financial analysis of tata moto.doc

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ACKNOWLEDGEMENT

Preparing a project of this nature is an arduous task and I was

fortunate enough to get support from a large number o persons. I wish toexpress my deep sense of gratitude to all those who generously helped in

successful completion of this report by sharing their invaluable time and

knowledge.

It is my proud and previledge to express my deep regards to

Respected , Head of DepartmentDr.Pramesh Gautam, Department of

Business Management , SWAMI VIVEKANAND INSTITUTE OF

TECHNOLOGY SAGARfor allowing me to undertake this project.

I feel extremely exhilarated to have completed this project under the

able and inspiring guidance of He rendered me all possible help me

guidance while reviewing the manuscript in finalising the report.

I also extend my deep regards to my teachers , family members ,

friends and all those whose encouragement has infused courage in me tocomplete to work successfully.

SUKHMAL JAIN

BBA VTH SEM.


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DECLARATION BY THE CANDIDATE

Date :

I declare that the project report titled " FINANCIAL ANALYSIS

OF TATA MOTO. " on Market Segmentation is nay own work conducted

under the supervision of MRS. SHWETA RAJPUT Department of Business

Management, SWAMI VIVEKANAND INSTITUTE OF TECHNOLOGY

SAGAR To the best of my knowledge the report does not contain any work ,

which has been submitted for the award of any degree , anywhere.

SUKHMAL JAIN

BBA VTH SEM.


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CERTIFICATE

The project report titled " FINANCIAL ANALYSIS OF

TATA MOTO. " been prepared by SUKHMAL JAIN BBA VTH SEM.,

under the guidance and supervision of MRS SHWETA RAJPUTfor the

partial fulfillment of the Degree of BBA

Signature of the Signature of the Signature of the

Supervisor Head of the

Department

Examiner


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INTRODUCTION

India is an emerging country with huge potential. The domestic economy is

now growing at around 9-10%per annum and Indias importance in globalterms is being reinforced by rapidly rising exports and domestic

consumption. At a time when numbers of a slowdown and overheating in the

Indian economy have started gaining momentum, the Indian rupee sprang a

surprise by pushing the GDP figure past the trillion-dollar (42,00,000 crore)

mark.

The automotive industry is at the center of Indias new global dynamic. The

domestic market expanding rapidly as incomes rise and consumer credit

becomes more widely available. Manufacturers product lines are being

continually expanded, as is the local automotive manufacturing base.

Expectation are high that India can develop as a global hub for vehicle

manufacturers and as an outsourcing center that offers the global automotive

industry solution high up the automotive value chain.

India eyes 25 million automotive jobs. India's GDP is set to double over the next decade In percentage terms, the automotive industry's contribution

should also double.

In dollar terms, the sector's contribution is set to quadrupleto some $145bn

With the worlds second largest and fastest-growing population, there is no

denying Indias potential in both economic and population terms and the

effect it will have on the auto industry in the years to come. The country is


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already off to a good start, with a well-developed components industry and a

production level of 1 million four-wheeled vehicles a year, plus a further 5

million two- and three-wheelers.

Historical back ground

In India there are 100 people per vehicle, while this figure is 82 in

China. It is expected that Indian automobile industry will achieve mass

motorization status by 2014.

Since the first car rolled out on the streets of Mumbai (then Bombay) in

1898, the Automobile Industry of India has come a long way. During its

early stages the auto industry was overlooked by the then Government and

the policies were also not favorable. The liberalization policy and various

tax reliefs by the Govt. of India in recent years has made remarkable impacts

on Indian Automobile Industry. Indian auto industry, which is currently

growing at the pace of around 18 % per annum, has become a hot destination

for global auto players like Volvo, General Motors and Ford. A well

developed transportation system plays a key role in the development of an

economy, and India is no exception to it. With the growth of transportation

system the Automotive Industry of India is also growing at rapid speed,

occupying an important place on the 'canvas' of Indian economy.

Today Indian automotive industry is fully capable of producing various

kinds of vehicles and can be divided into 03 broad categories: Cars, two-

wheelers and heavy vehicles.

The first automobile in India rolled in 1897 in Bombay. India is being recognized as potential emerging auto market. Foreign players are adding to their investments in Indian auto industry.


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Within two-wheelers, motorcycles contribute 80% of the segment size Unlike the USA, the Indian passenger vehicle market is dominated by

cars (79%).

Tata Motors dominates over 60% of the Indian commercial vehiclemarket.

