A PROJECT REPORT ON

“CASH FLOW STATEMENT ANALYSIS”

AT
SHIVA SAI AGENCIES, KODAD
A Project report submitted to the JNTU Hyderabad
In Partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
Submitted by
KANDULA BHAVANI
H. T. No. 19C11E0005
Under the guidance of
Mr. CH. RAGHAVENDAR RAO
Asst.Professor

DEPARTMENT OF MANAGEMENT STUDIES

ANURAG ENGINEERING COLLEGE

(AN AUTONOMOUS INSTITUTION)
(Accredited by NBA Delhi&Affiliated to JNTU, Hyderabad&Approved by AICTE)
ANANTHAGIRI (V&M), SURYAPET (DT), T.S, INDIA -508206
Ph: 08683-272555,27245,27245
www.anurag.ac.in
2019-2021

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 ANURAG ENGINEERING COLLEGE
(An Autonomous Institutions)
(Affiliated to JNTU, Hyderabad& Approved by AICTE)
ANANTHAGIRI (M), SURYAPET (DT), T.S, INDIA -508206
www.anurag.ac.in

CERTIFICATE

This is to certify that the seminar work entitled A PROJECT REPORT ON “CASH
FLOW STATEMENT ANALYSIS” AT SHIVA SAI AGENCIES, KODAD a bonafide
work done KANDULA BHAVANI, H.T.NO.19C11E0005 in partial fulfilment of the award
of Master of Business Administration from JNTU, Hyderabad during the year 2019-2021.
This work has not been submitted to any other university of institution or organization for the
award of any degree of diploma.

HEAD OF THE DEPARTMENT PRINCIPAL

INTERNAL EXAMINER EXTERNAL EXAMINER

2
 DECLARATION

I KANDULA BHAVANI bearing HALL TICKET No: 19C11E0005 IN ANURAG

ENGINEERING COLLEGE here by declared that the project report entitled “CASH FLOW
STATEMENT ANALYSIS” carried out at SHIVA SAI AGENCIES, KODAD. Is my
original work written and submitted by me in partial fulfilment of Master of Business
Administration of JNTUH. I also declare that this project has not been submitted earlier in
any other university or institution.

DATE: AMARTHALURI SHINY JEMIMAH

PLACE: Kodad 19C11E0023

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 ACKNOWLEDGEMENT

I take the opportunity to remember and acknowledge the cooperation and support by
several special individual out of which this report has evolved.

I express my great pleasure to have an opportunity to take up this project under the
inspiring guidance of Mr. S. NAGAYYA General manager whose support decision
and encouragement have immensely helped me in successful completion of the
project.

I wish to express my profound thanks to Dr. M. V. SIVA PRASAD the principal of the
ANURAG ENGINEERING COLLEGE for their constant help and support.

I wish to express my profound thanks to Mr. CH. RAMESH Head Of The

Department and whole of MBA department of business management for their constant
help and support.

I express my sincere thanks to my supervisor Mr. CH. RAGHAVENDRA RAO

Asst Prof for giving me moral support, kind attention and valuable guidance to me
throughout this project work.

I also convey my thanks to my parents, family members, friends and well-wishers who
have constantly supported me. I consider it my privilege to express my gratitude and
respect to all those who guided in the completion of the project.

19C11E0005

KANDULA BHAVANI

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 TABLE OF CONTENTS

Chapter No Particulars Page No

INTRODUCTION
OBJECTIVES OF THE STUDY
METHODOLOGY OF THE
STUDY
SCOPE OF THE STUDY
NATURE OF THE STUDY
1.
LIMITATIONS OF THE
6-22
STUDY

INDUSTRY PROFILE &

2. COMPANY PROFILE 23-41

THEORITICAL FRAMEWORK
3. 42-63
DATA ANALYSISAND
4. INTERPRETATION 64-71
FINDINGS,
5. SUGGESTIONS AND 72-74
CONCLUSION

6. BIBLOGRAPHY
75

5
 CHAPTER-I
INTRODUCTION

6
Introduction
Need of the study
Objectives of the study
Scope of the study
Methodology of the study
Limitations of the study

7
 INTRODUCTION
CASH FLOW STATEMENT ANALYSIS
What is the Statement of Cash Flows?

The Statement of Cash Flows (also referred to as the cash flow statement) is one of the three
key financial statements that report the cash generated and spent during a specific period of
time (e.g., a month, quarter, or year). The statement of cash flows acts as a bridge between
the income statement and balance sheet by showing how money moved in and out of the
business.

Three Sections of the Statement of Cash Flows:

Operating Activities:

The principal revenue-generating activities of an organization and other activities that are not
investing or financing; any cash flows from current assets and current liabilities.

Investing Activities:

Any cash flows from the acquisition and disposal of long-term assets and other investments
not included in cash equivalents

Financing Activities:

Any cash flows that result in changes in the size and composition of the contributed equity
capital or borrowings of the entity (i.e., bonds, stock, dividends)

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Cash Flow Definitions
Cash Flow:
Inflows and outflows of cash and cash equivalents (learn more in CFI’s Ultimate Cash
Flow Guide)

Cash Balance:
Cash on hand and demand deposits (cash balance on the balance sheet)

Cash Equivalents:
Cash equivalents include cash held as bank deposits, short-term investments, and any
very easily cash-convertible assets – includes overdrafts and cash equivalents with
short-term maturities (less than three months).

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Cash Flow Classifications
1. Operating Cash Flow
Operating activities are the principal revenue-producing activities of the entity. Cash
Flow from Operations typically includes the cash flows associated with sales,
purchases, and other expenses.

The company’s chief financial officer (CFO) chooses between the direct and indirect
presentation of operating cash flow:

Direct Presentation:
Operating cash flows are presented as a list of cash flows; cash in from sales, cash out
for capital expenditures, etc. This is a simple but rarely used method, as the indirect
presentation is more common.

Indirect Presentation:
Operating cash flows are presented as a reconciliation from profit to cash flow:
Depreciation expense reduces profit but does not impact cash flow (it is a non-cash
expense). Hence, it is added back. Similarly, if the starting point profit is above interest
and tax in the income statement, then interest and tax cash flows will need to be
deducted if they are to be treated as operating cash flows.

There is no specific guidance on which profit amount should be used in the

reconciliation. Different companies use operating profit, profit before tax, profit after
tax, or net income. Clearly, the exact starting point for the reconciliation will determine
the exact adjustments made to get down to an operating cash flow number.

2. Investing Cash Flow

Cash flow from investing activities includes the acquisition and disposal of non-current
assets and other investments not included in cash equivalents. Investing cash flows
typically include the cash flows associated with buying or selling property, plant, and
equipment (PP&E), other non-current assets, and other financial assets.
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Cash spent on purchasing PP&E is called capital expenditures (CapEx).

3. Financing Cash Flow

Cash flow from financing activities are activities that result in changes in the size and
composition of the equity capital or borrowings of the entity. Financing cash flows
typically include cash flows associated with borrowing and repaying bank loans, and
issuing and buying back shares. The payment of a dividend is also treated as a
financing cash flow.

Interest and Cash Flow

Under IFRS, there are two allowable ways of presenting interest expense in the cash
flow statement. Many companies present both the interest received and interest paid as
operating cash flows. Others treat interest received as investing cash flow and interest
paid as a financing cash flow. The method used is the choice of the finance director.

Under U.S. GAAP, interest paid and received are always treated as operating cash
flows.

Free Cash Flow

Investment bankers and finance professionals use different cash flow measures for
different purposes. Free cash flow is a common measure used typically for DCF
valuation. However, free cash flow has no definitive definition and can be calculated
and used in different ways.

Learn more, in CFI’s Ultimate Cash Flow Guide.

How to Prepare a Statement of Cash Flows

The operating section of the statement of cash flows can be shown through either the
direct method or the indirect method. With either method, the investing and financing
sections are identical; the only difference is in the operating section. The direct method
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shows the major classes of gross cash receipts and gross cash payments. The indirect
method, on the other hand, starts with the net income and adjusts the profit/loss by the
effects of the transactions. In the end, cash flows from the operating section will give
the same result whether under the direct or indirect approach, however, the presentation
will differ.

The International Accounting Standards Board (IASB) favors the direct method of
reporting because it provides more useful information than the indirect method.
However, it is believed that greater than 90% of public companies use the indirect
method.

Direct Method vs Indirect Method of Presentation

There are two methods of producing a statement of cash flows, the direct method, and
the indirect method.

In the direct method, all individual instances of cash that are received or paid out are
tallied up and the total is the resulting cash flow.

In the indirect method, the accounting line items such as net income, depreciation, etc.
are used to arrive at cash flow. In financial modeling, the cash flow statement is always
produced via the indirect method.

What Can the Statement of Cash Flows Tell Us?

• Cash from operating activities can be compared to the company’s net income to
determine the quality of earnings. If cash from operating activities is higher than
net income, earnings are said to be of “high quality.”
• This statement is useful to investors because, under the notion that cash is king,
it allows investors to get an overall sense of the company’s cash inflows and
outflows and obtain a general understanding of its overall performance.

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 • If a company is funding losses from operations or financing investments by
raising money (debt or equity) it will quickly become clear on the statement of
cash flows

Overview
The Cash flow statement is a significant financial statement, as it reveals how much cash the
company is actually generating. Is this information not revealed in the P&L statement you
may think? Well, the answer is both a yes and a no.

Consider the following scenario.

Assume a simple coffee shop selling coffee and short eats. All the shop’s sales are mostly on
a cash basis, meaning if a customer wants to have a cup of coffee and a snack, he needs to
have enough money to buy what he wants. On a particular day, assume the shop manages to
sell Rs.2,500/- worth of coffee and Rs.3,000/- worth of snacks. The shop’s income is
Rs.5,500/- for that day. Rs.5,500/- is reported as revenues in P&L, and there is no ambiguity
with this.

Now think about another business that sells laptops. For the sake of simplicity, let us assume
that the shop sells only 1 type of laptop at a standard fixed rate of Rs.25,000/- per laptop.
Assume on a certain day; the shop manages to sell 20 such laptops. Clearly the revenue for
the shop would be Rs.25,000 x 20 = Rs.500,000/-. But what if 5 of the 20 laptops were sold
on credit? A credit sale is when the customer takes the product today but pays the cash at a
later point in time. In this situation here is how the numbers would look:

Cash sale: 15 * 25000 = Rs.375,000/-

Credit sale: 5 * 25000 = Rs.125,000/-

Total sales: Rs.500,000/-

If this shop were to show its total revenue in its P&L statement, you would see revenue of
Rs.500,000/- which may seem good on the face of it. However, how much of this
Rs.500,000/- is actually present in the company’s bank account is not clear. What if this
13
company had a loan of Rs.400,000/- that had to be repaid urgently? Even though the
company has a sale of Rs.500,000, it has only Rs.375,000/- in its account. This means the
company has a cash crunch, as it cannot meet its debt obligations.

