CONTENT

 COMPANY PROFILE
 COMPANY VISION AND MISSION
 COMPANY BALANCE SHEET ANALYSIS
 ANALYSIS OF SOURCES OF FINANCE
 CAPITAL STRUCTURE OF COMPANY
 PEER COMPARISION (5 YEARS DATA)
 ANALYSIS
 RECOMMENDATIONS AND SUGESSTIONS
 CONCLUSION
 REFRENCES
 CAPITAL STRUCTURE ANALYSIS
REPORT ON
TATA MOTORS

SUBMITTED BY: SUBMITTED TO:

BABLU DR. GANGU NAIDU MANDALA
PREETY
ROHIT SEERA
DEEPAK YADAV
GOURAV BAINS

LOVELY PROFESSIONAL UNIVERSITY,

PHAGWARA- PUNJAB
 COMPANY PROFILE

Tata Motors Group (Tata Motors) is a $45 billion organisation. It is a leading global automobile
manufacturing company. Its diverse portfolio includes an extensive range of cars, sports utility
vehicles, trucks, buses and defence vehicles. Tata Motors is India’s largest and the only original
equipment manufacturer (OEM) offering extensive range of integrated, smart and e-mobility
solutions.

Part of the USD100 billion Tata group founded by Jamsetji Tata in 1868, Tata Motors is among the
world’s leading manufacturers of automobiles. We believe in ‘Connecting aspirations’, by offering
innovative mobility solutions that are in line with customers' aspirations. We are India's largest
automobile manufacturer, and we continue to take the lead in shaping the Indian commercial vehicle
landscape, with the introduction of leading-edge power trains and electric solutions packaged for
power performances and user comfort at the lowest life-cycle costs. Our new passenger cars and
utility vehicles are based on Impact Design and offer a superior blend of performance, driveability
and connectivity.
Our focus on connecting aspirations and our pipeline of tech-enabled products keeps us at the
forefront of the market. We have identified six key mobility drivers that will lead us into the future –
modular architecture, complexity reduction in manufacturing, connected & autonomous vehicles,
clean drivelines, shared mobility, and low total cost of ownership. Our sub-brand TAMO is an
incubating centre of innovation that will spark new mobility solutions through new technologies,
business models and partnerships.

Our mission - across our globally dispersed organisation – is to be passionate in anticipating and
providing the best vehicles and experiences that excite our global customers.
 VISION AND MISSION
VISION
As a high performance organisation, we are, by FY2019
 Among the top three in global CV and domestic PV
 Achieving sustainable financial performance
 Delivering exciting innovations

MISSION

We innovate mobility solutions with passion to enhance the quality of life.

VALUES

 Integrity  Customer focus

 Teamwork  Excellence Speed
 Accountability
 OBJECTIVE OF THE STUDY
The following are the objectives of the study:
 To assess the changes in proportion of debt and equity.
 To determine the capital structure of TATA motors during the study period.
 Research Methodology
The study is based on the secondary data which have been collected from various sources viz., published
annual reports and records of the company, journal, websites, etc., for the period from 2013-14 to 2017-
18. Ratio analysis and Leverage has been used to analyse the data.

