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ASSIGNMENT ON

FINANCIAL ANALYSIS OF
TATA MOTORS

SUBMITTED TO,
SUBMITTED BY,
DR. ANTONY JOSEPH K
CHRISTY DAVIS
HEAD OF DEPARTMENT
ROLL NO – 845
COMMERCE DEPT.
3rd DC B.COM
S.B COLLEGE
DRIVE YOUR OWN LIFE
CONTENTS
1. ABOUT THE COMPPANY
2. TATA MOTORS AT A GLANCE
3. MISSION, VISION, VALUES
4. SUBSIDIARIES
5. OUR BUSINESSES
6. GLOBAL FOOTPRINTS
7. CORPORATE GOVERNANCE
8. MANAGEMENT
9. CREDIT RATINGS
10. MARKET COMPETITORS AND SALES ANALYSIS
11. CORPORATE SOCIAL RESPONSIBILITY
12. RATIO ANALYSIS
13. COMPARITIVE STATEMENT
14. PERFORMANCE AT A GLANCE
ABOUT THE COMPANY
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 centres located in India, the UK, Italy and Korea
strive to innovate new products that achieve performances
that will fire the imagination of GenNext customers. Across
the globally dispersed organisation that we are today,
there is one thing that energises 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''
TATA MOTORS AT A
.

GLANCE

Type Public

Traded as BSE: 500570


NSE: TATAMOTORS
NYSE: TTM

Industry Automotive

Founded 1945

Headquarters Mumbai, India

Area served Worldwide

Key people Natarajan Chandrasekaran(Chairman)


Chandrasekaran Ramakrishnan (President and
Group CFO)
Guenter Butschek (CEO)

Products Automobiles
Sport Cars
Commercial vehicles
Coaches
Buses
Construction equipment
Military vehicles
Automotive parts
Services Automotive design, engineering and outsourcing
services
Vehicle leasing
Vehicle service

Revenue ₹2.697 trillion(US$42 billion) (2016)

Operating ₹216.5 billion(US$3.4 billion) (2016)


income

Profit ₹95.88 billion(US$1.5 billion) (2016)

Total assets ₹2.619 trillion(US$41 billion) (2016)

Total equity ₹763.5 billion(US$12 billion) (2016)

Number of 60,000 (2016)


employees

Parent Tata Group

Divisions Tata Motors Cars

Subsidiaries Jaguar Land Rover


Tata Daewoo
Tata Hispano

Website www.tatamotors.com
MISSION

VISION

VALUES
SUBSIDIARIES
With seventy-six direct and indirect subsidiaries in India
and abroad Tata Motors is also expanding its international
footprint, established through exports since 1961.

 Jaguar Land Rover Automotive Plc.


 Tata Daewoo Commercial Vehicle Company Ltd.
 Tata Marcopolo Motors Ltd
 Tata Motors (Thailand) Limited
 Tata Motors (SA) (Proprietary) Ltd
 TML Drivelines Limited
 TAL Manufacturing Solutions Ltd. (TAL)
 Tata Motors European Technical Centre plc.
(TMETC) Tata Technologies Ltd. (TTL)
 Concorde Motors (India) Ltd. (Concorde)
 Tata Motors Finance Limited
 Tata Motors Insurance Broking & Advisory
Services Ltd (TMIBASL)
 TML Holdings Pte. Ltd. (TML)
 Sheba Properties Ltd. (Sheba)
 PT Tata Motors Indonesia
 Trilix S.r.l.
 Tata Precision Industries Pte. Ltd.
 TML Distribution Company Limited (TDCL)
OUR BUSINESSES
Tata Motors has a unique position among global leaders in
the automotive segment with an unmatched range in both
commercial and passenger vehicles in a well-known brand
portfolio.