The cash flow statement captures this information. A statement of cash flows should be
presented as an integral part of an entity’s financial statements. Hence in this context
evaluation of the cash flow statement is highly critical as it reveals, amongst other things, the
true cash position of the company.

To sum up, every company’s financial performance is not so much dependent on the profits
earned during a period, but more realistically on liquidity or cash flows.

Brief on the financial statements

Over the last few chapters, we have discussed the company’s three important financial
statements, i.e. the P&L statement, the Balance Sheet and the Cash Flow statement of the
company. While the Cash flow and P&L statement are prepared on a standalone basis
(representing the given year’s financial position), the Balance Sheet is prepared on a flow
basis.

The P&L statement discusses how much the company earned as revenues versus how much
the company expanded in terms of expenses. The company’s retained earnings, also called
the surplus of the company, are carried forward to the balance sheet. The P&L also
incorporates the depreciation number. The depreciation mentioned in the P&L statement is
carried forward to the balance sheet.

The Balance Sheet details the company’s assets and liabilities. On the liabilities side of the
Balance sheet, the company represents the shareholders’ funds. The assets should always be
equal to the liabilities; only then do we say the balance sheet has balanced. One of the key
details on the balance sheet is the cash and cash equivalents of the firm. This number tells us
how much money the company has in its bank account. This number comes from the cash
flow statement.

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The cash flow statement provides information to the users of the financial statements about
the entity’s ability to generate cash and cash equivalents and indicates the cash needs of a
company. Cash flows are prepared on a historical basis providing information about the cash
and cash equivalents, classifying cash flows in to operating, financing and investing
activities. The final number of cash flow tells us how much money the company has in its
bank account.

We have so far looked into how to read the financial statements and what to expect from each
of them. We have not yet ventured into how to analyze these numbers. One of the ways to
analyze the financial numbers is by calculating a few important financial ratios.

Negative cash flow vs. positive cash flow

When your cash flow statement shows a negative number at the bottom, that means you lost
cash during the accounting period—you have negative cash flow. It’s important to remember
that, long-term, negative cash flow isn’t always a bad thing. Some months you may spend
cash in order to make money later on—by investing in equipment, for example.

When you have a positive number at the bottom of your statement, you’ve got positive cash
flow for the month. Keep in mind, positive cash flow isn’t always a good thing in the long
term. While it gives you more liquidity now, there are negative reasons you may have that
money—for instance, by taking on a large loan to bail out your failing business. Positive cash
flow isn’t always a positive overall.

Where do cash flow statements come from?

If you do your own bookkeeping in Excel, you can calculate cash flow statements each month
based on the information on your income statements and balance sheets. If you
use accounting software, it can create cash flow statements based on information you’ve
already entered in the general ledger.

Keep in mind, with both those methods, you cash flow statement is only accurate so long as
the rest of your bookkeeping it accurate too. The most surefire way to know how much

15
working capital you have is to hire a bookkeeper. They’ll make sure everything adds up, so
your cash flow statement always gives you an accurate picture.

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 OBJECTIVES OF THE STUDY
The primary objective of cash flow statement analysis is to understand
and diagnose the information contained in cash flow statement with a view to judge the flow
of cash of the firm, and to make forecast about future prospects of the firm.

The financial statements are to provide information about the financial position,
performance and changes in financial position of an enterprise that is useful to a wide range
of users in making economic decisions. “Financial statements should be understandable,
relevant, reliable and comparable.

➢ To find the liquidity position of the SHIVA SAI AGENCIES. For the availability
cash and utilization of the cash by the organization.
➢ It will help find to assess the company's ability to generate positive cash flows
in the future
➢ To assess its ability to meet its obligations to service loans, pay dividends etc.
➢ To assess the effect on its finances of major transactions in the year.
➢ To study the firms liquidity.
➢ To learn about how company manage its cash & become such well recognized
profitable industry & if there is any problem arise then what steps taken by
company.
➢ To study the techniques used in organization.
➢ To study methods & techniques use for cash flow analysis.

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 SCOPE OF THE STUDY

Aim of work help to reach destination by problems arises in the way

work become more efficient if purpose for doing work is clear. Scope
Statement of Cash Flows

1. Consolidated cash flow is a financial statement that presents information

about the company's cash receipts and disbursements during the accounting
period.

2. The purpose of cash flow statement is to provide information on sources

and uses of cash and cash equivalents during the period of accounting and cash
reconciliation at the beginning of the period with cash at the end of the
period plus the cash equivalent balances.

3. The general form of the cash flow statement shows cash receipts and
disbursements are divided into three categories, namely: cash flow from
operating activities, cash flows from investing activities and cash flows
arising from financing activities.

4. Operating activities are the principal revenue-producing activities of the

company (principal revenue producing activities) and other activities that are
not investing activities and financing activities. Cash flows from operating
activities can be reported with the use of two methods, either directly or
indirectly. E-code uses the indirect method for operating activities.

5. Investment activity is the acquisition and disposal of long-term assets and

other investments that do not include cash equivalents

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NATURE:

• Indicate the primary purpose of the statement of cash flows.

• Distinguish among operating, investing, and financing activities.
• Explain the impact of the product life cycle on a company's cash flows.
• Steps in the Preparation of the Statement of Cash Flows.
• Prepare a statement of cash flows using one of two approaches: (a) the
indirect method or (b) the direct method.

Benefits of Cash Flow Statement

Cash flow statement provides the following benefits :
• A cash flow statement when used along with other financial statements
provides information that enables users to evaluate changes in net assets
of an enterprise, its financial structure (including its liquidity and
solvency) and its ability to affect the amounts and timings of cash flows
in order to adapt to changing circumstances and opportunities.
• Cash flow information is useful in assessing the ability of the enterprise
to generate cash and cash equivalents and enables users to develop
models to assess and compare the present value of the future cash flows
of different enterprises.
• It also enhances the comparability of the reporting of operating
performance by different enterprises because it eliminates the effects of
using different accounting treatments for the same transactions and
events.
• It also helps in balancing its cash inflow and cash outflow, keeping in
response to changing condition.

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 NEED OF THE STUDY

The cash flow report is important because it informs the reader of the business cash position.
For a business to be successful, it must have sufficient cash at all times. It needs cash to pay
its expenses, to pay bank loans, to pay taxes and to purchase new assets. A cash flow report
determines whether a business has enough cash to do exactly this.

Having cash is a key requirement for a business to stay solvent. When a business has no
longer enough cash to pay its dues, it is often declared bankrupt.

For this introduction to accounting, we will not go through the actual preparation of an actual
cash flow report. In fact in the business world, small businesses rarely produce a cash flow
report, as profit and loss report is sufficient for their needs. It is unlikely that a small business
such as a bakery will involve complex non cash transactions that would warrant such
information. Therefore, it is considered a waste of time and money to have an accountant
prepare a report that would be of little use to anyone!

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 METHODOLOGY OF THE STUDY
Research is the systematic investigation of facts that seeks to establish relationship between
two types

Primary data

1. officers of account sections.

2. executives and staff of financial and accounts department.

3. Meeting with concerned people.

4. Personal observation.

Secondary data

5. Annual reports of TVS Motor Limited financial management text books.

6. printed material.

7. journals and magazines.

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 LIMITATIONS OF THE STUDY
1. The analysis made on the basis of secondary data.

2. The availability of data is only pertaining to five years.

3. Due to shortage of time it is not possible to cover all the factors and details regarding the
subject of study

4. The study is based on financial statements. It is a quantitative analysis does not reflect
qualitative aspect of the company

5. The latest financial data could not be reported as the company’s website have not been
updated.

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 CHAPTER-II

INDUSTRY PROFILE

AND

COMPANY PROFILE

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 INDUSTRY PROFILE
AUTOMOBILE INDUSTRY IN INDIA
Introduction
In 2020, India was the fifth-largest auto market, with ~3.49 million units combined
sold in the passenger and commercial vehicles categories. It was the seventh largest
manufacturer of commercial vehicles in 2019.
The two wheelers segment dominate 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. In addition, several initiatives by the Government of India and major automobile
players in the Indian market is expected to make India a leader in the two-wheeler and four-
wheeler market in the world by 2020.

Market Size
Domestic automobiles production increased at 2.36% CAGR between FY16-20 with
26.36 million vehicles being manufactured in the country in FY20. Overall, domestic
automobiles sales increased at 1.29% CAGR between FY16-FY20 with 21.55 million
vehicles being sold in FY20.
Two wheelers and passenger vehicles dominate the domestic Indian auto market.
Passenger car sales are dominated by small and mid-sized cars. Two wheelers and passenger
cars accounted for 80.8% and 12.9% market share, respectively, accounting for a combined
sale of over 20.1 million vehicles in FY20. Two-wheeler sales stood at 1,195,445 units in
March 2021, compared with 1,846,613 units in March 2020, recording a decline of 35.26 %.
Passenger vehicle (PV) sales stood at 279,745 units in March 2021, compared with 2,17,879
units in March 2020, registering a growth of 28.39%.
As per Federation of Automobile Dealers Associations (FADA), PV sales in
December 2020 stood at 271,249 units, compared with 218,775 units in December 2019,
registering a 23.99% growth.

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 Overall, automobile export reached 4.77 million vehicles in FY20, growing at a
CAGR of 6.94% during FY16-FY20. Two wheelers made up 73.9% of the vehicles exported,
followed by passenger vehicles at 14.2%, three wheelers at 10.5% and commercial vehicles at
1.3%.
EV sales, excluding E-rickshaws, in India witnessed a growth of 20% and reached 1.56
lakh units in FY20 driven by two wheelers. According to NITI Aayog and Rocky Mountain
Institute (RMI) India's EV finance industry is likely to reach Rs. 3.7 lakh crore (US$ 50
billion) in 2030. A report by India Energy Storage Alliance estimated that EV market in India
is likely to increase at a CAGR of 36% until 2026. In addition, projection for EV battery
market is forecast to expand at a CAGR of 30% during the same period.

• Premium motorbike sales in India recorded seven-fold jump in domestic sales,

reaching 13,982 units during April-September 2019. The luxury car market is
expected to register sales of 28,000-33,000 units in 2021, up from 20,000-21,000
units sold in 2020. The entry of new manufacturers and new launches is likely to
propel this market in 2021.

