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Project Report On TATA MOTORS 1
Project Report On TATA MOTORS 1
Project Report On TATA MOTORS 1
MOTORS
S.No CONTENTS
1. INTRODUCTION
3. ACCOUNTING CONCEPTS
AND CONVENTIONS
4. FINAL ACCOUNTS
5. FINANCIAL STATEMENT
ANALYSIS
6. RATIO ANALYSIS
tatamotors.com
Description
Tata Motors Limited is an Indian multinational automotive manufacturing company,
headquartered in Mumbai, India, which is part of the Tata Group. The company produces
passenger cars, trucks, vans, coaches, buses.
Type Public
BSE: 500570
Traded as
NSE: TATAMOTORS
NYSE: TTM
NSE NIFTY 50 Constituent
ISIN IN9155A01020
Industry Automotive
Guenter Butschek (CEO)
Martin Uhlarik (CDO)
Products Automobiles
Luxury vehicles
Commercial vehicles
Automotive parts
Pickup trucks
SUVs
Website www.tatamotors.com
COMPANY HISTORY
Formerly known as Tata Engineering and Locomotive Company (TELCO), the company was
founded in 1945 as a manufacturer of locomotives. The company manufactured its first
commercial vehicle in 1954 in a collaboration with Daimler-Benz AG, which ended in 1969.
Tata Motors entered the passenger vehicle market in 1988 with the launch of
the TataMobile followed by the Tata Sierra in 1991, becoming the first Indian manufacturer
to achieve the capability of developing a competitive indigenous automobile.[6] In 1998, Tata
launched the first fully indigenous Indian passenger car, the Indica, and in 2008 launched
the Tata Nano, the world's most affordable car. Tata Motors acquired the South Korean
truck manufacturer Daewoo Commercial Vehicles Company in 2004. Tata Motors has been
the parent company of Jaguar Land Rover since the company established it for the
acquisition of Jaguar Cars and Land Rover from Ford in 2008.
Tata Motors' principal subsidiaries include British premium car maker Jaguar Land
Rover (the maker of Jaguar and Land Rover cars) and the South Korean commercial vehicle
manufacturer Tata Daewoo. Tata Motors has a construction-equipment manufacturing joint
venture with Hitachi (Tata Hitachi Construction Machinery), and a joint venture
with Stellantis which manufactures automotive components and Fiat Chrysler and Tata
branded vehicles. On 12 October 2021, private equity firm TPG invested $1 billion in Tata
Motors' electric vehicle subsidiary.
Tata launched the Indica in 1998, a fully indigenous Indian passenger car tailor-made to suit
Indian consumer needs though styled by I.D.E.A, Italy. Although initially criticized by auto
analysts, its excellent fuel economy, powerful engine, and aggressive marketing strategy
made it one of the best-selling cars in the history of the Indian automobile industry. A newer
version of the car, named Indica V2, was a major improvement over the previous version and
quickly became a mass favorite. Tata Motors also successfully exported large numbers of car
to South Africa. The success of the Indica played a key role in the growth of Tata Motors.[10]
On 27 September 2004, Ratan Tata, the Chairman of Tata Motors, rang the opening bell at
the New York Stock Exchange to mark the listing of Tata Motors.[12]
In 2005, Tata Motors acquired a 21% controlling stake in the Spanish bus and coach
manufacturer Hispano Carrocera.[13] Tata Motors continued its market area expansion through
the introduction of new products such as buses (Starbus and Globus, jointly developed with
subsidiary Hispano Carrocera) and trucks (Novus, jointly developed with subsidiary Tata
Daewoo).
In 2006, Tata formed a joint venture with the Brazil-based Marco polo, Tata Marco polo Bus,
to manufacture fully built buses and coaches.[14]
Tata Bolt
In 2008, Tata Motors acquired the English car maker Jaguar Land Rover, manufacturer of the
Jaguar and Land Rover from Ford Motor Company.
