A

Research Project On
“Financial Statement and Working Capital Analysis of Tata Motors Ltd”

Submitted towards partial fulfillment to obtain the Five-Year Integrated MBA Degree
from Aliah University, Kolkata

Submitted by
MD JEESHAN ABRAR
Roll No:- MBA215018

Under the Guidance of

Prof. Gholam Syedain Khan

DEPARTMENT OF MANAGEMENT AND BUSINESS ADMINISTRATION

ALIAH UNIVERSITY

KOLKATA

1
CONTENTS

Financial Statement and Working Capital analysis of Tata Motors Ltd

1. Acknowledgement………………………………………3

2. Executive Summary……………………………………..4

3. Abstract………………………………………………….4

4. Introduction ……………………………………………..5

5. Background…………………………………………….. 8

6. Review of literature….......................................................9

7. Objectives……………………………………………….13

8. Research methodology………………………………….13

9. Scope and Limitations Of Study………………………..30

10. Data Collection & Analysis.…………………………..32

11. Recommendations and Conclusion…………………....32

12. Bibliography…………………………………………...33

13. Annexture……………………………………………...34

2
Acknowledgement

I would like to express my special thanks of gratitude to my supervisor Prof. Gholam Syedain Khan for
his valuable guidance and support in completing my project as well as to our HoD Prof. Parveen Ahmed
Alam, who gave me the golden opportunity to do this wonderful project on the topic of “Financial
Statement and Working Capital Analysis of Tata Motors Ltd”, which also helped me to gain a lot of
content knowledge on this topic.

By researching it, I came to know about so many new things and without their support and suggestions,
this project would not have been completed. I am thankful to them.

I would also like to thank those websites and journals from which I got valuable information and data
that helped me in finalizing this project within the limited time frame. In the end, I would like to thank
my parents and my younger sister, Afreen, for their never-ending support.

Your Name

(MD JEESHAN ABRAR)

3
Executive Summary
This research project aims to conduct a thorough financial analysis of Tata Motors by examining its
annual reports over the past three years. The focus areas include evaluating the company's working
capital management and assessing its investment and financing strategies. Key findings are as
follows:

Working Capital Analysis:

The net current assets or working capital for Tata Motors were calculated for each of the three years.
This analysis revealed fluctuations in the working capital levels, indicating varying liquidity
positions and operational efficiency over the period.

Efficacy of Working Capital Management:

A comparative study of the working capital figures across the three years was conducted to evaluate
the company's efficiency in managing its short-term assets and liabilities. The evaluation
highlighted trends and areas where the company improved or faced challenges in its working capital
management.

Investment and Financing Strategies:

An in-depth analysis of the balance sheets for the past three years was performed, categorizing items
into long-term and short-term investments and financing activities. This assessment provided
insights into the company's strategic decisions regarding capital allocation, funding sources, and
overall financial health.
Comparative analysis of these strategies over the three years offered a comprehensive understanding
of Tata Motors' investment decisions, highlighting shifts in strategy, risk management, and growth
initiatives.
The findings from this analysis are crucial for stakeholders to understand Tata Motors' financial
management practices, liquidity position, and strategic direction over the past three years. These
insights can inform future decisions and strategies for enhancing the company's financial
performance and stability.

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Introduction
Rationale of Study
Financial analysis involves evaluating the relationships between components of financial statements
to understand a firm’s position and performance better. Analyzing a company’s balance sheet,
income statement, and cash flow statement, as well as interpreting trends and identifying
weaknesses and strengths, provides valuable information for management to make sales and profit
projections for the next three to five years. This allows businesses to estimate future performance
based on general economic and industry trends. Such analyses aid in planning equipment purchases
and other initiatives, determining investment adequacy, assessing management competence, and
evaluating employee effectiveness. Financial analysis helps organizations identify progress, profits,
and growth, which are essential for satisfying investors, repaying debts, paying wages, and covering
operational costs. Profitability is a key indicator of overall performance and is crucial for growth,
expansion, and diversification.
Introduction to Automobile Industry
The automobile industry significantly contributes to the global economy, comprising the largest
suppliers of passenger cars and light trucks. Companies in this industry sell vehicles worldwide,
including in both developed and developing countries, through extensive dealership networks.
While these manufacturers offer a wide range of makes and models, brand integration is often
limited to marketing, advertisement, and dealership levels. Many companies operate production
facilities across multiple regions.
Indian Automobile Industry
In 2019, India became the fourth largest auto market, surpassing Germany with approximately 3.99
million passenger and commercial vehicles sold. By 2021, India is expected to overtake Japan to
become the world’s third-largest auto market. The Indian government encourages foreign
investment in the automobile sector, allowing 100% foreign direct investment (FDI) under the
automatic route. The Indian automobile industry is a crucial economic engine, accounting for nearly
half of the country’s manufacturing GDP and 7.5% of its total GDP, employing roughly 32 million
people in its value chain.
Major Companies in the Industry

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Tata Motors
Maruti Suzuki
Mahindra & Mahindra
Hyundai Motors
Hero MotoCorp
Honda Motor Company
Kia Motors
Bajaj Auto
Ashok Leyland
Eicher Motors