COMMERCIAL VEHICLES
For decades, Tata Motors has led India’s commercial vehicle
market from the front. Through our deep understanding of the
customer’s needs, we have consistently brought innovation to this
industry — with new product segments such as the sub-tonne
mini truck Tata Ace as the ideal last mile delivery vehicle and the
Winger mini bus for short distance passenger travel — to
revolutionise the trucking landscape in the country with market-
leading products, applications and services.
In our role as a game changer, we have introduced best-in-class
automotive technologies in India – the globally benchmarked
Prima and Ultra enabling a world-class trucking experience, in
terms of performance as well as user comfort and convenience.
As the fourth largest bus manufacturer globally, we provide
innovatively designed and technologically superior buses for the
smart cities of tomorrow. The new buses personify safety and
comfort, reliability and profitability. Our global subsidiaries —
Daewoo Commercial Vehicles Company and Marcopolo — have
only strengthened our portfolio.
As strategic partner to the Indian Armed Forces since 1958, we
provide defence, paramilitary and police mobility solutions
through our portfolio of light-to-heavy defence vehicles, including
armoured troop carriers and high-mobility vehicles.
At Tata Motors, we are passionate about owning the road
Our portfolio covers trucks from sub-tonne to 49-tonne mass
movers, and passenger transporters that range from 5-seater
mini vans to 81-seater buses.
PASSENGER VEHICLES
Tata Motors leverages its years of auto expertise to design
creatively styled cars and SUVs that come pre-packaged with
technology, high-end features, connected solutions, a best-in-
class purchase experience, and the convenience of a seamless
network for after-market service.
Our customer-centric approach has led to the development of the
premium compact car Zest and hatchbacks Bolt and GenX Nano,
which offer a never-before combo of technology-rich features,
contemporary designs and rich ambience interiors.
At Tata Motors, we are accelerating towards a new horizon.

Compact cars, mid-sized sedans, SUVs, utility vehicles,


hatchbacks and crossover cars.

GLOBAL FOOTPRINTS
Our logo went international in 1961, and we now sell our
vehicles in more than 50 countries. Our cars, buses and
trucks roll out at 20 locations across the world – seven in
India and the rest in the UK, South Korea, Thailand, South
Africa and Indonesia.
CORPORATE GOVERNANCE
Responsible and lawful conduct is an integral part of corporate culture and
fundamental to the success of any organization. Our philosophy on corporate
governance is in line with the Tata group philosophy. We believe good corporate
governance leads to effective decision making and it supports formation of robust
operations, financial, risk and information management systems. We have been
practicing the principles of good corporate governance over the years and have laid
strong emphasis on i n d e p e n d e n c e, r e s p o n s i b i l i t y, t r a n s p a r e n c
y, professionalism, accountability and code of ethics to ensure adherence to the
Tata ethos and value system.

We ensure that the Tata Code of Conduct (TCoC) is followed throughout the
organization and every employee conducts himself / herself in an ethically
acceptable way. It monitors aspects including anti-bribery, corruption, equal
opportunities and human rights. TCoC serves as a guide to the Company, its
directors and employees and is supplemented with an appropriate mechanism
‘Whistle Blower Policy’ to report any concern pertaining to non-adherence to the
said Code.

We have grievance redressal mechanism in place to address Labour, Human


Rights, Environment, Diversity & Equal Opportunity, Equal Remuneration and
concerns raised are suitably closed and corrective actions are deployed.

The Board of Directors at Tata Motors Ltd. comprises of eleven Directors of


which eight are non-executive, including one Woman Independent Director. The
Board, under the able guidance of Mr. Guenter Butschek (CEO and M a n a g i n g d
i r e c t o r ) , p e r i o d i c a l l y r e v i e w s t h e organizational policies, procedures
and performance conducted by the Board.

The Board has constituted a set of Committees with specific terms of


reference/scope to focus effectively on the issues and ensure expedient resolution
of diverse matters. The Committees operate as empowered agents of the Board as
per their Charter/terms of reference. Targets set by them as agreed with the
management are reviewed periodically and midcourse corrections are also carried
out. The Board of Directors and the Committees also take decisions by circular
resolutions which are noted at the next meeting.

