A STUDY ON FINANCIAL STATEMENT ANALYSIS OF TATA MOTORS

A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor of Management Studies

Under the Faculty of Commerce

By
Parth Mangesh Redij
Roll no 46

Under the Guidance of

Parvin Shaikh

Lords universal college

Topiwala Marg
Goregoan(West)
Mumbai 4000104

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 Declaration

I the undersigned Mr Parth Mangesh Redij hereby declare that the work

Embodied in this project work tiled “A Study of Financial Statement Analysis

Of Tata Motors” forms my own contribution to the research work carried out

under the Guidance of Parvin Shaikh 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

madeto previous works of others, it has been clearly indicated as such and

includes in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance rules and ethical conduct.

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 CHAPTER.1. INTRODUCTION

1.1 EXECUTIVE SUMMARY

To study the progress is very important.Through this study, organization can recognize its
strength s and weaknesses, so that they can be properly analysed. 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
analysing the overall financial study of the Tata motors by using various financial tools. The
study is based on the accounting information of Tata motors.For analyzing the financial
statement such as income statement and balance sheet.In this project will study About
financial statement analysis of tata motors of last 5years.

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FINANCIAL STATEMENT ANAYLSIS:

Advantages Financial statement analysis

• The most important benefit if financial statement analysis is that it provides an idea to the investors about
deciding on investing their funds in a specific company.

•Merits of financial ratio analysis is Another advantage of financial statement analysis is that regulatory
authorities can ensure the company following the required accounting standards or not .

•Financial statement analysis is helpful to the government agencies in analyzing the taxation owed to the
firm.

• Financial statements analysis can help the government agencies to analyze the taxation due to the company.

• Above all, company can analyze its own performance over the period through financial statements analysis.
Through financial statement analysis you can determine and identify financial strengths, weaknesses and
relationships that exist in a company.

• Comparing the financial statement analysis numbers over time to spot trends and changes that
Affect cd on Market Patterns

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Disadvantages of Financial statement analysis:

Although financial statement analysis is highly useful tool, it has two limitations. These two limitations
involve 6the comparability of financial data between companies and the need to look beyond ratios.

 Different companies operate in different industries each having different environmental conditions such
as regulation, market structure, etc such factors are so significant that a comparison of two companies
from different industries might be misleading.
 Financial accounting information is affected by estimates and assumptions. Accounting standards all owe
different accounting policies, which impairs comparability and hence ratio analysis is less useful in such
situations.
 Ratio Analysis explains relationships between past information while users are more concerned about
current future information.
 Ratio Analysis Is hampered by potential limitations with accounting and the data in the financial
statements themselves. This can include errors as well as accounting mismanagement, which involves
distorting the raw data used to derive financial ratios.
 Proponents of the stronger of the efficient-market hypothesis, technical analyst, and behavioral
economist argue the fundamental analysis is limited us a stock valuation tool, all for there on distinct
reasons.
 Ratio analysis can also omit important aspects of a firm’s success, such as key intangible, like brand,
lationships, skills and culture.

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PURPOSE OF FINANCIAL STATEMENT ANALYSIS:

Financial statements are prepared to meet external reporting obligations and also for decision making
provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from
this statement alone. However, the information provided in the financial statements is of immense use in
making decisions through analysis and intepretention of financial statements.

Few numbers appearing on financial statements may not have much significance standing by themselves. It
is in financial statement analysis. How does the analyst key in on significant relationship, How does the
analyst dig out the important trends and changes in company? Three analytical Techniques are widely used;
Dollar and percentage changes on statement, common size statements, and financial ratios and formulas.

The purpose of financial statement analysis is to examine past and current financial data so that a company's
performance and financial position can be evaluated and future risks and potential can
beestimated. Financial statement analysis can yield valuable information about trends and relationships, the
quality of a company's earnings, and the strengths and weaknesses of its financial position

To evaluate financial statements, a person must:

 be acquainted with business practices,
 understand the purpose, nature, and limitations of accounting,
 be familiar with the terminology of business and accounting, and
 be acquainted with the tools of financial statement analysis.