2/3rd of auto component production is consumed directly by OEMs. India is the largest three-wheeler market in the world. India is the largest two-wheeler manufacturer in the world. India is the second largest tractor manufacturer in the world. India is the fifth largest commercial vehicle manufacturer in the world. The number one global motorcycle manufacturer is in India. India is the fourth largest car market in Asia - recently crossed the 1

million mark.


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A Financial Analysis Of Tata Moto

The company is the Indias largest automobile producing industry in thecountry. The company is having 24000 employees all across their units. Thecompany was established in 1945 and enrolled its first vehicle in UttarPradesh in 1954 and taking over fiat in 1954.

It is the first Indian automobile company which is listed in the New Yorkstock exchange in September 2004. The company has many mergers andaccusations with other foreign companies like jaguar, land rover, and fiat toenter the foreign market and make the country aware of the foreign productspresent in the market.

(http://www.tatamotors.com/our_world/profile.php)

Going further with the strengths and weakness of the company:-

Strengths of the company:-

The company has various ranges of products to satisfy all kinds ofconsumers present in the market.

New products every time as there are variety of products for all kind ofconsumers starting from lower class to upper class.

With mergers and acquisitions high end profit and market leader in thecountry with the products and launching of new products.

New technological skills and high end employees for product creation soledistributors and manufacturers of the automobiles for lower middle class.

Weakness:-

A weak safety standard as there is less safety in Tata cars so consumer

switches over to the other product.

The company follows a low cost strategy in its luxury cars also but theconsumers when buys a luxury car of the company is not satisfied with thesegment so shifts over to the other brand vehicle.

Shareholders not getting benefit out of the company due to low ROI.


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Opportunities-

The company produces low cost vehicles so the company mainly can targetlower and middle class segments for their selling as in the country middleand low class people are more than higher class.

Company can manufacture and bring up new luxury cars in the market asthere are fewer players for luxury cars in the market.

Getting with new joint ventures in other countries to promote the brand andthe vehicle.

Threats:-

Low safety standards of the product so it could be sold less.

Rising prices of diesel, petrol so producing more efficient vehicles.

Competitors following the same strategy that the Tata Company isfollowing.

(http://www.freeswotanalysis.com/automobile/76-tata-motors-swot-analysis.html)

We would look into the ratio analysis of the company and compare both thefinancial years of the company that is 2009 and 2010 so as to see the progre

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FINANCIAL STATEMENT

RATIO ANALYSIS

Leverage RatioTotal debt ratioTotal debt / capital employed

For 2008Total debt - 63,345.5Capital employed - Net worth + borrowingOrShare capital + debt.86,975.2+ 63,345.5= 150320.763,345.5 / 150320.7 =.42For 2007Total debt - 38,693.6Capital employed - 77,216.7 + 38,693.6=

115910.3(shr. cap) (debt)38,693.6 / 115910.3 =.33Debt equity ratio - Net worth / total debt

Net worth = share cap.For 2008 86,975.2/63,345.5 =1.37For 2007 77,216.7 /38,693.6 =

1.99Capital equity ratio - Capital employed / net worthFor 2008 150320.7 / 86,975.2=1.73For 2007 115910.3 / 77,216.7 =

1.50

Interest coverage ratioEBIT + depreciation / Interest2008

2007Earning before tax 30,448.3 31,326.4 Add- Interest 9,127.2 4,650.639575.535977For 2008 - 39575.5 + 7,820.7/9,127.2 =5.19For 2007 - 35977 + 6,880.9 / 4,650.6=9.21In 2008, the long term financial position getting strong than 2008. Capabilityof paying long term debt. is increases. As we seen, debt ratio increases. And

thecontribution of debt is increases in 2008 than 2007. and the part of sharecapital isalso increases in total capital employed than 2007. it means,company is increasingits capital through shares.

Activity RatioInventory Turnover Ratio:- Cost of goods sold / Inventory


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(2008) (2007)Cost of goods sold 254,571.5 234,753.6Inventory 32,946.431,669.0For 2008:- 254,571.5 / 32,946.4 =7.72For 2007 :- 234,753.6 / 31,669.0 =

7.41

Debtor Turnover Ratio :- Sales / debtorFor 2008 :- 358,086.0 (sales) / 97,555.9 (debtor) =3.67For 2007 :- 325,143.8 (sales) / 101,638.5 (debtor) =

3.20Average collection period (2008) = 360 / 3.67 =

98 daysAverage collection period (2007) = 360 / 3.20 =

112 days

Assets Turnover Ratio :- Sales / Net assets or capital employedFor 2008 :-

358,086.0 (sales) / 150320.7 (c.e.) =2.38

For 2007 :- 325,143.8 (sales) / 115910.3 (c.e.) =2.80

Working Capital Turnover Ratio:- Sales / Net working capitalNet Working Capital = Current assetsCurrent liability For 2008 =