Investments
In order to keep up with the growing demand, several auto makers have started
investing heavily in various segments of the industry during the last few months. The
industry has attracted Foreign Direct Investment (FDI) worth US$ 25.40 billion between
April 2000 and December 2020, according to the data released by Department for Promotion
of Industry and Internal Trade (DPIIT).
Some of the recent/planned investments and developments in the automobile sector in
India are as follows:

• In 2019-20, the total passenger vehicles sales reached ~2.8 million, while ~2.7 million
units were sold in FY21.
• In February 2021, the Delhi government started the process to set up 100 vehicle
battery charging points across the state to push adoption of electric vehicles.
• In January 2021, Fiat Chrysler Automobiles (FCA) announced an investment of US$
250 million to expand its local product line-up in India.
25
• A cumulative investment of ~Rs. 12.5 trillion (US$180 billion) in vehicle production
and charging infrastructure would be required until 2030 to meet India’s electric
vehicle (EV) ambitions.
• In January 2021, Lamborghini announced it is aiming to achieve sales in India higher
than the 2019-levels, after recovering from pandemic-induced disruptions.
• In January 2021, Tesla, the electric car maker, set up a R&D centre in Bengaluru and
registered its subsidiary as Tesla India Motors and Energy Private Limited.
• In November 2020, Mercedes Benz partnered with the State Bank of India to provide
attractive interest rates, while expanding customer base by reaching out to potential
HNI customers of the bank.
• Hyundai Motor India invested ~Rs. 3,500 crore (US$ 500 million) in FY20, with an
eye to gain the market share. This investment is a part of Rs. 7,000 crore (US$ 993
million) commitment made by the company to the Tamil Nadu government in 2019.
• In October 2020, Kinetic Green, an electric vehicles manufacturer, announced plan to
set up a manufacturing facility for electric golf carts besides a battery swapping unit
in Andhra Pradesh. The two projects involving setting up a manufacturing facility for
electric golf carts and a battery swapping unit will entail an investment of Rs. 1,750
crore (US$ 236.27 million).
• In October 2020, Japan Bank for International Cooperation (JBIC) agreed to provide
US$ 1 billion (Rs. 7,400 crore) to SBI (State Bank of India) for funding the
manufacturing and sales business of suppliers and dealers of Japanese automobile
manufacturers and providing auto loans for the purchase of Japanese automobiles in
India.
• In October 2020, MG Motors announced its interest in investing Rs. 1,000 crore (US$
135.3 million) to launch new models and expand operations in spite of the anti-China
sentiments.
• In October 2020, Ultraviolette Automotive, a manufacturer of electric motorcycle in
India, raised a disclosed amount in a series B investment from GoFrugal
Technologies, a software company.

26
 • In September 2020, Toyota Kirloskar Motors announced investments of more than Rs
2,000 crore (US$ 272.81 million) in India directed towards electric components and
technology for domestic customers and exports.
• During early September 2020, Mahindra & Mahindra singed a MoU with Israel-based
REE Automotive to collaborate and develop commercial electric vehicles.
• In April 2020, TVS Motor Company bought UK’s iconic sporting motorcycle brand,
Norton, for a sum of about Rs. 153 crore (US$ 21.89 million), making its entry into
the top end (above 850cc) segment of the superbike market.
• In March 2020, Lithium Urban Technologies partnered with renewable energy
solutions provider, Fourth Partner Energy, to build charging infrastructure across the
country.
• In January 2020, Tata AutoComp Systems, the auto-components arm of Tata Group
entered a joint venture with Beijing-based Prestolite Electric to enter the electric
vehicle (EV) components market.

Government Initiatives
The Government of India encourages foreign investment in the automobile sector and
has allowed 100% foreign direct investment (FDI) under the automatic route.
Some of the recent initiatives taken by the Government of India are -

• In Union Budget 2021-22, the government introduced the voluntary vehicle scrappage
policy, which is likely to boost demand for new vehicles after removing old unfit
vehicles currently plying on the Indian roads.
• In February 2021, the Delhi government started the process to set up 100 vehicle
battery charging points across the state to push adoption of electric vehicles.
• The Union Cabinet outlaid Rs. 57,042 crore (US$ 7.81 billion) for automobiles &
auto components sector in production-linked incentive (PLI) scheme under the
Department of Heavy Industries.
• The Government aims to develop India as a global manufacturing centre and a
Research and Development (R&D) hub.

27
 • Under NATRiP, the Government of India is planning to set up R&D centres at a total
cost of US$ 388.5 million to enable the industry to be on par with global standards.
• The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in the
country for introduction of EVs in their public transport systems under the FAME
(Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India)
scheme. The Government will also set up incubation centre for start-ups working in
the EVs space.
• In February 2019, the Government of India approved FAME-II scheme with a fund
requirement of Rs. 10,000 crore (US$ 1.39 billion) for FY20-22.

Achievements
Following are the achievements of the Indian automotive sector:

• In H12019, automobile manufacturers invested US$ 501 million in India’s auto-tech

start-ups according to Venture intelligence.
• Investment flow into EV start-ups in 2019 (till end of November) increased nearly
170% to reach US$ 397 million.
• On 29th July 2019, Inter-ministerial panel sanctioned 5,645 electric buses for 65 cities.
• NATRiP’s proposal for “Grant-In-Aid for test facility infrastructure for EV
performance Certification from NATRIP Implementation Society” under the FAME
Scheme was approved by Project Implementation and Sanctioning Committee (PISC)
on 3rd January 2019.
• Under NATRiP, following testing and research centres have been established in the
country since 2015.
o International Centre for Automotive Technology (ICAT), Manesar
o National Institute for Automotive Inspection, Maintenance & Training
(NIAIMT), Silchar
o National Automotive Testing Tracks (NATRAX), Indore
o Automotive Research Association of India (ARAI), Pune
o Global Automotive Research Centre (GARC), Chennai

28
 • SAMARTH Udyog - Industry 4.0 centres: ‘Demo cum experience’ centres are being
set up in the country for promoting smart and advanced manufacturing helping SMEs
to implement Industry 4.0 (automation and data exchange in manufacturing
technology).

Road Ahead
The automobile industry is supported by various factors such as availability of skilled
labour at low cost, robust R&D centres, and low-cost steel production. The industry also
provides great opportunities for investment and direct and indirect employment to skilled and
unskilled labour.
Indian automotive industry (including component manufacturing) is expected to reach
Rs. 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026.
The Indian auto industry is expected to record strong growth in 2021-22, post recovering
from effects of COVID-19 pandemic. Electric vehicles, especially two-wheelers, are likely to
witness positive sales in 2021-22.
A study by CEEW Centre for Energy Finance recognised US$ 206 billion opportunity
for electric vehicles in India by 2030.

Reports

The automobile industry in India is the world’s fifth largest. India was the world's
fifth largest manufacturer of cars and seventh largest manufacturer of commercial vehicles in
2019. Indian automotive industry (including component manufacturing) is expected to reach
Rs. 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. The industry attracted Foreign
Direct Investment (FDI) worth US$ 25.40 billion between April 2000 and December 2020
accounting for ~5% of the total FDI during the period according to the data released by
Department for Promotion of Industry and Internal Trade (DPIIT).
Domestic automobile production increased at 2.36% CAGR between FY16-FY20
with 26.36 million vehicles being manufactured in the country in FY20. Overall, domestic
automobiles sales increased at 1.29% CAGR between FY16-FY20 with 21.55 million
vehicles being sold in FY20.

29
 Two wheelers and passenger vehicles dominate the domestic Indian auto market.
Passenger car sales are dominated by small and mid-sized cars. Two wheelers and passenger
cars accounted for 80.8% and 12.9% market share, respectively, accounting for a combined
sale of over 20.1 million vehicles in FY20. Two wheeler sales stood at 1,426,865 units in
February 2021, compared with 1,294,787 units in February 2020, recording a rise of 10.20%.
Passenger vehicle (PV) sales stood at 281,380 units in February 2021, compared with
238,622 units in February 2020, registering a growth of 17.92%. As per Federation of
Automobile Dealers Associations (FADA), PV sales in December 2020 stood at 271,249
units, compared with 218,775 units in December 2019, registering a 23.99% growth.
Overall, automobile export reached 4.77 million vehicles in FY20, growing at a
CAGR of 6.94% during FY16-FY20. Two wheelers made up 73.9% of the vehicles exported,
followed by passenger vehicles at 14.2%, three wheelers at 10.5% and commercial vehicles at
1.3%.
The electric vehicle (EV) market is estimated to be a Rs. 50,000 crore (US$ 7.09
billion) opportunity in India by 2025. Several technology and automotive companies have
expressed interest and/or made investments into the India EV space. Auto companies such as
Hyundai, MG Motors, Mercedes, and Tata Motors, have launched EVs in the market. A
recent study conducted by Castrol found out, most of Indian consumers would consider
buying an electric vehicle by the year 2022. The study also highlighted for an average Indian
consumer, price point of Rs. 23 lakh (or US$ 31,000), a charge time of 35 minutes and a
range of 401 kilometers from a single charge will be the 'tipping points' to get mainstream EV
adoption. A cumulative investment of ~Rs. 12.5 trillion (US$180 billion) in vehicle
production and charging infrastructure would be required until 2030 to meet India’s electric
vehicle (EV) ambitions.
A report by India Energy Storage Alliance estimated that EV market in India is likely
to increase at a CAGR of 36% until 2026. In addition, projection for EV battery market is
forecast to expand at a CAGR of 30% during the same period.
The Government aims to develop India as a global manufacturing and research and
development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure
Project (NATRiP) centres as well as National Automotive Board to act as facilitator between
the Government and the industry. Under (NATRiP), five testing and research centres have
30
been established in the country since 2015. NATRiP’s proposal for “Grant-In-Aid for test
facility infrastructure for Electric Vehicle (EV) performance Certification from NATRIP
Implementation Society” under FAME (Faster Adoption and Manufacturing of (Hybrid) and
Electric Vehicles in India) scheme was approved by Project Implementation and Sanctioning
Committee (PISC) on January 03, 2019. In Union Budget 2021-22, the government
introduced the voluntary vehicle scrappage policy, which is likely to boost demand for new
vehicles after removing old unfit vehicles currently plying on the Indian roads.
The Indian Government has also set up an ambitious target of having only EVs being
sold in the country. The Ministry of Heavy Industries, Government of India, has shortlisted
11 cities in the country for introduction of EVs in their public transport system under the
FAME scheme. The first phase of the scheme was extended to March 2019 while in February
2019, the Government approved FAME-II scheme with a fund requirement of Rs. 10,000
crore (US$ 1.39 billion) for FY20-22. Under Union Budget 2019-20, Government announced
to provide additional income tax deduction of Rs. 1.5 lakh (US$ 2,146) on the interest paid
on the loans taken to purchase EVs.
EV sales, excluding e-rickshaws, in India witnessed a growth of 20% and reached
1.56 lakh units in FY20 driven by two wheelers. According to NITI Aayog and Rocky
Mountain Institute (RMI) India's EV finance industry is likely to reach Rs. 3.7 lakh crore
(US$ 50 billion) in 2030.
The Government of India expects automobile sector to attract US$ 8-10 billion in
local and foreign investment by 2023.

