Transcript
Page 1: Tata Motors Capital Structure
Page 2: Tata Motors Capital Structure

• Established in 1945 • India’s largest automobile company, with

revenues of Rs. 35651.48 crores (USD 8.8 billion) in 2007-08.

• Leader in commercial vehicles .• Top 3 in passenger vehicles .• World’s 4th largest truck manufacturer .• World’s 2nd largest bus manufacturer. • 23,000 employees .

Page 3: Tata Motors Capital Structure

• 1945-Tata Engineering and Locomotive Co. Ltd. was established to manufacture locomotives and other engineering products.

• 1948 -Steam road roller introduced in collaboration with Marshall Sons (UK). • 1954 -Collaboration with Daimler Benz AG, West Germany, for manufacture

of medium commercial vehicles. The first vehicle rolled out within 6 months of the contract.

• 1959 -Research and Development Centre set up at Jamshedpur. • 1977-First commercial vehicle manufactured in Pune. • 1983-Manufacture of Heavy Commercial Vehicle commences. • 1985 -First hydraulic excavator produced with Hitachi collaboration. • 1986 -Production of first light commercial vehicle, Tata 407, indigenously

designed, followed by Tata 608. • 1991 -Launch of the 1st indigenous passenger car Tata Sierra. - One millionth vehicle rolled out. • 1994-Launch of Tata Sumo - the multi utility vehicle. • 1995 -Mercedes Benz car E220 launched.

Page 4: Tata Motors Capital Structure

• 1996 -Tata Sumo deluxe launched. • 1997 -Tata Sierra Turbo launched. • 1998 -Tata Safari - India's first sports utility vehicle launched. • 2001 -Indica V2 launched - 2nd generation Indica. -100,000th Indica wheeled out. • 2002 -2,00,000th Indica rolled out. -Launch of the Tata Sumo'+' Series -Tata signed a product agreement with MG Rover of the UK. • 2003-On 29th July, J. R. D. Tata's birth anniversary, Tata Engineering

becomes Tata Motors Limited. • 2004-Tata Motors and Daewoo Commercial Vehicle Co. Ltd. sign investment

agreement and completes acquisition of Daewoo Commercial Vehicle Company

-Tata Daewoo Commercial Vehicle Co. Ltd. (TDCV) launches the heavy duty truck 'NOVUS' , in Korea

-Sumo Victa launched -Indigo Marina launched -Tata Motors lists on the NYSE

Page 5: Tata Motors Capital Structure

• 2005-Tata Motors rolls out the 500,000th Passenger Car from its Car Plant Facility in Pune

-Tata Ace, India's first mini truck launched -The power packed Safari Dicor is launched -Launch of Tata Novus • 2006-Tata Motors vehicle sales in India cross four million mark -Indica V2 Xeta launched • 2007-Construction of Small Car plant at Singur, West Bengal, begins on January -Roll out of 100,000th Ace -Launch of Winger, India’s only maxi-van -Launch of new Safari DICOR 2.2 VTT range, powered by a new 2.2 L• 2008-Latest common rail diesel offering- the Indica V2 DICOR, launched. -Tata Motors unveils its People's Car, Nano, at the ninth Auto Expo. -Tata Motors signs definitive agreement with Ford Motor Company to

purchase Jaguar and Land Rover. -Indica Vista – the second generation Indica, is launched.

Page 6: Tata Motors Capital Structure

• Annual Reports from 2003-2008

Page 7: Tata Motors Capital Structure
Page 8: Tata Motors Capital Structure

P & L Account(Rs in Crs)

   Year Mar 08(12)  Mar 07(12)  Mar 06(12)  Mar 05(12)  Mar 04(12) 

  INCOME : Sales Turnover  32,885.03 31,611.21 23,673.43 20,152.03 15,165.85

   Excise Duty 4,355.63 4,425.44 3,380.13 3,063.44 2,270.30

  Net Sales 28,529.40 27,185.77 20,293.30 17,088.59 12,895.55

  Other Income  972.93 574.11 693.92 560.29 427.79

 Stock Adjustments  -40.48 349.68 256.91 144 -141.98

   Total Income 29,461.85 28,109.56 21,244.13 17,792.88 13,181.36

  EXPENDITURE :

