lOMoAR cPSD| 26274729

Major Project Report

on

“FINANCIAL ANALYSIS OF TATA MOTORS USING RATIOS”

Submitted in Partial Fulfillment of the requirement for the

Award of the Degree of
Bachelor of Business Administration (General)
Submitted To: Submitted By:
Name- Dr Anita Sharma Student Nam:-ISHAAN BAMAL
Enrollment No.:-05721201720 Class - BBA (Gen.), SecB,2ndshift

BATCH: 2020-2023

DEPARTMENT OF BUSINESS ADMINISTRATION

Maharaja Surajmal Institute

Recognized by UGC u/s 2(f), NAAC Accredited ‘A’ Grade
Affiliated to Guru Gobind Singh Indraprastha University, Delhi
C-4, Janakpuri, New Delhi-110058
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CERTIFICATE BY STUDENT
I, Mr.ISHAAN BAMAL Roll No. 05721201720 certify that the Major Project Report (Paper
Code :(BBA 312) entitled “FINANCIAL ANALYSIS OF TATA MOTORS USING
RATIOS” is done by me and it is an authentic work carried out by me. The matter embodied
in this has not been submitted earlier for the award of any degree or diploma to the best of my
knowledge and belief.
Signature of the Student

Name of the Guide:DR. ANITA SHARMA

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CERTIFICATE BY TEACHER

This is to certify that Project Report entitled “FINANCIAL ANALYSIS OF TATA

MOTORS USING RATIOS” which is submitted by ISHAAN BAMAL in partial
fulfillment of the requirement for the award of degree Bachelor in Business Administration to
Maharaja Surajmal Institute Affiliated to Guru Gobind Singh Indraprastha University, C-4,
Janakpuri, New Delhi-110058 is a record of the candidate own work carried out by him under
my supervision. The matter embodied in this report is original and has not been submitted for
the award of any other degree.Finally, I would like to pay regards to my parents without
whose inspiration and monetary aid this project was impossible.

ISHAAN BAMAL
BBA (GEN), Sec. B, 2nd shift

Signature of the Guide

Name of the Guide:DR. ANITA SHARMA
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ACKNOWLEDGEMENT

I express my gratitude To Dr Anita Sharma, my teacher and guide, who guided me through
the project, also gave insightful and valuable suggestions for completing the project. She
helped me to understand the intricate issues involved in making the project, besides
effectively presenting it. These intricacies would have been lost otherwise.
I’m deeply indebted to all those who have helped me in the execution of this project.
Finally I would like to pay regards to my parents without whose insipiration and monetary
aid this project was imposiible

ISHAAN BAMAL
BBA (GEN), SEC-B, SHIFT 2
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CONTENTS

S No Topic Page No
1 Certificate
2 Acknowledgements -
3 Executive Summary -
4 Chapter-1: Introduction -
5 Chapter-2: profile of the organisation -
6 Chapter-3: conceptual framework -
7 Chapter-4: Analysis and interpretation of data
8 Chapter-5: Conclusions and recommendation -
9 Bibliography
10 Appendices -
Tables and Graph (If Any)
Analytical Master Charts (If Any)
Financial Statements (If Any)
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CHAPTER 1
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INTRODUCTION

1.1OVERVIEW OF AUTOMOBILE INDUSTRY:

The automotive industry comprises a wide range of companies and organizations involved in
the design, development, manufacturing, marketing, and selling of motor vehicles. It is one of
the world's largest industries by revenue. It is also the industry with the highest spending on
research & development. Automotive industry, all those companies and activities involved in
the manufacture of motor vehicles, including most components, such as engines and bodies,
but excluding tires, batteries, and fuel. The industry’s principal products are passenger
automobiles and light trucks, including pickups, vans, and sport utility vehicles. Commercial
vehicles (i.e., delivery trucks and large transport trucks, often called semis), though important
to the industry, are secondary.
The Indian automotive industry is expected to reach US$ 300 billion by 2026. India enjoys a
strong position in the global heavy vehicles market as it is the largest tractor producer,
second-largest bus manufacturer, and third-largest heavy trucks manufacturer in the world.
According to NITI Aayog and Rocky Mountain Institute (RMI), India's EV finance industry
is likely to reach Rs. 3.7 lakh crore (US$ 50 billion) by 2030. A report by India Energy
Storage Alliance estimated that the EV market in India is likely to increase at a CAGR of
36% until 2026. In addition, projection for the EV battery market is expected to expand at a
CAGR of 30% during the same period. A cumulative investment of Rs. 12.5 trillion (US$ 180
billion) in vehicle production and charging infrastructure would be required until 2030 to
meet India’s EV ambitions. The Government aims to develop India as a global manufacturing
and research and development (R&D) hub. It has set up National Automotive Testing and
R&D Infrastructure Project centres as well as the National Automotive Board to act as
facilitator between the Government and the industry. Under, five testing and research centres
have been established in the country since 2015

