Project Report on TATA

MOTORS

Financial Accounting AndAnalysis

Submitted To: Submitted By:

Dr. Jayasree GAJAVELLI MANOJ (146)

In Partial Fulfilment of the Requirements

ofMBA Program
Batch (2022-2024)
 ACKNOWLEDGEMET

The satisfaction and euphoria that accompany the successful

completion of any work would be incomplete unless we
mention some of the persons, as an expression of gratitude,
which made it possible, whose constant guidance and
encouragement served as a beckon light and crowned the
efforts and success.

We take this opportunity of expressing our gratitude to Dr.

Jayasree who has always been of immense help during the
making of this project, which helped us a great deal in
enhancing our knowledge by virtue of practical application.
Her guidance and support carried us all through the
preparationof this project.

Last but not the least I would also like to acknowledge

contributions of various official websites and books named
in the references for helping me with the data collection and
analysis which have provided me with the relevant
information for me to successfully complete my Project
Report.
 INDEX

S.No CONTENTS
1. INTRODUCTION

2. HISTORY OF THE COMPANY

3. ACCOUNTING CONCEPTS
AND CONVENTIONS
4. FINAL ACCOUNTS

5. FINANCIAL STATEMENT
ANALYSIS
6. RATIO ANALYSIS

7. FUNDS FLOW AND CASH

FLOW
COMPANY PROFILE
Tata Motors
Automotive manufacturer

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.

Formerly Tata Engineering and Locomotive Company Ltd. (TELCO)

Type Public

BSE: 500570
Traded as
NSE: TATAMOTORS
NYSE: TTM
NSE NIFTY 50 Constituent

ISIN IN9155A01020

Industry Automotive

Founded 1945; 78 years ago

Founder Jehangir Ratnangi Dadahol Tata

Headquarters Mumbai, Maharashtra, India[1]

Area served Worldwide

Key people Natarajan Chandrasekaran (Chairman)

Guenter Butschek (CEO)

Martin Uhlarik (CDO)

Products Automobiles
Luxury vehicles
Commercial
vehicles Automotive
parts Pickup trucks
SUVs

Production 1.1 Million (approx) (2021)

output
Services Automotive finance
Vehicle leasing
Vehicle service

Revenue ₹301,144 crore (US$38 billion) (2022)[2]

Operating ₹−7,003 crore (US$−880 million) (2022)[2]

income
Net income ₹−11,234 crore (US$−1.4 billion) (2022)
[2]
Total assets ₹330,619 crore (US$41 billion) (2022)[3]

Total equity ₹44,554 crore (US$5.6 billion) (2022)[3]

Number of 50,837 (2022)[4]

employees
Parent Tata Group

Divisions Tata Motors Cars

Subsidiaries Tata Daewoo

Jaguar Land Rover
Tata Technologies
Tata Hispano
 Website

COMPANY HISTORY

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.[5]

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 Motors has auto manufacturing and vehicle plants
in Jamshedpur, Pantnagar, Lucknow, Sanand, Dharwad, and Pune in India, as well as in
Argentina, South Africa, the United Kingdom, and Thailand. It has research and development
centres in Pune, Jamshedpur, Lucknow, Dharwad, India and South Korea, the United
Kingdom, and Spain. Tata Motors is listed on the BSE (Bombay Stock Exchange), where it is a
constituent of the BSE SENSEX index, the National Stock Exchange of India, and the New
York Stock Exchange. The company is ranked 265th on the Fortune Global 500 list of the
world's biggest corporations as of 2019.

On 17 January 2017, Natarajan Chandrasekaran was appointed chairman of the

company Tata Group. Tata Motors increased its UV market share to over 8% in FY2019.

Tata Motors was founded in 1945, as a locomotive manufacturer. Tata Group entered the
commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz of
Germany. After years of dominating the commercial vehicle market in India, Tata Motors
entered the passenger vehicle market in 1991 by launching the Tata Sierra, a sport utility
vehicle based on the Tata Mobile platform. Tata subsequently launched the Tata
Estate (1992; a station wagon design based on the earlier Tata Mobile), the Tata Sumo (1994,
a 5-door SUV) and the Tata Safari (1998).

