Pag e |0

NAME- BHOOMIKA GANESH OSWAL

UID NUMBER-7323307

SUBJECT- ECONOMICS

ISC 2023
 Pag e |1

INDEX
Serial No. Contents Page

1. Introduction 3

4-5
2. Steps involved in Issuing Shares

6
3. Equity Shares and Process of allotment of shares

7
4. About Tata Motors

5. 8-9
Balance Sheet of the Company and Journal Entry

10
6. Ratio Analysis

11
7. Conclusion

8. Bibliography 12

Signature of Visiting Examiner Signature of Subject Teacher

Date- Date-
 Pag e |2

ACKNOWLEDGEMENT
I would like to acknowledge Mr. Dalal Jamshed for his vital cooperation and help in ensuring the successful completion of my
assignment. He deserves the utmost credit for the assignment’s outcome.
Finally, I would want to convey my sincere thanks to my friends and supporters; without them, the task would not have been
accomplished in such a timely manner.

BHOOMIKA OSWAL
XII B
 Pag e |3

INTRODUCTION

ISSUE OF SHARES
Issue of Shares is the process by which companies pass on new shares to shareholders, who can be either individuals or
corporates. While acquiring the shares, companies follow the rules prescribed by the Companies Act 2013.

There are 3 basic steps of the procedure of issuing the shares.

1. Issue of Prospectus

2. Receiving Applications

3. Allotment of Shares

A share is a unit of ownership in a company or an organization. It is also considered as an asset because in case a company
makes a profit, an amount in proportion to the share held by you will be provided to you in the form of a dividend. Anyone
who holds a share is called a shareholder for that specific financial asset or organization.

It should be noted that an organization is allowed to offer shares to be purchased by others through the Companies Act
2013 and has to follow the rules predefined under the act.

Generally, the Issue of Shares is of two kinds - common shares and preference shares. While the former allows for voting
rights to the shareholders, the latter does not permit the holders of any rights.

However, the dividend is passed on to both in case of a profit. In another instance, when there is a bankruptcy, the preferred
shareholders are given preference in matters of dividend sharing. So, they receive the dividend even before the common
shareholders and have an upper hand.

What is the Issue of Shares?

The meaning of the Issue of Shares is that the shares of an enterprise or any financial asset are distributed among
shareholders who wish to purchase them. These shareholders can be either individuals or corporates who take part in
buying the shares at a specific price.

Let us understand the concept of share allocation with the help of an example.

A company called XYZ has a total capital of Rs. 6 lakhs. It has divided the capital into 6000 units of shares each amounting
to Rs. 100. Therefore, you can see that each unit or share of the company costs Rs. 100. Individuals or corporations can
purchase the share at this price.

Hence, holding a share in an organization is often regarded as partial ownership as well. It is for the same reason that
anyone holding a share is termed as a shareholder.
 Pag e |4

What are the Steps involved in Issue of Shares?

The process of issues of shares is primarily divided into three significant steps, which are:

1. Prospectus Issue
This is the first step of the Issue of Shares wherein an enterprise releases a prospectus to the public. It contains the details
that a new enterprise has come into being and that it would require funds from the public to operate, for which the public
can purchase shares of that particular enterprise.

The prospectus has all the necessary details of that share issuing authority along with details pertaining to how they will
collect money from investors.

2. Application Receipt
The second step in share issuing is the receipt of application as and when an investor wishes to purchase a share of that
asset or enterprise. However, they have to follow the necessary rules and regulations as cited in the prospectus issued
earlier.

They also have to deposit the amount against shares they are willing to purchase. The money has to be deposited to any
scheduled bank along with the application.

3. Share Allocation
This is the last step in issues of shares wherein after completing the formalities from the investor’s side, the enterprise will
issue the shares to the investors. As there is a minimum subscription limit, one has to wait till that quota is fulfilled.

Once that limit is fulfilled, the shares will be allocated to those investors who have subscribed for the capital shares. A letter
of allotment is also sent out to those who have been allocated with shares.