1.2 PROFILE OF THE ORGANISATION:

• Founded in 1945 as a manufacturer of locomotives, the company manufactured its first com-
mercial vehicle in 1954 in collaboration with Daimler-Benz AG, which ended in 1969.
• Tata Motors entered the passenger vehicle market in 1991 with the launch of the Tata Sierra,
becoming the first Indian manufacturer to achieve the capability of developing a competitive
indigenous automobile.
• In 1998, Tata launched the first fully indigenous Indianpassenger car, the Indica,
• Part of the USD110 billion Tata group founded by Jamsetji Tata in 1868, Tata Motors is among
the world’s leading manufacturers of automobiles.
• Tata Motors Limited (TML), a USD 42 billion organization, is India’s largest automobile com-
pany by revenues. The company is a leading global manufacturer of cars, utility vehicles, buses,
trucks and defence vehicles and is working towards developing Smart Mobility Solutions for
Smart Cities.
• Tata Motors is also developing a smart range of EVs, to accelerate the adoption of Electric
Vehicles (EV) in the country, supporting the government’s mission on electric vehicles.
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• Incorporated in India, in the year 1945, Tata Motors is a part of the USD 100 billion Tata group
and has operations across India, UK, South Korea, Thailand, South Africa, and Indonesia.
• A leader in the Indian commercial vehicle market, Tata Motors also ranks amongst India’s top
passenger vehicle manufacturers, with over 9 million vehicles plying on Indian roads.
• The company has played an instrumental role in transforming the country into a destination for
world-class automotive manufacturing and continues to work towards building the nation.
• Tata Motors has always been at forefront of innovating technologies and providing products
and experiences catering to the discerning needs of our customers across both passenger and
commercial vehicles business.
• With its corporate brand identity - Connecting Aspirations, Tata Motors continues to create
segment-defining products that will fire up the imagination of customers.
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1.3PROBLEMS OF THE ORGANISATION:

To develop on its internal capabilities, Tata had to integrate all its resources and align it to the
manufacturing operations to be carried out. So bringing together all the products and
packaging under one brand name was challenging. Tata had to enter a market where big
players like Hyundai Motors, Daewoo Motors and Fiat India already existed. Increased
competition in the sector had to lead to rise in price sensitivity among the customers. Tata
was focussing on the domestic market only, so they were not sure to get benefits of
economies of scale as the volumes to be produced were thought to be low. There was major
shortfall in the marketing area of Tata Motors as they did not have showrooms to create
customer base. After sales service in terms of spare parts availability and servicing facility
was also poor.
The company has warned that a shortage of semiconductors may see Jaguar Land Rover
(JLR) report 50% lower wholesale volumes by the end of the September 2021 quarter
coupled with a negative EBIT (earnings before interest and taxes) margin. In an exchange
filing, Tata Motors said, looking ahead the chip shortage is very dynamic and difficult to
forecast.
"Based on recent input from suppliers, we now expect chip supply shortages in the
September 2021 quarter to be greater than in the first quarter, potentially resulting in
wholesale volumes about 50% lower than planned, although we are continuing to work to
mitigate this," it added. The broader underlying structural capacity issues will only be
resolved as supplier investment in new capacities comes online over the next 12-18 months.
The company expects some shortages to continue through to the end of the year.
How does this impact the company?
Unlike JLR, at the standalone level, Tata Motors’ production has not been impacted so far due
to the chip shortages. But the passenger vehicle division of the company generates minuscule
revenue compared to JLR which has operations in the US, the UK, Europe, China and other
international markets.
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1.4 SWOT ANALYSIS OF TATA MOTORS