192,673.5 - 188,948.8 = 3724.7For 2007 =

162,779.2 - 127,633.7 = 35145.5

For 2008 :- 358,086.0 (sales) / 3724.7 (N.W.C.) =96.13

For 2007 :- 325,143.8 (sales) / 35145.5

(N.W.C) =9.25As we seen, companys efficiency of using its assets is increasing in 2008

than2007. The inventory turnover ratio which shows its efficiency of selling


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product isincreasing. Average collection period is decreasing meanscompany is selling itsproduct more on cash basis in 2008 than 2007. butcompanys assets turnoverratio is decreasing means sales is not growingaccording to its capital employedand working capital.

Profitability RatioGross Margin = Gross profit / SalesGross Margin (2008) = 103,514.5 / 358,086.0 =.29Gross Margin (2007) = 90,390.2 / 325,143.8 =

.28EBIT Ratio = PAT / EBITFor 2008 = 21,677.0 / 37878.9 =.57

For 2007 = 21,699.9 / 35384.5 =.61Return on investment = EBIT / Capital employedFor 2008 = 39575.5 / 150320.7 =.26For 2007 = 35977 / 115910.3

=.31Return on equity = PAT / Net worthFor 2008 = 21,677.0 / 86,975.2 =.25For 2007 = 21,699.9 / 77,216.7 =.28In profitability ratio, the gross profit ratio is increasing in 2008 than 2007.itmeans its profit is growing in sales. But companys EBIT ratio isdecreasing meansinterest on capital and tax rate is increased in 2008 than2007 which is responsiblein decreasing its PAT. And companys return on

investment is decreased thatindicates that its earning on capital employed isdecreased in 2008 than 2007. andits ROE is also decreases means its PAT onits share capital is decreased.


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Tata motors

Tata Motors is Indias largest automobile company. Its revenue in 2008-2009 was Rs 24,000 crore (U.S.$ 6.4 billion).It is the leader in commercialvehicles in each segment and the second largest in the passenger vehiclesmarket ,with winning products in compact, mid-size car and utility vehiclesegment. The company is the worlds fifth largest medium and heavycommercial vehicle manufacturer and the worlds second-largest mediumand heavy bus manufacturer. The companys 29,600 employees are guidedby the vision to be best in the manner in which we operate, best in theproducts we deliver and best in our value system and ethics Established in1945, Tata Motors presence extends across the length and breadth of India.Over 3.5 million Tata vehicles have driven on Indian roads since the firstone rolled out on 1954.The companys manufacturing base is spread acrossmultiple plants, supported by a nationwide dealership, sales and services andspare parts network comprising of about 1,200 touch points. The company

also has a strong auto finance operation, Tata Motors Finance for supportingcustomers in purchasing Tata Motors vehicles


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TELCO (TATA Engineering and Locomotive Company)

Multinational Corporation. Headquarters in Mumbai. India's largest passenger automobile and commercial vehicle

manufacturing company. World's 19th largest automaker. Sales: 19,654.41cr. Stock price: Rs. 347

In 1969 Tata motors had become an independent producer of MediumCommercial Vehicles. It had also developed the capability of designing,testing and manufacturing such vehicles.

Leading commercial vehicle manufacturer and has significant presence inthe multi-utility and passenger car segments.

With the Launch of Tata Indica, a Euro 2 compliant vehicle is the countrysfirst indigenously designed, developed and manufactured passenger car.

With the launch of Tata nano, Tata has penetrated the market to its extremeby making a car available for Rs. 132000 only. This is the cheapest car inIndia till date and with the announcement of its diesel variant it has made

potential buyers to eagerly wait for it.


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Limitations of study

(1) When the buyers are busy we cant get accurate data from them.(2) According to the time limit of our project we can cover only the

some area.

(3) During survey some respondents may not give answer in propermanner.

OBJECTIVES OF STUDY

(1)To know market position of Tata automobile in the market.(2)To know consumer behavior for purchase of four wheeler.


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Questionnaire

Questionnaire is a source of Primary Data. It is a simple way to collect data from general public Multiple choice questions were given to the respondents and they

were asked to fill their opinion. The data was then analyzed and inferences were drawn on that basis.