 Raw Materials  20,190.19 19,374.93 14,263.86 11,929.48 8,341.39

  Power & Fuel Cost 325.19 327.41 258.51 237.81 214.52

 Employee Cost  1,534.41 1,361.20 1,141.48 1,037.93 879.49

  Other Manufacturing Expenses  1,847.43 1,618.68 1,251.02 1,017.11 722.95

 Selling and Administration Expenses  1,442.91 1,322.88 985.74 795.03 645.73

  Miscellaneous Expenses  1,598.73 1,153.53 784.56 673.78 644.75

 Less: Pre-operative Expenses Capitalised 1,131.40 577.05 308.85 218.13 144.89

   Total Expenditure 25,807.46 24,581.58 18,376.32 15,473.01 11,303.94

  Operating Profit 3,654.39 3,527.98 2,867.81 2,319.87 1,877.42

  Interest  425.61 368.51 293.49 217.81 202.48

  Gross Profit 3,228.78 3,159.47 2,574.32 2,102.06 1,674.94

  Depreciation 652.31 586.29 520.94 450.16 382.6

  Profit Before Tax 2,576.47 2,573.18 2,053.38 1,651.90 1,292.34

  Tax 139.01 476 363.35 363.82 96

 Deferred Tax 401.54 177.22 142.15 51.13 386

   Reported Net Profit 2,028.92 1,913.46 1,528.88 1,236.95 810.34

 Extraordinary Items  149.49 37.4 145.42 24.77 -29.95

   Adjusted Net Profit 1,879.43 1,876.06 1,383.46 1,212.18 840.29

 Adjst. below Net Profit  0 0 0 0 0

   P & L Balance brought forward 1,013.83 776.76 585.6 365.8 123.71

 Statutory Appropriations  0 0 0 0 0

  Appropriations  1,659.68 1,676.39 1,337.72 1,017.15 568.25

  P & L Balance carried down 1,383.07 1,013.83 776.76 585.6 365.8

   Dividend 578.43 578.07 497.94 452.19 282.11

  Preference Dividend 0 0 19.94 0 0

   Equity Dividend % 150 150 130 125 80

  Earnings Per Share-Unit Curr 50.52 47.1 37.59 32.44 21.93

   Book Value-Unit Curr 202.68 177.57 143.93 113.64 101.69

 http://www.capitaline.com

Page 9: Tata Motors Capital Structure

Balance Sheet(Rs in Crs)

   Year Mar 08  Mar 07  Mar 06  Mar 05  Mar 04 

  SOURCES OF FUNDS :

 Share Capital  385.54 385.41 382.87 361.79 353

  Reserves Total  7,453.96 6,484.34 5,154.20 3,749.60 3,236.77

  Total Shareholders Funds 7,839.50 6,869.75 5,537.07 4,111.39 3,589.77

  Secured Loans  2,461.99 2,022.04 822.76 489.81 942.65

 Unsecured Loans  3,818.53 1,987.10 2,114.08 2,005.61 317.12

   Total Debt 6,280.52 4,009.14 2,936.84 2,495.42 1,259.77

  Total Liabilities 14,120.02 10,878.89 8,473.91 6,606.81 4,849.54

   APPLICATION OF FUNDS :

  Gross Block  10,830.83 8,775.80 7,971.55 6,611.95 5,985.40

 Less : Accumulated Depreciation  5,443.52 4,894.54 4,401.51 3,454.28 3,023.69

  Net Block  5,387.31 3,881.26 3,570.04 3,157.67 2,961.71

  Lease Adjustment 0 0 0 0 0

  Capital Work in Progress 5,064.96 2,513.32 951.19 538.84 286.09

 Investments  4,910.27 2,477.00 2,015.15 2,912.06 3,056.77

   Current Assets, Loans & Advances

  Inventories  2,421.83 2,500.95 2,012.24 1,601.36 1,147.44

 Sundry Debtors  1,130.73 782.18 716.6 798.58 614.99

  Cash and Bank 2,397.31 826.76 1,119.43 2,005.04 770.49

 Loans and Advances  4,433.91 6,402.16 5,639.54 2,681.05 1,162.78

   Total Current Assets 10,383.78 10,512.05 9,487.81 7,086.03 3,695.70

  Less : Current Liabilities and Provisions

 Current Liabilities  8,667.20 6,363.68 5,726.82 5,414.61 4,228.13

  Provisions  1,989.43 1,364.32 1,215.04 1,126.06 430.64

  Total Current Liabilities 10,656.63 7,728.00 6,941.86 6,540.67 4,658.77

   Net Current Assets -272.85 2,784.05 2,545.95 545.36 -963.07

 Miscellaneous Expenses not written off  6.05 10.09 14.12 18.16 22.19

   Deferred Tax Assets 397.45 176.6 150.75 102.69 135.06

  Deferred Tax Liability 1,373.17 963.43 773.29 667.97 649.21

   Net Deferred Tax -975.72 -786.83 -622.54 -565.28 -514.15

  Total Assets 14,120.02 10,878.89 8,473.91 6,606.81 4,849.54

  Contingent Liabilities 2,953.57 2,527.78 1,558.65 1,102.68 839.45

 http://www.capitaline.com

Page 10: Tata Motors Capital Structure

(Rs in Crs)