STRENGHTS:
1.Large and diversified product portfolio: Tata’s product portfolio is broad and well-diversi-
fied. The well-diversified automobile portfolio helps them bring revenue and income stabili-
zation. This stability develops confidence for the investors in Tata Motors.
2.Brand recognition: TATA is a well-known brand in the country of origin and in neighbour-
ing countries such as Bangladesh, Pakistan, etc.
3.Stable Earning: Stabilized profit has been earned. Tata has a strong method of governing.
Tata Motors acquire those companies which are similar in the management structure. They
only follow this policy, as they have confidence in their policy objectives of management.
4.Large employee base: it employs a large number of people. More than 82,797 workers
work under Tata Motors.
5.Local Manager Recruitment Policy: The internationalization policy to date consisted of
keeping local managers in new acquisitions and transplanting only some few senior managers
from India into the new industry. Thus in this way, Tata is able to exchange technical
expertise.
6.Research and development activities: Tata Motor has strong research and development
(R&D) capability. The company incurred large expenditure for its R&D activities. The com-
pany’s R&D activities focus on product development, environmental technologies and ve-
hicle safety through its Engineering Research Centre (ERC).
The ERC is one of the few government recognized in-house automotive R&D centers in
India.
7.Good strategy: Good Strategy is the key to success and required for the expansion of the
company. Tata Motors not only focuses on Acquisitions and new products but also has an ef-
ficient management development system in a place to create leaders and loyal employees.
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WEAKNESS:
1.Global presence: The global car market is growing at a rapid pace. If it’s limited to a
particular area, then it’s a strong barrier to growth as other international companies can enter
the very same sector. In achieving global market shares Tata remained silent.
2.Ineffective Marketing strategy: a firm’s power lies in a solid marketing strategy. It’s the
way a firm can know their customer’s demands and produce the products accordingly. This
also helps to connect with customers and educate them about the value they expect to offer.
The TATA lacks a clear marketing strategy for promoting its company worldwide.
3.Limited its domestic market presence: Tata has not marked itspresence in too many countries.
Tata Motors must try to tap international markets.
4.Old Technology Use: The passenger car products of the companyare based on old platforms
which are the major disadvantage for Tata Motors for competing with its rivals in the automo-
bile manufacturers.
5.Indifferent to Changes: Automotive is a highly competitive market.Every company remains
competitive in this industry as most of the automotive companies are very old and experienced
in this business. They sell a modern model, and cars that are tech-savvy. But in this case, the
Tata Motors are indifferent. Its large base model is old.
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OPPORTUNITIES:
1.Strategic Positioning: For creating a positive brand identitycompany must have a clear mar-
keting strategy. It can also allow developing a good client base in India and around the world.
For reaching new markets and position itself TATA Motors must follow an aggressive market-
ing and promotional strategy.
2.Merger and Acquisition Opportunities: Merger and acquisition is afairly common tradition
in the automotive sector. Tata has a long track record as one of India’s oldest companies. As it
grew larger, it has acquired acquisition capabilities. It also has its own proven management
policies which may help manage newly acquired businesses.
3.Increasing Purchasing Power of Indians: The sales of a productdepend largely on the price
of the products. When costs are fair, an organization can easily produce new cars that are tech-
savvy and meet the sales target. As the Indian people earn more than they did before, they have
more purchasing power.
4.Widening the Car Market: Modernizing the world. Citizens areheavily reliant on the
transport facilities. It’ll boost motor vehicle sales. Seeing that Tata still has the potential to
reach another international market, it has a great opportunity to grow.
5.Electric Vehicles are the demand of the new generation. TataMotors must introduce new
electric cars to compete with new emerging players.
6.The company can Tap New Markets. The Super Milo range of fuelefficient buses is powered
by super-powerful, environmentallyfriendly engines. The bus has an optional organic clutch
with a booster and better air intakes to reduce fuel consumption by up to 10%.
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THREATS:
1.Fuel price: Fuel prices influence vehicle sales not only in India butworldwide as well. The
fuel price and car sales are directly related. So if the price of the product increases, the sales
volume will decrease. This is the biggest threat for the car manufacturing company like TATA
Motors
2.Competition in the Luxury Segment: Tata Motors is lagging behindin Luxury Car Segments.
Tata Motors must launch new luxury cars with good and competitive technological features.
Luxury car market players are giving tough competition to Tata Motors. Luxury Car Manufac-
turers like Ford, Toyota, Kia, etc will be the major competitors of Tata Motors.
3.Aluminum and Steel Prices can be a major threat: Increasing worldeconomic prices can be a
major Threat. Steel and aluminum prices are steadily placing pressure on production costs.
Conclusion: Tata’s engines have more strengths than weaknesses. It is a locally organized or-
ganization, meaning that most of its business activities are locally run. It will develop new
strengths and leverage its potential prospects to further expand it. To compete with the new
foreign players, Tata Motors needs to develop good quality interiors and features in their car
models.
4.Environmental Policies: Conservation and environmentalism couldrequire additional costs.
This could impact the competitive advantage that underpins it. Obviously this issue will be
alleviated when Tata globalizes and acquire new brands.
5.Industry pressure: There’s so much rivalry in the car industry. Suchcompanies also sell newly
designed cars that have fuel efficiency, updated models, technology, and eco-friendliness. In
this sector, TATA has many strong competitors. So, it’s got to be vigilant to become more suc-
cessful. Tata Motors is facing stiff competition with the players in the Car Market. Tata Motors
Limited, therefore, has to concentrate on both quality and lean manufacturing.
6.The rising cost of production: Competition has increased in thisnew age. As a result, the cost
of production is more than before, because the company must be more competitive in offering
innovative products.
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1.5 COMPETITIVE ANALYSIS

Highlights:
• Tata (+3.2%) and Mahindra (+2.3%) gained significant market share
• Maruti (-2.7%) and Hyundai (-1.8%) have lost significant market share
• The top three brands control 70% of the Indian passenger vehicle market
• Nissan discontinued the Datsun brand due to poor sales
• Among old players, Tata Motors, Mahindra, Hyundai, and Skoda posted their highest
sales in 2022.
• Among new entrants, KIA has posted the best sales figure with an increase in market
share and 40% growth
• Tata (+3.2%) and Mahindra (+2.3%) gained significant market share.
• Maruti (-2.7%) and Hyundai (-1.8%) have lost significant market share.
• Tata Motors was just 25,690 units short for the #2 position in 2022.
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2018 was the previous best year for

the PV industry, and many automakers posted their best sales figures. However, 2022 has
been totally different. Many old players lost market share due to aggressive new entrants like
KIA and MG, followed by resurgent homegrown car makers like Tata and Mahindra.

Maruti, Hyundai, and Honda have lost considerable market share since 2018. Maruti and
Honda lost share due to underwhelming product launches in the fast-growing mid-size cross-
over segment before 2022. Hyundai lost a considerable share in the hatchback segment and
the absence of a MUV in its product portfolio limits its growth. An SUV/crossover-focused
strategy has led to a strong start for KIA, Tata, Mahindra, and MG.

