Financial Statement Analysis of Tata Motors

Ratios
Liquidity Ratios: Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Current Ratio 0.98 1.07 0.86 0.64 0.44
Acid/Quick Ratio 0.76 0.97 0.92 0.66 0.58
Debt Equity Ratio 0.61 0.53 0.59 0.8 1.06

Profitability Ratios
Gross Profit Margin(%) 12.39 12.21 11.19 8.26 3.3
Net Profit Margin(%) 7.02 7.35 6.94 6.96 3.77
Return On Capital Employed(%) 28.49 26.47 25.82 18.96 6.41
Retun on Total Assets(ROA) 8.91 9.36 9.98 7.77 2.61
Return On Equity 32.12 31.36 30.98 23.91 5.34

Management Efficiency Ratios

Inventory Turnover Ratio 10.99 10.32 11.02 14.44 13.47
Debtors Turnover Ratio 24.12 26.31 35.6 30.08 19.11
Fixed Assets Turnover Ratio 5 5 5.01 2.69 1.88
Asset Turnover Ratio 2.62 2.55 3.08 2.69 1.88

Debt Coverage Ratios

Interest Cover 8.64 7.62 7.19 6.28 2.43
 -------------
------ in
Rs. Cr.
-------------
Profit & Loss account ------
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
12 mths 12 mths 12 mths 12 mths 12 mths

Income
Sales Turnover 20,262.61 23,490.55 31,089.69 33,123.54 28,538.20
Excise Duty 3,063.44 3,401.92 4,425.44 4,355.63 2,877.53
Net Sales 17,199.17 20,088.63 26,664.25 28,767.91 25,660.67
Other Income 403.98 852.41 1,114.38 734.17 921.29
Stock Adjustments 144 256.91 349.68 -40.48 -238.04
Total Income 17,747.15 21,197.95 28,128.31 29,461.60 26,343.92
Expenditure
Raw Materials 12,245.28 14,633.02 19,879.56 20,891.33 18,801.37
Power & Fuel Cost 237.81 258.51 327.41 325.19 304.94
Employee Cost 1,039.34 1,143.13 1,367.83 1,544.57 1,551.39
Other Manufacturing
Expenses 592.64 671.31 872.95 904.95 866.65
Selling and Admin
Expenses 890.21 1,061.07 1,505.23 2,197.49 1,652.31
Miscellaneous
Expenses 620.27 740.99 1,051.49 964.78 1,438.89
Preoperative Exp
Capitalised -282.43 -308.85 -577.05 -1,131.40 -916.02
Total Expenses 15,343.12 18,199.18 24,427.42 25,696.91 23,699.53

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 2,000.05 2,146.36 2,586.51 3,030.52 1,723.10

PBDIT 2,404.03 2,998.77 3,700.89 3,764.69 2,644.39
Interest 234.3 350.24 455.75 471.56 704.92
PBDT 2,169.73 2,648.53 3,245.14 3,293.13 1,939.47
Depreciation 450.16 520.94 586.29 652.31 874.54
Other Written Off 67.12 73.78 85.02 64.35 51.17
Profit Before Tax 1,652.45 2,053.81 2,573.83 2,576.47 1,013.76
Extra-ordinary items -1.54 0 -0.07 0 15.29
PBT (Post Extra-ord
Items) 1,650.91 2,053.81 2,573.76 2,576.47 1,029.05

Tax 415.5 524.93 660.37 547.55 12.5

Reported Net Profit 1,236.95 1,528.88 1,913.46 2,028.92 1,001.26

Total Value Addition 3,097.84 3,566.16 4,547.86 4,805.58 4,898.16

Preference Dividend 0 0 0 0 0
Equity Dividend 452.19 497.94 578.07 578.43 311.61
Corporate Dividend
Tax 63.42 69.84 98.25 81.25 34.09

Per share data (annualised)

Shares in issue (lakhs) 3,617.52 3,828.34 3,853.74 3,855.04 5,140.08

Earning Per Share (Rs) 34.19 39.94 49.65 52.63 19.48

Equity Dividend (%) 125 130 150 150 125

Book Value (Rs) 113.65 143.94 177.59 202.7 240.64

 ------------------
- in Rs. Cr.
------------------
Balance Sheet -
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 361.79 382.87 385.41 385.54 514.05

Equity Share Capital 361.79 382.87 385.41 385.54 514.05

Share Application Money 0 0 0 0 0

Preference Share Capital 0 0 0 0 0

Reserves 3,749.60 5,127.81 6,458.39 7,428.45 11,855.15

Revaluation Reserves 0 26.39 25.95 25.51 25.07

Networth 4,111.39 5,537.07 6,869.75 7,839.50 12,394.27
Secured Loans 489.81 822.76 2,022.04 2,461.99 5,251.65
Unsecured Loans 2,005.61 2,114.08 1,987.10 3,818.53 7,913.91

Total Debt 2,495.42 2,936.84 4,009.14 6,280.52 13,165.56

Total Liabilities 6,606.81 8,473.91 10,878.89 14,120.02 25,559.83

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
6,611.95 7,971.55 8,775.80 10,830.83 13,905.17
3,454.28 4,401.51 4,894.54 5,443.52 6,259.90
3,157.67 3,570.04 3,881.26 5,387.31 7,645.27
538.84 951.19 2,513.32 5,064.96 6,954.04

Investments 2,912.06 2,015.15 2,477.00 4,910.27 12,968.13

Inventories 1,601.36 2,012.24 2,500.95 2,421.83 2,229.81
Sundry Debtors 811.32 715.78 782.18 1,130.73 1,555.20