An Organization Chart depicting the relationship between the Board of Directors,


the Committees and the Senior Management functions as on March 31, 2016 is
illustrated below:
MANAGEMENT
Mr Guenter Butschek
CEO and managing director

Mr Ravindra Pisharody
Executive Director (Commercial Vehicles)

Mr Satish Borwankar
Chief Operating Officer

Mr C Ramakrishnan
President and Group Chief Financial Officer

Dr Timothy Leverton
Chief Technology Officer

Mr Girish Wagh
Head (Commercial Vehicle Business Unit)

Mr Mayank Pareek
President (Passenger Vehicle Business Unit)

Mr Gajendra Chandel
Chief Human Resources Officer

Mr Thomas Flack
Chief Purchase Officer (CPO)
CREDIT RATINGS
CARE
RATING LONG TERM
Current* CARE AA+
Prior CARE AA
*Rating change – March 2014
Instruments with this rating are considered to have high degree of safety regarding timely
servicing of financial obligations. Such instruments carry very low credit risk. ‘Positive’
outlook indicates an expected upgrade in the credit ratings in the medium term on account
of expected positive impact on the credit risk profile of the entity in the medium term

CRISIL
RATING SHORT TERM LONG TERM OUTLOOK
Current* CRISIL A1+ CRISIL AA Positive

Prior CRISIL A1+ CRISIL AA- Stable

*Rating change – October 2016


SHORT TERM INSTRUMENTS:
Instruments with this rating are considered to have very strong degree of safety regarding
timely payment of financial obligations. Such instruments carry lowest credit risk. CRISIL
may apply '+' (plus) sign for ratings from 'CRISIL A1' to 'CRISIL A4' to reflect comparative
standing within the category.

LONG TERM INSTRUMENTS:


Instruments with this rating are considered to have high degree of safety regarding timely
servicing of financial obligations. Such instruments carry very low credit risk. CRISIL may
apply '+' (plus) or '-' (minus) signs for ratings from 'CRISIL AA' to 'CRISIL C' to reflect
comparative standing within the category.

ICRA
RATING SHORT TERM LONG TERM OUTLOOK
Current* ICRA A1+ ICRA AA Positive

Prior ICRA A1+ ICRA AA Stable

*Rating change – October 2016


SHORT TERM INSTRUMENTS:
Instruments with this rating are considered to have very strong degree of safety regarding
timely payment of financial obligations. Such instruments carry lowest credit risk. The
Rating of AA+ is one notch higher than AA.

LONG TERM INSTRUMENTS:


Instruments with this rating are considered to have high degree of safety regarding timely
servicing of financial obligations. Such instruments carry very low credit risk.

MOODY’S
RATINGS LONG TERM OUTLOOK
Current* Ba1 Stable
Prior Ba2 Stable
*Rating change – October 2016

Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.
The modifier 1 indicates that the obligation ranks in the higher end of its generic rating
category. Modifier 2 indicates a mid-range ranking.

S&P
RATINGS LONG TERM OUTLOOK
Current* BB+ Stable
Prior BB Stable
*Rating change – August 2016

An obligor rated 'BB' is less vulnerable in the near term than other lower-rated obligors.
However, it faces major on going uncertainties and exposure to adverse business,
financial, or economic conditions, which could lead to the obligor's inadequate capacity to
meet its financial commitments. BB is a speculative-grade. '+' (plus) indicates that the
obligation ranks in the higher end of its generic rating category.
MARKET COMPETITORS AND
SALES ANALYSIS
PASSENGER VEHICLES
Company Sales(April 2016) Sales(April 2017) %change

Maruti Suzuki 117045 144492 23.4

Hyundai 42351 44758 5.7

Tata Motors 10495 12827 23

Honda Cars India 10486 14480 38.1

Nissan India 3028 4217 39

Toyota Kriloskar Motors 8529 12948 52

COMMERCIAL VEHICLES

Company Sales(April 2016) Sales(April 2017) %change

Tata Motors 29584 16017 -36

VECV 5365 3089 -42.4

Ashok Leyland 10182 7083 -30

Tata Motors continued its Growth momentum at sales of 12,827 units in the
domestic market for its passenger vehicle segment, growing 23 per cent over April
2016. This was due to an encouraging response for its recently launched Tata Hexa
UV and its latest Styleback, the Tata Tigor which maintains a good order book.