Skoda and Nissan also improved their market shares to a small extent due to the launch of
new products. However, due to poor sales, Nissan has been forced to discontinue its budget
brand, Datsun.

Market shares for Toyota, Renault, and Volkswagen remain almost unchanged.
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OBJECTIVES OF STUDY
To analyse the the financial status of the company “TATA MOTOR” using different financial
ratio and provide useful insights on the findings.

Objective of a research study are to identify the problem or question, hypothesize a solution,
and collect data and organize it. Research is so important because it helps us understand the
world and possible solutions to the problems we face. So much of what we do in life relies on
understanding how things work - so if we have accurate information about how things really
work, then our decisions will be better.
Research is a loop process. The steps: defining the problem or question, identifying and
clarifying the issue, developing a hypothesis, testing the hypothesis are repeated as you find
more information or need to refine or change your thinking. At any point you can stop,
analyze your results and decide if you still think your original hypothesis is valid.
1.Specify the problem or issue that you want to study:- research methods can be subdivided
into qualitative and quantitative based on the method of analysis used. modern research
practices are being specifically focused on solving complex problems, where one can not use
simple methods like case study. in qualitative research methodology, researchers study human
behavior and experience through social science, humanities, arts and other soft sciences. of
information being studied. The variables can be concrete such as money, persons, or time.
They can be abstract such as schools, movements or ideas.
2.Determine how the variables are related to each other:- inqualitative research the researcher
believes that the relationship between the independent and dependent variables are essential
for study and that it is important to define it precisely before starting.
3.Determine if there is a relationship between one or moreindependent variables and one de-
pendent variable:- in quantitative research all items of information (independent variable) must
have some relation with each other and must have an obvious relationship with at least one
dependent variable, this is known as 'the central idea'.

4.Make predictions based on your research findings:- The purpose ofa research study is to find
the solution to a problem. The objective of a research study is to find the answer to this problem.
There are several steps involved in finding an answer to such questions. You must first define
your problem, then you must identify issues related and relevant to your defined problem, you
must conduct experiments and finally analyze data for the results obtained in order to get mean-
ingful information that can be used as evidence in making short term decisions as well as long
term decisions.
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CHAPTER 2
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Profile of the organisation

2.1 LATEST NEWS

India's Tata Group signed an outline deal on 2 june 2023 on build-

ing a lithium-ion cell factory, based on investment of about 130 bil-
lion rupees ($1.58 billion), as part of the nation's efforts to create its
own electric vehicle supply chain.

Compared to the size of its population, India's car market is tiny.

Tata Motors dominates its electric vehicle (EV) sales, which made
up just 1% of India's total car sales of about 3.8 million last year.

A joint statement on the memorandum of understanding, between

Tata's unit Agratas Energy Storage Solutions and the government
of the western state of Gujarat, said work on the plant, to be based
in Sanand, northern Gujarat, was expected to start in less than
three years.

It would have initial manufacturing capacity of 20 Gigawatt hours

(GWh), which could be doubled in a second phase of expansion,
the statement said.

"The plant will go a long way in contributing to the development of

the EV ecosystem in Gujarat and India," Vijay Nehra, an official in
the Gujarat state government told Reuters.
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Litreature review
Ratio Analysis: A Study on the Financial Performance of Tata Motors

Financial ratio analysis is the process of reviewing the financial position of the company.
Ratio analysis is extensively used by firms as a technique to forecast the financial soundness
of the company to build future growth. This study aims at analyzing the financial
performance of Tata Motors by calculating financial ratios.
The results reveal that the company has performed very bad almost on all parameters as the
Return on Capital Employed and Net worth went to an all-time low. Also, the results also
highlights few areas that needs to be considered like current ratio can be a matter of concern
for the investors as it directly impacts the company’s financial performance. Also, the
company has performed well in the 2019 before COVID-19 pandemic and the possible
reasons could be the policies adopted by the company such as voluntary retirement scheme
and sell-off non-core assets has worked well in favor of the company.
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CHAPTER 3
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Conceptual framework

3.1 TITLE
PROFITABILITY
Profitability is the primary goal of all business ventures. Without profitability the business
will not survive in the long run. So measuring current and past profitability and projecting
future profitability is very important.
Profitability is measured with income and expenses. Income is money generated from the
activities of the business. For example, if crops and livestock are produced and sold, income
is generated. However, money coming into the business from activities like borrowing money
do not create income. This is simply a cash transaction between the business and the lender to
generate cash for operating the business or buying assets.
SOME COMMONLY USED PROFITABILITY RATIOS:

1. Gross Profit Margin

2. EBITDA Margin
3. Operating Profit Margin
4. Net Profit Margin
5. Cash Flow Margin
6. Return On Invested Capital
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3.3Types of research methodology that is being used:-

Research is a process of gathering information using different tools and methods. These
methodologies typically fall into one of two types: qualitative or quantitative. The main
difference between these types is that quantitative research involves the collection, analysis,
and interpretation of numerical data whereas qualitative research predominantly uses
obsrvations to gather information about a topic. Qualitative research may involve
interviewing or observing people while they are interacting with their environment (an
example would be ethnography). Quantitative research can involve surveys or experiments,
which are both experimental designs that rely on observed behavior in order to infer causal
relationships between variables.