Introduction to Company
Tata Motors, an Indian multinational car manufacturer, was founded in 1945 and is headquartered in
Mumbai, Maharashtra. It is one of the world’s leading automobile manufacturers, producing buses,
trucks, sports cars, and coaches, as well as military vehicles. Known for producing some of India's
safest vehicles, Tata Motors offers cars priced between 4.70 lakhs and 16.25 lakhs. A $35 billion
organization and a subsidiary of the USD 113 billion Tata Group, Tata Motors operates in South
Korea, the United Kingdom, Thailand, Indonesia, and South Africa through a global network of 113
subsidiary and associate companies, including Tata Daewoo in South Korea and Jaguar Land Rover
in the United Kingdom. With 9 million vehicles on Indian roads, Tata Motors is a market leader in
commercial vehicles and a major passenger vehicle manufacturer. The company focuses on
pioneering new technologies with design and R&D centers in India, the UK, Italy, and Korea.
Tata Motors, originally established as Tata Engineering and Locomotive Co. Ltd. in 1945 to
manufacture locomotives, has grown into a global automobile manufacturing leader. It dominates
the commercial vehicle market and ranks among the top three in passenger cars in India. The
company’s manufacturing bases in India are located in Lucknow, Pune, Jamshedpur, Dharwad, and
Pantnagar. In 1954, Tata Motors collaborated with Daimler Benz AG of West Germany to
manufacture medium commercial vehicles. It began producing passenger vehicles in 1988. With a
legacy of innovation, Tata Motors introduced India’s first indigenously manufactured Light
Commercial Vehicle, Sports Utility Vehicle, and the entirely indigenous passenger vehicle, the Tata
Indica, in 1998. The Tata Indica became India's best-selling vehicle in its segment within two years

6
of its launch. The Tata Ace, India’s first indigenously constructed mini-truck, was launched in 2005.
In 2008, Tata Motors acquired Jaguar Land Rover from Ford, and also unveiled the Tata Nano, the
world’s cheapest car, in the same year. In 2017, Tata Motors and Volkswagen signed a
Memorandum of Understanding to collaborate on car development for the Indian market.
Tata Motors is listed on the New York Stock Exchange, the National Stock Exchange of India, and
the Bombay Stock Exchange. It is part of the BSE SENSEX index and ranked 265th on the Fortune
Global 500 list of the world’s most powerful companies as of 2019.

Joint Ventures

Fiat-Tata: Fiat Group Automobiles and Tata Motors have a joint venture in Ranjangaon,
Maharashtra, producing passenger vehicles, engines, and transmissions for domestic and
international markets.
Tata Marcopolo: Tata Motors and Marcopolo S.A. of Brazil have a 51:49 joint venture for bus
production in India, manufacturing fully constructed buses and coaches. The joint venture utilizes
Tata Motors’ chassis technology and Marcopolo’s expertise in bus body design.
Tata Hitachi Construction Machinery: A partnership between Tata Motors and Hitachi to
manufacture excavators and other construction equipment.
Hyundai-Tata: Tata Motors and Hyundai collaborated to develop the transmission for the Tata
Harrier.
Tata Motors European Technical Centre (TMETC): Located in Coventry, UK, TMETC is a wholly-
owned subsidiary of Tata Motors, participating in collaborative ventures in low carbon technology,
electric, and hybrid vehicle technologies.

Justification of the Topic

Tata Motors is chosen for this study due to its significant presence in both the Indian and global
markets. It is one of India's leading car manufacturers. Additionally, the global economic slowdown
in the automotive market has currently impacted Tata Motors, making it an important subject for
financial analysis. Moreover, the findings of this study can provide valuable insights not only for
Tata Motors but also for stakeholders, industry analysts, and policymakers, facilitating informed
decision-making and strategic interventions to navigate the evolving automotive landscape

7
effectively.

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Background of the Research Topic
Effective working capital management is critical for the financial health and operational efficiency
of any company. Working capital, defined as the difference between a company's current assets and
current liabilities, represents the liquidity available to a business for day-to-day operations. Efficient
management of working capital ensures that a company maintains a balance between liquidity and
profitability, thereby avoiding insolvency while optimizing its operational efficiency.
The assessment of working capital involves a detailed analysis of current assets such as cash,
inventory, and receivables, as well as current liabilities including payables and short-term debt.
Over the past few decades, the importance of working capital management has been underscored by
its impact on a company's profitability and risk profile. Companies with effective working capital
management are often better positioned to invest in growth opportunities, manage unexpected
expenses, and navigate economic downturns.
In the context of a dynamic and competitive market environment, such as the automotive industry,
working capital management becomes even more crucial. The automotive sector is characterized by
high capital intensity, extensive supply chains, and significant fluctuations in demand.
Consequently, firms like Tata Motors must diligently manage their working capital to sustain
operations, finance investments, and remain competitive.