However, sales of Tata Motors commercial vehicles were affected by the Supreme
Court judgement announced on March 29, with the ban on BS-III sales, leading to
the need for a higher quantity of BS-IV stock for April sales. The higher demand at
short notice was not met in production, as vendors struggled to meet with the higher
demand, especially in the Medium & Heavy Commercial Vehicle segments.
CORPORATE SOCIAL
RESPONSIBILITY
Tata Motor's commitment to sustainable development is
deeply rooted in the legacy of the Tata Group - to build
businesses with social and environmental consciousness
and positively contribute to societal wellbeing.

PHILOSOPHY & APPROACH


As an integral part of our commitment to Good Corporate
Citizenship, we at TATA Motors believe in actively
assisting in the improvement of the quality of life of the
people in the communities, giving preference to local areas
around our business operations.
CSR at Tata Motors is underpinned by ‘More from Less for
More People’ philosophy which implies striving to achieve
greater impacts, outcomes and outputs of our CSR
projects and programmes by judicious investment and
utilization of financial and human resources, engaging in
like-minded stakeholder partnerships for higher outreach
benefitting more lives. We adopt a human life-cycle
approach for serving the communities.

OUR PROGRAMS
 AAROGYA (HEALTH)

Health is a key determinant of the quality of life of a person and the family.
Because of its inter-generational character, it can impact future generations as
well.
 KAUSHALYA (EMPLOYABILITY)

Our skill development programmes aim to build the capacity of unemployed youth
by providing vocational training in automotive and other industrial trades.

 VIDYADHANAM (EDUCATION)

Education is often referred to as the ultimate leveller that prepares and equips
an individual, regardless of one’s socio-economic background, to realise her or
his true potential.

 SEVA (VOLUNTEERING PROGRAMME)


Seva is aimed at providing our employees and their families with varied
opportunities to meaningfully volunteer their time for social causes.

 AADHAAR (COMMUNITY DEVLOPMENT)

Aadhaar at Tata Motors is aimed at serving the socio-economically backward


and disadvantaged Scheduled Caste (SC) & Schedule Tribe (ST)
communities.

 VASUNDHARA (ENVIRONMENT)

Under the environment-related CSR programmes Vasundhara, Tata Motors


strives to contribute to enhanced environmental sustainability by proactively
facilitating the protection.

 AMRUTDHARA (DRINKING WATER)

Amrutdhara is a programme conceived and deployed under the aegis of


Sumant Moolgaokar Development Foundation (SMDF) focussed on
addressing the ‘drinking-water’ needs of needy and deserving communities.
SOCIAL RESPONSIBILITY – ANNUAL REPORT 2015- 16
*(Rs in Crores)
Sl. CSR project / activity Sector in which the Amount Amount Cumulative
No identified Project is covered outlay spent on the spend up
(budget) project to the
project/ /programs reporting
programs Subheads period
wise
1. Skill Development and Employability 11.6 0.29 11.89
vocational skills in Enhancing Skill
Automotive and Non- Development
Automotive Sector
1(a) Vocational skills development in Automotive 4.3 0.10 4.40
trades
1(b) Skill development in rural/ underdeveloped 7.3 0.19 7.49
communities
Promoting primary Promoting Education 20.44 0.34 20.78
2. and secondary
education in Rural
and Socially/
Economically
Backward
communities
3. Preventive and Eradicating Hunger, 5.63 0.81 6.44
curative health Promoting preventive
services in healthcare, Malnutrition,
Communities Promoting Preventive
healthcare and
sanitation and safe
drinking water
3(a) Preventive and curative interventions 3.97 0.64 4.61
3(b) Awareness based interventions 1.66 0.17 1.83
4 Ensuring Ensuring environmental 2.25 0.06 2.31
environmental sustainability
sustainability through
awareness and
protection of natural
habitats
5 Administrative overheads and Capacity Building 2.06 0.03 2.09
cost
59.21 2.63 61.84
Total
RATIO ANALYSIS
1) CURRENT RATIO: - Current Assets / Current Liabilities
*(Rs. in crores)

March March March March March


2016 2015 2014 2013 2012
Current 10,705.91 8,572.97 6,739.06 10,134.96 13,712.92
Assets(Rs.)
Current 17,751.06 20,370.63 18,797.53 21,104.61 22,177.47
Liabilities(Rs.)
Current Ratio 0.60 0.42 0.36 0.48 0.62