Tata launched the Indica in 1998, a fully indigenous Indian passenger car tailor-made to suit
Indian consumer
Tata Indica (firstneeds though styled by I.D.E.A, Italy. Although initially criticized by auto
generation)
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]

In 2004, Tata Motors acquired Daewoo's South Korea-based truck manufacturing unit,
Daewoo Commercial Vehicles Company, later renamed Tata Daewoo.[11]

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]

In 2008, Tata Motors acquired the English car maker Jaguar Land Rover, manufacturer of the
Jaguar and Land Rover from Ford Motor Company.
Tata Bolt
In April 2022, Tata AVINYA Concept: A NEW PARADIGM OF INNOVATION;

Tata acquired full ownership of Hispano Carretera in 2009.

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 2 November 2015, Tata Motors announced Lionel Messi as global brand ambassador
at New Delhi, to promote and endorse passenger vehicles globally.

On 27 December 2016, Tata Motors announced the Bollywood actor Akshay Kumar as brand
ambassador for its commercial vehicles range.
On 8 March 2017, Tata Motors announced that it has signed a memorandum of understanding
with Volkswagen to develop vehicles for India's domestic market.[27][28]

On 3 May 2018, Tata Motors announced that it sold its aerospace and defence business to
another Tata, was
Tata Nano Group
theEntity,
world'sTata
mostAdvanced
affordableSystems
car. , to unlock their full potential.
[29]

On 29 April 2019, Tata Motors announced a partnership with Nirma

University in Ahmedabad to provide a B.Tech. degree programme for employees of its
Sanand plant.

ACCOUNTING CONCEPTS FOLLOWED BY THE TATA

Going concern concept
MOTORS
Cost recognition concept
Costs and expenses are recognised when incurred and are classified according to them
The Company''s financial statements have been prepared on a going concern basis.
nature. Expenditure are capitalized where appropriate, in accordance with the policy for internally gen erated
The Company has performed an assessment of its financial position as at March 31, 2022
intangible assets and represents employee costs, stores and other manufacturing supplies, and other expenses
and forecasts of the Company for a period of eighteen months from the date of these financial stateme nts (the
incurred for construction and product development undertaken by the Company.
‘Going Concern Assessment Period'' and the ''Foreseeable Future'').
In developing these forecasts, the Company has modelled a base case, which has been
TATA MOTORS
further sensitised ADOPTED
using severe but plausibleINDIAN ACOUNTING
downside scenarios. STANDARDS
The base case covers the Going Co ncern
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.

FINAL ACCOUNTS OF TATA MOTORS

The final accounts are prepared basis of few polices that are adopted by the company.

SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance
These financial statements have been prepared in accordance with Ind AS as notified
und er the Companies (Indian Accounting Standards) Rules, 2015 read with Section
133 of th e Companies Act, 2013 (“the Act”).
b. Basis of preparation

The consolidated financial statements have been prepared on historical cost basis
except f or certain financial instruments which are measured at fair value at the end of
each reporti ng 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
t he investee. Relevant activities are those activities that significantly affect an entity's
retur ns.
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 assess ing control, potential voting rights.

FINANCIAL STATEMENTS

Preparing and understanding your company’s financial statements is an

important part of being a small business owner. The balance sheet is particularly
helpful in that it keeps both you and your stakeholders informed of your
financial standing. Keeping this financial information updated can help you
make better management decisions. In addition, it may improve your small
business’s efficiency, borrowing habits, and overall financial health. In addition
to creating a balance sheet, your business may benefit from creating an income
statement and cash flow statement.