Sample of a questionnaire

1. WHAT IS YOUR SALARY?1 LAC 1 LAKH -3 LAKH

3LAKH-5LAKH 5LAKH

2. WHICH VEHICLE DO YOU OWN?

______________________________________________________________________________________

3. DID YOU RIDE SOME OTHER VEHICLE BEFORE THIS?YES NO

4. WHAT IS YOUR EXPERIENCE FROM THE PREVOIUSVEHICLE?

SATISFIED NOT SATISFIED

5. WHICH IS THE MOST ESSENTIAL THING YOU PREFERWHILE BYING VEHICLE?

PRICE MILEAGE POWERSTEERING OTHERS

6. DOES TV AD APPEAL YOU?YES NO

7. DO YOU LIKE TV PROGRAMMES ON CAR?YES NO

8. DOES BRAND VALUE AFFECT YOUR DECISION ON BUYINGVEHICLE?

YES NO


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Research methodology

Research Methodology: The data for the project was collected from malls,customers at showrooms, markets and from public also.

Sample Size: Sample size of 60 was taken based on convenient SimpleRandom Sampling.

Research Tools: The data was collected through Survey QuestionnaireMethod.

Data Collection: Data was collected through the following:-

Primary sources: Questionnaire from General publicSecondary Sources: Magazines, newspapers, Internet.

ANALYSIS

Sample size40 Respondents: Owners of Santro9 Owners of Zen estilo8 Owners of Indica18 Owners of other cars5


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Q1) what do you own?

A) car B) Two Wheeler C) Nothing

From that it was found that:-

20 people owned a car15 owned two wheelers and5 dont nothing


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Q2) Which car do you own?

a) zen estilo b) santro c) indica d) others


8 people owns zen estilo18people owns indica9 people owns santro5 people owns others


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Q3) Are you satisfied with it?

A) Yes b) No


25 were satisfied and15 were not.


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(4) Car customers


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Q5) How much do you spend on maintenance on a monthly basis?

a) 4000


25 %spends below 2000 10% spends between 2000-4000 5 %spends above 4000


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(6) Sample of 30 customers, according to their income.


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Q7)Name he car that comes first inyour mind when you think of smallsegment car in India?


9said zen estilo 8 said santro 17said Indica

6 said others


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Q8)Out of these which you will see first when you will buy a car?


12 people consider cost & perf. Before purchasing a car. 9 people consider perf.& style before purchasing a car. 8 people consider style before purchasing a car.

11 people consider cost before purchasing a car.


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(9)Are you planning to buy a car within next session?


29 people want to purchase within 1 year 11 people want to purchase in 1 month


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(10)Factors affecting buying of customers

Power steering 7

Mileage 15

Price 10

Others 8


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FINDINGS & SUGESSTIONS

FINDINGS

TATA MOTORS is number three in passenger car market after maruti-suzuki & Hyundai.

Majority of the customers see TATA MOTORS with savings. Most of the customers spend large sum of money. Out of the samples, people are highly convinced that TATA MOTORS

will yield them better results.

As the sales of Maruti grows as well as Hyundais santro is sti ll doingwell in mid size and small size segment so the INDICA may be a goodoptions for the company in this term for sustaining sales in long run aswell as in the current situations.

Product will have a gradual progress. Because most industries wouldwait for the response about the product from other Company.

Customers were educated by me, about fuel efficient cars by TATAMOTORS.


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SUGGESTIONS

Based on the findings from the analysis the following suggestions could bemade:

Demo of the product should be made available to Customers, sincemost of the purchase decisions are based on it.

Technical details should be made available to the customers in themost accurate numerical form.

The Indica has remained a bestseller throughout in the industryfiguring in the top 3 selling list of cars for most of the years.

The distribution channel should be more efficient to cater the demandduring peak seasons like during dassraa, diwali etc .

The city is mostly dominated by the working class like people employed inhigh court, AG office( accountant general office) and government schoolemployees who this year are getting more pay due to the recommendationsmade by the sixth pay commission so , the sales for mid size car can beenhanced in this scenario.


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BIBLIOGRAPHYBooks:1. Philip Kotler, Kevin Keller (2009),Marketing Management (Thirteenth Edition)2. Marketing Management, The McGraw.HillCompany Rajan Saxena (Third Edition)

MAGAZINES:A) OUTLOOK BUSINESS (FEB, 2009)B) BUSINESS STANDARD (April-July 2009)C) 4PS OF BUSINESS AND MARKETING (June 2009)D) BUSINESS TODAY - Pick and Choose

INTERNET:

1. Tata Motors' Official Website2. Wiki - Tata Motors Ltd8. htttp://www.moneycontrol/com/tata- group/Tata motors9. http://www.yahoofinance.com/tatamotors

10.http://www.carwale.com/research/cars
http://www.carwale.com/research/carshttp://www.carwale.com/research/cars

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financial analysis of tata moto.doc