Current Assets and Current Liabilities


25,000.00

20,000.00
Rs in crores

15,000.00
Current Assets
10,000.00
Current Liabilities
5,000.00

0.00
2016 2015 2014 2013 2012
Years

Current Ratio

0.7
0.6
0.5
0.4
Current Ratio
0.3
0.2
0.1
0
2016 2015 2014 2013 2012
The current ratio depicts the relationship between current assets and current
liabilities. It is required to evaluate the ability of a firm to meet its short term
obligations in time. It helps to assess the short term financial position of the
business enterprise. Current ratio of 2:1 is considered an ideal ratio to the
accounting principles so that, even if, the value of current assets become half the
firm is still in a position to pay off its short term obligations without disturbing the
overall financial position.

However the ideal current ratio may vary from industry to industry. The ideal current
ratio of automobile industry in India is 1.23.

The above table and graph shows that Tata motors had failed to maintain the ideal
current ratio that is 1.23 in the 5 above mentioned financial years. This implies that
the short term flexibility or short term financial position was vulnerable during all 5
years. The low ratio shows lack of liquidity and shortage of working capital.

2) QUICK RATIO: – Liquid Assets / Current Liabilities

(Liquid Assets = Current Assets – Inventories – Other Current Assets)


*(Rs. in crores)

March March March March March


2016 2015 2014 2013 2012
Liquid 5550.86 3653.86 2766.93 5575.67 9011.28
Assets(Rs.)
Current 17,751.06 20,370.63 18,797.53 21,104.61 22,177.47
Liabilities(Rs.)
Quick Ratio 0.33 0.19 0.15 0.27 0.41
Liquid Assets and Current Liabilities
25000

20000
Rs. in crores

15000
Lquid Assets
10000 Current Liabilities

5000

0
2016 2015 2014 2013 2012
Years

Quick Ratio

0.45
0.4
0.35
0.3
0.25
Quick Ratio
0.2
0.15
0.1
0.05
0
2016 2015 2014 2013 2012

Liquid ratio establishes the relationship between quick/liquid assets and the current
liabilities. The liquid assets do not include the portion of current assets that cannot
be immediately converted into cash. Considering this fact, inventory and other
current assets are excluded from the current assets. But in manufacturing concerns
this ratio is not of much importance because in manufacturing concerns a major
portion of current asset is available in the shape of inventories.

Generally a liquid ratio of 1:1 is said to be satisfactory. But in case of Tata Motors,
the company had failed to maintain the ideal ratio. That means insufficient liquid
assets were maintained by the company. But quick ratio cannot give a clear picture
about the liquidity of Tata Motors, as it is a manufacturing concern. In Tata Motors a
major portion of current assets are available in the form of inventories.
3) INVENTORY TURNOVER RATIO: -
Cost of revenue from operations / Average Inventory
(Cost Of Revenue from Operations= Cost Of Material Consumed +Purchase of
Stock In Trade + Change in Inventory + Direct Expense)

(Average Inventory = Opening Inventory +Closing Inventory / 2)

Computation of cost of revenue from operations


*(Rs. in crores)

Particulars March 2016 March 2015 March 2014 March 2013 March 2012
Cost Of Materials 24,313.08 22,155.23 20,492.87 27,244.28 33,894.82
Consumed
(+)Purchase Of Stock-In 5,259.27 5,765.24 5,049.82 5,864.45 6,433.95
Trade
(+)Operating And Direct 424.61 437.47 428.74 425.76 234.25
Expenses
(+)Changes In Inventories 22.94 -878.82 371.72 -143.60 623.84
and Stock-In Trade
Cost of revenue from 30019.9 27479.12 26343.15 33390.89 41186.86
operations

Computation of average inventory


*(Rs. in crores)

Particulars March 2016 March 2015 March 2014 March 2013 March 2012
Opening Inventory 4,802.08 3,862.53 4,455.03 4,588.23 3,891.39

Closing inventory 4,902.20 4,802.08 3,862.53 4,455.03 4,588.23

Average inventory 4852.14 4332.31 4158.78 4521.63 4239.81

Computation of inventory turnover ratio


*(Rs. in crores)