 BALANCE SHEET FROM 2014-2018

-------------------
in Rs. Cr. ------
Consolidated Balance Sheet -------------
of Tata Motors Mar 18 Mar 17 Mar 16 Mar 15 Mar 14
EQUITIES AND LIABILITIES
Equity Share Capital 679.22 679.22 679.18 643.78 643.78
Total Share Capital 679.22 679.22 679.18 643.78 643.78
Revaluation Reserves 0 0 0 22.87 22.87
Reserves and Surplus 94,748.69 57,382.67 78,273.23 55,595.27 64,936.80
Total Reserves and Surplus 94,748.69 57,382.67 78,273.23 55,618.14 64,959.67
Total Shareholders Funds 95,427.91 58,061.89 78,952.41 56,261.92 65,603.45
Minority Interest 525.06 453.17 432.84 433.34 420.65
Long Term Borrowings 61,199.50 60,629.18 50,510.39 56,071.34 45,258.61
Deferred Tax Liabilities [Net] 6,125.80 1,174.00 4,474.78 1,343.20 1,572.33
Other Long Term Liabilities 13,904.33 28,802.14 17,830.29 9,141.92 2,596.86
Long Term Provisions 10,948.44 9,004.46 7,891.01 15,134.27 12,190.29
Total Non-Current Liabilities 92,178.07 99,609.78 80,706.47 81,690.73 61,618.09
Short Term Borrowings 16,794.85 13,859.94 11,450.78 13,140.14 9,695.86
Trade Payables 72,038.41 57,698.33 57,580.46 57,407.28 57,315.73
Other Current Liabilities 46,432.71 38,263.49 32,173.68 23,688.58 17,373.86
Short Term Provisions 7,953.50 5,807.76 5,844.51 6,036.00 7,970.68
Total Current Liabilities 1,43,219.47 1,15,629.52 1,07,049.43 1,00,272.00 92,356.13
Total Capital And Liabilities 3,31,350.51 2,73,754.36 2,67,141.15 2,38,657.99 2,19,998.32
Tangible Assets 73,867.84 59,594.56 64,927.07 52,326.21 40,694.29
Intangible Assets 47,429.57 35,676.20 41,544.89 31,456.29 23,418.55
Capital Work-In-Progress 16,142.94 10,186.83 6,550.97 9,330.47 10,137.30
Intangible Assets Under
Development 23,890.56 23,512.01 19,367.97 19,309.62 23,125.26
Fixed Assets 1,61,330.91 1,28,969.60 1,32,390.90 1,12,422.59 97,375.40
Non-Current Investments 5,651.65 5,296.77 4,533.98 1,240.50 1,114.39
Deferred Tax Assets [Net] 4,158.70 4,457.34 3,957.03 2,733.20 2,347.08
Long Term Loans And
Advances 495.41 753.66 503.88 14,948.31 13,268.84
Other Non-Current Assets 23,624.55 17,483.92 15,071.89 858 5,068.45
Total Non-Current Assets 1,95,377.67 1,57,634.61 1,57,217.48 1,36,899.59 1,24,152.99
Current Investments 15,161.10 15,041.15 19,233.04 14,096.24 9,572.28
Inventories 42,137.63 35,085.31 32,655.73 29,272.34 27,270.89
Trade Receivables 28,294.95 20,885.67 13,570.91 12,579.20 10,574.23
Cash And Cash Equivalents 34,613.91 36,077.88 30,460.40 32,115.76 29,711.79
Short Term Loans And
Advances 2,279.66 710.45 1,117.10 10,746.44 14,055.24
Other Current Assets 13,485.59 8,319.29 12,886.49 2,948.42 4,660.90
Total Current Assets 1,35,972.84 1,16,119.75 1,09,923.67 1,01,758.40 95,845.33
Total Assets 3,31,350.51 2,73,754.36 2,67,141.15 2,38,657.99 2,19,998.32

 NET WORTH OF TATA MOTORS

 Tata Motors Ltd. has used only two sources of finance to finance its assets and working capital
 Tata Motors Ltd. is authorized capital to issue a paid up capital of Rs.679.32cr.
 The net worth of the company is also increasing over the years.
 This shows the company is getting benefitted through the increase in equity share capital.
 The net worth of company is calculated as:
Net Worth= Equity Share capital + Reserves Surplus – (Dr. Balance of P/L account + Misc.
Expenditure not written off, if any)
YEAR NET WORTH (rs. in cr.)
 2014  65603.45
 2015  56261.92
 2016  78952.41
 2017  58061.89
 2018  95427.91