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TECHNIQUE OF FINANCIAL STATEMENT ANAYLSIS:

Various techniques are used in the analysis of financial data to emphasis the comparative and relative
importance of data presented and to evaluate the position of firm. These techniques of financial analysis are
as follows :

 Horizontal Analysis: Horizontal analysis is the comparison of financial informationover a series of

reporting periods. That is horizontal analysis is the review of the results of multiple time periods

 Vertical Analysis: Vertical analysis is the proportional analysis of a financial statement, where each
line item on a financial statement is listed as a percentage of another item. Typically, this means that
every line item on an income statement is stated as a percentage of gross sales, while every line item on a
balance sheet is stated as a percentage of total assets. That is vertical analysis is the review of the
proportion of accounts to each other within a single period.

 Ratio Analysis: The third method for analyzing financial statements is the use of many kinds of
ratios.We use ratios to calculate the relative size of one number in relation to another. After you calculate
a ratio, you can then compare it to the same ratio calculated for a prior period, or that is based on an
industry average, to see if the company is performing in accordance with expectations.In a typical
financial statement analysis,most ratios will be within expectations, while a small number will flag
potential problems that will attract the attention of the reviewer.

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1.2 COMPANY PROFILE TATA MOTORS

Tata Motors was established in 1945 as Tata Engineering and Locomotive Co. Ltd. to manufacture
locomotives and other engineering products. It is India's largest automobile company, with standalone
revenues of Rs. 25,660.79 crores (USD 5.5 billion) in 2008–09. It is the leader in commercial vehicles in
each segment, and among the top three in passenger vehicles with winning products in the compact, midsize
car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, and the
world's second largest bus manufacturer.
The company's 23,000 employees are guided by the vision to be 'best in the manner in which they operate
best in the products they deliver and best in their value system and ethics.'
Tata Motors' presence indeed cuts across the length and breadth of India. Over 4 million Tata vehicles ply on
Indian roads, since the first rolled out in 1954. The company's manufacturing base in India is spread across
Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and
Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint
venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and
Fiat powertrains. The company is establishing a new plant at Sanand (Gujarat). The company's dealership,
sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and
markets Fiat branded cars in India
Tata Motors, the first company from India's engineering sector to be listed in the New York Stock Exchange
(September 2004), has also emerged as an international automobile company. Through subsidiaries and
associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them
is Jaguar Land Rover, a business comprising the two iconic British brands that was acquired in 2008. In
2004, it acquired the Daewoo Commercial Vehicles Company, South Korea's second largest truck maker.
The rechristened Tata Daewoo Commercial Vehicles Company has launched several new products in the
Korean market, while also exporting these products to several international markets. Today two–thirds of
heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired
a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with an option to acquire
the remaining stake as well. Hispano's presence is being expanded in other markets. In 2006, it formed a
joint venture with the Brazil–based Marcopolo, a global leader in body–building for buses and coaches to
manufacture fully–built buses and coaches for India and select international markets. In 2006, Tata Motors
entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture
and market the company's pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun
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production of the Xenon pickup truck, with the Xenon having been launched in Thailand at the Bangkok
Motor Show 2008.

Tata Motors is also expanding its international footprint, established through exports since 1961. The
company's commercial and passenger vehicles are already being marketed in several countries in Europe,
Africa, the Middle East, South East Asia, South Asia and South America. It has franchisee/joint venture
assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal.
The foundation of the company's growth over the last 50 years is a deep understanding of economic stimuli
and customer needs, and the ability to translate them into customer–desired offerings through leading edge
R&D. With over 2,000 engineers and scientists, the company's Engineering Research Centre, established in
1966, has enabled pioneering technologies and products. The company today has R&D centres in Pune,
Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK. It was Tata Motors, which
developed the first indigenously developed Light Commercial Vehicle, India's first Sports Utility Vehicle
and, in 1998, the Tata Indica, India's first fully indigenous passenger car. Within two years of launch, Tata
Indica became India's largest selling car in its segment. In 2005, Tata Motors created a new segment by
launching the Tata Ace, India's first indigenously developed mini–truck.
In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and the world have been
looking forward to. The Tata Nano has been subsequently launched, as planned, in India in March 2009. A
development, which signifies a first for the global automobile industry, the Nano brings the comfort and
safety of a car within the reach of thousands of families. The standard version has been priced at Rs.100, 000
(excluding VAT and transportation cost).
Designed with a family in mind, it has a roomy passenger compartment with generous leg space and head
room. It can comfortably seat four persons. Its mono–volume design will set a new benchmark among small
cars. Its safety performance exceeds regulatory requirements in India. Its tailpipe emission performance too
exceeds regulatory requirements. In terms of overall pollutants, it has a lower pollution level than two–
wheelers being manufactured in India today. The lean design strategy has helped minimise weight, which
helps maximise performance per unit of energy consumed and delivers high fuel efficiency. The high fuel
efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of
an affordable transportation solution with a low carbon footprint.