Particulars March 2016 March 2015 March 2014 March 2013 March 2012
Cost of revenue from 30019.9 27479.12 26343.15 33390.89 41186.86
operations
Average inventory 4852.14 4332.31 4158.78 4521.63 4239.81
Inventory Turnover 6.18 6.34 6.33 7.38 9.71
Ratio
Cost of Revenue from Operation and Average
Inventory
50000

40000
Rs. in crores

30000

20000
Cost or Revenue from Operations
10000
Average Inventory
0
2016
2015
2014
2013
2012
Years

Inventory Turnover Ratio


10

4
Inventory Turnover Ratio
2

2016
2015
2014
2013
2012

Inventory turnover ratio indicates the number of times inventory is replaced during
the year. It shows the relationship between cost of revenue from operations and the
inventory level. Inventory turnover ratio indicates whether the stock has been
efficiently used or not ensuring that only adequate amount is locked in inventories.

Higher the ratio, the better it is as it indicates that a unit of investment in stock
is producing more sales.

The inventory turnover ratio of Tata motors during 2016 shows that the
business has more than the required investment in inventories when compared to
previous years. In 2012 the company was having an ideal inventory turnover ratio of
9.71.But it dropped to 6.18 in 2016 showing the excess of inventory in business. The
ratio invites an inspection into the affairs of the business.
4) DIVIDEND PAYOUT RATIO (NP): -
Dividends / Net Income * 100
*(Rs. in crores)

Particulars March 2016 March 2015 March 2014 March 2013 March 2012
Share Dividend 61.00 0.00 648.56 645.20 1,280.70
Net Profit/Loss For The 234.23 -4,738.95 334.52 301.81 1,242.23
Period
Dividend Payout Ratio 26.04 0.00 193.87 213.77 103.09

Share Dividend And Net Profit Or Loss For The Year


2000

1000

0
2016 2015 2014 2013 2012
Rs. in crores

-1000
Share Dividend
-2000

-3000
Net profit/loss for the
year
-4000

-5000
year

Dividend Payout Ratio

250

200

150
Dividend payout ratio
100

50

0
2016 2015 2014 2013 2012
High. Payout ratios that are between 55% to 75% are considered high because the
company is expected to distribute more than half of its earnings as dividends, which
implies less retained earnings. A higher payout ratio viewed in isolation from the
dividend investor's perspective is very good.

The dividend payout ratio of tata motors fot the FY 2016-17 was below the
standard rate. That is , it was 26.04 during 2016-17. That was because the company
suffered net loss in the previous FY and to overcome this loss the company had
retained its earnings in 2016-17. The retention ratio was 73.96.

5) EARNINGS RETENTION RATIO


Net income – dividend distributed / net income OR
100 - dividend payout ratio

Particulars March 2016 March 2015 March 2014 March 2013 March 2012

Dividend Payout Ratio 26.04 0.00 193.87 213.77 103.09


Earnings retention 73.96 0.00 -93.87 -113.77 -3.09
ratio

Dividend Payout Ratio and Earnings retention


ratio

100%

50%

0%
2016 2015 2014 2013 2012
-50%
Dividend Payout Ratio Earnings retention ratio

The retention rate, sometimes called the plowback ratio, is a financial ratio that
measures the amount of earnings or profits that are added to retained earnings at
the end of the year. In other words, the retention rate is the percentage of profits that
are withheld by the company and not distributed as dividends at the end of the year.
Higher retention rates are not always considered good for investors because this
usually means the company doesn't give as much dividends. It might mean that the
stock is continually appreciating because of company growth however. This ratio
helps illustrate the difference between a growth stock and an earnings stock.

Since Tata motors is the one among the leading market player and a well-
established company in automobile industry they have maintained to distribute high
dividends throughout the years except FY 2015 when the company suffered a loss.
In FY 2016 Company’s retention ratio stands higher than the payout ratio as it
retained the profits to overcome the loss of previous FY.