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Review Of Literature
National Reviews
International Reviews
National Reviews
A Study on Financial Author: A. Moses Joshuva Description: This study,
Status of Tata Motors Ltd Daniel conducted by Daniel
(2013), analyzed the
overall financial status of
Tata Motors Ltd over a
five-year period (2006-
2011) using various
accounting ratios to
measure profitability,
solvency, operational
efficiency, and financial
stability. The findings
indicated that Tata Motors
maintained a satisfactory
financial performance,
demonstrated steady
growth, and held a strong
market position.
Financial Analysis of Tata Author: Suman Rana Description: Rana's
Motors & Maruti Suzuki (2019) comparative study
examined the financial
statements of Tata Motors
and Maruti Suzuki from
2013-2018 using ratio
analysis. The study
revealed that Tata Motors
had a higher capacity to

10
 pay liabilities compared to
Maruti Suzuki, despite
having lower earnings per
share. Maruti Suzuki’s
high debt-to-equity ratio
highlighted its weaker
financial performance.
Profitability Analysis Of Author: Dr. K. Gandhi Description: Gandhi
Select Companies In India (2017) explored the
– With Special Reference profitability of Tata
To Tata Motors And Motors and Mahindra and
Mahindra And Mahindra Mahindra, noting a
decrease in Tata Motors'
net profit during the study
period, while Mahindra
and Mahindra showed
significant profit
increases. The study used
an ANOVA test to
conclude that the
operating profit ratio and
return on investment of
both companies did not
exhibit major variations.
A Study on Profitability Authors: Dr. M.S. Description: Ranjithkumar
Analysis of Indian Ranjithkumar and C. and Eahambaram (2018)
Selected Automobile Eahambaram analyzed profitability
Industry in India determinants within the
Indian automotive
industry, suggesting
improvements in liquidity

11
 positions to enhance
profitability. The study
concluded that liquidity
positively impacts
profitability.
Liquidity and Profitability Authors: Vikas Garg, Description: Garg et al.
Analysis of Selected Pooja Tewari, and Shalini (2018) evaluated the
Automobile Companies Srivastav financial performance of
Maruti Suzuki, Mahindra
and Mahindra, and Tata
Motors. The study found
that Maruti Suzuki
excelled in profitability
ratios, while Tata Motors
and Mahindra and
Mahindra showed average
performance.
Financial Performance Of Authors: Kanagavalli G. Description: This paper by
Selected Automobile and Saroja Devi Kanagavalli and
Companies Rajendran Rajendran (2018)
analyzed the financial
performance of major
automobile companies
from 2013-2017 using
ratio analysis. The study
concluded that TVS
Motors and Bajaj Auto
showed satisfactory
financial performance,
while Hero Motocorp held
a strong market position.

12
Financial Analysis Of Author: Dr. Nishi Sharma Description: Sharma
Indian Automobile (2011) assessed the
Industry financial performance of
selected automobile
companies using 11
financial variables
reflecting liquidity,
profitability, activity, and
long-term solvency. The
study ranked companies
based on their
performance and provided
recommendations for
industry improvement.
A Study On Comparative Authors: T. Bhargavi, Description: Bhargavi et
Financial Statement K.S.G. Chandravath, and al. (2020) found that Hero
Analysis On Hero Motor Dr. K. Veeraiah Motor Corp maintained a
Corp good working capital
position and could meet
its contractual obligations
despite having liabilities
exceeding assets.
A Study On Financial
Analysis Of Tata Motors
Ltd., Navi Mumbai India
Authors: Dr. G. Description: Prabhakaran
Prabhakaran and Miss. J. and Banu (2014) reviewed
Nazirin Banu Tata Motors' financial
performance from 2006-
2013, examining liquidity,
financial ratios, activity,

13
 profitability, and solvency

International Reviews
Financial Statements Authors: Anupam Mehta Description: Mehta and
Analysis On Tesla and Ganga Bhavani Bhavani (2018) analyzed
Tesla's financial
statements, noting a
decline in gross profit
percentage despite rising
absolute gross profits.
Increased expenditures
contributed to the
company’s net losses.
Financial Analysis Of Authors: Dušan Baran, Description: Baran et al.
Selected Company Andrej Pastýr, and (2016) highlighted the
Daniela Baranová importance of financial
analysis as a tool for
decision-making,
providing insights into a
company's overall state
and growth by examining
various activity areas.
Role of Ratio Analysis in Author: Mohammed Nuhu Description: Nuhu (2014)
Business Decisions: A emphasized the role of
Case Study NBC ratio analysis in business
Maiduguri Plant decisions, concluding that
it helps in discovering,
comparing, and
interpreting key features
of financial statements,

14
 thereby determining a
company's strengths and
weaknesses.

Objectives
The primary objectives of this study are as follows:
Evaluate Working Capital Management: To assess how effectively Tata Motors managed its
working capital during the fiscal years 2021, 2022, and 2023.
Analyze Financial Statements: To conduct a comprehensive analysis of Tata Motors' financial
statements for the years 2021, 2022, and 2023, focusing on liquidity, solvency, profitability, and
operational efficiency.
Identify Trends and Patterns: To identify and analyze trends and patterns in the financial
performance and working capital management of Tata Motors over the specified period.
Compare Annual Performance: To compare the financial performance and working capital
management of Tata Motors across the three years and identify any significant changes or
improvements.
Provide Strategic Insights: To provide strategic insights and recommendations based on the findings
for improving Tata Motors' financial performance and working capital management.

