing policy is to be planned it means avoid the unnecessary investment in inventory. At the same way companies should have to increase operating efficiency. Therefore, company can be maintained inventory turnover ratio at higher level as it desirable for the company. 16. Higher level of capital turnover ratio is preferable for the company as it indicates that the efficient and well-organized management of current asset. Higher ratio means current assets is to be easily converted into cash and working capital cycle is to be smooth going.
  69. 69. SWOT ANALYSIS
  70. 70. SWOT Analysis Strengths • Excellent brand equity and strengths in Indian Market • Legacy Dignity of Tata brand heritage which is almost as old as Ford Motor Company. • Sound global recognition in light trucks and buses. • Sound fundamentals in turbo diesel engines that they developed in joint venture with Cummins. • Sound presence in Asian Markets. • Ownership of the heritage of British motor brands -Land Rover and jaguar. • Strategic tie up with Mercedes Benz which is one of the hottest cars in premium car market segment in India. • World class quality accreditation (ISO 0001,ISO 20000,ISO 14001). • Excellent cost management framework (Ariba Spend Management). • Excellent Supply Chain Management using the SAP framework. • Experienced, high quality, productive and low cost work force. • Ownership of some of the largest automobile manufacturing plants of the world. • Diversification strengths due to other large businesses of Tata Group. • Excellent financial strengths - dose to $10 Billion of annual revenues. • Sound Parent Group support - Tata Group annual turnover is in excess o f $30 Billion.
  71. 71. WEAKNESS  Perceived as too Indian in cheap & low quality car maker, definitely it will take them along time to establish a global branding.  Focus is more on cost thus their car models lack advanced features that are common is western markets.  Most of cars, commercial vehicles are not suitable (may not meet the safety standards) for international markets particularly in Europe & USA.  History oh failure in international brands (they failed miserably in their first launch of city rover launch in Europe).  Do not possess localization skills outside India markets, this is one of the primary reason for their failure in the city rover venture. Opportunities • Asia has continued to register growth, mainly from domestic and overseas sales growth in China and India. China has emerged as the largest car market and car producing center of the world. Chinese brands have started to appear in world markets and in all probability these will grow into international brands in the next few years • Car gain control over UK 7 Europe market by re-enforcing the heritage of jaguar & land rover. • Deep roots of British style manufacturing processes given their own heritage of the British rule in India - can help them do better with jaguar and Land Rover. • Introduce Asian variants of jaguar and Land Rover by promoting their 'Power Icon. Branding, this may work very well with Asian politicians, Capitalists and Bureaucrats. • Develop more joint ventures like Tata - Mercedes Benz and introduce their cars in Asian markets. • Tata Nano has taken the world by surprise whereby many economy car manufacturers of the world are yet not even think of such a cheap car.
  72. 72. THREATS  In the coming years, Tata motors predominance in commercial vehicles will be challenged by the entry of international brands like: Mercedes- Benz , Volvo and Navistar which have all entered, or are in the process entering Indi  India's domestic car market has quite a few new entrants. Such GM, Honda, Hyundai and others. They are setting up the plan. to Asia to take advantage of growing market .  More fuel-efficient cars, hybrids and electric vehicles continue to be of interest to consumers. Delays in launching the new energy efficient models may results in sharp decline in the market share.
  73. 73. CONCLUSION
  74. 74. CONCLUSION I would like to conclude that the prosperity of Tata Motors Ltd., is wealthy for the last 2 years period. But the last 2 years of profitability is not wealthy, It was found to be in a gradual decreasing manner regarding the Net Sales and the Net Profits of the company since 2011 onwards. These changes in the profits might have occurred due to: 1. High taxation 2. High cost of borrowed funds 3. High depreciation cost 4. High expenses etc. 5. Overtaking luxury brands. 6.Wrong managerial decisions. Which can be modified by implementing proper financial management concepts. Thus it can be concluded that inner strength of the company is remarkable. Company can further improve its profitability through optimum capital gearing and reduction in Administration and Financial expenses.

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