6) RETURN ON INVESTMENT
(RETURN ON CAPITAL EMPLOYED): - PBIT / Capital Employed *100

Particulars March 2016 March 2015 March 2014 March 2013 March 2012

Return on capital 0.67 -16.02 1.08 0.97 3.84


employed (%)
Return on capital employed (%)
5

0
2016 2015 2014 2013 2012

-5
Return on capital
employed (%)
-10

-15

-20

Return on capital employed (ROCE) is a financial ratio that measures a company's


profitability and the efficiency with which its capital is employed. A higher ROCE indicates
more efficient use of capital. ROCE should be higher than the company’s capital cost;
otherwise it indicates that the company is not employing its capital effectively and is not
generating shareholder value. For a company, the ROCE trend over the years is also an
important indicator of performance. In general, investors tend to favour companies with
stable and rising ROCE numbers over companies where ROCE is volatile and bounces
around from one year to the next.
7) DEBT TO EQUITY RATIO: - Total Liabilities / Total Equity

Particulars March 2016 March 2015 March 2014 March 2013 March 2012

Debt To Equity Ratio 0.63 1.35 0.76 0.75 0.56

Debt To Equity Ratio


1.6

1.4

1.2

0.8
Debt to Equity Ratio
0.6

0.4

0.2

0
2016 2015 2014 2013 2012

The debt to equity ratio is a financial, liquidity ratio that compares a company's total debt to
total equity. The debt to equity ratio shows the percentage of company financing that
comes from creditors and investors. A higher debt to equity ratio indicates that more
creditor financing (bank loans) is used than investor financing (shareholders).

A debt to equity ratio of 1 would mean that investors and creditors have an
equal stake in the business assets.

A lower debt to equity ratio usually implies a more financially stable business.
Companies with a higher debt to equity ratio are considered more risky to creditors and
investors than companies with a lower ratio.

The debt to equity ratio of Tata Motors has been below 1 for the last 5 years except
the FY 2015. The ratio was 1.35 during FY 2015. This was because the company made
debt financing to meet the loss occurred during that year.

Since debt financing also requires debt servicing or regular interest payments, debt
can be a far more expensive form of financing than equity financing. So it increased the
ratio from 0.76 in FY 2014 to 1.35 in FY 2015. For the FY 2016 the ratio was 0.63. Since
the ratio is below 1, implies a more financially stable business.
8) RETURN ON NETWORTH / EQUITY (%): -
Annual Net Income / Average Stockholders' Equity

Particulars March 2016 March 2015 March 2014 March 2013 March 2012

Return On Equity 1.04 -31.93 1.74 1.57 6.33

Return On Equity
10
5
0
2016 2015 2014 2013 2012
-5
-10
Return On Equity
-15
-20
-25
-30
-35

The return on equity ratio or ROE is a profitability ratio that measures the ability of a
firm to generate profits from its shareholders investments in the company. In other
words, the return on equity ratio shows how much profit each dollar of common
stockholders' equity generates. Net income is the after tax income whereas average
shareholders' equity is calculated by dividing the sum of shareholders' equity at the
beginning and at the end of the year by 2. The net income figure is obtained from
income statement and the shareholders' equity is found on balance sheet. You will
need year ending balance sheets of two consecutive financial years to find average
shareholders' equity.

Return on equity is an important measure of the profitability of a company. Higher


values are generally favourable meaning that the company is efficient in generating
income on new investment. Investors should compare the ROE of different
companies and also check the trend in ROE over time. However, relying solely on
ROE for investment decisions is not safe. It can be artificially influenced by the
management, for example, when debt financing is used to reduce share capital
there will be an increase in ROE even if income remains constant.
9) BASIC EPS RATIO: -
Net income – preferred dividend / weighted average common shares outstanding

Particulars March 2016 March 2015 March 2014 March 2013 March 2012

Earnings per Share 0.68 -14.72 1.03 0.93 3.90


Ratio

EPS Ratio
5

0
2016 2015 2014 2013 2012
-5
EPS Ratio
-10

-15

-20

The Earnings per Share Ratio (EPS ratio) measures the amount of a company's net
income that is theoretically available for payment to the holders of its common stock.
... Conversely, a declining trend can signal to investors that a company is in trouble,
which can lead to a decline in the stock price.