In May 2009, Tata Motors ushered in a new era in the Indian automobile industry, in keeping with its
pioneering tradition, by unveiling its new range of world standard trucks. In their power, speed, carrying
capacity, operating economy and trims, they will introduce new benchmarks in India and match the best in
the world in performance at a lower life–cycle cost.

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The years to come will see the introduction of several other innovative vehicles, all rooted in emerging
customer needs. Besides product development, R&D is also focussing on environment–friendly technologies
in emissions and alternative fuels.
Through its subsidiaries, the company is engaged in engineering and automotive solutions, construction
equipment manufacturing, automotive vehicle components manufacturing and supply chain activities,
machine tools and factory automation solutions, high–precision tooling and plastic and electronic
components for automotive and computer applications

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1.3 HISTORICAL BACKGROUND OF TATA MOTORS:

Tata Sumo (1994–present)

Tata Group entered the commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benzof
Germany. After years of dominating the commercial vehicle market in India, Tata Motors entered the
passenger vehicle market in 1991 by launching the Tata Sierra, a sport utility vehicle based on the Tata
Mobile platform
Tata subsequently launched the Tata Estate (1992; a station wagondesign based on the earlier Tata Mobile),
the Tata Sumo (1994, a 5-door SUV) and the Tata Safari(1998).

Tata Indica (first generation)

Tata launched the Indica in 1998, the first fully indigenous Indian passenger car. Although initially criticized
by auto analysts, its excellent fuel economy, powerful engine, and an aggressive marketing strategy made it
one of the best-selling cars in the history of the Indian automobile industries. A newer version of the car,
named Indica V2, was a major improvement over the previous version and quickly became a mass favourite.
Tata Motors also successfully exported large numbers of the car to South Africa. The success of the Indica
played a key role in the growth of Tata Motors.[6]

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In 2004, Tata Motors acquired Daewoo's South Korea-based truck manufacturing unit, Daewoo Commercial
Vehicles Company, later renamed Tata Daewoo.[7]
On 27 September 2004, Tata Motors rang the opening bell at the New York Stock Exchange to mark the
listing of Tata Motors.[8]
In 2005, Tata Motors acquired a 21% controlling stake in the Spanish bus and coach manufacturer Hispano
Carrocera.[9] Tata Motors continued its market area expansion through the introduction of new products such
as buses (Starbus and Globus, jointly developed with subsidiary Hispano Carrocera) and trucks (Novus,
jointly developed with subsidiary Tata Daewoo).
In 2006, Tata formed a joint venture with the Brazil-based Marcopolo, Tata Marcopolo Bus, to manufacture
fully built buses and coaches.[10]

Tata Bolt

In 2008, Tata Motors acquired the English car maker Jaguar Land Rover, manufacturer of the Jaguar and
Land Rover from Ford Motor Company.[11][12][13][14]
In May 2009, Tata unveiled the Tata World Truck range jointly developed with Tata Daewoo;[15] the range
went on sale in South Korea, South Africa, the SAARC countries, and the Middle East at the end of 2009.[15]
Tata acquired full ownership of Hispano Carrocera in 2009.[16]
In 2009, its Lucknow plant was awarded the "Best of All" Rajiv Gandhi National Quality Award.[17]
In 2010, Tata Motors acquired an 80% stake in the Italian design and engineering company Trilix for €1.85
million. The acquisition formed part of the company's plan to enhance its styling and design capabilities.[18]
In 2012, Tata Motors announced it would invest around ₹6 billion in the development of Futuristic Infantry
Combat Vehicles in collaboration with DRDO.[19]
In 2013, Tata Motors announced it will sell in India, the first vehicle in the world to run on compressed air
(engines designed by the French company MDI) and dubbed "Mini CAT".