Research Methodology
Research Hypothesis
The study is based on the following hypotheses:
H1: There is a significant relationship between working capital management and the financial
performance of Tata Motors.
Calculation of Working Capital or Net Current Assets for 2021, 2022, and 2023
Working Capital (or Net Current Assets) is calculated as the difference between Current Assets and
Current Liabilities.
For March 2022:
Current Assets: Rs. 146,977.54 Cr.
Current Liabilities: Rs. 150,682.81 Cr.

15
Working Capital: 146,977.54 - 150,682.81 = -3,705.27 Cr.

For March 2023:

Current Assets: Rs. 151,528.47 Cr.
Current Liabilities: Rs. 155,027.33 Cr.
Working Capital: 151,528.47 - 155,027.33 = -3,498.86 Cr.

For March 2024:

Current Assets: Rs. 168,392.15 Cr.
Current Liabilities: Rs. 173,617.00 Cr.
Working Capital: 168,392.15 - 173,617.00 = -5,224.85 Cr.

Evaluation of the Company's Working Capital Management Over the Last Three Years
2021-2022:
Working Capital: -3,705.27 Cr.
Observation: The company had a negative working capital, indicating that its current liabilities
exceeded its current assets. This situation can pose liquidity risks, suggesting that Tata Motors
might have faced challenges in meeting its short-term obligations.
2022-2023:
Working Capital: -3,498.86 Cr.
Observation: Although the working capital remained negative, there was a slight improvement
compared to the previous year. This improvement suggests marginal progress in managing short-
term liabilities versus assets, but the negative working capital still signals potential liquidity issues.
2023-2024:
Working Capital: -5,224.85 Cr.
Observation: The working capital deteriorated further, indicating an increased gap between current
liabilities and current assets. This trend suggests worsening liquidity conditions and could imply that
the company is struggling more with its short-term financial management.

Efficacy Evaluation:
Over the three years, the working capital has consistently been negative and has worsened in 2024

16
compared to 2023. The initial slight improvement from 2022 to 2023 did not sustain, indicating
potential inefficiencies in managing current assets and liabilities. The worsening situation in 2024
might be due to increased current liabilities outpacing the growth in current assets or possibly
inefficient asset utilization. The persistent negative working capital could mean the company might
need to explore strategies to improve cash flow, manage payables better, or optimize inventory
levels.

Assessment of Investment and Financing Strategies:

Long-Term Investments and Financing Activities
Long-Term Investments:
Non-Current Investments: Rs. 8,717.83 Cr. (2024), Rs. 7,540.85 Cr. (2023), Rs. 6,670.31 Cr. (2022)
Tangible and Intangible Assets:
Tangible: Rs. 156,123.63 Cr. (2024), Rs. 84,442.47 Cr. (2023), Rs. 87,586.15 Cr. (2022)
Intangible: Rs. 0 Cr. (2024), Rs. 46,796.69 Cr. (2023), Rs. 50,462.13 Cr. (2022)
Capital Work-In-Progress and Intangible Assets Under Development: Rs. 0 Cr. (2024), Rs.
14,274.50 Cr. (2023), Rs. 10,251.09 Cr. (2022)
Long-Term Financing:
Long Term Borrowings: Rs. 62,148.53 Cr. (2024), Rs. 88,695.81 Cr. (2023), Rs. 97,759.17 Cr.
(2022)
Other Long-Term Liabilities and Provisions:
Other Long-Term Liabilities: Rs. 21,576.59 Cr. (2024), Rs. 25,155.25 Cr. (2023), Rs. 18,831.32 Cr.
(2022)
Long-Term Provisions: Rs. 16,536.66 Cr. (2024), Rs. 13,196.53 Cr. (2023), Rs. 12,955.89 Cr.
(2022)
Observations:
The company has significantly invested in tangible assets, particularly in 2024. The decrease in
intangible assets in 2024 suggests a strategic shift or reclassification.
Long-term borrowings have decreased significantly from 2022 to 2024, indicating efforts to reduce
debt, which is a positive sign of financial stability.
Short-Term Investments and Financing Activities
Short-Term Investments:

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Current Investments: Rs. 14,253.24 Cr. (2024), Rs. 18,838.31 Cr. (2023), Rs. 22,709.22 Cr. (2022)
Inventories, Trade Receivables, and Cash Equivalents:
Inventories: Rs. 47,788.29 Cr. (2024), Rs. 40,755.39 Cr. (2023), Rs. 35,240.34 Cr. (2022)
Trade Receivables: Rs. 41,021.31 Cr. (2024), Rs. 15,737.97 Cr. (2023), Rs. 12,442.12 Cr. (2022)
Cash and Cash Equivalents: Rs. 45,806.69 Cr. (2024), Rs. 37,015.56 Cr. (2023), Rs. 40,669.19 Cr.
(2022)
Short-Term Financing:
Short Term Borrowings: Rs. 36,351.56 Cr. (2024), Rs. 36,964.66 Cr. (2023), Rs. 41,917.87 Cr.
(2022)
Trade Payables and Other Current Liabilities:
Trade Payables: Rs. 93,978.52 Cr. (2024), Rs. 72,055.77 Cr. (2023), Rs. 59,970.38 Cr. (2022)
Other Current Liabilities: Rs. 30,995.45 Cr. (2024), Rs. 34,196.24 Cr. (2023), Rs. 38,028.25 Cr.
(2022)
Observations:
The decrease in short-term investments from 2022 to 2024 might indicate a shift towards utilizing
cash for operations or paying down debt.
The significant increase in trade receivables in 2024 suggests improved sales but also implies that
the company might be extending more credit to customers.
Short-term borrowings have decreased from 2022 to 2024, aligning with the reduction in long-term
borrowings, indicating a strategic move to lower overall leverage.
Implications and Insights
Investment Decision:
Tata Motors has focused on expanding its tangible asset base, potentially indicating investments in
infrastructure or production capabilities.
The reduction in intangible assets might suggest a strategic reclassification or divestment from
certain non-tangible investments.
The increase in inventories and trade receivables in 2024 indicates growth in operations and sales,
though it also raises concerns about liquidity and collection efficiency.
Financing Strategies:
The company has made a significant effort to reduce both long-term and short-term borrowings,
improving its financial leverage and potentially lowering interest costs.