Earnings per Share is the same as any profitability or market


prospect ratio. Higher Earnings per Share is always better than a lower ratio
because this means the company is more profitable and the company has more
profits to distribute to its shareholders.

Although many investors don't pay much attention to the EPS, higher Earnings per
Share ratio often make the stock price of a company rise. Since so many things can
manipulate this ratio, investors tend to look at it but don't let it influence their
decisions drastically.
10) ASSET TURNOVER RATIO: -
Net sales / Average Total Assets

Particulars March 2016 March 2015 March 2014 March 2013 March 2012

Asset Turnover Ratio (%) 80.81 72.67 68.94 85.78 99.60

Asset Turnover Ratio


120

100

80

60
Asset Turnover Ratio

40

20

0
2016 2015 2014 2013 2012

This ratio measures how efficiently a firm uses its assets to generate sales, so a
higher ratio is always more favourable. Higher turnover ratios mean the company is
using its assets more efficiently. Lower ratios mean that the company isn't using its
assets efficiently and most likely have management or production problems. For
instance, a ratio of 1 means that the net sale of a company equals the average total
assets for the year.

Like with most ratios, the asset turnover ratio is based on industry standards. Some
industries use assets more efficiently than others. To get a true sense of how well a
company's assets are being used, it must be compared to other companies in its
industry.

The asset turnover ratio of Tata motors is high throughout the years this shows that
the have succeeded in using its assets to generate more revenue and to increase
the investors wealth.
COMPARITIVE STATEMENTS
NET PROFIT
YEARS NET PROFIT % CHANGE
2016 234.23 95 %
2015 -4,738.95 (1526) %
2014 334.52 11 %
2013 301.81 (76) %
2012 1,242.23 (31) %
2011 1,811.82 -

% CHANGE IN NET PROFIT


500

0
2016 2015 2014 2013 2012
-500
% CHANGE IN NET
PROFIT
-1000

-1500

-2000

REVENUE FROM OPERATIONS (NET)


YEARS REVENUE FROM % CHANGE
OPERATION
2016 41,948.00 17 %
2015 35,890.50 6%
2014 33,906.97 (24) %
2013 44,373.04 (18) %
2012 54,005.40 15 %
2011 46,855.40 -

% CHANGE IN REVENUE FROM OPERATIONS


20
15
10
5
0
2016 2015 2014 2013 2012 % CHANGE IN REVENUE
-5
FROM OPERATIONS
-10
-15
-20
-25
-30
PERFORMANCE AT A GLANCE
CATEGORY INDUSTRY SALES COMPANY SALES MARKET
SHARE
FY FY GROWTH FY FY GROWTH FY FY
2016 2015 2016 2015 2016 2015

COMMERCIAL 704,440 642,641 9.60% 326,755 317,780 2.80% 46.40% 46.40%


VEHICLES
PASSENGER 2,771,099 2,575,680 7.60% 127,118 136,653 -7.00% 4.60% 5.30%
VEHICLES

TOTAL 3,475,539 3,218,321 8.00% 453,873 454,433 -0.10% 13.10% 14.10%

The domestic passenger vehicle industry grew by 7.6% during Fiscal


2016. Correction in fuel prices and easing financing cost has resulted in
lower operating cost which should further aid domestic PV growth in near
to medium term. During the year the Company's Passenger Vehicles
sales were lower by 7.0% at 127118 vehicles registering a 4.6% market
share. The Company sold 106827 cars (lower by 3.8%) and 20291 utility
vehicles and vans (lower by 20.6%). The Company's sales in the Utility
Vehicle segment suffered as competitive activity intensified with multiple
new launches mainly in the soft-roader category in this segment
Within the domestic market the Company sold 326755 Commercial
Vehicles (CV) a growth of 2.8% from Fiscal 2015 driven by volume
expansion across segments. While M&HCVs have been growing through
the year the LCV segment witnessed positive growth during the second-
half of the Fiscal 2016 both in goods and passenger carrier segment.
M&HCV trucks continued strong growth registering a 30.0% rise over last
Fiscal Year and the Company has been able to retain a strong market
share of 56% in this category.