TATA MOTORS

Tata Motors Limited is Indias largest automobile company, with consolidated revenues of
INR 2, 32, 834 crores (USD 38.9 billion) in 2013-14. It is the leader in commercial vehicles
in each segment, and among the top in passenger vehicles with winning products in the
compact, midsize car and utility vehicle segments. It is also the world's fifth largest truck
manufacturer and fourth largest bus manufacturer.

Financial Analysis of TATA Motors Ltd

RATIO ANALYSIS: - PROFITABILITY ANALYSIS
1) Profit Margin:
A higher profit margin indicates a more profitable company that has better control over its
costs compared to its competitors. Here, we calculate after-tax profit margin, given by:
Margin = PAT/Sales.

Profit Margin

2013-14

2012-13

2011-12

0.060090195

0.052399328 0.081594528

2010-11
0.07593366

Analysis: Profit Margin was increasing but saw a sudden dip in 2012-13 but is again on the
rise. This shows that the company is not having as good control over costs as it used to have
but this dip can be caused due to the losses prevalent in whole Indian automobile industry.
2) Return on Equity (ROE):
It is calculated as: ROE = Profit Available to Equity Shareholders/Shareholders Fund

ROE

2013-14

2012-13

2011-12

2010-11

0.213266528

0.262840586 0.407738418 0.483719819

Analysis: Company is giving good returns to the shareholders around 21%. Although ROE is
showing a similar pattern as Profit Margin which is justifiable as Automobile Industry is
facing a dip.
LEVERAGE RATIOS
Debt-Equity Ratio:
It is calculated as: D/E = Long term Borrowings / Shareholders Fund

D/E

2013-14

2012-13

2011-12

2010-11

0.689881553

0.854346353 0.843515507 0.900087474

Analysis: D/E ratio of the company is very high, but it is because TATA Motors has acquired
JLR in 2008-09 due to which it has taken a huge borrowing, but afterwards it is decreasing
constantly and has seen a sudden dip in this financial year.
LIQUIDITY RATIOS
1) Current Ratio
It is calculated as: Current Ratio = Current Assets / Current Liabilities

Current Ratio

2013-14

2012-13

1.037779842

0.856814195

2011-12

2010-11

0.87980303 0.763507422

Analysis: Companys Current Ratio has been constantly increasing which shows that
company is increasing its current assets at a higher rate than current liabilities. Its a good
sign for liquidity in company. But we still need to check for quick ratio as current ratio can
have an increase due to high inventory.
2) Quick Ratio/Liquidity Ratio:
It is calculated as: Quick/Liquidity Ratio = (Current Assets Inventories)/ (Current
Liabilities Working Capital)

Quick Ratio

2013-14

2012-13

2011-12

2010-11

0.742500146

0.613742272 0.631181496 0.508262946

Analysis: Companys quick ratio is showing similar trend as current ratio. It means company
is having high liquidity to meet its short term obligations.
EFFICIENCY RATIOS
1) Asset Turnover Ratio:
Formula used: A/T Ratio = Sales / (Total Assets)
2013-14

2012-13

2011-12

2010-11

Assets Turnover
Ratio

1.0583429

1.108079823

1.1394379 1.209017585

Analysis: A/T ratio is decreasing which shows that companys need to work on that and
become more effective in using investment in assets to generate revenues.

2) Inventory Turnover Ratio:

It is calculated as: IT ratio = Raw material consumed / Average Raw Material Inventory
2013-14

2012-13

2011-12

2010-11

Inventory
Turnover Ratio

5.611942276
5.80092243 6.243931448 5.551353805
Analysis: IT ratio has been consistently decreasing but as we already know that sales has
decreased so this is not to worry about.
Latest related news
Excise duty in automobile sector will be continued which will further back growth in this
sector.
With an eye on beefing up its share in the burgeoning intermediate light commercial vehicle
(ILCV) segment, Tata Motors has launched a new range of trucks christened ULTRA.
Claimed to be contemporary in style, design and feature, the new ULTRA range of vehicles, Tata
Motors believes, will provide buyers comfort in terms of driving and cost of ownership.