1. Qualitative Research:-
Qualitative research encompasses a wide variety of methods. They can fall into two
categories: content analysis and observation. Content analysis is used to categorize the
contents of documents, images, and other types of material, while observation attempts to
gather information about the participants’ behaviors.

2. Quantitative research:-
Quantitative research embraces a number of different research methods including
experiments (quasi-experiments) and surveys that aim to generate statistically significant
results through random sampling or systematic sampling. Surveys use questionnaires,
interviews, and/or structured observations to develop ideas about the research problem.
Another tool used in quantitative research is an experiment, which can be an observational or
controlled experiment. In an observational experiment, the researcher does not actively
influence the behavior of the participants.

3. Observational research:- a. Observational research is a study theresearcher observes

the phenomena. This method may be used when the researcher wishes to understand the ac-
tivities of people engaged in a particular activity, or simply to gain insight into people's eve-
ryday lives and worlds. The researcher observes people as they go about their daily routine,
or natural setting as opposed to bringing them into a laboratory setting and observing their
behavior there.

4. Comparative methodology:- a. This form of methodology involvesa process of com-

parison. Researchers compare an object (the topic or inquiry) in one study setting with an-
other object that is being studied in another setting (the control). The comparison reveals dif-
ferences, but also may reveal similarities; differences might, for example, suggest that both
settings have aspects that are important in their own way. Comparative methodological re-
search is particularly useful for studying the behaviour of a group of people who have similar
characteristics or are performing similar tasks in different locations or at different times or
under different circumstances, such as the behaviour of soldiers during wartime, how fast col-
lege graduates earn their degrees and how far they go to achieve them
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3.4 LIMITATION OF THE STUDY

Limitations of the Study Examples

There are several reasons why limitations of research might exist. The two main categories of
limitations are those that result from the methodology and those that result from issues with
the researcher(s).
1.Common Methodological Limitations of Studies
Limitations of research due to methodological problems can be addressed by clearly and
directly identifying the potential problem and suggesting ways in which this could have been
addressed—and SHOULD be addressed in future studies. The following are some major
potential methodological issues that can impact the conclusions researchers can draw from
the research. 2.Issues with research samples and selection
Sampling errors occur when a probability sampling method is used to select a sample, but
that sample does not reflect the general population or appropriate population concerned. This
results in limitations of your study known as “sample bias” or “selection bias.”
For example, if you conducted a survey to obtain your research results, your samples
(participants) were asked to respond to the survey questions. However, you might have had
limited ability to gain access to the appropriate type or geographic scope of participants. In
this case, the people who responded to your survey questions may not truly be a random
sample.
3.Insufficient sample size for statistical measurements
When conducting a study, it is important to have a sufficient sample size in order to draw
valid conclusions. The larger the sample, the more precise your results will be. If your sample
size is too small, it will be difficult to identify significant relationships in the data.
Normally, statistical tests require a larger sample size to ensure that the sample is considered
representative of a population and that the statistical result can be generalized to a larger
population. It is a good idea to understand how to choose an appropriate sample size before
you conduct your research by using scientific calculation tools—in fact, many journals now
require such estimation to be included in every manuscript that is sent out for review.
4.Methods/instruments/techniques used to collect the data
After you complete your analysis of the research findings (in the discussion section), you
might realize that the manner in which you have collected the data or the ways in which you
have measured variables has limited your ability to conduct a thorough analysis of the results.
For example, you might realize that you should have addressed your survey questions from
another viable perspective, or that you were not able to include an important question in the
survey. In these cases, you should acknowledge the deficiency or deficiencies by stating a
need for future researchers to revise their specific methods for collecting data that includes
these missing elements.
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CHAPTER 4
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ANALYSIS
Data analysis is a process of inspecting, cleansing, transforming, and modeling data
with the goal of discovering useful information, informing conclusions, and
supporting decisionmaking. Data analysis has multiple facets and approaches,
encompassing diverse techniques under a variety of names, and is used in different
business, science, and social science domains. In today’s business world, data analysis
plays a role in making decisions more scientific and helping businesses operate more
effectively. Although many groups, organizations, and experts have different ways to
approach data analysis, most of them can be distilled into a one-size-fits-all
definition. Data analysis is the process of cleaning, changing, and processing raw
data, and extracting actionable, relevant information that helps businesses make
informed decisions. The procedure helps reduce the risks inherent in decision making
by providing useful insights and statistics, often presented in charts, images, tables,
and graphs.