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- %
12 Mar-21*
Ending 22* Change

Net Sales Rs m 2,497,948 2,784,536 11.5%

Other income Rs m 57,574 44,242 -23.2%

Total Revenues Rs m 2,555,522 2,828,778 10.7%

Gross profit Rs m 154,122 227,199 47.4%

Depreciation Rs m 235,467 248,357 5.5%

Interest Rs m 80,972 93,119 15.0%

Profit before tax Rs m -104,743 -70,034 -33.1%

Tax Rs m 25,419 42,313 66.5%

Profit after tax Rs m -130,161 -112,347 -13.7%

Gross profit
% 6.2 8.2
margin

Effective tax rate % -24.3 -60.4

Net profit margin % -5.2 -4.0

INCOME STATEMENT OF TATA MOTORS

TATA MOTORS Income Statement Analysis

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.
BALANCE SHEET OF THE TATA MOTORS

%
No. of Mths Year Ending 12 Mar-21* 12 Mar-22*
Change

Net worth Rs m 552,245 445,166 -19.4

Current Liabilities Rs m 1,577,492 1,506,828 -4.5

Long-term Debt Rs m 931,128 977,592 5.0

Total Liabilities Rs m 3,386,055 3,267,491 -3.5

Current assets Rs m 1,468,876 1,469,775 0.1

Fixed Assets Rs m 1,917,178 1,797,715 -6.2

Total Assets Rs m 3,386,055 3,267,491 -3.5

TATA MOTORS Balance Sheet as on March 2022

TATA MOTORS Balance Sheet Analysis

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%.

TATA MOTORS Cash Flow Statement 2021-22

No. of
12 12
Particulars months % Change
Year Ending Mar-21 Mar-22

Cash Flow from Operating

Rs m 290,005 142,828 -50.7%
Activities

Cash Flow from Investing -

Rs m -47,751 -
Activities 261,263

Cash Flow from Financing

Rs m 99,042 -33,802 -
Activities

Net Cash Flow Rs m 132,322 64,590 -51.2%

TATA MOTORS Cash Flow Statement Analysis

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 Total Depreciation and Amortization - Cash Flow

2010-2022 | TTM

Total Depreciation and Amortization - Cash Flow

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.

Tata Motors Annual Total Depreciation and Amortization - Cash Flow

(Millions of US $)
 2022 $3,158
2021 $3,141
2020 $2,744
2019 $3,329
2018 $3,219
2017 $2,813
2016 $2,537
2015 $2,152
2014 $1,844
2013 $1,358
2012 $1,070
2011 $974
2010 $816
2009 $553

Analysis

Fiscal Years
The following section summarizes insights on Tata Motors Limited's Depreciation & Amortization: Mar

2014Mar 2016Mar 2018Mar 2020Mar 20221

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%).

Depreciation and amortisation

Depreciation is provided on Straight Line Method (SLM), at the rates and in the
manner prescribed in Schedule XIV to the Companies Act, 1956 except in the case of :
• Leasehold Land – amortised over the period of the lease
• Technical Know-how – at 16.67% (SLM)•Laptops – at 23.75% (SLM)
• Cars – at 23.75% (SLM)•Assets acquired prior to April 1, 1975 – on Written Down
Value basis at rates specified in Schedule XIV to the Companies Act,1956.
• Software in excess of`25,000 is amortised over a period of 60 months or on the basis of
estimated useful life whichever is lower.
• Assets taken on lease are amortised over the period of lease.
i)Product development costs are amortised over a period of 36 months to 120 months or
on the basis of actual production to planned production volume over such period.