31
 COMPANY PROFILE

TVS MOTOR COMPANY LIMITED Franchised by SHIVA SAI

AGENCIES
TVS Motor Company Limited (TVS) is an Indian multinational motorcycle company
headquartered at Chennai, India. It is the third largest motorcycle company in India with a
revenue of over ₹20,000 crore (US$2.8 billion) in 2018–19. The company has an annual sales
of 3 million units and an annual capacity of over 4 million vehicles. TVS Motor Company is
also the 2nd largest two wheeler exporter in India with exports to over 60 countries.

TVS Motor Company Ltd (TVS Motor), a member of the TVS Group, is the largest company
of the group in terms of size and turnover.

Company History

TVS Motor Company the flagship company of TVS Group is the third largest two-wheeler
manufacturer in India. The company manufactures a wide range of two-wheelers from
mopeds to racing inspired motorcycles. The company also manufactures three-wheelers. The
company has an annual production capacity of 4 million 2 wheelers & 120000 three
wheelers. It is one of the leading two-wheeler and three-wheeler exporters from India
distributing to over 60 countries. The company has manufacturing plants located at Hosur in
Tamil Nadu Mysore in Karnataka and Nalagarh in Himachal Pradesh. It also has one
manufacturing unit located at Karawang in Indonesia.

In the year 1979 TVS Group company Sundaram-Clayton Ltd started Moped Division at
Hosur to manufacture TVS 50 mopeds. In the year 1982 the company entered into a technical
know-how and assistance agreement with Suzuki Motor Co Ltd of Japan and in the year 1985
they incorporated a new company Lakshmi Auto Components Pvt Ltd for the manufacture of
critical engines and transmission parts.In the year 1986 the company acquired the assets of
the moped division from Sundaram Clayton Ltd. Also the name of the company was changed
from Indo Suzuki Motorcycles Ltd to TVS Suzuki Ltd.

32
In the year 1992 they launched two modes of motor cycles namely Samurai and Shogun and
in the year 1993 they launched TVS Scooty.During 1999-2000 TVS Suzuki Ltd was
amalgamated with Sundaram Auto Engineers Ltd an unlisted group company which was
incorporated in the year 1992. As per the scheme all the assets and liabilities of erstwhile
TVS Suzuki Ltd together with all obligations and contingent liabilities were vested in
Sundaram Auto Engineers (India) Ltd with effect from April 22 1999. This merged entity
was later renamed TVS Suzuki Ltd.The TVS group and Suzuki Motor Corporation parted
ways from their 15-year-old joint venture on September 27 2001. The shares held by the
Suzuki Motor Corporation were acquired by Anusha Investments Ltd a wholly owned
subsidiary of Sundaram-Clayton Ltd for Rs 9 crore. Thus the company became a subsidiary
of Sundaram-Clayton Ltd with effect from November 15 2001. Since Suzuki Motor
Corporation ceased to be a shareholder of the company the company cannot use the word
'Suzuki' as the part of their name and hence the name of the company was changed to TVS
Motor Company Ltd. During the year 2002-03 the new stylish TVS Scooty Pep and the
upgraded version of Fiero was launched in the market.

In April 1 2003 the subsidiary company namely Lakshmi Auto Components Ltd acquired the
entire paid up capital of Sundaram Auto Components Ltd. Consequently Sundaram Auto
Components Ltd became a subsidiary company with effect from April 1 2003.In October
2003 the company entered into a scheme of arrangement with Lakshmi Auto Components
Ltd and Sundaram Auto Components Ltd. As per the scheme all the assets and liabilities of
the rubber and plastic businesses of Lakshmi Auto Components Ltd were transferred to
Sundaram Auto Components Ltd on slump sale basis on April 1 2003 for a consideration of
12.25 crores.

The remaining business of Lakshmi Auto Components Ltd namely engine components
division together with their investments in other bodies corporate was transferred to the
company with effect from April 2 2003.During the year 2003-04 the company launched new
products such as TVS Centra New Victor GL Fiero F2 & Fx and Scooty Pep. During the year
2004-05 they launched new products such as TVS Star New Victor GLX New Victor GX and
Scooty Pep 'Splash' series.During the year 2005-06 the company entered into a joint venture
with Columbian party for exploring opportunities in Columbian market with an equity
33
investment of Rs 5 million. The company incorporated TVS Motor Company (Europe) B V
in Netherlands as a wholly owned subsidiary of the company with an investment of Rs 91.63
crore. During the year TVS Motor Singapore Pte Ltd Singapore became a wholly owned
subsidiary of the company with an investment of Rs 30.51 crore.

PT TVS Motor Company Indonesia was incorporated in Indonesia to manufacture

motorcycles and parts with an investment of USD 27.60 million and became subsidiary of the
company in view of it being the subsidiary of TVS Motor Company (Europe) B V which
holds 75% of the share capital. The remaining 25% was held by TVS Motor Singapore Pte
Ltd. PT TVS Motor Company Indonesia has acquired lands in Indonesia for setting up a
facility for manufacturing two wheelers.During the year 2006-07 the company has
established a new plant in Himachal Pradesh with an annual production capacity of 400000
units scalable to 600000 units. PT TVS Motor Company Indonesia a subsidiary of the
company established a manufacturing facility at Karawang near Jakarta in Indonesia with
production capacity of 3 lakh vehicles per annum. During the year the company launched
multiple new products and variants such as StaR City ES StaR Sport Scooty Teenz and 99
Colors on Scooty PEP.

During the year 2007-08 the company commenced commercial production from its Nalagarh
Plant located in Himachal Pradesh. They commenced their commercial production from their
state-of-the art plant located at Karawang in Indonesia and launched TVS Neo which is
exclusively developed for the Indonesian market. During the year the company launched
various new products and variants such as TVS Flame Apache RTR StaR Sport StaR City
110 cc Scooty TeenZ Electric TVS Tru4 Oil.

In March 2008 the company launched their three wheeler TVS King in two variants namely
two stroke petrol and two stroke LPG. The company won the Team Tech 2007 Award of
Excellence for Integrated use of Advanced Computer Aided Engineering Technologies in
product development. They also won the prestigious SAP ACE 2007 Awards for Customer
Excellence in the Most Innovative Net weaver Category for several SAP implementations
that are put in place.

34
In June 2008 the company entered into a contract manufacturing arrangement with
Mahabharat Motors Manufacturing Pvt Ltd whereby TVS motor cycles will be manufactured
at the latter's two-wheeler manufacturing facility that is located on the outskirts of Kolkata.
TVS would help Mahabharat Motors to set up the factory and provides engineering support to
them. The production would commence from June 2009.During the year 2008-09 the
company launched Scooty Streak a tough and trendy variant of Scooty Pep+ and Apache
RTR RD premium segment motorcycle. Also they launched their three-wheeler TVS King in
six states.

In June 2009 T V Sundram Iyengar & Sons Ltd and their subsidiaries acquired the holding of
foreign collaborators Clayton Dewandre Holdings Ltd in Sundaram-Clayton Ltd. Thus
Sundaram-Clayton Ltd became a subsidiary of T V Sundram Iyengar & Sons Ltd.
Consequent to this acquisition the company also became the subsidiary of TVS with effect
from June 3 2009.During the year 2009-10 the company launched TVS JIVE and TVS Wego
in the market. They also launched a four stroke three-wheeler with superior features. They
commenced export of TVS Apache to Brazil. Also they developed a pan India presence in
three-wheelers. In December 2009 the company acquired the entire shareholding of TVS
Energy Ltd. Thus TVS Energy became a wholly owned subsidiary of the company.

In June 2010 they acquired the entire paid up capital of TVS Housing Ltd and thus TVS
Housing Ltd became a wholly owned subsidiary of the company.In October 2010 the
company won the SAP ACE Award for Consumer Excellence 2010 in 'Best Run Award in
Automotive' category. They also won the Silver EDGE award from Information Week a
leading IT magazine for in house design and development of Data Acquisition System for
improving shop floor productivity. Information Week annually recognize enterprises driving
growth and excellence through IT.In November 2010 the company launched TVS TRU4
Premium a semi-synthetic 4T Engine Oil. In February 2011 Indian Bank signed an MoU with
the company for financing three wheelers manufactured by the company.

In March 2011 the company introduced ABS (Anti-lock Braking System) in their premium
segment motorcycle TVS Apache RTR 180 giving the bike formidable stopping power and
superior braking control that compliments its high performance capability.In 2011 the
Company has developed an engine that is 20 per cent more fuel efficient and is usable both in
35
scooters and motorcycles.In 2012 the company signed a MOU with Central Bank of India to
provide attractive financing options for its three wheeler TVS king across all 4000 branches
operating in India.

The company is also a winner of the CII ITC Sustainability Awards 2012 during under
review.In 2013 the company won Silicon India Mentor Graphics Best VLSI / Embedded
Design - Automotive Award. The company and BMW Motorrad Signed a Cooperation
Agreement. The Company proposed to set up assembly line in Uganda.In 2014 the company
launched TVS TRU4 Synthetic 10W 30 Engine Oil. The Company launches StaR HLX 125
Motorcycle in Tanzania. The Company also launched Stylish TVS StaR City+ -Asian
Network for Quality Award 2014.In 2015 TVS Motor Company & Kangra Central Co-
operative Bank in Himachal Pradesh sign MOU.

The company has launched the 2015 edition of TVS Phoenix 125 for the drum version and
for the disc brake version. During the year the company has introduced a special edition of its
legendary TVS XL Super' in celebration of crossing the milestone of 1 crore mark in sales.
The Company signs MOU with TN Government for investment of Rs 350 crore.

