Description
financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form easy to understand. They typically include basic financial statements, accompanied by a management discussion and analysis
FINANCIAL REPORTS ON TATA MOTORS
TABLE OF CONTENT
Sr. No. 1. 2. 3. 4. 5. 5.1 5.2 6. 7. 8. 9. Content Introduction Objectives Methodology Company?s Profile Findings Data Collection Data analysis Conclusion Limitations Recommendation Bibliography Page Nos.
6
INTRODUCTION
Profitability is expressed in terms of several popular numbers, which measure one of two generic types of performance: "how much they make with what they've got" and "how much they make from what they take in". The efficiency of a company or industry at generating earnings depends on various factors. The profitability ratio can be determined o the basis of either sales or investments.The Profitability measures the operating efficiency and the owners of the company invest their funds in the expectation of reasonable returns, which ensures adequate returns to the shareholders of the company. In other words the profitability ratios are designed to answer to questions such as rate of return does it indicate? What are the earnings per share? And so on. The chart below illustrates how Tata companies in each of these sectors contribute, in percentage terms, to the overall financial makeup of the Group. The table that follows shows the Group's sector-wise financial performance. And in as you can very well see that the major holding of 31% is by TATA MOTORS which shows that the profitability in this sector is more than the other sector of the company. NB: Group financials do not include Corus
7
OBJECTIVES
analysing the different aspects of the organization.
know the current position of the organization in the market. and also internationally with a constant and stable growth.
8
RESEARCH METHODOLOGY
Research is defined as a systematic gathering, recording and analysis of the data concerned with an objective. This whole activity is divided in to various parts & after compilation of that we reach at certain findings, which enable us to take financial decision. It involves the diagnosis of information needed and the selection of relevant and interrelated variables. Project Title: "Profitability of TATA Motors" The project was conducted to examine and understand the concept of Profitability and to determine the various key factors which affects in the growth of a company due to the financial reason.
DATA COLLECTION: Secondary Data: Data was collected from books, magazines, web sites, going through the records of the organisation, etc. It is the data which has been collected by individual or someone else for the purpose of other than those of our particular research study. Or in other words we can say that secondary data is the data used previously for the analysis and the results are undertaken for the next process.
9
COMPANY'S PROFILE Leadership with trust
Founded by Jamsetji Tata in 1868, the Tata group?s early years were inspired by the spirit of nationalism. Established in 1945, Tata Motors is India ?s largest automobile company, with a portfolio of commercial, passenger and utility vehicles. Tata Motors Limited is India?s largest automobile company, with revenues of Rs. 35651.48 crores (USD 8.8 billion) in 2007-08. It is the first Indian automobile company to list on the New York Stock Exchange. Tata Motors is India?s largest commercial vehicle manufacturer. It ranks among the world?s top five manufacturers of medium and heavy trucks and is the world?s second largest medium and heavy bus manufacturer. It is India?s second largest passenger vehicle player. Starting with commercial vehicles in 1954, it entered the passenger vehicles segment in 1991. The Tata Indica, India?s first indigenously designed car, was launched in 1998. In November 2007, the company rolled off the millionth car on the Indica platform. The company launched the Indigo in 2002, the Indigo Marina in 2004, and the Indigo XL in 2007. In January 2008, Tata Motors also launched the world?s least cost car, the Tata Nano. The Nano, Tata Motors? People?s Car, designed with a family in mind, has a roomy passenger compartment with generous leg space and head room. It can comfortably seat four persons. Its mono-volume design will set a new benchmark among small cars.
On January 3, 2008, Ford announced that it was "committed to focused negotiations at a more detailed level with Tata Motors concerning the potential sale of the combined Jaguar Land Rover business." The statement added: "There is still a considerable amount of work to do, and while no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned." Tata Motors plants are at Jamshedpur (Eastern India), Pune (West), Lucknow and Pantnagar (North).
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BOARD OF DIRECTORS
Mr. Ratan N Tata (Chairman) Mr. N A Soonawala Dr. J J Irani Mr. R Gopalakrishnan Mr. Nusli N Wadia Mr. S M Palia Dr. R A Mashelkar Mr. Nasser Munjee Mr. Subodh Bhargava Mr. Ravi Kant Mr. P M Telang
SENIOR MANAGEMENT
Mr. Ravi Kant - Managing Director Mr. P M Telang - Executive Director (Commercial Vehicles) Mr. Rajiv Dube - President (Passenger Cars) Mr. C Ramakrishnan - Chief Financial Officer Mr. S N Ambardekar - Plant Head (CVBU, Pune) Mr. S B Borwankar - Head (Jamshedpur - Plant) Mr. A M Mankad - Head (Car Plant) Mr. U K Mishra - Vice President (ADD and Materials-CVBU) Mr. S Krishnan - Vice President (Commercial - PCBU) Mr. P Y Gurav - Vice President (Corp. Finance - A/c and Taxation) Mr. S J Tambe - Vice President (Human Resources) Mr. R Pisharody - Vice President (Sales and Marketing - CVBU) Mr. A Gajendragadkar - Chief Internal Auditor
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MAJOR ACHIEVEMENTS
has recently acquired Jaguar and Land Rover. Hungary, Brazil, Uruguay and China, besides India. UK-based subsidiary Tetley. Tata Chemicals is the world?s second largest manufacturer of soda ash. ?s largest wholesale voice carriers. -based consultancy firm, recently valued the Tata brand at $11.4 billion and ranked it 57th amongst the Top 100 brands in the world. Business week ranked the group sixth amongst the „World?s Most Innovative Companies? and the Reputation Institute, USA, recently rated it as the „World?s Sixth Most Reputed Firm.? ?s plant employs 850 people in the city of Gunsan. Tata Motors now exports Korean-made trucks to key markets such as South Africa.