BALANCE SHEET OF MAR 23 MAR 22 MAR 21 MAR 20 MAR 19

TATA MOTORS (in Rs.
Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILI-

TIES

SHAREHOLDER'S FUNDS

Equity Share Capital 766.02 765.88 765.81 719.54 679.22

TOTAL SHARE CAPITAL 766.02 765.88 765.81 719.54 679.22

Reserves and Surplus 21,703.83 19,171.88 18,290.16 16,800.61 21,483.30

TOTAL RESERVES AND 21,703.83 19,171.88 18,290.16 16,800.61 21,483.30

SURPLUS

TOTAL SHAREHOLDERS 22,469.85 19,937.76 19,055.97 18,387.65 22,162.52

FUNDS

NON-CURRENT LIABILI-
TIES
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Long Term Borrowings 10,445.70 14,102.74 16,326.77 14,776.51 13,914.74

Deferred Tax Liabilities [Net] 51.16 173.72 266.50 198.59 205.86

Other Long Term Liabilities 1,411.78 1,212.34 1,786.93 1,646.56 404.11

Long Term Provisions 1,588.75 1,474.11 1,371.94 1,769.74 1,281.59

TOTAL NON-CURRENT LI- 13,497.39 16,962.91 19,752.14 18,391.40 15,806.30

ABILITIES

CURRENT LIABILITIES

Short Term Borrowings 8,426.74 9,129.91 5,421.95 6,121.36 3,617.72

Trade Payables 7,162.60 6,102.10 8,115.01 8,102.25 10,408.83

Other Current Liabilities 9,805.30 11,152.74 11,671.05 10,180.46 7,765.57

Short Term Provisions 408.89 608.06 1,043.54 1,406.75 1,148.69

TOTAL CURRENT LIABILI- 25,803.53 26,992.81 26,251.55 25,810.82 22,940.81

TIES

TOTAL CAPITAL AND LIA- 61,770.77 63,899.87 65,059.66 62,589.87 60,909.63

BILITIES

ASSETS

NON-CURRENT ASSETS

Tangible Assets 15,627.27 12,065.89 19,922.06 19,540.25 18,316.61

Intangible Assets 0.00 2,009.87 6,501.04 5,667.73 3,970.22

Capital Work-In-Progress 0.00 585.21 1,400.82 1,755.51 2,146.96

Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED ASSETS 15,627.27 15,543.00 29,429.56 29,702.78 28,573.42

Non-Current Investments 29,181.62 29,256.39 16,114.91 15,730.86 15,434.19

Deferred Tax Assets [Net] 1,477.26 0.00 0.00 0.00 0.00

Long Term Loans And Ad- 114.40 48.43 72.39 138.46 143.13
vances
 lOMoAR cPSD| 26274729

Other Non-Current Assets 3,870.27 3,432.44 3,588.21 3,449.01 3,529.59

TOTAL NON-CURRENT 50,270.82 48,280.26 49,205.07 49,021.11 47,680.33

ASSETS

CURRENT ASSETS

Current Investments 3,142.96 5,143.08 1,578.26 885.31 1,433.18

Inventories 3,027.90 3,718.49 4,551.71 3,831.92 4,662.00

Trade Receivables 2,307.72 2,111.78 2,087.51 1,978.06 3,250.64

Cash And Cash Equivalents 1,414.65 2,605.43 4,318.94 3,532.19 1,306.61

Short Term Loans And Ad- 132.29 139.37 184.49 232.14 200.08
vances

OtherCurrentAssets 1,474.43 1,901.46 3,133.68 3,109.14 2,376.79

TOTAL CURRENT AS- 11,499.95 15,619.61 15,854.59 13,568.76 13,229.30

SETS

TOTAL ASSETS 61,770.77 63,899.87 65,059.66 62,589.87 60,909.63

OTHER ADDITIONAL IN-

FORMATION

CONTINGENT LIABILI-
TIES, COMMITMENTS

Contingent Liabilities 0.00 3,353.04 3,694.20 4,737.19 7,246.04

CIF VALUE OF IMPORTS

Raw Materials 0.00 0.00 0.00 0.00 0.00

Stores, Spares And Loose 0.00 0.00 0.00 0.00 0.00

Tools

Trade/Other Goods 0.00 0.00 0.00 0.00 0.00

Capital Goods 0.00 0.00 0.00 0.00 0.00

EXPENDITURE IN FOR-
EIGN EXCHANGE
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Expenditure In Foreign Cur- 0.00 1,983.68 2,159.77 2,946.64 0.00

rency

REMITTANCES IN FOR-
EIGN CURRENCIES FOR
DIVIDENDS

Dividend Remittance In For- -- -- -- -- --

eign Currency

EARNINGS IN FOREIGN
EXCHANGE

FOB Value Of Goods -- -- -- -- --

Other Earnings -- 4,006.60 2,181.66 3,144.88 --

BONUS DETAILS

Bonus Equity Share Capital -- 111.29 111.29 111.29 111.29

NON-CURRENT INVEST-
MENTS

Non-Current Investments -- 718.49 446.23 140.96 270.17

Quoted Market Value

Non-Current Investments -- 620.45 521.42 407.61 393.21

Unquoted Book Value

CURRENT INVESTMENTS

Current Investments Quoted -- -- -- -- 0.91

Market Value

Current Investments Un- -- 5,143.08 1,578.26 885.31 1,174.46

quoted Book Value
 lOMoAR cPSD| 26274729

1.)LIQUIDITY RATIO (SHORT TERM SOLVENCY RATIO)

1) Current Ratio = current assets/current liabilities Table

4.1 showing current ratio

2019 0.58

2020 0.53

2021 0.60

2022 0.58

2023 0.45

The following table shows current ratio. The current ratio of 2:1 is said to be an ideal one.
This ideal ratio means that the current assets shall be at least twice the current liability. The
table shows that the current ratio of the company in past five years is below ideal ratio. It is
almost consistent for the last five years. So the current ratio of the company is highly
unsatisfied. That means it is not able to meet even the current liabilities of the company.