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The stable equity base with a slight increase in share capital indicates cautious equity financing
while relying more on internal accruals for funding.
The increased trade payables in 2024 suggest better credit terms with suppliers, aiding in managing
cash flows effectively.

Key Financial Ratios

Liquidity Ratios
Current Ratio: Measures the company's ability to pay short-term obligations.
Current Ratio=Current Assets/Current Liabilities

Current Current
Financial Year Current ratio
Assets Liabilities

2023-24 168,392.15 173,617.00 0.97

2022-23 151,528.47 155,027.33 0.98

2021-22 146,977.54 150,682.81 0.98

C urrent asset and current liability com -

parison(in R s C r.)
200000
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
2023-24 2022-23 2021-22

19
current liability
current asset

Quick Ratio: Measures the company's ability to meet its short-term obligations with its most
liquid assets.
Quick ratio is also known as the Acid test ratio. The quick ratio measures whether the firm
can meet its short-term debt obligations without selling any inventory. (CARLSON, 2020)

Quick Ratio=Current Assets−Inventories/Current Liabilities

2024: 168,392.15−47,788.29/173,617.00=0.69
2023: 151,528.47−40,755.39/155,027.33=0.71
2022: 146,977.54−35,240.34/150,682.81=0.74

Current
Financia Current
assets - Quick
l Liabilities(In
Inventory Ratio
Year Cr)
(in Cr)

2023-24 120,603.86 173,617.00 0.69

2022-23 110,773.08 155,027.33 0.71

2021-22 111,737.20 150,682.81 0.74

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 Chart Title
200000
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
2023-24 2022-23 2021-22

Current assets -Inventory (in Cr) Current Liabilities

Quick Ratio

Quick Ratio
0.74

0.72

0.7 2022
2023
0.68
2024
0.66

Quick Ratio

INTERPRETATION: This diagram shows the fall of quick ratio of the corporation from
0.74 to 071 since 2021-2022 and from 0.71 to 0.69 since 2022-23 to 2022-24. It means that
the company's ability to meet its short-term obligations is deteriorating.

Profitability Ratios
Gross Profit Margin: Indicates the percentage of revenue that exceeds the cost of goods sold

21
(COGS).
Gross Profit Margin=Gross Profit/Total Revenue×100
Gross Profit=Total Revenue−Cost of Materials Consumed
2024: 443,877.69−249,277.79/443,877.69×100=43.82%
2023: 350,600.15−208,944.31/350,600.15×100=40.41%
2022: 281,507.25−160,920.56/281,507.25×100=42.83%
Year Gross Profit Total Revenue Gross Profit
Margin
2024 194,599.9 443,877.69 43.82%
2023 141,655.84 350,600.15 40.41%
2022 120,586.69 281,507.25 42.83%

Chart Title
500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
2024 2023 2022

Gross Profit Total Revenue

22
 Gross Profit Margin
45.00%
44.00%
43.00%
42.00%
41.00%
40.00%
39.00%
38.00%
2024 2023 2022

Gross Profit Margin

Net Profit Margin: Indicates how much profit a company makes for every rupee of revenue.
Net Profit Margin=Net Profit/Total Revenue×100
2024: 31,106.95/443,877.69×100=7.01%
2023: 2,353.49/350,600.15×100=0.67%
2022: −11,234.70/281,507.25×100=−3.99%

Year Net Profit Total Revenue Net Profit

Margin
2024 31,106.95 443,877.69× 7.01%
2023 2,353.49 350,600.15 0.67%
2022 -11,234.70 281,507.25 -3.99%

23
 Chart Title
400,000.00
350,000.00
300,000.00
250,000.00
200,000.00
150,000.00
100,000.00
50,000.00
0.00
2024 2023 2022
-50,000.00

Net Profit Total Revenue

Net Profit Margin

8.00%

6.00%

4.00%

2.00%

0.00%
31,106.95 2,353.49 -11,234.70
-2.00%

-4.00%

-6.00%

Net Profit Margin

Return on Assets (ROA): Indicates how profitable a company is relative to its total assets.
ROA=Net Profit/Total Assets×100
2024: 31,106.95/370,663.96×100=8.39%
2023: 2,353.49/336,081.38×100=0.70%
2022: −11,234.70/330,619.93×100=−3.40%

Year Net Profit Total Assets ROA

2024 31,106.95 370,663.96 8.39%
2023 2,353.49 336,081.38 0.70%

24
 2022 −11,234.70 330,619.93 −3.40%

Chart Title
400,000.00
350,000.00
300,000.00
250,000.00
200,000.00
150,000.00
100,000.00
50,000.00
0.00
2021.5 2022 2022.5 2023 2023.5 2024 2024.5

Net Profit Total Assets

ROA
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2024 2023 2022

ROA

Return on Equity (ROE): Measures the profitability relative to shareholder's equity. This
ratio indicates how much money shareholders make on their investment in the business firm.
The ROE ratio is most important for publicly traded firms.