The Company also has launched its motorcycle 'TVS Sport' with improved mileage and
additional features during the year under review.On 16 March 2016 TVS Motor Company
announced that it has entered into a partnership with Snapdeal to sell its motorcycles and
scooters online. Nine two-wheeler products from TVS Motor Company will be available on
Snapdeal. Customers will now be able to select model colour and dealership of their choice
on the Snapdeal Motors platform from the comfort of their homes. Snapdeal Motors platform
was launched in November 2015.On 11 May 2017 TVS Motor Company announced its
alliance with MASESA (Mayor Servicios Socieda Anonima) a Guatemala based company
that is a leader in the commercialization of motorcycles and Tuk Tuks in the Central
American region. This alliance is in line with the company's plan to expand and strengthen its
presence in Central America LATAM South East Asia and Middle East.

In this alliance MASESA will develop exclusive TVS Motor Company concessionaires in
Guatemala El Salvador Honduras Nicaragua and Costa Rica.On 28 June 2017 TVS Motor
Company announced its partnership with Abans Auto a leading distributor in Sri Lanka.

36
Through this tie-up TVS King the 200 cc passenger three-wheeler will be launched in the Sri
Lankan market. As a part of the agreement TVS Motor Company will leverage Abans Auto's
network of over 200 showrooms and appointed dealers in strategic locations around Sri
Lanka. Furthermore Abans Finance will provide finance schemes to the customers of TVS
Motor Company at affordable rates.On 26 September 2017 TVS Motor Company announced
that its popular scooter brand TVS Jupiter has clocked sales of 2 million units within 4 years
of its launch. On 6 December 2017 TVS Motor Company announced the launch of TVS
Apache RR 310.

The motorcycle marks TVS Motor Company's entry into the super-premium segment both in
domestic and international markets.On 5 February 2018 TVS Motor Company announced its
foray in the 125cc scooter segment with the launch of TVS NTORQ 125. Designed for the
youth TVS NTORQ 125 has been developed based on the TVS Racing pedigree and comes
with the state-of-the-art CVTi-REVV 3 Valve engine. The scooter also marks the launch of
an exclusive technology platform - TVS SmartXonnect - making it India's first connected
scooter.On 14 March 2018 TVS Motor Company launched the new 2018 TVS Apache RTR
160 4V. A testimony to the racing legacy of the TVS Apache RTR series the new TVS
Apache RTR 160 4V is the most powerful 160cc motorcycle creating a new benchmark in the
segment.

On 23 August 2018 TVS Motor Company launched a new 110cc commuter motorcycle -
TVS Radeon. On 10 September 2018 TVS Motor Company announced that its premium
motorcycle brand TVS Apache has crossed a key sales milestone of 3 million units. On 18
September 2018 TVS Motor Company announced that its 125cc scooter offering TVS
NTORQ 125 has crossed the 1 lakh sales mark. On 19 September 2018 TVS Motor Company
announced its association with leading distributer in the Mexican region Torino Motors a
subsidiary of Groupo Autofin. In the first year of the association Torino Motors will work
with TVS Motor Company to open 40 exclusive stores in the country for the distribution of
two-wheelers. With over 40 years of experience in the region Torino Motors specialises in
automobile and retail finance.

37
T. V. Sundaram Iyengar began with Madurai's first bus service in 1911 and founded TVS, a
company in the transportation business with a large fleet of trucks and buses under the name
of Southern Roadways.

Early history

Sundaram Clayton was founded in 1962 in collaboration with Clayton Dewandre Holdings,
United Kingdom. It manufactured brakes, exhausts, compressors and various other
automotive parts. The company set up a plant at Hosur in 1976, to manufacture mopeds as
part of their new division. In 1980, TVS 50, India's first two-seater moped rolled out of the
factory at Hosur in Tamil Nadu, India. A technical collaboration with the Japanese auto giant
Suzuki Ltd. resulted in the joint-venture between Sundaram Clayton Ltd and Suzuki Motor
Corporation, in 1987. Commercial production of motorcycles began in 1989.

Suzuki relationship

TVS and Suzuki shared a 1-year-long relationship that was aimed at technology transfer for
design and manufacture of two-wheelers specifically for the Indian market. Re-christened
TVS-Suzuki, the company brought out several models such as the Suzuki Supra, Suzuki
Samurai, Suzuki Shogun and Suzuki Shaolin. In 2001, after separating ways with Suzuki, the
company was renamed TVS Motor, relinquishing its rights to use the Suzuki name. There
was also a 30-month moratorium period during which Suzuki promised not to enter the
Indian market with competing two-wheelers.

Recent

Recent launches include the flagship model TVS Apache RR 310, the TVS Apache RTR 200,
TVS Victor and TVS XL 100. TVS has recently won 4 top awards at J.D. Power Asia Pacific
Awards 2016, 3 top awards at J.D. Power Asia Pacific Awards 2015 and Two-Wheeler
Manufacturer of the Year at NDTV Car & Bike Awards (2014–15).

In early 2015, TVS Racing became the first Indian factory team to take part in the Dakar
Rally, the world's longest and most dangerous rally. TVS Racing partnered with French
motorcycle manufacturer Sherco, and named the team Sherco TVS Rally Factory Team. TVS
Racing also won the Raid de Himalaya and the FOX Hill Super Cross held at Sri Lanka. In

38
three decades of its racing history, TVS Racing has won over 90% of the races it participates
in.

In 2016, TVS started manufacturing the BMW G310R, a model co-developed with BMW
Motorrad after their strategic partnership in April 2013. In December 2018, the Hosur plant
where the motorcycle is manufactured rolled out its 50,000th G310R series unit.

On 6 December 2017, TVS launched their most-awaited motorcycle, the Apache RR 310 in
an event at Chennai. The 310 cc motorcycle with an engine which was co-developed with
BMW features the first ever full fairing on a TVS bike, dual-channel ABS, EFI, KYB
suspension kits, etc. It is expected to rival bikes like KTM RC 390, Kawasaki Ninja 250SL,
Bajaj Pulsar and Dominar and Honda CBR 250R after hitting the market. The Apache RR
310 is designed and realised entirely in India.

On 17 April 2020, it has been reported that TVS Motor Company acquired Norton
Motorcycle Company in an all cash deal. In the short term, they will continue the production
of motorcycles at Donington Park using the same staff.

Characteristics of TVS Motor Company

It was the first Indian company to deploy a catalytic converter in a 100 cc motorcycle and the
first to indigenously produce a four stroke motorcycle. The list of firsts from the firm include:
India's first 2-seater moped – TVS 50, India's first Digital Ignition – TVS Champ, India's first
fully indigenous motorcycle – Victor, first Indian company to launch ABS in a motorcycle –
Apache RTR Series, Indonesia's first dual-tone exhaust noise technology – Tormax, and a
recent launch – India's first connected scooter TVS NTORQ which claims to be India's first
Bluetooth Connected Scooter with features like Call Assistance, Navigation, etc.

Current Models

• TVS NTORQ
• TVS Scooty
• TVS Jupiter
• TVS Wego
• Apache RTR Series
39
 • TVS Radeon
• TVS Star City Plus
• TVS XL100

Awards and Recognitions

TVS Motor won the Deming Application Prize in 2002.

In the same year, the work done for the TVS Victor motorcycle made TVS Motor win the
National Award for successful commercialization of indigenous technology from the
Technology Development Board, Ministry of Science & Technology, Government of
India. In 2004, TVS Scooty Pep won the 'Outstanding Design Excellence Award'
from BusinessWorld magazine and the National Institute of Design, Ahmedabad.

The effective implementation of Total Productivity Maintenance practices gave TVS Motor
the TPM Excellence Award, given by the Japan Institute of Plant Maintenance in 2008.

The company's chairman, Venu Srinivasan, was conferred with an honorary Doctorate of
Science degree by the University of Warwick, United Kingdom in 2004, while the
Government of India honoured him with Padma Shri, one of India's highest civilian
distinctions in 2010.

Innovative implementation of Information Technology has won TVS Motor the Ace Award
for Most Innovative NetWeaver Implementation in 2007, awarded by technology major SAP
AG, and the Team Tech 2007 Award of Excellence for Integrated use of Computer-aided
engineering Technologies.

Himalayan Highs, an initiative launched by TVS Motor Company has been included in the
India Book of Records when Anam Hashim became the first woman on a 110 cc scooter to
complete the trip to Khardung La, the world's highest motorable stretch.

During a Grand Tour challenge, Richard Hammond bought a brand new TVS Star HLS 100
cc "for £800" and used it to complete the "Feed the world" challenge, transporting fish from
Maputo to Bingo. During the challenge, the bike performed beyond the presenter's

40
expectations, prompting the normally motorbike-critical Clarkson to comment, "That Ewan
McGregor travelled the world on a BMW GS – why didn't he just get one of these?"

Vision
We are committed to being a highly profitable, socially responsible, and leading
manufacturer of high value for money, environmentally friendly, lifetime personal
transportation products under the TVS brand, for customers predominantly in Asian markets
and to provide fulfillment and prosperity for employees, dealers, and suppliers.

Mission

We are committed to being a highly profitable, socially responsible, and leading

manufacturer of high value for money, environmentally friendly, lifetime personal
transportation products under the TVS brand, for customers predominantly in Asian markets
and to provide fulfilment and prosperity for employees, dealers and suppliers.

Core Values
Our core values are – Trust, Values, Exactness, Passion for customers and Speed without
haste We hold ourselves to high standards and make sure our core values are upheld and
brought to life in the way we work.
Committed to Total Quality
TVS Motor is committed to achieving a self-reviewing organization in perpetuity by
adopting TQM as a way of life. TVS Motor believes in the importance of the process.
People and projects will be evaluated both by their end results and the process adopted.
The Human Factor
We believe that people make the organization and that its well-being is dependent on
the commitment and growth of its people. We create an enabling ambience for
developing competencies and enhancing job satisfaction through systematic training
and career planning. We support and encourage the process of self-renewal and nurture
a sense of self-worth in every member of our TVS family.

41
 CHAPTER-III
THEORITICAL FRAME WORK

42
METHODOLOGY OF THE STUDY

COLLECTION OF THE DATA:

The information related to this project collected from secondary data sources.

1) Primary data

2) Secondary data

PRIMARY DATA:

Primary data is the information collected directly with any references. In this study it
as mainly through interviews with concerned officers and staff either individually or
collectively. The primary data has been obtained through the interactions with staff members
of the company.

SECONDARY DATA:

It was collected from already published books . Secondary data helps researcher to
save time. While primary researchers takes a considerable amount of time in the form of
collecting and analyzing the data. Secondary data offers readymade solutions.

The secondary data has been obtained through:

1. Annual Reports and Internal Records of the company.

2. Journals and text books related to financial management.

43
 CASH FLOW STATEMENT ANALYSIS

Introduction

Every big and small firms performs cash transactions. Cash transaction refers to cash inflows
and outflows. Cash inflows and outflows help to review success, failure of a firm and its
ability to meet maturing debts. Such review and evaluation are possible if the statement of
cash flow is prepared. Accounting standard Board (ASB) at international level in 1996
suggested every firm to publish the statement of cash flow along with the final accounts.
Since then the statement of cash flow is getting more recognition than funds flow statement.