2) Liquid Ratio = liquid assets/current assets

liquid ratio

2019 0.37
 lOMoAR cPSD| 26274729

2020 0.38

2021 0.43

2022 0.44

2023 0.33

The following table shows liquid ratio. Generally, liquid ratio of 1:1 is considered as
satisfactory. This means that liquid assets are just equal to the current liabilities. For this
company the past five years show a less than liquid ratio, when compared to the
satisfactory ratio. It further means that, the company is not able to pay off its current
liabilities.

Chart Title
0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2019 2020 2021 2022 2023

Series 1 Column1 Column2

 lOMoAR cPSD| 26274729

2.)SOLVENCY RATIO

3) Debt-equity ratio = long term debt/share holders’ fund Ta-

ble 4.4 showing debt-equity ratio

2019 2020 2021 2022 2023

0.79 1.14 1.14 1.17 0.84

The following table shows debt-equity ratio. The standard debtequity ratio is 1:1. Here, the
company shows lower ratio for the past five years. It indicates that it is better for the
creditors. But this lower ratio is not a satisfactory ratio for the share holders’ as it indicates
the firm has not been able to use outsiders fund to manage their earnings.

Figure 4.4 showing debt-equity ratio

DEBT EQUITY RATIO

0.9
0.8
0.7
0.6
0.5
0.4 DEBT EQUITY RATIO

0.3
0.2
0.1
0
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4) Proprietary ratio = share holders’ fund/total asset

2019 2020 2021 2022 2023

0.4 0.35 0.34 0.36 0.29

The following table shows proprietary ratio. A ratio of 0.5:1 or above is considered as
satisfactory. Here, the proprietary ratio is declined for the last five years which is a greater
risk to the creditors. In the share holders’ point of view, the lower ratio indicates the
company is highly dependent on creditors for its working capital. Therefore, the
company’s financial position for the last five years is not sound.

Figure 4.5 showing proprietary ratio

PROPRIETARY RATIO
0.45
0.4
0.35
0.3
0.25
0.2 PROPRIETARY RATIO

0.15
0.1
0.05
0
2019 2020 2021 2022 2023
 lOMoAR cPSD| 26274729

5) Long term debt to total asset = total assets/total debt Total

debt = long term borrowings + current liabilities Table 4.6 showing

solvency ratio

2019 2020 2021 2022 2023

1.9 1.6 1.56 1.58 1.51

The following table shows solvency ratio. If the ratio is more than one it is treated as
satisfactory. Here, the company shows higher ratio than the satisfactory ratio which
indicates the solvency and financial position are strong. And in the creditors’ point of view,
it shows a greater margin of safety to them.

Figure 4.6 showing solvency ratio

SOLVENCY RATIO
2.5

1.5

SOLVENCY RATIO
1

0.5

0
2019 2020 2021 2022 2023
 lOMoAR cPSD| 26274729

6) Fixed assets to net worth ratio = fixed assets/total share holders’ fund

Table 4.7 showing fixed assets to net worth ratio

2019 2020 2021 2022 2023

1.05 1.3 1.31 1.29 1.61

The following table shows fixed assets to net worth ratio. The standard rate of the fixed
assets to net worth ratio is one. The company shows higher ratio for the past five years,
when compared to the standard ratio. A higher ratio indicates that the outsiders’ funds have
been used to acquire a part of fixed assets.

FIXED ASSET TO NET

2.5 WORTH RATIO
2

1.5

0.5

0
2019 2020 2021 2022 2023
 lOMoAR cPSD| 26274729

7) Fixed assets ratio = (fixed assets/long term funds)*100

2019 2020 2021 2022 2023

181% 160% 180% 180.1% 175%

Long term funds = share capital + reserves and surpluses + long term liabilities

Table 4.8 showing fixed assets ratio

The following table shows fixed assets ratio. The standard percentage is 100%. Here the
company shows decreased mode for the past five years but it is higher when compared to
the standard rate. This indicates that the company’s fixed assets are more than long term
funds. That means fixed assets have been financed out of short term funds. So the
company’s financial position is not sound.
Figure 4.8 showing fixed assets ratio

FIXED ASSETS RATIO

185

180

175

170

165 FIXED ASSETS RATIO

160

155

150
2019 2020 2021 2022 2023
 lOMoAR cPSD| 26274729

PROFITABILITY RATIO

8)Gross profit ratio = (gross profit/revenue from operation)*100 Table 4.10 showing
gross profit ratio

2019 2020 2021 2022 2023

45% 41% 38% 39% 41%

The following table shows gross profit ratio. There is no norm to interpret gross profit
ratio. Generally, a higher ratio is considered better. Here the company has highest ratio for
the last five years. So the gross profit ratio is satisfied.