In 2014, Tata Motors introduced first Truck Racing championship in India "T1 Prima Truck Racing
Championship"

On 26 January 2014, the Managing Director Karl Slymwas found dead. He fell from the 22nd floor to the
fourth floor of the Shangri-La Hotel in Bangkok, where he was to attend a meeting of Tata Motors
Thailand.[20]

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On 2 November 2015, Tata Motors announced Lionel Messi as global brand ambassador at New Delhi, to
promote and endorse passenger vehicles globally.[21]
On 27 December 2016, Tata Motors announced the Bollywood actor Akshay Kumar as brand ambassador
for its commercial vehicles range.[22]
On 8 March 2017, Tata Motors announced that it has signed a memorandum of understanding
with Volkswagen to develop vehicles for India's domestic market.
On 3 May 2018, Tata Motors announced that it sold its aerospace and defense business to another Tata
Group Entity, Tata Advanced Systems, to unlock their full potential.[23]

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1.4 THE INDIAN AUTOMOBILE SECTOR

The Indian auto industry became the 4th largest in the world with sales increasing 9.5 per cent year-on-year
to 4.02 million units (excluding two wheelers) in 2017. It was the 7th largest manufacturer of commercial
vehicles in 2017.
The Two Wheelers segment dominates the market in terms of volume owing to a growing middle class and
a young population. Moreover, the growing interest of the companies in exploring the rural markets further
aided the growth of the sector.
India is also a prominent auto exporter and has strong export growth expectations for the near future.
Automobile exports grew 20.78 per cent during April-November 2018. It is expected to grow at a CAGR of
3.05 per cent during 2016-2026. In addition, several initiatives by the Government of India and the major
automobile players in the Indian market are expected to make India a leader in the two-wheeler and four
wheeler market in the world by 2020.

Market size
Domestic automobile production increased at 7.08 per cent CAGR between FY13-18 with 29.07 million
vehicles manufactured in the country in FY18. During April-November 2018, automobile production
increased 12.53 per cent year-on-year to reach 21.95 million vehicle units.
Overall domestic automobiles sales increased at 7.01 per cent CAGR between FY13-18 with 24.97 million
vehicles getting sold in FY18. During April-November 2018, highest year-on-year growth in domestic sales
among all the categories was recorded in commercial vehicles at 31.49 per cent followed by 25.16 per cent
year-on-year growth in the sales of three-wheelers.
Premium motorbike sales in India crossed one million units in FY18. . During January-September 2018,
BMW registered a growth of 11 per cent year-on-year in its sales in India at 7,915 units. Mercedes Benz
ranked first in sales satisfaction in the luxury vehicles segment according to J D Power 2018 India sales
satisfaction index (luxury).
Sales of electric two-wheelers are estimated to have crossed 55,000 vehicles in 2017-18.

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1.5 HISTORY OF INDIAN AUTOMOBILE INDUSTRY:

Indian market before independence was seen as a market for imported vehicles whileassembling 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 vehiclesLater 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

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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 groups.

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1.6. INVESTMENTS OF TATA MOTORS

Tata MotorsNSE -1.88 % will invest $1 bln -- its biggest ever investment in the passenger vehicle
business --- in the next three years as above average growth spurs demand for newer cars. Mumbai-based
Tata will spend $1 bln after the board approved its mid-term business plan recently which includes
investments, people in the know said.

The plans include a new manufacturing line in Pune, which is going through a complete overhaul and
Sanand, Gujarat to house the new modular platforms Omega and Alfa to be built in the next five years.
These platforms are likely to churn out as much as a dozen new models.

Tata Motors raced past Mahindra & Mahindra in local monthly sales in June, bringing cheer at a time when
the UK-based Jaguar Land Rover luxury vehicle unit, the company’s money-spinner business for a long
time, has warned of brexit worries.