The statement that shows cash inflows and outflows of a firm for a specified period is called
the cash flow statement. Cash flow statement demonstrates where the cash has come during
the period and what the firm has done with the available cash. Therefore, cash flow
statement shows a picture of cash movement occurred in and out from a firm during a year
in a summarized form. Cash flow statement gives a picture of sources and applications of
cash of a firm for a year.

Objectives of Cash flow Statement

A Cash flow statement shows inflow and outflow of cash and cash equivalents from various
activities of a company during a specific period. The primary objective of cash flow
statement is to provide useful information about cash flows (inflows and outflows) of an
enterprise during a particular period under various heads, i.e., operating activities, investing
activities and financing activities.

This information is useful in providing users of financial statements with a basis to assess
the ability of the enterprise to generate cash and cash equivalents and the needs of the
enterprise to utilise those cash flows. The economic decisions that are taken by users require
an evaluation of the ability of an enterprise to generate cash and cash equivalents and the
timing and certainty of their generation.

44
Benefits of Cash flow Statement

Cash flow statement provides the following benefits :

• A cash flow statement when used along with other financial statements provides
information that enables users to evaluate changes in net assets of an enterprise, its
financial structure (including its liquidity and solvency) and its ability to affect
the amounts and timings of cash flows in order to adapt to changing circumstances
and opportunities.
• Cash flow information is useful in assessing the ability of the enterprise to generate
cash and cash equivalents and enables users to develop models to assess and
compare the present value of the future cash flows of different enterprises.
• It also enhances the comparability of the reporting of operating performance by
different enterprises because it eliminates the effects of using different accounting
treatments for the same transactions and events.
• It also helps in balancing its cash inflow and cash outflow, keeping in response to
changing condition. It is also helpful in checking the accuracy of past assessments of
future cash flows and in examining the relationship between profitability and net cash
flow and impact of changing prices.

Definition of Cash Flow Statement

“Cash Flow is the money that comes in and goes out of a company. It is the generation of
income and the payment of expenses. Cash inflows result from either the generation of
revenue through the selling of goods and services, money borrowed, or money earned
through investments.”

If more cash is coming into the company than leaving the company, you are experiencing
positive cash flow. But if more cash is leaving the company than coming into the company,
then you are experiencing negative cash flow. Keep in mind that just because you are
experiencing negative cash flow for the moment doesn't mean you are going to suffer a
loss, because cash flow is dynamic. Cash flow is reported on the company’s cash flow
statement, which is also called a statement of cash receipts and disbursements.
45
The cash flow statement was previously known as the flow of Cash statement. The cash
flow statement reflects a firm's liquidity.

The balance sheet is a snapshot of a firm's financial resources and obligations at a single
point in time, and the income statement summarizes a firm's financial transactions over an
interval of time. These two financial statements reflect the accrual basis accounting used by
firms to match revenues with the expenses associated with generating those revenues. The
cash flow statement includes only inflows and outflows of cash and cash equivalents; it
excludes transactions that do not directly affect cash receipts and payments. These non-cash
transactions include depreciation or write-offs on bad debts or credit losses to name a few.
The cash flow statement is a cash basis report on three types of financial activities:
operating activities, investing activities, and financing activities. Non-cash activities are
usually reported in footnotes.

STRUCTURE OF CASH FLOW STATEMENT:

The cash flow statement is distinct from the income statement and balance sheet because
it does not include the amount of future incoming and outgoing cash that has been
recorded on credit.

Therefore, cash is not the same as net income which, on the income statement and balance
sheet, includes cash sales and sales made on credit.

Cash Flow activities

The cash flow statement is partitioned into three segments, namely:

• cash flow resulting from operating activities;

• cash flow resulting from investing activities;
• cash flow resulting from financing activities.

The money coming into the business is called cash inflow, and money going out from the
business is called cash outflow.

46
Operating activities

Operating activities include the production, sales and delivery of the company's product as
well as collecting payment from its customers. This could include purchasing raw
materials, building inventory, advertising, and shipping the product.

Under IAS 7, operating cash flows include:

a. Receipts from the sale of goods or services

b. Receipts for the sale of loans, debt or equity instruments in a trading portfolio
c. Interest received on loans
d. Payments to suppliers for goods and services
e. Payments to employees or on behalf of employees
f. Interest payments (alternatively, this can be reported under financing activities
in IAS 7)
g. Buying Merchandise

Items which are added back to [or subtracted from, as appropriate] the net income
figure (which is found on the Income Statement) to arrive at cash flows from
operations generally include:

• Depreciation (loss of tangible asset value over time)

• Deferred tax
• Amortization (loss of intangible asset value over time)
• Any gains or losses associated with the sale of a non-current asset, because associated
cash flows do not belong in the operating section (unrealized gains/losses are also
added back from the income statement).

• Dividends received
• Revenue received from certain investing activities
47
Investing activities

These are the acquisition and disposal of long term assets such as land, building, plant
machinery etc and other investments not included in cash equivalents. Cash flow from
investing activities represents the extent to which expenditure has been made for resources
intended to generate future income and cash flows.

Examples of Investing activities are

i. Purchase or Sale of an asset (assets can be land, building, equipment, marketable

securities, etc.)
ii. Loans made to suppliers or received from customers
iii. Payments related to mergers and acquisition.

Financing activities

Financing activities include the inflow of cash from investors such as banks and
shareholders, as well as the outflow of cash to shareholders as dividends as the company
generates income. Other activities which impact the long-term liabilities and equity of the
company are also listed in the financing activities section of the cash flow statement.

Under IAS 7,

a) Payments of dividends
b) Payments for repurchase of company shares
For non-profit organizations, receipts of donor-restricted cash that is limited to long-
term purposes

Items under the financing activities section include:

a. Dividends paid

48
 b. Sale or repurchase of the company's stock
c. Net borrowings
d. Payment of dividend tax
Repayment of debt principal, including capital leases

CASH FLOW FROM OPERATING ACTIVITIES

Cash flows from operating activities can be calculated by two methods

a) Direct method
b) Indirect method

a) Direct Method

The direct method for creating a cash flow statement reports major classes of gross cash
receipts and payments. Under IAS 7, dividends received may be reported under operating
activities or under investing activities. If taxes paid are directly linked to operating
activities, they are reported under operating activities; if the taxes are directly linked to
investing activities or financing activities, they are reported under investing or financing
activities. Generally Accepted Accounting Principles (GAAP) vary from International
Financial Reporting Standards in that under GAAP rules, dividends received from a
company's investing activities is reported as an "operating activity," not an "investing
activity.”

b) Indirect Method

The indirect method uses net-income as a starting point, makes adjustments for all
transactions for non-cash items, then adjusts from all cash-based transactions. An increase
in an asset account is subtracted from net income, and an increase in a liability account is
added back to net income. This method converts accrual-basis net income (or loss) into
cash flow by using a series of additions and

deductions.

1. Decrease in non-cash current assets are added to net income

49
 2. Increase in non-cash current asset are subtracted from net income
3. Increase in current liabilities are added to net income
4. Decrease in current liabilities are subtracted from net income
5. Expenses with no cash outflows are added back to net income (depreciation and/or
amortization

expense are the only operating items that have no effect on cash flows in the period)

6. Revenues with no cash inflows are subtracted from net income

7. Non operating losses are added back to net income
8. Non operating gains are subtracted from net income.

Rules (financing activities)

Finding the Cash Flows from Financing Activities is much more intuitive and needs little
explanation. Generally, the things to account for are financing activities:

Include as outflows, reductions of long term notes payable (as would represent the cash
repayment of debt on the balance sheet)
Or as inflows, the issuance of new notes payable

a. Include as outflows, all dividends paid by the entity to outside parties

b. Or as inflows, dividend payments received from outside parties

c. Include as outflows, the purchase of notes stocks or bonds

d. Or as inflows, the receipt of payments on such financing vehicles.

In the case of more advanced accounting situations, such as when dealing with
subsidiaries, the accountant must

50
 a. Exclude intra-company dividend payments.

b. Exclude intra-company bond interest.

NEED / IMPORTANCE / USES OF CASH FLOW STATEMENT

Therefore cash flow statement is important on the following grounds.

1. Cash flow statement helps to identify the sources from where cash inflows
have arisen within a particular period and also shows the various activities where
in the cash was utilized.

2. Cash flow statement is significant to management for proper cash planning

and maintaining a proper matching between cash inflows and outflows.

3. Cash flow statement shows efficiency of a firm in generating cash inflows

from its regular operations.

4. Cash flow statement reports the amount of cash used during the period in
various long-term investing activities, such as purchase of fixed assets.

5. Cash flow statement reports the amount of cash received during the period
through various financing activities, such as issue of shares, debentures and
raising long-term loan.

6. Cash flow statement helps for appraisal of various capital investment

programmers to determine their profitability and viability.

51
There are uses of cash flows on the following grounds.

External uses

1. To assess the ability of the firm to manage cash flows.

2. To assess the ability of the firm to generate cash through its operations.
3. To assess the ability of the firm its obligations and dividend policy.
4. To assess the ability of the firm the effectiveness of firm to convert the revenue
its cash.
5. Estimating the company’s need for additional financing.

Internal uses

1. To assess liquidity.
2. Determine if short term financing is necessary.
3. To determine the dividend policy.
To evaluate the investment and financial decision

OBJECTIVES OF CASH FLOW STATEMENT

a) To find the liquidity position of the TCS-iON. For the availability cash
and utilization of the cash by the organization.
b) It will help find to assess the company's ability to generate positive cash flows
in the future
c) To assess its ability to meet its obligations to service loans, pay dividends etc.
d) To assess the effect on its finances of major transactions in the year.
e) To study the firms liquidity.
f) To learn about how company manage its cash & become such well
recognized profitable industry & if there is any problem arise then what
steps taken by company.
g) To study the techniques used in organization.
h) To study methods & techniques use for cash flow analysis.

Meeting day to day cash requirement of firm.

52
INFORMATION ABOUT CASH FLOW STATEMENT

Cash flow is the money that comes in and goes out of a company. It is the generation
of income and the payment of expenses. Cash inflows result from either the
generation of revenue through the selling of goods and services, money borrowed, or
money earned through investments.