 SOURCE OF DEBT
 Working capital borrowings from short term loans and trade payables
 Term Loan from bank, financial institutions
 Unsecured loan and Secured Loan
YEAR DEBT CAPITAL (rs. In cr.)
 2014  54954.47
 2015  69211.48
 2016  61961.17
 2017  74489.12
 2018  77994.35
 CURRENT ASSETS TO PROPRIETOR’S FUND
The purpose of this ratio is to calculate the percentage of shareholders’ funds invested in current assets.
There is no ‘rule of thumb’ for this ratio. Depending upon the nature of the business there may be
different ratios for different firms.
 YEAR CURRENT ASSETS SHAREHOLDER RATIO IN
FUND PERCENTAGE
2014 67556.91 65603.45 1.02
2015 73967.30 56261.92 1.31
2016 76687.04 78952.41 0.97
2017 85238.74 58061.89 1.47
2018 105046.49 95427.91 1.1
INTERPRETATION: From the above table, it is found that the current assets to proprietor’s fund ratio
show a fluctuating trend. The trend has occurred because the ratio is higher in the year 2017with 1.47%
and it is lower in the year 2016 with 0.97%. The value of proprietor’s fund had been remained more or
less same during the first three years of the study. Therefore, the value of current assets should be
increased and kept constant in order to overcome the fluctuating trend and to have a good financial
performance in future.

 FIXED ASSETS TURNOVER RATIO

This ratio measures the company’s return on their investment in property, plant and equipment by
comparing its net sales with fixed assets. It is the relationship between sales or cost of goods sold and
fixed/capital asset employed in the business.

YEAR RATIO (TIMES)

2014 2.44
2015 2.43
2016 2.68
2017 2.67
2018 2.30
INTERPRETATION: From the above table, it is depicted that the fixed assets turnover ratio is
increasing in the year 2016 with 2.68 times whereas decreasing in the year 2018 with 2.30 times. It has
been found during the study that the ratio fluctuates. Hence, there had been a poor performance of Tata
Motors Ltd for the last three years, as it has not properly utilized its fixed assets in generating the
revenue.

 Capital gearing ratio

The term “capital gearing” is used to describe the relationship between equity share capital including
reserves and surpluses to preference share capital and other fixed interest – bearing loans.

YEAR NETWORTH LONG TERM DEBT RATIO (TIMES

2014 65603.45 45,258.61 1.44

2015 56261.92 56,071.34 1.03

2016 78952.41 50,510.39 1.56

2017 58061.89 60,629.18 0.95

2018 95427.91 61,199.50 1.55

INTERPRETATION: From the above table, it is noticed that the capital gearing ratio shows a
fluctuating trend. The ratio is higher in the year 2016 with 1.56 times and it is lower in the year 2017
with 0.95 times. There had been a little change in the value of equity capital over the period of study.
 Therefore, the ratio had depicted a healthier position of the company because the equity and reserves are
more sufficient to meet out the fixed bearing expenses.

 DEBT EQUITY RATIO

Debt Equity ratio, is also known as External – Internal Equity ratio which is calculated to measure the
relative claims of outsiders and the owners (i.e. shareholders) against the firm’s asset. The two basic
components of the ratio are outsider’s funds (external equities) and shareholder’s funds (internal
equities).

YEAR DEBT EQUITY RATIO

2014 0.84
2015 1.23
2016 0.78
2017 1.28
2018 0.82
INTERPRETATION: From the above table, it is found that the debt equity ratio shows a fluctuating
trend. The ratio is increasing in the year 2017 with 1.28 times and it is decreasing in the year 2016 with
0.78 times. There had been a sudden change in the value of outsider’s fund and shareholders fund in the
year 2017 when compared to other years of the study. Hence, the expected debt equity ratio will depend
upon the future borrowings of the Tata Motors Ltd.

 LEVERAGE
The term leverage is commonly used to describe the firm’s ability to use fixed cost assets or funds to
increase the return to its owners i.e. equity shareholders. It is the power and relationship between two
inter-related variables and these variables can be of output, sales, cost and profit.

 FINANCIAL LEVERAGE
Financial Leverage is known as trading on equity and it is used to magnify the earnings of the
shareholders. Financial leverage is associated with financial activities and it results from the presence of
fixed financial charges in the income with the firm’s EBIT.