Cash and Bank Balance 345.26 327.66 535.78 750.14 638.17

Total Current Assets 2,757.94 3,055.68 3,818.91 4,302.70 4,423.18

Loans and Advances 2,831.16 5,964.61 6,208.53 4,831.36 5,909.75

Fixed Deposits 1,659.78 791.77 290.98 1,647.17 503.65

Total CA, Loans & Advances 7,248.88 9,812.06 10,318.42 10,781.23 10,836.58
Deffered Credit 0 0 0 0 0

Current Liabilities 6,142.74 6,673.61 6,956.88 10,040.37 10,968.95

Provisions 1,126.06 1,215.04 1,364.32 1,989.43 1,877.26

Total CL & Provisions 7,268.80 7,888.65 8,321.20 12,029.80 12,846.21

Net Current Assets -19.92 1,923.41 1,997.22 -1,248.57 -2,009.63

Miscellaneous Expenses 18.16 14.12 10.09 6.05 2.02

Total Assets 6,606.81 8,473.91 10,878.89 14,120.02 25,559.83

Contingent Liabilities 1,450.32 2,185.63 5,196.07 5,590.83 5,433.07

Book Value (Rs) 113.65 143.94 177.59 202.7 240.64
Liquidity/Solvency Ratios :

Current Ratio Acid/Quick Ratio

1.2 1.2
1 1
0.8 0.8
Current Ratio A
0.6 0.6
0.4 0.4
0.2 0.2
0 0
1 2 3 4 5 1 2 3 4 5

Current ratio : in a business indicates that the availability of the current asset to meet it’s c
accepted.Here it is much below the accepted values and has been decreasing over the years,
Quick Ratio : THIS RATIO DOES NOT INCLUDES INVENTORIES AS INVENTORIES ARE NOT AS LIQUID AS CASH. AN OPT
YEARS AND IS QUITE BELOW THE OPTIMAL VALUE WHICH GIVES THE INTERPRETATION THAT THE COMPANY IS LOW
DEBT EQUITY RATIO : IT MEASURES THE RELATIONSHIP OF THE CAPITAL PROVIDED BY CREDITORS TO THE AMOUNT
AGGRESSIVE USE OF LEVERAGE AND THIS MAKES THE COMPANY MORE RISKY FOR CREDITORS. IN THIS CASE, WE OB
EARLIER BUT LAST YEAR HAS SEEN GREATER DEBT OVER EQUITY WHICH SUGGESTS THEY USED AGGRESSIVE APPROA

PROFITABILITY RATIOS :

Gross Profit Margin(%) Net Profit Margin(%) Return O

14 8 Employe
12 7
30
6
10 Gross Profit Net Profit 25
5
8 Margin(%) Margin(%) 20
4
6 15
3
4 10
2
2 5
1
0 0
0
1 2 3 4 5 1 2 3 4
1 2 3 4 5 6

GROSS PROFIT MARGIN : FOR THE COMPANY, GROSS PROFIT HAS BEEN DECREASING OVER THE YEARS WHICH GIVE
NET PROFIT MARGIN : NET PROFIT MARGIN IS DECREASING OVER THE PREVIOUS YEARS WHICH STATES THAT COMP

RETURN ON ASSETS : THIS IS A MEASURE OF PROFITABILITY FROM A GIVEN LEVEL OF INVESTMENT. WE OBSERVE TH
GIVES A NEGATIVE IMPRESSION ON COMPANY'S RETURNS.
RETURN ON EQUITY : THIS IS A MEASURE OF PROFITABILITY FROM STANDPOINT OF COMPANY'S SHAREHOLDERS. IT MEASUR
BEEN VERY HIGH IN THE PREVIOUS YEARS BUT HAS FALLEN CONSIDERABLY IN THE LAST YEAR. BUT IT HAS BEEN CONSISTENTL
RETURN ON CAPITAL : This ratio is the most important for measuring the overall efficiency of a firm. Higher the rati

Management Efficiency Ratios

 Inventory Turnover Debtors Turnover Ratio Fixed Assets Tu
Ratio 40 Ratio
20 Inventory 30 6 F
Turnover Debtors
Turnover Ratio T
15 Ratio R
20 4
10
5 10 2
0 0 0
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

Inventory Turnover Ratio :

INVENTORY TURNOVER RATIO SHOWS THE NUMBER OF TIMES A COMPANY'S INVENTORY IS TURNED INTO SALES. INVESTMEN
THIS RATIO SHOULD BE HIGH WHICH INDICATES EFFICIENT INVENTORY MANAGEMENT. IT RATIO IS CONSIDERABLY HIGH FOR
Debtors Turnover Ratio :
DEBTOR TURNOVER MEASURES THE EFFICACY OF A FIRM'S CREDIT AND COLLECTION POLICY AND SHOWS THE NO. OF TIMES
IT PROVIDES SOME INDICATION OF THE QUALITY OF A FIRM'S DEBTORS AND COLLECTION EFFORTS. DEBTOR TURNOVER RATI
ASSET TURNOVER:
IT MEASURES THE TURNOVER OF ALL THE FIRM'S ASSETS. FOR THE CURRENT COMPANY, ASSET TURNOVER IS HIGH WHICH M

Debt Coverage Ratios:

Interest Cover:
This indicates the extent to which, earnings may fall without causing any embarrassment to the firm, regarding Payment Charg
Interest cover has been decreasing over previous years which indicates that they may face problems in getting credit in future
last year which shows that sales and profits have decreased considerably.
O DUE TO DECREASE IN SALES AND PROFITS.
Gross Profi 12.39 12.21 11.19 8.26 3.3