If more cash is coming into the company than leaving the company, you are
experiencing positive cash flow. But if more cash is leaving the company than
coming into the company, then you are experiencing negative cash flow. Keep in
mind that just because you are experiencing negative cash flow for the moment
doesn't mean you are going to suffer a loss, because cash flow is dynamic. Cash flow
is reported on the company's cash flow statement, which is also called a statement
of cash receipts and disbursements.

Complementing the balance sheet and income statement, the cash flow statement
(CFS), a mandatory part of a company's financial reports since 1987, records the
amounts of cash and cash equivalents entering and leaving a company. The CFS
allows investors to understand how a company's operations are running, where its
money is coming from, and how it is being spent. Here you will learn how the CFS
is structured and how to use it as part of your analysis of a company.

People and groups interested in cash flow statements include:

a. Accounting personnel, who need to know whether the organization will be

able to cover payroll and other immediate expenses
b. Potential lenders or creditors, who want a clear picture of a company's ability to
repay

53
 c. Potential investors, who need to judge whether the company is financially sound
d. Potential employees or contractors, who need to know whether the company
will be able to afford compensation
e. Shareholders of the business.

HISTORY AND VARIATIONS

Cash basis financial statements were very common before accrual basis financial
statements. The "flow of funds" statements of the past were cash flow statements.

In 1863, the Dowlais Iron Company had recovered from a business slump, but had no cash
to invest for a new blast furnace, despite having made a profit. To explain why there were
no funds to invest, the manager made a new financial statement that was called a
comparison balance sheet, which showed that the company was holding too much
inventory. This new financial statement was the genesis of cash flow statement that is used
today.

In the United States in 1973, the Financial Accounting Standards Board (FASB) defined
rules that made it mandatory under Generally Accepted Accounting Principles(US GAAP)
to report sources and uses of funds, but the definition of "funds" was not clear. Net
working capital might be cash or might be the difference between current assets and
current liabilities. From the late 1970 to the mid- 1980s, the FASB discussed the usefulness
of predicting future cash flows.[7] In 1987, FASB Statement No. 95 (FAS 95) mandated that
firms provide cash flow statements.[8] In 1992, the International Accounting Standards
Board issued International Accounting Standard 7 (IAS 7), Cash Flow Statement, which
became effective in 1994, mandating that firms provide cash flow statements

US GAAP and IAS 7 rules for cash flow statements are similar, but some of the differences
are:

• IAS 7 requires that the cash flow statement include changes in both cash and
cash equivalents. US GAAP permits using cash alone or cash and cash
54
 equivalents.
• IAS 7 permits bank borrowings (overdraft) in certain countries to be included
in cash equivalents rather than being considered a part of financing activities.
• IAS 7 allows interest paid to be included in operating activities or financing
activities. US GAAP requires that interest paid be included in operating
activities.
US GAAP (FAS 95) requires that when the direct method is used to present the
operating activities of the cash flow statement, a supplemental schedule must
also present a cash flow statement using the indirect method. The IASC
strongly recommends the direct method but allows either method. The IASC
considers the indirect method less clear to users of financial statements. Cash
flow statements are most commonly prepared using the indirect method, which is
not especially useful in projecting future cash flows.

The cash flow statement is partitioned into three segments,

namely

1. cash flow resulting from operating activities;

2. cash flow resulting from investing activities;

3. cash flow resulting from financing activities.

The money coming into the business is called cash inflow, and money going out from
the business is called cash outflow.

Cash flow from operating activities can be calculated by two

Direct Method

55
 Indirect Method

Requirements for Cash flow statement

Thornton (2008) indicated that FASB 95 requires a statement of cash flows to classify cash
receipts and cash payments in accordance with the prescribe format whether they start
from operating activities, investing activities, or financing activities. The provisions given
by FASB are as follows on the presentation of cash flow statement are:

a. it provides that the cash flows statement should be prepared under either
direct or indirect method and provides examples of how to use each method
when preparing statements.
b. It also provides that under the core concept, cash is stated as “cash and cash
equivalents”.

while cash is the most liquid assets within the asset portion of a company’s
balance sheet including currency and bank deposit, in the other hand cash
equivalents are asset that are ready to be converted into cash such as money
market holding, short term government bond, bills, marketable securities and
commercial paper. Other sources of investments such as stocks, bonds,
futures contracts, and so forth are not considered cash.

Cash and Profitability concepts

Cash

Cash is one of the most important aspects of running any large or small business. It is one
of the single most important reasons why many businesses fail regardless of how good the
business is. The physical aspect of cash can be any currency, coins on hand, bank balances,
negotiable money and so forth. Managing cash flow therefore is vitally important in the
soft running, survival and success of a business (Atrill P. 2004).

The use of some examples has illustrated how cash flow can make the difference between
success and failure. The meaning of failure in this case is insolvency that is, the company
is unable to pay its debts. The term bankrupt is sometimes used to describe that situation,

56
even though it is only individual who can be declared bankrupt. But sometimes both terms
can be confusing.

Significance of non-cash transactions

Also known as profitability, non-cash transactions are not included in the statement of cash
flows, but often they need to be disclosed elsewhere in financial statements. Examples of
these types of transactions include:

a) Conversion of bonds to stock

b) Acquisition of assets by assuming liabilities.

When there are some few of such transaction, it may be fairly recommended to include
them on the same page as the statement of cash flows but in a separate schedule at the
bottom of the statement of cash flows. Otherwise, the transactions may be reported
elsewhere in the financial statements, clearly referenced to the statement of cash flows.
Some other transactions are generally reported in combination with statement of cash;
these include stock dividends, stock splits, and appropriation of retained earnings.

Classifications/ Presentation of cash flow statement

Nearly all business transactions completed during the fiscal year impact cash flow in one
way or another, and in summary form they are factored into the year's cash flow statement.
Exactly where on the statement depends on the nature of the transaction. As noted, the
three essential categories of cash flow are operating activities, investing activities, and
financing activities. The components of each of these will be addressed separately.

Operating activities
Operating activities are the fundamental transactions that keep the business running. Most
notably, they include incoming revenue (also known as net income) from the sale of goods
or services and most kinds of outgoing payments. Cash flow from operating activities
57
doesn't include principal paid on or received from loans, and only includes transactions
that were completed during the period. This simply means that an operating transaction is
not considered cash flow until the cash is actually received or paid, as opposed to just
being recorded as accounts receivable or payable. In general, if an activity would appear on
the company's income statement, it would be a candidate for the operating section of the
cash flow statement. Net changes in balance sheet categories from period to period also
represent cash flow; thus, a net decrease in accounts receivable from year to year normally
suggests an increase in cash flow for that period. Sometimes goods or services are paid
forprior to the period in which the benefit is matched to revenue (recognized). This results
in a deferred or prepaid expense. Items such as insurance premiums that are paid in
advance of the coverage period are classified as prepaid. Sometimes goods or services are
received and used by the company before they are paid for, such as telephone service or
merchandise inventory. These items are called accrued expenses, or payables, and are
recognized on the income statement as an expense before the cash flow occurs. Operating
activities include the production, sales and delivery of the company's product as well as
collecting payment from its customers. This could include purchasing raw materials,
building inventory, advertising, and shipping the product.

Under IAS 7, operating cash flows include:

a) Receipts from the sale of goods or services

b) Receipts for the sale of loans, debt or equity instruments in a trading portfolio
c) Interest received on loans
d) Dividends received on equity securities
e) Payments to suppliers for goods and services
f) Payments to employees or on behalf of employees
g) Interest payments (alternatively, this can be reported under financing
activities in IAS 7, and US GAAP)

Items which are added back to [or subtracted from, as appropriate] the net income figure
(which is found on the Income Statement) to arrive at cash flows from operations generally
include:
58
 a. Depreciation (decline in value of assets and, loss of tangible asset value over
time)
b. Deferred tax
c. Amortization (loss of intangible asset value over time)

Any gains or losses associated with the sale of a non-current asset, because associated cash
flows do not belong in the operating section.(unrealized gains/losses are also added back
from the income statement

Investing activities

Investment activities represent the cash flow from the purchase of long term assets ( such as
property and equipment) required to make or sell goods and services. Investment activities
also include purchases of stocks or other securities, loans made to other businesses. A major
issue that potential investors have with the investing activities section is that the money
listed here represents activities paid for in cash. In other words, it includes only the
principal or book value of the investment. So, if an example of company that wanted to
purchase $5 million dollars worth of equipment with only $1 million cash and $4 million in
financing, only the $1 million will show up under investing activities. Interest and
depreciation are classified as operating cash flow, as are net gains or losses on investments.
Because of these distinctions, cash flow from investment activities is typically more
complex to calculate than that from other categories. Examples of investing activities are

a) Purchase or Sale of an asset (assets can be land, building, equipment,

marketable securities, etc.)
b) Loans made to suppliers or received from customers
Financing activities.
Financing activities consist of transactions affecting a company's liabilities and shareholder
equity. Mainly involving how the company obtains capital and enhances the value of its

59
stock, they include such things as issuing bonds, payments on debt, paying dividends, and
issuing and buying back stock.

Financing activities include the inflow of cash from investors such as banks and
shareholders, as well as the outflow of cash to shareholders as dividends as the company
generates income. Other activities which impact the long-term liabilities and equity of the
company are also listed in the financing activities section of the cash flow statement.

Under IAS 7,

a) Proceeds from issuing short-term or long-term debt

b) Payments of dividends
c) Payments for repurchase of company shares
d) Repayment of debt principal, including capital leases
e) For non-profit organizations, receipts of donor-restricted cash that is limited
to long-term

purposes

f) Items under the financing activities section include:

g) Dividends paid
h) Sale or repurchase of the company's stock
i) Net borrowings
j) Payment of dividend tax

Disclosure of non-cash activities

Under IAS 7, noncash investing and financing activities are disclosed in footnotes to the
financial statements. Under US General Accepted Accounting Principles (GAAP), noncash
activities may be disclosed in a footnote or within the cash flow statement itself. Noncash
financing activities may include

a) Leasing to purchase an asset

60
 b) Converting debt to equity
c) Exchanging noncash assets or liabilities for other noncash assets or liabilities
d) Issuing shares in exchange for assets

Wrongly recommends the direct method but allows either method. The International
Accounting Standard Committee (IASC) considers the indirect method less clear to users
of financial statements. Cash flow statements are most commonly prepared using the
indirect method, which is not especially useful in projecting future cash flows.

The cash flow statement was previously known as the flow of funds statement. The cash
flow statement reflects a firm's liquidity.