In 2009, its Lucknow plant was awarded the "Best of All" Rajiv Gandhi National Quality
Award.[21]
In 2010, Tata Motors acquired an 80% stake in the Italian design and engineering company
Trilix for €1.85 million. The acquisition formed part of the company's plan to enhance its
styling and design capabilities.[22]
In 2012, Tata Motors announced it would invest around ₹6 billion in the development of
Futuristic Infantry Combat Vehicles in collaboration with DRDO.
In 2013, Tata Motors announced it will sell in India, the first vehicle in the world to run on
compressed air (engines designed by the French company MDI) and dubbed "Mini CAT".
In 2014, Tata Motors introduced the first Truck Racing championship in India "T1 Prima
Truck Racing Championship".
On 26 January 2014, the Managing Director Karl Slym was found dead. He fell from the
22nd floor to the fourth floor of the Shangri-La Hotel in Bangkok, where he was to attend a
meeting of Tata Motors Thailand.
On 3 May 2018, Tata Motors announced that it sold its aerospace and defence business to
another Tata Group Entity, Tata Advanced Systems, to unlock their full potential.[29]
financial statements under Indian GAAP and annual financial statements under IFRS. The Company
will be required to prepare annual and interim financial statements under Indian Accounting Standard
101 "First-time Adoption of Indian Accounting Standards", or Ind-AS from April 1, 2016.
Ind-AS differs in certain respects from Indian GAAP and IFRS and therefore financial statements
prepared under Ind-AS may be substantially different from financial statements prepared under Indian
GAAP or IFRS. There can be no assurance that the Company's financial condition, results of
operation, cash flow or changes in shareholders' equity will not be presented differently under Ind-AS
compared to Indian GAAP or IFRS. When the Company adopts Ind-AS reporting, it may encounter
difficulties in the ongoing process of implementing and enhancing its management information
systems. There can be no assurance that the adoption of Ind-AS will not adversely affect the
Company's financial condition or results of operations.
The final accounts are prepared basis of few polices that are adopted by the company.
a. Statement of compliance
These financial statements have been prepared in accordance with Ind AS as notified
under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133
of the Companies Act, 2013 (“the Act”).
b. Basis of preparation
The consolidated financial statements have been prepared on historical cost basis except
for certain financial instruments which are measured at fair value at the end of each
reporting period as explained in the accounting policies below.
c. Basis of consolidation Subsidiaries
The consolidated financial statements include Tata Motors Limited and its subsidiaries.
Subsidiaries are entities controlled by the Company. Control exists when the Company
(a) has power over the investee,
(b) it is exposed, or has rights, to variable returns from its involvement with the investee
(c) has the ability to affect those returns through its power to direct relevant activities of
the investee. Relevant activities are those activities that significantly affect an entity's
returns.
The Company reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements listed above. In
assessing control, potential voting rights.
FINANCIAL STATEMENTS
The financial statements are prepared for the internal and external users of the
company
The internal users like management.
The external users like
Investors
Creditors
These financial statements are prepared to analyse the performance and position
of the company.
No. of Mths Year
12 Mar-21* 12 Mar-22* % Change
Ending
Gross profit
% 6.2 8.2
margin
Operating income during the year rose 11.5% on a year-on-year (YoY) basis.
The company's operating profit increased by 47.4% YoY during the fiscal. Operating profit
margins witnessed a fall and down at 8.2% in FY22 as against 6.2% in FY21.
Depreciation charges increased by 5.5% and finance costs increased by 15.0% YoY,
respectively.
Other income declined by 23.2% YoY.
Net profit for the year declined by 13.7% YoY.
Net profit margins during the year grew from 5.2% in FY21 to 4.0% in FY22.
The company's current liabilities during FY22 down at Rs 1,507 billion as compared to Rs 1,577
billion in FY21, thereby witnessing an decrease of -4.5%.
Long-term debt stood at Rs 978 billion as compared to Rs 931 billion during FY21, a growth of 5.0%.
Current assets rose 0% and stood at Rs 1,470 billion, while fixed assets fell 6% and stood at Rs 1,798
billion in FY22.
Overall, the total assets and liabilities for FY22 stood at Rs 3,267 billion as against Rs 3,386 billion
during FY21, thereby witnessing a fall of 4%.