A manufacturing line is already being installed at J Block in Pune plant to designed for Omega architecture
to manufacture the Q5 range of SUVs – H5X 5 seater SUV to rolled out by the end of the year, followed by
a seven-seater version within a year after that. There will be Alfa or X4 architecture X451 hit the market in
2019 festive season.

Guenter Butschek, Tata Motors MD said the company doesn’t give independent investment plans for the
passenger vehicle or commercial vehicle business. Tata had said in the past that it would invest Rs 4,000
crore every year in both passenger and commercial vehicle business. The new investment plan boosts the
passenger side of the business significantly with over Rs 6,000 crore being spent on it in three years.

The investment is a part of Tata’s turnaround 2.0 strategy which focuses on winning sustainably in passenger
vehicles, the MD said in response to ET’s questions. “We continue to fortify our capacity utilisation, sales
numbers, and cost structures. We are headed towards a long-term objective of accelerated growth. This will
be accomplished through product portfolio expansion, network expansion, enhanced quality operations and
superlative customer service,” he added. The reinforcement comes after two consecutive years of 15-20%
growth in car sales, significantly outpacing the industry that expanded 8-9%. This growth has been on the
back of bridge products — Tiago, Tigor and Nexon. With several new-generation models set to hit the roads
in the coming year, company officials are very confident about the strategy.
The Turnaround 2.0 mission emphasizes on turning around the passenger vehicle business with an aim
towards self-sustenance, which is a significant departure from the past dependence on either the commercial
vehicle business or dividend from Jaguar Land Rover.

For the first time ever, Tata Motors will be announcing segregated passenger vehicle and commercial
vehicle earnings for the quarter ended June 30, laying threadbare the accountability of the passenger vehicle
business. There is a strong tailwind for brand Tata in the car business and positive sentiment within the
organisation with growing volumes,” said a person, speaking on the condition of anonymity. “Unlike the
past, the company has managed to break into the consideration set of people. With a new range of products
under two architectures, Tata Motors will cover over 95% of the Indian passenger vehicle market and will
play a much serious role in the market.”

Already, Tata Motors has seen its market share improving more than one percentage point to 6.39% at the
end of FY-18. Chairman N Chandrasekaran has now set a stiff target of a minimum 10% market share in the
short to medium term.

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The Mumbai-based company had stated that it was eyeing a top-three finish on local vehicle sales in the
ongoing financial year. Though it nudged past Mahindra in June, it will be difficult to sustain the edge
through the year, as the crosstown rival is coming out with two new offerings this year, which will offer
incremental volumes to the maker of the Scorpio SUV.

In order to facilitate the turnaround and growth initiatives, Tata Motors has structured 24 vehicle module
teams and four cross functional teams, each of which is empowered to generate potential and execute swift
implementation, thereby ensuring nimbleness in operation.

As part of the new operational structure being put in place, there is focus on daily work management , cost
reduction targets and holistic inclusion of employees, which collectively helps to accelerate efforts in
maturing newly generated potential across the Generated, Evaluated, Approved, Realised (GEAR)
milestones, the company said in a statement to ET.
Last fiscal year, the standalone operation reduced cost in excess of Rs 1,900 crore. This year’s target is to
exceed Rs 1,000 crore, which will be largely led by the passenger vehicle division.

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1.7 INTERNATIONAL MARKET

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.

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.

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.

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.

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.

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1.8 TATA MOTORS

PASSENGER VEHICLES
HATCHBACKS

SEDANS

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SUVs

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ENIVORNMENTAL POLICIES

Depletion of forests disturbs the delicate ecological balance and also contributes to climate change. With
our initiatives under Vasundhara, we aim to promote environmental consciousness among community
members, school students and our employees by engaging them in plantation and cleanliness drives. The
underlying vision is that environment being a common global concern, any effort at promoting
environmental sustainability at a local level would benefit the environment as well as local communities
and society at large. We also encourage community members to use renewable energy products like
solar lamps and promote innovative products like fuel efficient chulhas that reduce the carbon footprint.
We partner with the communities and NGOs around our manufacturing plants and office locations for
deployment of Vasundhara projects. This approach meets the needs of the local community, and also
inculcates in them a sense of responsibility. This, we believe, is essential for ensuring long-term
sustainability of our collective interventions.