ROE=Net Profit/Shareholder’s Equity×100

2024: 31,106.95/87,465.92×100=35.56%
2023: 2,353.49/45,319.33×100=5.19%

25
2022: −11,234.70/44,554.85×100=−25.21%

ROE(in %)
40
30
20
10
0
2024 2023 2022
-10
-20
-30

ROE(in %)

INTERPRETATION: This figure shows that the return on equity rate has had a massive
incline since 2022 from negative 25.21% to positive 35.56%, which is a good sign.
Asset Turnover Ratio: Measures the efficiency of a company's use of its assets to generate
sales. Asset Turnover=Total Revenue/Total Assets
2024: 443,877.69/370,663.96 =1.20
2023: 350,600.15/336,081.38=1.04
2022: 281,507.25/330,619.93=0.85
Year Total Revenue Total Assets Asset Turnover
Ratio
2024 443,877.69 370,663.96 1.20
2023 350,600.15 336,081.38 1.04
2022 281,507.25 330,619.93 0.85

26
 Chart Title
500,000.00

400,000.00

300,000.00

200,000.00

100,000.00

0.00
2024 2023 2022

Total Revenue Total Assets

Asset Turnover Ratio

1.4
1.2
1
0.8
0.6
0.4
0.2
0
2024 2023 2022

Asset Turnover Ratio

INTERPRETATION: This figure shows that the asset turnover ratio has had a incline since
2022 from 0.85 to positive 1.20, which is a good sign.

Long-term Solvency Ratios

Debt to Equity Ratio: Indicates the relative proportion of shareholders' equity and debt used
to finance a company's assets. Debt to Equity=Total Debt/Shareholder’s Equity
2024: 62,148.53/87,465.92=0.71
2023: 88,695.81/45,319.33=1.96
2022: 97,759.17/44,554.85=2.19

27
 Year Total Debt (In Rs. Shareholder’s Equity (In Debt to Equity
Cr.) Rs. Cr.) Ratio
2024 62,148.53 87,465.92 0.71
2023 88,695.81 45,319.33 1.96
2022 97,759.17 44,554.85 2.19

Chart Title
120,000.00

100,000.00

80,000.00

60,000.00

40,000.00

20,000.00

0.00
2024 2023 2022

Total Debt (In Rs. Cr.) Shareholder’s Equity (In Rs. Cr.)

28
 Debt to Equity Ratio
2.5

1.5

0.5

0
2024 2023 2022

Debt to Equity Ratio

Interest Coverage Ratio

Interest Coverage Ratio: A higher ratio in 2024 signifies better ability to meet interest
obligations, reflecting improved financial health and profitability.
Interest Coverage Ratio=EBIT/Finance Costs

EBIT (Earnings Before Interest and Taxes) is Profit Before Tax plus Finance Costs.
2022:
EBIT=−7003.41+9311.86=2308.45 Interest Coverage Ratio=2308.45/9311.86≈0.248
2023:
EBIT=3057.55+10225.48=13283.03
Interest Coverage Ratio=13283.03/10225.48≈1.30
2024:
EBIT=27255.31+9985.76=37241.07
Interest Coverage Ratio=37241.07/9985.76≈3.73

29
Year EBIT Finance Costs Interest
Coverage
Ratio
2022 2308.45 9311.86 0.248
2023 13283.03 10225.48 1.30
2024 37241.07 9985.76 3.73

Chart Title
40000
35000
30000
25000
20000
15000
10000
5000
0
2022 2023 2024

EBIT Finance Costs Interest Coverage Ratio

Interest Coverage Ratio

4

3.5

2.5

1.5

0.5

0
2022 2023 2024

Interest Coverage Ratio

30
Scope and Limitations of Study
Scope of Study
This research project aims to conduct a detailed financial analysis of Tata Motors over the past three
years, focusing on its working capital management and investment and financing strategies. The
scope is delineated into three primary areas:
Acquisition and Analysis of Annual Reports:
The study will involve obtaining the annual reports of Tata Motors for the last three fiscal years.
These reports will include the Profit and Loss statements and Balance Sheets.
By reviewing these documents, the research will ensure a comprehensive understanding of the
company's financial performance and position over the specified period.
Calculation and Evaluation of Working Capital:
Working capital, also known as net current assets, will be calculated for each of the three years
using the formula: Working Capital = Current Assets - Current Liabilities.
The research will evaluate the efficacy of Tata Motors' working capital management by comparing
the working capital figures across the three years. This comparison will help determine if the
company has maintained, improved, or deteriorated in managing its short-term financial health.