Therefore, this process makes up for an authentic way of trading shares between investors and enterprises.

The main reason for issuing new shares by the company is to raise money to finance the business. The following are some
of the examples where an Allotment of Shares may be considered.

 A number of shares will usually be issued when the company is established. With the help of a share issue, the
company will be able to trade, along with any money that the company may borrow.

 Allotment of Shares is considered when the company requires new funds to grow the business organically. There
are various factors that influence how many shares to issue.

 In order to repay all or some of the company’s borrowing, shares can be issued.

 Shares can be issued to fund the purchase of another company, which means raising cash from a share issue and
using that cash to acquire the new business.
 Pag e |5

 Shares can also be issued to continue trading after a particularly difficult period, to repair a damaged balance sheet
or in case of problems across an industry or part of a wider downturn in the whole economy.

 The company can make a capitalization Issue of Shares to existing shareholders. Rather than the shareholders
needing to pay for the shares themselves, the company uses its own money to fund the allotment. This generally has
the effect of reducing the value of the shares in issue, which may, in turn, make them more merchantable to investors.

 If shareholders prefer not to receive a cash dividend, the company may offer them a ‘scrip’ dividend instead by
allotting shares of the same value as the cash dividend. This is often popular among compan ies because issuing
shares as a dividend does not impact cash flow in the way a cash dividend does.

 In case a director or employee of the company takes on a share option after being permitted by the company, the
company may acquire shares.

 The company may consider allotting the shares in case a new director or senior employee joins the business or an
existing employee becomes a director. This can demonstrate the commitment of an employee or a new director to
the business, and they will have a clear interest in the company’s success. The shares would either be passed to the
employee or new director through a transfer from existing shareholders or by a new Allotment of Shares.’
 Pag e |6

What are Equity Shares?

 Equity shares are issues of shares that are purely meant for ownership. It is entirely opposite to preference shares
and does not provide any preference rights to shareholders during the distribution of dividends. However, these
shareholders have voting rights.

The Process for Issue and Allotment of Shares

The following steps are involved in the process for the issue and Allotment of Shares.

Step 1: Board resolution

Step 2: Passing of special or ordinary resolution

Step 3: Filing of necessary forms

Step 4: Approval of the ROC (registrars of companies)

 Pag e |7

TATA MOTORS

Tata Motors Limited is an Indian multinational automotive manufacturing company, headquartered in the city of Mumbai,
India which is part of Tata Group. The company produces passenger cars, trucks, vans, coaches, buses, luxury
cars, sports cars, construction equipment.

Tata Motors History

Tata Motors was founded in 1945 and started its operations as a manufacturer of locomotives. After 9 years in 1954, in
collaboration with Daimler-Benz AG, manufactures its first commercial vehicle in history; its partnership with Daimler-Benz
AG was ended in 1969.
In 1988, Tata Motors started the manufacturing of passenger vehicles, with the launch of the model Tata Mobil e and after
that Tata Sierra in 1991, and become the first Indian automobile company to manufacture a fully indigenous automobile.

Chairman N Chandrasekaran

Jamsetji (Jamshedji) Nusserwanji Tata (3 March 1839 – 19 May 1904) was an Indian pioneer industrialist who founded
the Tata Group, India's biggest conglomerate company. Named the greatest philanthropist of the last century by several
polls and ranking lists, he also established the city of Jamshedpur.
 Pag e |8

BALANCE SHEET OF TATA

MOTORS

BALANCE SHEET OF TATA MOTORS (in MAR 22 MAR 21 MAR 20

Rs. Cr.)