-
Cash Flow from Investing -
Rs m 261,26 -
Activities 47,751
3
132,32
Net Cash Flow Rs m 64,590 -51.2%
2
TATA MOTORS's cash flow from operating activities (CFO) during FY22 stood at Rs 143
billion on a YoY basis.
Cash flow from investing activities (CFI) during FY22 stood at Rs -48 billion on a YoY
basis.
Cash flow from financial activities (CFF) during FY22 stood at Rs -34 billion on a YoY
basis.
Overall, net cash flows for the company during FY22 stood at Rs 65 billion from the Rs 132
billion net cash flows seen during FY21.
Tata Motors annual/quarterly total depreciation and amortization - cash flow history and growth rate
from 2010 to 2022. Total depreciation and amortization - cash flow can be defined as the total amount
of depreciation and amortization listed on the Cash Flows Statement.
Tata Motors total depreciation and amortization - cash flow for the quarter ending September 30,
2022 was $1.467B, a 11.82% decline year-over-year.
Tata Motors total depreciation and amortization - cash flow for the twelve months ending September
30, 2022 was $4.625B, a 3.75% decline year-over-year.
Tata Motors annual total depreciation and amortization - cash flow for 2022 was $3.158B, a 0.53%
increase from 2021.
Tata Motors annual total depreciation and amortization - cash flow for 2021 was $3.141B, a 14.46%
increase from 2020.
Tata Motors annual total depreciation and amortization - cash flow for 2020 was $2.744B, a 17.56%
decline from 2019.
Analysis
Fiscal Years
The following section summarizes insights on Tata Motors Limited's Depreciation & Amortization:
Performance Summary
Tata Motors's latest twelve months depreciation & amortization is 1.297 billion.
Tata Motors's depreciation & amortization for fiscal years ending March 2018 to 2022
averaged 1.573 billion.
Tata Motors's operated at median depreciation & amortization of 1.495 billion from fiscal
years ending March 2018 to 2022.
Looking back at the last five years, Tata Motors's depreciation & amortization peaked in
March 2019 at 1.779 billion.
Tata Motors's depreciation & amortization hit its five-year low in March 2020 of 1.418
billion.
Tata Motors's depreciation & amortization decreased in 2020 (1.418 billion, -20.3%) and
2022 (1.47 billion, -1.7%) and increased in 2018 (1.704 billion, +19.9%), 2019 (1.779 billion,
+4.4%) and 2021 (1.495 billion, +5.4%).
RATIO ANALYSIS
Investors and analysts employ ratio analysis to evaluate the financial health of companies by
scrutinizing past and current financial statements. Comparative data can demonstrate how a
company is performing over time and can be used to estimate likely future performance. This
data can also compare a company's financial standing with industry averages while
measuring how a company stacks up against others within the same sector.
Investors can use ratio analysis easily, and every figure needed to calculate the ratios is found
on a company's financial statements.
Ratios are comparison points for companies. They evaluate stocks within an industry.
Likewise, they measure a company today against its historical numbers. In most cases, it is
also important to understand the variables driving ratios as management has the flexibility to,
at times, alter its strategy to make its stock and company ratios more attractive. Generally,
ratios are typically not used in isolation but rather in combination with other ratios. Having a
good idea of the ratios in each of the four previously mentioned categories will give you a
comprehensive view of the company from different angles and help you spot potential red
flags.
1. Liquidity Ratios
Liquidity ratios measure a company's ability to pay off its short-term debts as they become
due, using the company's current or quick assets. Liquidity ratios include the current ratio,
quick ratio, and working capital ratio.
2. Solvency Ratios
Also called financial leverage ratios, solvency ratios compare a company's debt levels with its
assets, equity, and earnings, to evaluate the likelihood of a company staying afloat over the
long haul, by paying off its long-term debt as well as the interest on its debt. Examples of
solvency ratios include: debt-equity ratios, debt-assets ratios, and interest coverage ratios.
3. Profitability Ratios
These ratios convey how well a company can generate profits from its operations. Profit
margin, return on assets, return on equity, return on capital employed, and gross margin ratios
are all examples of profitability ratios.