Assessment of Investment and Financing Strategies:

The analysis will involve categorizing items from the balance sheets into long-term and short-term
investments and financing activities.
A comprehensive assessment of these categories will be conducted to provide insights into Tata
Motors' strategic financial decisions over the three years.
The study will compare the investment and financing strategies year-over-year to identify trends,
improvements, or potential areas of concern.

Limitations of Study
While this study aims to provide a thorough financial analysis, several limitations must be
acknowledged:
Availability and Accuracy of Data:

31
The study relies on the availability and accuracy of the annual reports provided by Tata Motors. Any
discrepancies, omissions, or errors in these reports will directly affect the analysis.
Changes in accounting policies or restatements in financial data over the years can also pose
challenges in ensuring consistent comparisons.
Scope of Financial Statements:
The analysis is limited to the data presented in the Profit and Loss statements and Balance Sheets. It
does not include other financial statements like Cash Flow Statements, which could provide
additional insights into the company’s financial health and management.
Qualitative aspects, such as management discussions and industry conditions affecting Tata Motors,
are beyond the scope of this study.
External Factors and Economic Conditions:
The analysis will not account for external economic conditions, market trends, or industry-specific
challenges that might have influenced Tata Motors' financial performance.
Macroeconomic factors, such as inflation rates, currency fluctuations, and global economic
conditions, are not considered in the working capital and investment strategy evaluations.
Static Analysis Period:
The study covers a fixed period of three years, which may not capture long-term trends or the
effects of strategic initiatives that have longer gestation periods.
A three-year period may also be too short to draw definitive conclusions about the efficacy of
investment and financing strategies, which typically require a longer timeframe to manifest fully.
Subjectivity in Categorization:
Categorizing balance sheet items into long-term and short-term investments and financing activities
involves a degree of subjectivity and interpretation. Different analysts may classify certain items
differently, leading to potential variability in conclusions.
Lack of Comparative Benchmarking:
The study focuses solely on Tata Motors without benchmarking against industry peers or standards.
This limits the ability to contextualize the company's performance and strategies relative to its
competitors.
By acknowledging these limitations, the study aims to provide a balanced and realistic evaluation of
Tata Motors' financial management over the specified period while highlighting areas for potential
further research and analysis.

32
Data Collection & Analysis
The required data has been collected from secondary sources,e.g. Moneycontrol, own website of
Tata Motors,etc.
Company Health
Liquidity: The current ratio has remained below 1, indicating potential liquidity issues. The quick
ratio has also been declining, suggesting that the company may struggle to cover its short-term
liabilities without relying heavily on inventory sales.
Profitability: Significant improvement in profitability in 2024, with a net profit margin of 7.01%
compared to 0.67% in 2023 and a negative margin in 2022. This improvement indicates a strong
recovery and better cost management.
Asset Turnover: Improvement in asset turnover ratio from 0.85 in 2022 to 1.20 in 2024, reflecting
more efficient use of assets to generate revenue.
Solvency: The debt-to-equity ratio has significantly improved from 2.19 in 2022 to 0.71 in 2024,
indicating a healthier balance between debt and equity financing.

Recommendations and Conclusion

Improve Liquidity: Enhance cash management strategies to maintain an adequate level of liquid
assets. This could involve optimizing receivables and payables management and securing short-term
financing if necessary.
Sustain Profitability: Focus on sustaining the high profitability achieved in 2024. This involves
maintaining cost control measures and exploring new revenue streams.
Manage Debt: Continue to manage and reduce debt levels to maintain a healthy debt to equity ratio.
This can be achieved by refinancing high-cost debt and using profits to pay down existing debts.
Investment in Technology and Innovation: Investing in technology and innovation to improve
operational efficiency and reduce costs, thus enhancing profitability and competitiveness.
By focusing on these areas, Tata Motors can further strengthen its financial position and ensure
sustainable growth.
Overall, Tata Motors seems to be focused on improving its financial stability by reducing debt and
strategically investing in tangible assets. However, the negative working capital trend highlights a
need for better management of current assets and liabilities to ensure liquidity and operational

33
efficiency.