12 months 12 months 12 months

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 765.88 765.81 719.54

TOTAL SHARE CAPITAL 765.88 765.81 719.54

Reserves and Surplus 19,178.27 18,290.16 16,800.61

TOTAL RESERVES AND SURPLUS 19,178.27 18,290.16 16,800.61

TOTAL SHAREHOLDERS FUNDS 19,944.15 19,055.97 18,387.65

NON-CURRENT LIABILITIES

Long Term Borrowings 14,102.74 16,326.77 14,776.51

Deferred Tax Liabilities [Net] 173.72 266.50 198.59

Other Long Term Liabilities 1,212.34 1,786.93 1,646.56

Long Term Provisions 1,474.11 1,371.94 1,769.74

TOTAL NON-CURRENT LIABILITIES 16,962.91 19,752.14 18,391.40

CURRENT LIABILITIES

Short Term Borrowings 9,129.91 2,542.50 6,121.36

Trade Payables 13,986.06 8,115.01 8,102.25

Other Current Liabilities 3,268.78 14,550.50 10,180.46

Short Term Provisions 608.06 1,043.54 1,406.75

TOTAL CURRENT LIABILITIES 26,992.81 26,251.55 25,810.82

TOTAL CAPITAL AND LIABILITIES 63,899.87 65,059.66 62,589.87

ASSETS
 Pag e |9

NON-CURRENT ASSETS

Tangible Assets 15,543.00 19,922.06 19,540.25

Intangible Assets 0.00 6,501.04 5,667.73

Capital Work-In-Progress 0.00 1,400.82 1,755.51

Other Assets 0.00 0.00 0.00

FIXED ASSETS 15,543.00 29,429.56 29,702.78

Non-Current Investments 29,256.39 16,114.91 15,730.86

Deferred Tax Assets [Net] 777.68 0.00 0.00

Long Term Loans And Advances 48.43 126.05 138.46

Other Non-Current Assets 2,654.76 3,534.55 3,449.01

TOTAL NON-CURRENT ASSETS 48,280.26 49,205.07 49,021.11

CURRENT ASSETS

Current Investments 5,143.08 1,578.26 885.31

Inventories 3,718.49 4,551.71 3,831.92

Trade Receivables 2,111.78 2,087.51 1,978.06

Cash And Cash Equivalents 2,605.43 4,318.94 3,532.19

Short Term Loans And Advances 139.37 185.42 232.14

OtherCurrentAssets 1,901.46 3,132.75 3,109.14

TOTAL CURRENT ASSETS 15,619.61 15,854.59 13,568.76

TOTAL ASSETS 63,899.87 65,059.66 62,589.87

JOURNAL ENTRY FOR TATA MOTORS-:

Bank a/c Dr

To Equity Share Apllication & Alllotment a/c

Equity Share Application & Allotment a/c

To Equity Share Capital

 P a g e | 10

RATIO ANAYLYSIS

What Is Ratio Analysis?

Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational efficiency, and profitabil ity
by studying its financial statements such as the balance sheet and income statement. Ratio analysis is a cornerstone
of fundamental equity analysis.

KEY TAKEAWAYS

 Ratio analysis compares line-item data from a company's financial statements to reveal insights regarding
profitability, liquidity, operational efficiency, and solvency.
 Ratio analysis can mark how a company is performing over time, while comparing a company to another within
the same industry or sector.
 While ratios offer useful insight into a company, they should be paired with other metrics, to obtain a broader
picture of a company's financial health.

3 ratios Formulas-:

1) Debt equity ratio – long term debt

Shareholders Fund

2) Proprietary ratio – Shareholders Funds

Total Assets

3) Net Profit before interest tax, dividend

Capital Employees * 100
 P a g e | 11

CONCLUSION

Tata Motors balance sheet has more strengths than weaknesses. It is a locally organized company

means most of its business operations are in the local market. It should develop new strengths and

utilize its future opportunities to grow and prosper further in the future.
 P a g e | 12

BIBLIOGRAPHY

1. https://byjus.com

2. https://www.vedantu.com

3. https://www.toppr.com

4. https://www.moneycontrol.com

5. https://www.tatamotors.com

6. https://economictimes.indiatimes.com

7. https://www.capitalmarket.com