The balance sheet is a snapshot of a firm's financial resources and obligations at a single
point in time, and the income statement summarizes a firm's financial transactions over an
interval of time. These two financial statements reflect the accrual basis accounting used
by firms to match revenues with the expenses associated with generating those revenues.
The cash flow statement includes only inflows and outflows of cash and cash equivalents;
it excludes transactions that do not directly affect cash receipts and payments. These
noncash transactions include depreciation or write-offs on bad debts or credit losses to
name a few. The cash flow statement is a cash basis report on three types of financial
activities: operating activities, investing activities, and financing activities. Noncash
activities are usually reported in footnotes.

The cash flow statement is intended to

a) provide information on a firm's liquidity and solvency and its ability to

change cash flows in future circumstances
b) provide additional information for evaluating changes in assets, liabilities and
equity
c) improve the comparability of different firms' operating performance by
eliminating the

d) effects of different accounting methodscindicate the amount, timing and

probability of future cash flows
61
 The cash flow statement has been adopted as a standard financial statement because
it eliminates allocations, which might be derived from different accounting methods,
such as various timeframes for depreciating fixed assets

Cash inflows and cash outflows

The concept of cash flow can be broadly divided into two categories, namely the inflow
and outflow. The cash inflow, which is also known as inward cash flow or just cash flow,
is generated as a result of financing, ventures and sales. The cash outflow which is also
known as onward flow of cash is seen as a result of many factors such as purchases,
investments, salaries and administrative expenditures. The importance of cash flow
statement was realized in the wake of the 2007 recession cycle. Business organizations
have realized the importance of cash flow analysis, and have started regular audits of cash
outflows as well as inflows. This study of inflow and outflow tends to play a highly
instrumental role on general financial planning and financial management.

Ideally, during the business cycle, money flows in than flows out. This allows manager to
build up cash balances with which to plug cash flow gaps, seek expansion and reassure
lenders and investors about the health of their business.

A point to note is that income and expenditure cash flows rarely occur together, with
inflows often filling behind. The aim of this knowledge was to speed up the inflows and
slow down the outflows.

Cash inflows key elements

a) Payment for goods or services from your customers.
b) Receipt of a bank loan.
c) Interest on savings and investments.
d) Shareholder investments.
e) Increased bank overdrafts or loans.

62
Cash outflows key elements

a) Purchase of stock, raw materials or tools.

b) Wages, rents and daily operating expenses.
c) Purchase of fixed assets - PCs, machinery, office furniture, etc.
d) Loan repayments.
e) Dividend payments.
f) Income tax, corporation tax, VAT and other taxes.
g) Reduced overdraft facilities

Many of your regular cash outflows, such as salaries, loan repayments and tax, have to be
made on fixed dates. You must always be in a position to meet these payments in order to
avoid large fines or a disgruntled workforce.

63
 CHAPTER -IV

DATA ANALYSIS &

INTERPRETATION

64
 CONCOLIDATED CASH FLOW STATEMENT FROM 2017 TO 2021

CASH FLOW OF TVS MOTOR MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

COMPANY (in Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

NET PROFIT/LOSS BEFORE 0.00 754.41 960.96 878.64 698.68

EXTRAORDINARY ITEMS
AND TAX

Net CashFlow From Operating 0.00 1,393.62 1,097.78 1,251.57 723.93

Activities

Net Cash Used In Investing 0.00 -1,288.85 -1,002.28 -1,085.61 -748.12

Activities

Net Cash Used From Financing 0.00 270.51 81.13 -74.74 -72.70
Activities

Foreign Exchange Gains / 0.00 0.00 0.00 0.00 0.00

Losses

Adjustments On Amalgamation 0.00 0.00 0.00 0.00 0.00

Merger Demerger Others

NET INC/DEC IN CASH AND 0.00 375.28 176.63 91.22 -96.89

CASH EQUIVALENTS

Cash And Cash Equivalents 0.00 39.02 -137.62 -228.84 -131.95

Begin of Year

Cash And Cash Equivalents 0.00 414.30 39.01 -137.62 -228.84

End Of Year

65
Interpretation

By observing the Cash Flow Statement we can observe that the company is having negative
cash flows which is not a good sign to the company which will raise to deficit of funds in
emergency situations. Company is having -228.84 crores negative cash balance at the end of
the year 2017 and in present year it has 0 fund balance. This results in that the company is
improving its cash balance which is good for the organisation.

66
CONSOLIDATED BALANCE SHEET OF TVS MOTORS
LIMITED FROM 2017 TO 2021

BALANCE SHEET OF TVS MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

MOTOR COMPANY (in Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 47.51 47.51 47.51 47.51 47.51

TOTAL SHARE CAPITAL 47.51 47.51 47.51 47.51 47.51

Reserves and Surplus 4,123.44 3,570.58 3,299.81 2,832.91 2,360.82

TOTAL RESERVES AND 4,123.44 3,570.58 3,299.81 2,832.91 2,360.82

SURPLUS

TOTAL SHAREHOLDERS FUNDS 4,170.95 3,618.09 3,347.32 2,880.42 2,408.33

NON-CURRENT LIABILITIES

Long Term Borrowings 1,035.58 904.63 709.12 317.62 468.76

Deferred Tax Liabilities [Net] 195.45 158.05 212.63 148.17 125.70

67
Other Long Term Liabilities 93.76 85.79 0.00 0.00 0.00

Long Term Provisions 116.30 83.40 58.61 53.76 50.80

TOTAL NON-CURRENT 1,441.09 1,231.87 980.36 519.55 645.26

LIABILITIES

CURRENT LIABILITIES

Short Term Borrowings 0.00 1,070.00 668.82 719.35 616.38

Trade Payables 3,921.60 2,886.39 2,923.90 2,517.99 1,859.36

Other Current Liabilities 587.57 461.96 389.31 480.14 312.47

Short Term Provisions 76.24 92.85 59.65 62.02 62.87

TOTAL CURRENT LIABILITIES 4,585.41 4,511.20 4,041.68 3,779.50 2,851.08

TOTAL CAPITAL AND 10,197.45 9,361.16 8,369.36 7,179.47 5,904.67

LIABILITIES

ASSETS

NON-CURRENT ASSETS

Tangible Assets 3,289.01 2,723.21 2,526.29 2,315.46 1,930.64

Intangible Assets 0.00 176.73 53.02 56.41 53.23

Capital Work-In-Progress 0.00 126.56 116.64 91.74 62.28

68
Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED ASSETS 3,289.01 3,185.37 2,836.54 2,503.00 2,046.15

Non-Current Investments 3,314.52 2,605.88 2,300.67 2,035.38 1,587.90

Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00

Long Term Loans And Advances 0.00 0.00 0.00 0.00 0.00

Other Non-Current Assets 147.13 340.48 77.25 62.98 83.73

TOTAL NON-CURRENT ASSETS 6,750.66 6,131.73 5,214.46 4,601.36 3,717.78

CURRENT ASSETS

Current Investments 0.00 0.00 0.00 0.00 0.00

Inventories 1,151.81 1,038.93 1,175.94 964.39 966.95

Trade Receivables 869.98 1,281.36 1,414.14 968.37 723.77

Cash And Cash Equivalents 929.81 419.17 43.86 10.90 8.51

Short Term Loans And Advances 0.00 0.00 0.00 0.00 0.00

OtherCurrentAssets 495.19 489.97 520.96 634.45 487.66

TOTAL CURRENT ASSETS 3,446.79 3,229.43 3,154.90 2,578.11 2,186.89

TOTAL ASSETS 10,197.45 9,361.16 8,369.36 7,179.47 5,904.67

69
OTHER ADDITIONAL
INFORMATION

CONTINGENT LIABILITIES,
COMMITMENTS

Contingent Liabilities 0.00 375.27 568.44 500.84 622.69

CIF VALUE OF IMPORTS

Raw Materials 0.00 0.00 0.00 0.00 0.00

Stores, Spares And Loose Tools 0.00 0.00 0.00 0.00 0.00

Trade/Other Goods 0.00 0.00 0.00 0.00 0.00

Capital Goods 0.00 0.00 0.00 0.00 0.00

EXPENDITURE IN FOREIGN
EXCHANGE

Expenditure In Foreign Currency 0.00 1,723.00 2,791.00 1,942.52 0.00

REMITTANCES IN FOREIGN
CURRENCIES FOR DIVIDENDS

Dividend Remittance In Foreign -- -- -- -- --

Currency

EARNINGS IN FOREIGN
EXCHANGE

FOB Value Of Goods -- -- -- 2,885.81 --

70
Other Earnings -- 4,579.00 4,141.00 -- --

BONUS DETAILS

Bonus Equity Share Capital -- 23.75 23.75 23.75 23.75

NON-CURRENT INVESTMENTS

Non-Current Investments Quoted -- 33.23 72.27 82.51 71.53

Market Value

Non-Current Investments Unquoted -- 2,572.65 2,228.40 1,952.87 1,516.37

Book Value

CURRENT INVESTMENTS

Current Investments Quoted -- -- -- -- --

Market Value

Current Investments Unquoted -- -- -- -- --

Book Value

Interpretation

From the Balance sheet we can observe that the company is not raising funds from fresh issue
of equity shares. It is raising funds in the form of debt. The non-current liabilities of the
company has increased from 645.26 crores in 2017 to 1,441.09 crores in 2021. The
companies non-current assets are also increased from 3,717.78 crores in 2017 to 6,750.66
crores in 2021. This is a good sign to the company that it is growing.

71
 FINDINGS

1. The company has not taken any loans, secured or unsecured

from companies, firms or other parties.

2. The company has not accepted any deposit from the public
during the year.

3. The company is not a sick industrial company.

4. The company has not granted any loan, secured or unsecured

to company, firms or other parties.

5. The company has paid the entire long term and short term
borrowing during the year.

6. The company does not have any pending litigations which would
impact its financial position

7. The company have long term contracts

72
 SUGGESTIONS

1. All levels of the company are increasing year by year it’s a

better indication for the organization.
2. Proper control over various expenses may increase the profit
generation of a company.
3. Company debtors’ position is very favourable so try to maintain
this position in future.

73
 CONCLUSION

➢ Customers are well aware about the brand.

➢ Most of the two-wheeler customers in the market are choosing
TVS.
➢ Introduction of new attractive incentive schemes can bring new
dealers and retailers for TVS Motors.
➢ TVS is one of the most trusted brand in India.

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 BIBLIOGRAPHY

Following sources have been sought for the preparation of this

report:

➢ www.tvsmotor.com
➢ www.quickbooks.com
➢ www.comparative.com.
➢ www.bloomberg.com
➢ www.investopedia.com
➢ www.wikipedia.com
➢ www.moneycontrol.com
➢ www.zerodha.com
➢ www.corporatefinanceinstitute.com

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