Assets taken on lease are amortised over the period of lease

.(ii)Product development costs are amortised over a period of 36 months to 120 months or on
the basis of actual production to planned production volume over such period
.(iii) In respect of assets whose useful life has been revised, the unamortised
depreciable amount has been charged over the revised remaining useful life.
(iv) Depreciation is not recorded on capital work-in-progress until construction and
installation are complete and asset is ready for its intended use.
(v)Capital assets, the ownership of which does not vest with the Company, other than
leased assets, are depreciated over the estimated period of their utility or five years,
whichever is less.(e)Fixed assets
(i) Fixed assets are stated at cost of acquisition or construction less accumulated depreciation
/ amortization and accumulated impairment, if any.
(ii) Product development cost incurred on new vehicle platform, engines, transmission and
new products are recognised as fixed assets,
when feasibility has been established, the Company has committed technical, financial and
other resources to complete the development and it is probable that asset will generate future
benefits.
(iii) Cost includes purchase price, taxes and duties, labour cost and directly attributable
overhead expenditure for self-constructed assets incurred up to the date the asset is ready for
its intended use.
Borrowing cost incurred for qualifying assets is capitalised up to the date the asset is ready
for intended use, based on borrowings incurred specifically for financing the asset or the
weighted average rate of all other borrowings, if no specific borrowings have been
incurred for the asset.
The cost of acquisition is further adjusted for exchange differences relating to long term
foreign currency borrowings attributable to the acquisition of depreciable asset w.e.f.
April1, 2007.
(iv) Software not exceeding`25,000 and product development costs relating to minor product
enhancements, facelifts and upgrades are charged off to the Statement of Profit and Loss as
and when incurred.
(f)Impairment At each Balance Sheet date, the Company assesses whether there is any
indication that the fixed assets with finite lives may be impaired.

RATIO ANALYSIS

Ratio analysis is a quantitative method of gaining insight into a company's liquidity,

operational efficiency, and profitability by studying its financial statements such as the
balance sheet and income statement. Ratio analysis is a cornerstone of fundamental equity
analysis.
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.
Ratio analysis may also be required by external parties that set benchmarks often tied to
risk. 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.
Examples of ratio analysis include current ratio, gross profit margin ratio, inventory turnover
ratio.

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.

Types of Ratio Analysis

The various kinds of financial ratios available may be broadly grouped into the following
six silos, based on the sets of data they provide:

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.

6. Market Prospect Ratios

These are the most commonly used ratios in fundamental analysis. They include dividend
yield, P/E ratio, earnings per share (EPS), and dividend payout ratio. Investors use these
metrics to predict earnings and future performance.

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.
RATIO ANALYSIS OF TATA MOTORS

Ratio Analysis for TATA MOTORS

 Solvency Ratios

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

No. of Mths Year Ending 12 Mar-21* 12 Mar-22*

Current ratio x 0.9 1.0

Debtors’ Days Days 2 2

Interest coverage x -0.3 0.2

Debt to equity ratio x 1.7 2.2

Return on assets % -1.5 -0.6

Return on equity % -23.6 -25.2

 Return on capital employed % -1.6 1.6

TABLE OF THE RATIO ANALYSIS OF TATA MOTORS

Y/e 31 Mar Mar-2022 Mar-2021 Mar-2018 Mar-2017

Growth matrix (%)

Revenue growth 11.473 -15.214 9.243 -1.228

Op profit growth -23.437 -6.485 16.688 -19.356

EBIT growth -74.191 -17.875 11.444 -40.388

Net profit growth -14.942 -249.644 20.586 -35.623

Profitability ratios (%)

OPM 8.878 12.926 11.719 10.971

EBIT margin 1.055 4.557 4.705 4.612

Net profit margin -4.109 -5.385 3.051 2.764

RoCE 1.479 5.815 7.783 7.31

RoNW -5.732 -4.464 2.928 2.72

RoA -1.44 -1.718 1.262 1.095

Per share ratios (₹)

EPS -29.34 -33.99 20.06 17.85

Dividend per share 0 0 0 0

Cash EPS -109.239 -111.421 -36.997 -30.772

Book value per share 1.479 5.815 7.783 7.31

 Y/e 31 Mar Mar-2022 Mar-2021 Mar-2018 Mar-2017

Valuation ratios

P/E -14.775 -8.881 16.324 26.104

P/CEPS -3.968 -2.709 -8.851 -15.142

P/B 3.231 1.814 1.165 2.725

EV/EBIDTA 9.37 5.785 4.468 6.308

Payout (%)