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 CHAPTER .2:RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

The word “Research” is the combination of two words – first is ‘Re’ which means ‘a new return to

previous stage’ and the second is ‘Search’ means ‘to find’. So in simple word it is defined as the

process of gaining new knowledge from previous/old work in a systematic manner. In other words,

Research is a scientific and systematic search for pertinent information on specific topic. The term

methodology means it is a way to scientifically solve the research problem. It may be understood as a

science of studying how research is done scientifically. In it we study the various steps that are

generally adopted by a researcher in studying his research problem along with the logic behind them.

The chapter research methodology describes the methods which will be used for the present study.

2.1 Objectives of the study

 To analyse the financial statement of TATA Motors Ltd.

 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 andliabilities and to
find out the liquidity position of the company.
 Standardize financial information for comparisons.
 Evaluate current operations.
 Compare performance with past performance.
 Compare performance against other firms or industry standards.
 Study the efficiency of operations.
 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.
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2.2 Hypothesis

 From this study of financial statement analysis of Tata motors we can estimate the growth of the
company
 From the study of financial statement analysis we easily come to know whether organization is making
profit or loss every year.
 Financial statement analysis helps researcher to understand easily the organization growth towards
future.

2.3 Scope of study

 The financial statement analysis means to analysis the profit or loss of the company of last 5 years
 In this project will study About financial statement analysis tata motors
 It is important to study financial statement because it will help organization to refer past performs and
help them to grow their business in futures.
 Company has undergone many rapid changes in the past 5 years due to many changes in decisionsfor
benefit of the company's growth.

2.4 Source of data

 To full fill the information need of the study. The data can be collected from primary and secondary
sources but I prefered secondary data more because financial statement can be refered from past
financial records of the organization. But primary data can be collected from company's website for
reference.

2.5 Sample Design

 The sample size denotes the elements which are selected for the study.

2.6 Data Collection

Data Collection can be collected from primary and secondary sources. For this project secondary data was
collected the most.

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2.4 Primary Data

 Primary Data was collected by myself.

2.5 Secondary Data

 Secondary Data are those which have already been collected from others data sources.

2.6 Limitations to study

 Not a Substitute of Judgement

An analysis of financial statement cannot take place of sound judgement. It is only a means to reach
conclusions. Ultimately, the judgements are taken by an interested party or analyst on his/ her
intelligence and skill.

 Based on Past Data

Only past data of accounting information is included in the financial statements, which are analysed .
The future cannot be just like past. Hence, the analysis of financial statements cannot provide a basis for
future estimation, forecasting, budgeting and planning.

 Problem in Comparability

The size of business concern is varying according to the volume of transactions. Hence, the figures of
different financial statements lose the characteristic of comparability.

 Reliability of Figures

Sometimes, the contents of the financial statements are manipulated by window dressing. If so, the
analysis of financial statements results in misleading or meaningless.

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 CHAPTER.3.LITERATURE REVIEW

Literature Review

Financial ratio analysis is a process of determining and interpreting relationships between the items to
financial statements to provide a meaningful understanding of the performance and financial position of an
enterprise. Ratio analysis is an accounting tool to present accounting variables in a simple, concise,
intelligible and understandable form. Ratio analysis is a study of relationship among various financial factors
in a business. Thus, it seeks to measure the value of the entity and purpose which it pursues, financial
analysis develops the steps of collecting, shaping and treatment of range of management information which
may clarify the wanted diagnosis and prognosis.

Many researchers have studied financial ratios as a part of working capital management; however , very few
of them have discussed the working capital policies in specific. Some earlier work byexamined the
differences in financial ratios averages between industries. The conclusion of both the studies was that
differences do exist in mean profitability, activity, leverages and liquidity ratios amongst industrygroups

Pinches et al. (1973): used factor analysis to develop seven classifications of ratios, and found that
classifications were stable over the 1951-1969 time periods.

Chu et al. (1991) analysed the hospital sectors to observe the differences of financial ratios groups between
hospital sectors and industrial firms sectors. Their study concluded that financial ratios groups were
significantly different from those of industrial firms’ ratios as well these ratios were relatively stable over the
five years period. A significance relationships for about half of industries studied indicated that results might
vary from industry to industry.