Bibliography
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Selected Company [Journal]. - SLOVAK REPUBLIC : [s.n.], 2016. - 37 : Vol. 24.
BHARGAVI T., CHANDRAVATH K.S.G and VEERAIAH Dr. K. A STUDY ON
COMPARATIVE FINANCIAL STATEMENT ANALYSIS ON HERO MOTOR CROP.
[Journal] // Mukt Shabd Journal. - JUNE 2020. - 6 : Vol. 9. - pp. 2256-2264.
Daniel A. Moses Joshuva A Study on Financial Status of Tata Motors Ltd [Journal] // INDIAN
JOURNAL OF APPLIED RESEARCH. - Puducherry : [s.n.], April 2013. - 4 : Vol. 3.
Gandhi Dr. K Profitability Analysis Of Select Companies In India – With Special Reference To
Tata Motors And Mahindra And Mahindra [Journal] // SJCC Management Research Review . -
Chennai : [s.n.], December 2017. - 2 : Vol. 7. - pp. 82-90.
Garg Vikas & Tewari, & Srivastav, Shalini Liquidity and profitability analysis of selected
automobile companies. [Journal] // International Journal of Supply Chain Management. . - January
2018. - Vol. 7. - pp. 101-110.
Kanagavalli G. and Saroja Rajendran Devi FINANCIAL PERFORMANCE OF SELECTED
AUTOMOBILE COMPANIES [Journal] // International Journal of Management (IJM) . - Tamil
Nadu : [s.n.], 2018. - 4 : Vol. 9. - pp. 14-23.
Mehta Anupama and Bhavani Ganga FINANCIAL STATEMENTS ANALYSIS ON TESLA
[Journal] // Academy of Accounting and Financial Studies Journal. - Dubai : [s.n.], 2018. - 6 : Vol.
22. - pp. 1-9.
Nuhu Mohammed Role of Ratio Analysis in Business Decisions: A Case Study NBC Maiduguri
Plant [Journal] // Journal of Educational and Social Research. - Nigeria : MCSER Publishing, July
2014. - 5 : Vol. 4.
Prabhakaran Dr. G and Banu J. Nazirin A Study On Financial Analysis Of Tata Motors Ltd., Navi
Mumbai India [Journal] // EXCEL International Journal of Multidisciplinary Management Studies. -
Kumbakonam : [s.n.], 2014. - 3 : Vol. 4. - pp. 109-120. - 2249-8834.
Rana Suman Financial Analysis of Tata Motors & Maruti Suzuki [Journal] // RESEARCH
REVIEW International Journal of Multidisciplinary. - Haryana : [s.n.], March 2019. - 3 : Vol. 4.
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Application & Management (IJREAM). - Coimbatore : [s.n.], October 2018. - 7 : Vol. 4. - pp. 412-
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SHARMA DR. NISHI FINANCIAL ANALYSIS OF INDIAN AUTOMOBILE INDUSTRY
[Journal] // INTERNATIONAL JOURNAL OF RESEARCH IN COMPUTER APPLICATION
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Links
https://www.moneycontrol.com/financials/tatamotors/profit-lossVI/TM03
https://www.moneycontrol.com/stocks/company_info/print_main.php
https://www.tatamotors.com/annual-reports/

Annexture

35
Tata Motors
Consolidated Profit & --------------
Loss account ----- in Rs.
Cr.
--------------
-----
Mar-24 Mar-23 Mar-22
12 mths 12 mths 12 mths
INCOME
Revenue From 434,984.12 342,874.58 275,235.23
Operations [Gross]
Revenue From 434,984.12 342,874.58 275,235.23
Operations [Net]
Other Operating 2,943.65 3,092.38 3,218.39
Revenues
Total Operating 437,927.77 345,966.96 278,453.62
Revenues
Other Income 5,949.92 4,633.19 3,053.63
Total Revenue 443,877.69 350,600.15 281,507.25
EXPENSES
Cost Of Materials 249,277.79 208,944.31 160,920.56
Consumed
Purchase Of Stock-In 25,043.44 22,306.95 18,374.77
Trade
Operating And Direct 0 10,675.71 9,223.95
Expenses
Changes In Inventories -1,565.53 -4,781.62 1,590.49
Of FG,WIP And Stock-
In Trade
Employee Benefit 42,486.64 33,654.70 30,808.52
Expenses
Finance Costs 9,985.76 10,225.48 9,311.86
Depreciation And 27,270.13 24,860.36 24,835.69
Amortisation Expenses
Other Expenses 63,147.09 61,682.08 47,212.53
Less: Amounts Transfer 0 18,434.84 14,397.29
To Capital Accounts 36

Total Expenses 415,645.32 349,133.13 287,881.08

Source: Moneycontrol

37
 Tata Motors
Consolidated Balance Sheet in Rs. Cr.

Mar-24 Mar-23 Mar-22

12 mths 12 mths 12 mths
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 766.5 766.02 765.88
Preference Share Capital 2,547.90 0 0
Total Share Capital 3,314.40 766.02 765.88
Reserves and Surplus 84,151.52 44,553.31 43,788.97
Total Reserves and Surplus 84,151.52 44,553.31 43,788.97
Money Received Against 0 0 0
Share Warrants
Total Shareholders Funds 87,465.92 45,319.33 44,554.85
Equity Share Application 0 2.46 6.39
Money
Minority Interest 8,175.91 7,277.72 4,271.06
NON-CURRENT LIABILITIES
Long Term Borrowings 62,148.53 88,695.81 97,759.17
Deferred Tax Liabilities 1,143.35 1,406.95 1,558.44
[Net]
Other Long Term Liabilities 21,576.59 25,155.25 18,831.32
Long Term Provisions 16,536.66 13,196.53 12,955.89
Total Non-Current Liabilities 101,405.13 128,454.54 131,104.82
CURRENT LIABILITIES
Short Term Borrowings 36,351.56 36,964.66 41,917.87
Trade Payables 93,978.52 72,055.77 59,970.38
Other Current Liabilities 30,995.45 34,196.24 38,028.25
Short Term Provisions 12,291.47 11,810.66 10,766.31
Total Current Liabilities 173,617.00 155,027.33 150,682.81
Total Capital And Liabilities 370,663.96 336,081.38 330,619.93
ASSETS
NON-CURRENT ASSETS
Tangible Assets 156,123.63 84,442.47 38 87,586.15
Intangible Assets 0 46,796.69 50,462.13
Source: Moneycontrol

39