Figure 4.10 showing gross profit ratio

GROSS PROFIT RATIO

46

44

42

40

GROSS PROFIT RATIO

38

36

34

2019 2020 2021 2022 2023

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9)Net profit ratio = (net profit after tax/revenue from operation)*100 Table 4.11 showing net

profit ratio

2019 2020 2021 2022 2023

-9.58% -4.20% -5.21% -4.03% 0.68%

The following table shows net profit ratio. Generally, the ideal net profit ratio is 10%. The
company has failed to attain the standard ratio, which means the company is under pricing.
Also shows lower profitability and lower return to the share holders of the company. It
turned profitable in the FY 23 after 4 long years of negative profit which is a good news.

Figure 4.11 showing net profit ratio

NET PROFIT RATIO

5

2019 2020 2021 2022

0
2023

-5
NET PROFIT RATIO
-10

-15

-20
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10) Operating cost ratio = (operating cost/revenue from operation)*100 Table 4.12

showing operating cost ratio

2019 2020 2021 2022 2023

81% 90% 85% 84% 65%

The following table shows operating cost ratio. The ideal ratio of operating cost ratio is
60% to 80%. Although, the lower it is, the better. Here, the company has lower ratio,
which indicates that the expenses are decreasing. This is a positive sign for the company.

Figure 4.12 showing operating cost ratio

OPERATING COST RATIO

14

12

10

6 OPERATING COST RATIO

0
2019 2020 2021 2022 2023
 lOMoAR cPSD| 26274729

Comparitive statements
 lOMoAR cPSD| 26274729

Interpretation:

In comparative balance sheet, it shows the changes in the items on it on the basis
of just previous year. In case of current assets and current liabilities, the
comparative balance sheet from 2020-2021 to 2021-2022 shows that current assets
increased to 0.0617% and current liabilities reduced by 4.47%. But in case of other
three comparative balance sheets, the current liabilities show higher percentage
than the current assets. When we analyze the comparative balance sheet from
2020-2021 to 2021-2022, it shows positive increase in case of current assets and
decrease in liabilities. Thus it results that, the short term financial position of the
company is satisfied in terms of current liabilities.
In case of liquid assets (cash and equivalents), shows a miniscule decrease in the
current year of the comparative balance sheet except that of. This means that, there
is no change in the liquidity position of the company.
If we analyze the fixed assets, long term liabilities and capital, the share capital of
the company is increased only in the comparative balance sheet of 2020-2021 to
2021-2022 to . The share capital is constant for the others. It also shows increasing
long term liabilities and decreasing non current assest. If we compare the
increasing fixed assets and long term liabilities in the comparative balance sheets,
we can see that long term liabilities are comparatively more than the fixed assets.
That means, the fixed assets and part of working capital has also been financed
from the long term sources. So, this indicates that the company’s long term
financial position is satisfied.
In case of reserves and surplus of the company, it is in an increasing rate, when we
analyze the last two comparative balance sheets, which means that there is an
improvement in the profitability of the company.
So, it can be interpreted that, the company’s overall financial position is satisfied if we
ignore the short term financial position of the company.
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CHAPTER 5 FINDINGS\ OBSERVATIONS

• Current ratio is below the ideal ratio and it is in a declined rate.

• Liquid ratio of the company is not satisfactory because it is lower than the standard ratio.
• Super quick ratio is not satisfactory because it is lower than the ideal ratio of the super
quick ratio.

• The company’s short term assets are not sufficient to meet the short term liabilities.

• The company is highly dependent on creditors for the working capital and its outsiders’
funds are not sufficient to manage their earnings.

• The company’s solvency position is strong as they have sufficient total assets to meet their
debts.
• The company use share holders’ funds and short term funds to finance the fixed assets

• The company’s equity share capital is less than fixed income bearing funds, which is a
satisfactory element to the share holders.
• The company is in loss for the past five years except 2019, which means that the company
is not able to pay the returns to share holders. The company has to improve its net profit.

• The company shows lower ratio in operating cost ratio, which is a satisfactory.
• Operating profit ratio shows higher value indicating that it is a good sign.

• In comparative balance sheet, the company’s long term financial position, liquidity posi-
tion and profitability are satisfactory.

• Company’s short term financial position is week.

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CHAPTER 6 SUGGESTIONS AND CONCLUSIONS

6.1CONCLUSION

The study highlights, the profitability performance of Tata Motors Ltd is

satisfactory. To conclude, Tata Motors company has shown its impact on industry.
We can see the downfall of the company, but it is expected, as it is such a big
company. Looking at all the five years, 2019 is considered the best financial year
out of all the five years, as it has improved its profitability in the year 2019. If the
company manages its revenue from sales and assets, it is expected to recover from
the loss.
6.2SUGGESTIONS

The company has to improve its short term financial position by increasing its
working capital. It has no sufficient funds to finance even short term liabilities. The
company is dependent on creditors for working capital, which may lead to
increased liabilities. The company’s share capital is constant for the past five years.
They have to improve its share capital by improving the net earnings. Generally, the
companies do not pay dividend to the investors that they utilize the dividend
amount for operations of the business. Here also the company has utilized the
dividend. This may create a bad impact on the investors. So it is very important to
increase its sales revenue.
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BIBLOGRAPHY

• https://www.tatamotors.com
• https://www.moneycontrol.com
• https://www.wsj.com
• https://in.investing.com
• https://in.tradingview.com

• https://www.wikipedia.org