4. Efficiency Ratios
Also called activity ratios, efficiency ratios evaluate how efficiently a company uses its assets
and liabilities to generate sales and maximize profits. Key efficiency ratios include: turnover
ratio, inventory turnover, and days' sales in inventory.
5. Coverage Ratios
Coverage ratios measure a company's ability to make the interest payments and other
obligations associated with its debts. Examples include the times interest earned ratio and the
debt-service coverage ratio.
For example, if the average P/E ratio of all companies in the S&P 500 index is 20, and the
majority of companies have P/Es between 15 and 25, a stock with a P/E ratio of seven would
be considered undervalued. In contrast, one with a P/E ratio of 50 would be considered
overvalued. The former may trend upwards in the future, while the latter may trend
downwards until each aligns with its intrinsic value.
Current Ratio: The company's current ratio improved and stood at 1.0x during FY22, from
0.9x during FY21. The current ratio measures the company's ability to pay short-term and
long-term obligations.
Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 0.2x
during FY22, from -0.3x during FY21. The interest coverage ratio of a company states how
easily a company can pay its interest expense on outstanding debt. A higher ratio is
preferable.
Profitability Ratios
Return on Equity (ROE): The ROE for the company declined and down at -25.2% during
FY22, from -23.6% during FY22. The ROE measures the ability of a firm to generate profits
from its shareholders capital in the company.
Return on Capital Employed (ROCE): The ROCE for the company improved and stood at
1.6% during FY22, from -1.6% during FY21. The ROCE measures the ability of a firm to
generate profits from its total capital (shareholder capital plus debt capital) employed in the
company.
Return on Assets (ROA): The ROA of the company improved and stood at -0.6% during
FY22, from -1.5% during FY21. The ROA measures how efficiently the company uses its
assets to generate earnings.
Key Ratio Analysis
Valuation ratios
Payout (%)
Dividend pay-out 0 0 0 0
Liquidity ratios
Leverage ratios
A fund flow refers to the inflow and outflow of funds or assets for a company and is often
measured on a monthly or quarterly basis. A fund flow statement reveals the reasons for these
changes or anomalies in the financial position of a company between two balance sheets.
A fund flow refers to the inflow and outflow of funds or assets for a company and is often
measured on a monthly or quarterly basis. A fund flow statement reveals the reasons for these
changes or anomalies in the financial position of a company between two balance s Current
Assets
1. Cash
2. Receivables
3. Inventory
Current Liabilities
1. Payables
Net working capital is the total change in the business's working capital, calculated as total
change in current assets minus total change in current liabilities.
For example: If the inventory of a business increased from $700,000 to $750,000, then this
increase of $50,000 is the increase in the working capital for the corresponding period and
will be mentioned on the funds flow statement. But the same would not be reflected in the
cash flow statement as it does not involve cachets
Usually, the preparation of these statements is followed by a funds flow statement analysis. It
serves as a financial parameter that helps a company to control its finance and develop a
better strategy for long term financial planning, and to utilize short term and long term funds.
Fund flow statement analysis is a comparison between various aspects of a Balance Sheet.
While evaluating this statement, it is also vital to understand all the aspects.
Assets
If the asset section of a balance sheet experiences growth, it implies that the company has
purchased assets by spending funds. These assets might then result in the inflow of funds in
the future. Here are some examples:
Fixed assets
Short-term loans
Long-term loans
Inventory
Cash and cash equivalents
Receivables
Present investments
On the other hand, if the assets section shows a decline, it means that the company has sold
some of its assets to maintain fund inflow.
Liabilities
In a Funds Flow Statement, any increase in liabilities means the organization has funds
inflow which needs to be paid. Some of the examples are:
Lenders
Customers
Vendors
Employees
Shareholders
Conversely, a decline in liabilities implies that the current obligations have been satisfied.
remain financially sound, part of every company's accounting process should be to frequently
analyze its fund flow statement (and other financial statements) to make appropriate business
decisions.