Dividend pay-out 0 0 0 0

Tax payout 66.385 -77.337 -47.298 -39.648

Liquidity ratios

Debtor days 16.465 23.797 21.042 18.708

Inventory days 46.749 57.152 47.835 45.84

Creditor days -99.079 -128.901 -98.99 -92.656

Leverage ratios

Interest coverage -0.316 -1.406 -2.961 -2.935

Net debt / equity 2.374 1.726 0.569 0.732

Net debt / op. profit 4.279 2.953 1.574 1.437

Cost breakup (₹)

Material costs -64.961 -63.369 -63.081 -61.512

Employee costs -11.064 -11.068 -10.284 -10.506

Other costs -15.097 -12.637 -14.915 -17.011

FUND FLOW STATEMENT AND CASH FLOW STATEMENT

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

The importance of fund flow statements

A funds flow statement is an essential factor in revealing how funds are used. A fund flow
statement shows financial analysts how to assess the fund flow of an organization in the near
future.

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).
FUND FLOW STATEMENT OF TATA MOTORS
CASH FLOW STATEMENT

"Cash" is a vital element of any business entity, as it plays a crucial role throughout the entire
lifetime of a business enterprise. 'Cash' for a 'Business' has been aptly compared with the
'Blood' for a 'Human Body'. 'Cash' is required to meet day-to-day requirements for running
the business and for making payments to 'Suppliers', 'Wages/Salaries to the Employees',
'Interest', 'Dividends', etc. Maintenance of an optimum level of cash is, therefore, of
paramount importance for a business entity.

Definition of Cash Flow Statement :

According to Indian Accounting Standard (AS-3) :

Cash flow means inflows and outflows of cash and cash equivalents. Cash comprises of cash
in hand and demand deposits with banks. Cash equivalents are short-term, highly liquid
investments which are readily convertible into cash.

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.

Objectives of Cash Flow Statement:

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.

Advantages of 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.

5) Identification of 'Discretionary Cash Flows' from business transactions becomes

possible through 'Cash Flow Analysis'.

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 FLOW OF TATA MAR 22 MAR 21 MAR 20 MAR 19 MAR 18

MOTORS (in Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

NET PROFIT/LOSS BEFORE - - - 2,020.60 -

EXTRAORDINARY ITEMS AND 1,390.86 2,395.44 7,289.63 1,034.85
TAX

Net CashFlow From Operating 5,281.93 6,680.32 - 6,292.63 4,133.94

Activities 1,454.59

Net Cash Used In Investing - - - - -710.27

Activities 3,149.49 2,991.32 4,718.86 3,820.55

Net Cash Used From Financing -515.84 - 7,749.21 - -

Activities 3,471.91 2,529.70 3,105.63

Foreign Exchange Gains / Losses 9.30 3.15 82.14 -1.80 -0.16

Adjustments On Amalgamation - 0.00 0.00 0.00 0.00

Merger Demerger Others 1,541.21
 NET INC/DEC IN CASH AND 84.69 220.24 1,657.90 -59.42 317.88
CASH EQUIVALENTS

Cash And Cash Equivalents Begin of 2,365.54 2,145.30 487.40 546.82 228.94
Year

Cash And Cash Equivalents End Of 2,450.23 2,365.54 2,145.30 487.40 546.82
Year

TATA MOTORS Cash Flow Statement Analysis

 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.

What does the cash flow statement of TATA MOTORS reveal?

The cash flow statement is the financial statement that presents the cash inflows and outflows
of a company during a given period of time.

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.

The cash flow statement of TATA MOTORS reveals:

Cash flow from operations increased in FY21 and stood at Rs 290,005 m as compared to Rs
266,329 m in FY20.
Cash flow from investments increased in FY21 and stood at Rs -261,263 m as compared to
Rs -341,702 m in FY20.
Cash flow from financial activity increased in FY21 and stood at Rs 99,042 m as compared
to Rs 33,896 m in FY20.
Here's the cash flow statement of TATA MOTORS for the past 5 years.
 (Rs m) FY17 FY18 FY19 FY20 FY21

From Operations 301,993 238,574 188,908 266,329 290,005

- - - - -
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

Net Cashflow -31,669 7,300 68,431 -30,920 1