Year 2008-03 2007-03 2006-03 2005-03 2004-03

Equity Paid Up 385.54 385.41 382.87 361.79 353

Networth 7813.99 6843.8 5510.68 4111.39 3589.77

Capital Employed 14094.51 10852.94 8447.52 6606.81 4849.54

Gross Block 10805.32 8749.85 7945.16 6611.95 5985.4

Net Working Capital ( Incl. Def. Tax) -1248.57 1997.22 1923.41 -19.92 -1477.22

Current Assets ( Incl. Def. Tax) 10781.23 10688.65 9638.56 7188.72 3830.76

Current Liabilities and Provisions ( Incl. Def. Tax) 12029.8 8691.43 7715.15 7208.64 5307.98

Total Assets/Liabilities (excl Reval & W.off) 26118.26 19534.28 16148.55 13797.29 10135.33

Gross Sales 32885.03 31611.21 23673.43 20152.03 15165.85

Net Sales 28529.4 27185.77 20293.3 17088.59 12895.55

Other Income 972.93 574.11 693.92 560.29 427.79

Value Of Output 28488.92 27535.45 20550.21 17232.59 12753.57

Cost of Production 24611.49 23290.95 17447.8 14614.45 10511.53

Selling Cost 1179.48 1068.56 759.54 581.41 455.56

PBIDT 3654.39 3527.98 2867.81 2319.87 1877.42

PBDT 3228.78 3159.47 2574.32 2102.06 1674.94

PBIT 3002.08 2941.69 2346.87 1869.71 1494.82

PBT 2576.47 2573.18 2053.38 1651.9 1292.34

PAT 2028.92 1913.46 1528.88 1236.95 810.34

CP 2681.23 2499.75 2049.82 1687.11 1192.94

Revenue earnings in forex 2844.12 2714.68 2384.81 1497.85 1016.64

Revenue expenses in forex 1695.58 1504.74 1132.9 671.4 354.38

Capital earnings in forex 0 0 0 0 0

Capital expenses in forex 1314.31 472.76 264.88 226.84 43.22

Book Value (Unit Curr) 202.68 177.57 143.93 113.64 101.69

Market Capitalisation 24037.11 28048.94 35707.39 14976.3 17331.23

CEPS (annualised) (Unit Curr) 67.44 62.31 51.19 44.88 32.77

EPS (annualised) (Unit Curr) 50.52 47.1 37.59 32.44 21.93

Dividend (annualised%) 150 150 130 125 80

Payout (%) 29.7 31.85 34.6 38.66 36.44

Financial Overview

Page 11: Tata Motors Capital Structure

Year Dividend Per Share(DPS) in Rs.2003-04 8

2004-05 12.50

2005-06 13.00

2006-07 15.00

2007-08 15.00

Financial Statistics

Page 12: Tata Motors Capital Structure

OBJECTIVE

• To calculate Weighted Average Cost of Capital (WACC)• To calculate Return on Investment(ROI)• Compare WACC and ROI.

If ROI is greater than WACC, then the company is getting returns more than the capital employed.

Vice Versa.

Page 13: Tata Motors Capital Structure

Weighted Average Cost of Capital

• Cost of Equity,

• Cost of Debt,

Page 14: Tata Motors Capital Structure

Return on Investment(ROI)

PBIT – Profit Before Interest and Tax

Page 15: Tata Motors Capital Structure

Analysis

Page 16: Tata Motors Capital Structure

Formulae at Glance

Cost of Debt,

Cost of Equity,

Dividend Per Yield = Dividend Per Share / Book Value

Growth rate (G) = Retention Ratio x ROE = (1 – Payout Ratio) x ROE

ROE = ( PAT – Preference Dividend ) / Equity Shareholder Funds

Equity Shareholder Funds = Equity Share Capital + Reserves – P & L A/c (Dr Balance)

Page 17: Tata Motors Capital Structure

Rs in Crs            

             