Sathamoorthi (2002) focused on good corporate governance and in turn effective management of business
assets. He observed that more emphasis is given to investment in fixed investments in fixed assets both in
management area & research. However, effective management working capital has been receiving little
attention and yielding more significant results. He analysed selected co-operatives in Botswana for a period
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of 1993-1997 and concluded that an aggressive approach has been followed by these firms during all four
years of study.

Doron Nissim & Stephen H Penman (1999): In his research article on financial performance he has
pointed that this paper outlines a financial statement analysis for use in equity valuation. Standard
profitability analysis is incorporated, and extended, and is complemented with an analysis of growth. The
perspective is one of the forecasting payoff to equities. So financial statement analysis is presented first as a
matter of Performa analysis of the future, with forecasted ratios viewed as building blocks of forecasts of
payoffs.

John J. Wild, K.R. Subramanyam & Robert F. Halsey (2006): In his research article on financial 54
performance he has pointed that he have said that the financial statement analysis is the application of
analytical tools and techniques to general purpose financial statements and related data to derive estimates
and inferences useful in business analytics. Financial Statements analysis reduces reliance on hunches,
guesses and intuition for business decisions. It decreases the uncertainty of business analysis.

I.M. Pandey (2007): In his research article on financial performance he has pointed that the financial
statements contain information about the financial consequences and sources and uses of financial resources,
one should be able to say whether the financial condition of a firm is good or bad; whether it is improving or
deteriorating. One can relate the financial variables given in financial statements in a meaningful way which
will suggest the actions which one may have to initiate to improve the firms’ financial condition.

Rachchh Minaxi A (2011): In his research article on financial performance he has pointed and suggested
that the financial statement analysis involves analyzing the financial statements to extract information that
can facilitates decision making. It is the process of evaluating the relationship between components parts of
the financial statements to obtain a better understanding of an entity’s positions and performance.

Priyaaks (Mar 2012): In his research article on financial performance he has pointed that Financial
statement analysis is the process of examining relationships among financial statement elements and making
comparisons with relevant information. It is a tool in decision making processes related to stocks, bonds and
other financial instruments.

The study of Laitinen (2006) presents a framework for the financial statement analysis of a network of
small and medium-sized enterprises. The objective is to make an approach towards a systematic network
financialstatement analysis The data for the study are drawn from the public financial statements of the
partner firms. The proportion of income statement items and balance sheet items is traced by a simple
estimation to the resources used by the network and identified by each firm. Virtual network income
statement and balance sheet are made up of the allocated proportions. The paper is focused on eight
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measurement objects that are causally related to form a strategic map: resources; growth; concentration;
productivity; profitability; mutual flows; risk and value; and, several measures for each object are suggested

The study that has been done by Al-Aameri and Alrikabi (2007):was focusing on one of the important
techniques projects company, and to find out the main strength and weakness points, so as to suggest the
remedial actions in financial analysis, namely, the financial ratios, for the purpose evaluating the
performance of petroleum for treatment of negative points and enhance the positive one. The paper’s
contains detail study for the data included in financial statements to explain the financial performance of the
company, and that will help the management for planning the future according to the previous performance,
and also contain for presented a report on automobile sector named ‘Automotive Market in India’ on the net.
This report provides detailed overview of the automotive market in India with relevant facts and figures
regarding the structure and size, growth rates, key players, main challenges, restraints, international trade as
well as an indication of future outlook of the industry. According to this report the automotive industry in
India is one of the largest industries and a key sector of the economy. The Indian automotive industry began
its journey from 1991 with the government's de-licensing of the sector and subsequent opening up for 100
per cent FDI through automatic route. Since then many large global companies have set up their facilities in
India taking the production of vehicle from 2 million in 1991 to 9.7 million in 2005-2006 and in 2008-09 it
touched to 11.18 million units. The entry of global auto-majors into India has significantly altered the
automobile manufacturing scenario in the country. The changes in design and adaptation of international
technologies have enabled the Indian automotive industry to compete globally, and thus are also exposed to
global challenges. Alongside the challenges, there is also a plethora of opportunities to Indian automotive
industry, which needs to be capitalized.

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