Fund flow statements, along with profit and loss account statements and balance sheets
portray the company’s present financial position when approaching banks, investors etc. for
working capital funds and loans. Today, most businesses use advanced technology for
accounting to draw up these complicated financial statements instantly.
Ten key benefits of a fund flow statement
1. Shows financial position. A funds flow statement helps indicate the addition in profits,
which is a boon to shareholders.
2. Indicates addition of share capital. The fund flow statement can highlight changes in share
capital.
3. Shows addition or reduction in share premium. The fund flow statement shows
fluctuations in share premiums. This increases when shares are issued at premium or when
preferential shares or debentures are reduced and the funds flow statement shows key
information at a glance.
4. Reveals profit or loss of operation. The fund flow statement clearly shows whether an
organization is earning profit or sustaining a loss.
5. Reveals addition in long-term borrowings. The statement can show the additional amount
borrowed by issuing debentures.
6. Indicates decrease in working capital. The statement shows the reduction in working
capital (i.e., when current assets are less than current liabilities).
7. Fund flow statement acts as a guide. The statement allows management to learn about
future problems, needs, and fundraising requirements, helping the company to avoid financial
problems.
8. Helpful in sound dividend policy. Sometimes, a company may have sufficient profit, yet it
is advisable not to distribute dividends due to lack of cash or liquidity. The fund flow
statement is useful in informing sound dividend policy.
9. Helpful in long-term borrowings. Before advancing long-term loans, lenders may ask for
several years of fund flow statements to learn the firm’s creditworthiness.
10. Useful information for investors. Before investing, some investors study a company’s
fund flow statements to know how funds are raised and used (e.g., whether funds are
adequate for the payment of interest and principal sum).
Cash Flow Statement' may be defined as a statement, which depicts the changes in financial
position of a business organisation due to 'Inflows' and 'Outflows' of cash. Analysis of such
'Inflows' and 'Outflows' is necessitated for short-range business activities.
The fundamental objective behind the preparation of the 'Cash Flow Statement' is to
underline and emphasis the changes that have taken place in the 'Cash Position' during a
specific period. The sources from where the cash was procured by an organisation and the
uses, to which it (the cash) was put, are elaborated in the cash flow statement.
Preparation and analysis of cash flow statement have the following advantages :
1) It facilitates measurement of the business enterprise's ability to meet its fixed charges.
2) It is useful in bringing to the forefront the business enterprise's status with regard to its
‘Liquidity' and 'Solvency' during adverse conditions.
3) It is helpful in assessing the changes in 'Cash Position' between 'Profit & Loss Account'
and 'Balance Sheet' items of two consecutive accounting periods.
4) Disclosures made by the 'Cash Flow Statement enables the management of a business
enterprise to initiate preventive measures in financially difficult situations.
6) It facilitates listing out the 'Potential Financial Flows', which may be put to use during
crisis conditions.
7) Cash Flow Statement reveals the information with regard to the availability of 'Cash'. Such
information is very useful in deciding the quantum of 'Dividend' to be distributed to the
shareholders or in extreme cases whether or not to skip a dividend payment altogether.
Cash And Cash Equivalents Begin 2,365.5 2,145.3 487.40 546.82 228.94
of Year 4 0
Cash And Cash Equivalents End 2,450.2 2,365.5 2,145.3 487.40 546.82
Of Year 3 4 0
TATA MOTORS's cash flow from operating activities (CFO) during FY21 stood at Rs
290 billion, an improvement of 8.9% on a YoY basis.
Cash flow from investing activities (CFI) during FY21 stood at Rs -261 billion on a
YoY basis.
Cash flow from financial activities (CFF) during FY21 stood at Rs 99 billion, an
improvement of 192% on a YoY basis.
Overall, net cash flows for the company during FY21 stood at Rs 132 billion from the
Rs -31 billion net cash flows seen during FY20.
This statement is one of the most useful tools for judging a company's liquidity position. The
ratios and parameters in this statement helps test a company's financial health.
- - - - -
From Investments
380,799 262,016 197,111 341,702 261,263
From Financial
62,053 20,117 88,304 33,896 99,042
Activity