Year 2008 2007 2006 2005 2004             

DPS(Rs)   15 15 13 12.5 8

Book Value(Rs.)   202.68 177.57 143.93 113.64 101.69

Payout(%)   29.7 31.85 34.6 38.66 36.44

Retention Ratio   0.703 0.6815 0.654 0.6134 0.6356

PBT   2576.47 2573.18 2053.38 1651.9 1292.34

Tax   139.01 476 363.35 363.82 96

PAT   2437.46 2097.18 1690.03 1288.08 1196.34

Preference Divident 0 0 19.94 0 0

Equity   385.54 385.41 382.87 361.79 353

Reserves   7453.96 6484.34 5154.2 3749.6 3236.77

P & L Account(Dr Balance) 0 0 0 0 0

Equity Shareholder Fund 7839.5 6869.75 5537.07 4111.39 3589.77

ROE   0.31 0.31 0.30 0.31 0.33

Growth Rate(%)   21.86 20.80 19.73 19.22 21.18

Cost of Equity(%)   29.26 29.25 28.76 30.22 29.05

Interest   425.61 368.51 293.49 217.81 202.48

Total Debt   6280.52 4009.14 2936.84 2495.42 1259.77

Cost of Debt(%)   6.78 9.19 9.99 8.73 16.07

PBIT   3002.08 2941.69 2346.87 1869.71 1494.82

Capital Employeed 14094.51 10852.94 8447.52 6606.81 4849.54

ROI(%)   21.30 27.11 27.78 28.30 30.82

             

Capital Structure

Page 18: Tata Motors Capital Structure

Weighted Average Cost of Capital   Rs in Crs

         Year 2008

Source Amount Proportion(%) Cost(%) Weighted Cost(%)           Equity   385.54 6.14 29.26 1.80Debt   6280.52 94.22 6.78 6.38    6666.06 100.36   8.18Year   2007

Source   Amount Proportion(%) Cost(%) Weighted Cost(%)           Equity   385.41 9.61 29.25 2.81Debt   4009.14 91.23 9.19 8.39    4394.55 100.84   11.20Year   2006

Source   Amount Proportion(%) Cost(%) Weighted Cost(%)           Equity   382.87 13.04 28.76 3.75Debt   2936.84 88.47 9.99 8.84    3319.71 101.50   12.59Year   2005

Source   Amount Proportion(%) Cost(%) Weighted Cost(%)           Equity   361.79 14.50 30.22 4.38Debt   2495.42 87.34 8.73 7.62    2857.21 101.84   12.00Year   2004

Source   Amount Proportion(%) Cost(%) Weighted Cost(%)           Equity   353 28.02 29.05 8.14Debt   1259.77 78.11 16.07 12.55    1612.77 106.13   20.69

Page 19: Tata Motors Capital Structure

WACC Vs ROI

Year WACC(%) ROI(%) Difference

2008 8.18 21.30 13.12

2007 11.20 27.11 15.91

2006 12.59 27.78 15.19

2005 12.00 28.30 16.30

2004 20.69 30.82 10.13

Page 20: Tata Motors Capital Structure

ReasonsFiscal 2007-08, the first year of 11th Five Year Plan saw a marginal fall in GDP growth rate of 9%. • The slow down in economy.• Increase in inflation.• Poor credit availability. • Hardening of interest rates• Rise in prices of input materials.• Proposed increase in fuel prices and volatility in foreign exchange rates.• Manufacturing expenses, employee cost increased• Net raw material consumption inclusive of processing charges increased , with pressure on volumes and margins.

Page 21: Tata Motors Capital Structure

The year 2007-08 was a historic year for the Company marked with two significant events viz., the unveiling of Tata Nano -the world's least expensive car.

During the year, the Company recorded its highest ever sale of 5, 85,649 vehicles and grew its turnover to Rs. 33,094 crores to remain as India's largest automobile company by revenue.

The Profit Before-Tax at Rs.2, 576 crores was 0.1 % higher than last year, The Profit after Tax at Rs.2, 029 crores, was 6.1 % higher than last year.

Financial performance of a company is satisfactory and attaining good return’s of the capital employed even in peak stage as WACC is less than ROI about 13.12%.

Conclusion

Page 22: Tata Motors Capital Structure

Sources:

• www.capitaline.com

• www.tatamotors.com

• www.google.com

• Society of Indian Automobile Manufacturers report and Company Analysis

• http://deadpresident.blogspot.com/2008/08/tata-motors-2007-2008-annual-

report.html

Bibliography:

Financial Management, I M Pandey

Financial Management, R K Sharma & Shashi Gupta

Sources and Bibliography

Page 23: Tata Motors Capital Structure

Recommended