= EARNING BEFORE INTEREST AND TAX/ EARNING BEFORE TAX

YEAR EBIT EBT RATIO (TIMES)

2014 24588.13 18868.97 1.30
2015 21887.27 21702.56 1.00
2016 20865.20 14125.77 1.48
2017 12438.24 9314.79 1.33
2018 13861.68 11155.03 1.24
INTERPRETATION: From the above table, it is noted that. The financial leverage is higher in the year
2016 with 1.48 times and it is lower in the year 2015 with 1.00 times. It had been found during the study
that the financial leverage show a fluctuating trend. Hence, the Tata Motors Ltd should try to lower the
degree of financial leverage in order to lower the financial risk in the future
 OPERATING LEVERAGE
Operating leverage may be defined as “the firm’s ability to use operating costs to magnify the effects of
changes in sales on its earnings before interest and taxes”.

=SALES/ EARNING BEFORE INTEREST AND TAX

YEAR SALES EBIT RATIO

2014 230677.10 24588.13 9.381645
2015 260734.33 21887.27 11.9126
2016 273045.60 20865.20 13.08617
2017 269692.51 12438.24 21.68253
2018 294619.18 13861.68 21.25422
From the above table, it is found that the operating leverage is increasing in the year 2017 with
21.68times and it is decreasing in the year 2014 with 9.38 times. It has been found from the study period
that the operating leverage shows a fluctuating trend. Hence, in future, the Tata Motors Ltd should use
the maximum level of operating costs in order to meet the future effects of changes in sales on its
earnings before interest and taxes.

 FINDINGS AND SUGGESTIONS OF THE STUDY

 The current assets to proprietor’s fund ratio are used to calculate the percentage of shareholders fund
invested in current assets. The ratio is higher in the year 2017with 1.47% and it is lower in the year
2016 with 0.97%. The value of proprietor’s fund had been remained more or less same during the
first three years of the study. Therefore, the value of current assets should be increased and kept
constant in order to overcome the fluctuating trend and to have a good financial performance in
future.
 The fixed assets turnover ratio is increasing in the year 2016 with 2.68 times whereas decreasing in
the year 2018 with 2.30 times. It has been found during the study that the ratio fluctuates. Hence,
there had been a poor performance of Tata Motors Ltd for the last three years, as it has not properly
utilized its fixed assets in generating the revenue.
 The capital gearing ratio shows a fluctuating trend. The ratio is higher in the year 2016 with 1.56
times and it is lower in the year 2017 with 0.95 times. There had been a little change in the value of
equity capital over the period of study.
 The ratio is increasing in the year 2017 with 1.28 times and it is decreasing in the year 2016 with
0.78 times. There had been a sudden change in the value of outsider’s fund and shareholders fund in
the year 2017 when compared to other years of the study. Hence, the expected debt equity ratio will
depend upon the future borrowings of the Tata Motors Ltd.
LEVERAGES
 The financial leverage is higher in the year 2016 with 1.48 times and it is lower in the year 2015 with
1.00 times. It had been found during the study that the financial leverage show a fluctuating trend.
Hence, the Tata Motors Ltd should try to lower the degree of financial leverage in order to lower the
financial risk in the future
 The operating leverage is increasing in the year 2017 with 21.68times and it is decreasing in the year
2014 with 9.38 times. It has been found from the study period that the operating leverage shows a
fluctuating trend. Hence, in future, the Tata Motors Ltd should use the maximum level of operating
costs in order to meet the future effects of changes in sales on its earnings before interest and taxes.
 PEER COMPARISION
The comparison of Tata Motors Ltd. with its competitors company which is under as:
1. Tata Motors
2. Ashok Leyland
3. Eicher Motors
4. Force Motors
5. SML Isuzu

 Comparison with Sales over a Year

70000

58831.41
60000

50000
TATA MOTORS
40000 ASHOK LEYLAND
EICHER MOTORS
30000 26247.91
FORCE MOTORS

20000 SML ISUZU

8957.51
10000
3430.19
1135.05
0
SALES (IN CRORE)

Above the chart shows that major the part of the market covered by a Tata Motors in the form sales of its
product. From the data we got to know about half of the market covered by a Tata motors in compare to
other companies. The main reason of covered this much part of market is Tata motor have variety of
products as compare to other companies in the form of cars, buses, truck and defence vehicles etc.