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SERVICES
Legend has it that it all started in the early 1900s when an Indian took umbrage at not being allowed entry to a hotel because he had the wrong skin colour. Jamsetji Tata, the founder of the Tata Group, responded by creating India?s first luxury hotel, the Taj Mahal Palace and Tower. Those following in his footsteps have built on the legacy with enterprises across the services spectrum, including insurance and other financial services. At the Tata Group our purpose is to improve the quality of life of the communities we serve. The heritage of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. This heritage will be continuously enriched by formalising the high standards of behaviour expected from employees and companies. The Tata name is a unique asset representing leadership with trust. Leveraging this asset to enhance group synergy and becoming globally competitive is the route to sustained growth and long- term success.
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DATA COLLECTION Balance Sheet
Mar ' 08 Source of fund Owner?s fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-inprogress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity shares outstanding (Lacs) Mar ' 07 Mar ' 06 Mar ' 05
(Rs Crore)
Mar ' 04
385.54 7,428.45 2,461.99 3,818.53 14,094.51
385.41 6,458.39 2,022.04 1,987.10 10,852.94
382.87 5,127.81 822.76 2,114.08 8,447.52
361.79 3,749.60 489.81 2,005.61 6,606.81
353.00 3.83 3,236.77 942.65 317.12 4,853.37
10,830.83 25.51 5,443.52 5,361.80 5,064.96 4,910.27 10,781.23 12,029.80
8,775.80 25.95 4,894.54 3,855.31 2,513.32 2,477.00 10,318.42 8,321.20
7,971.55 26.39 4,401.51 3,543.65 951.19 2,015.15 9,812.06 7,888.65
6,611.95 3,454.28 3,157.67 538.84 2,912.06 7,248.88 7,268.80
5,985.40 3,023.69 2,961.71 286.09 3,056.77 3,835.78 5,309.17
-1,248.57 6.05 14,094.51 4,145.82
1,997.22 10.09 10,852.94 2,117.86
1,923.41 14.12 8,447.52 1,648.57
-19.92 18.16 6,606.81 2,480.15
-1,473.39 22.19 4,853.37 2,778.87
2,530.55 5,590.83 3855.04
1,323.08 5,196.07 3853.74
1,550.00 2,185.63 3828.34
1,260.05 1,450.32 3617.52
732.76 896.07 3529.58
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Profit and Loss Account
Mar ' 08 Income: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Administrative expenses Expenses capitalized Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Nonrecurring items Other non cash adjustments Reported net profit Earnings before appropriation Equity dividend Preference dividend 28,738.30 20,931.81 1,230.14 1,544.57 1,179.48 1,982.79 -1,131.40 25,737.39 3,000.91 389.03 3,389.94 471.56 652.31 64.35 2,201.72 547.55 1,654.17 374.75 - -0.07 2,028.92 3,042.75 578.43 -- 69.84 2,383.07 615.80 Mar ' 07 26,664.25 19,529.88 1,200.36 1,367.83 1,068.56 1,488.16 -577.05 24,077.74 2,586.51 887.23 3,473.74 455.75 586.29 85.02 2,346.68 660.37 1,686.31 227.15 - -1.54 1,913.39 2,690.15 578.07 - -Dividend tax 63.42 2,013.83 Mar ' 06 20,088.63 14,376.11 929.82 1,143.13 759.54 1,042.52 -308.85 17,942.27 2,146.36 685.18 2,831.54 350.24 520.94 73.78 1,886.58 524.93 1,361.65 167.23 -3.02 1,528.88 2,094.54 Mar ' 05 17,199.17 12,101.28 830.45 1,039.34 598.75 911.73 -282.43 15,199.12 2,000.05 399.94 2,399.99 234.30 450.16 67.12 1,648.41 415.50 1,232.91 4.04
(Rs Crore)
Mar ' 04 13,028.17 8,720.10 628.73 882.49 455.56 758.90 -144.89 11,300.89 1,727.28 235.65 1,962.93 225.96 382.60 51.64 1,302.73 482.55 820.18 -6.82
1,235.41 1,601.21
810.34 934.05 282.11
497.94 452.19 81.25 98.25 36.14 Retained earnings 1,526.76 1,085.60
15
Cash Flow
Profit before tax Net cash flowoperating activity Net cash used in investing activity Net cash used in fin. Activity Net income/dec in cash and equivalent Cash and equivalent begin of year Cash and equivalent end of year Mar ' 08 2,028.92 6,174.50 -5,721.86 1,132.46 1,585.10 Mar ' 07 1,913.46 2,210.13 -2,805.10 303.58 -291.39 Mar ' 06 1,528.88 -221.03 -1.06 -855.27 -1,077.36 Mar ' 05 1,236.95 1,249.82 -956.57 940.67 1,233.92
(Rs Crore)
Mar ' 04 810.34 2,717.53 -2,043.19 -149.20 525.14
806.21 2,391.31
1,118.15 826.76
2,196.79 1,119.43
771.12 2,005.04
245.35 770.49
Dividend
Year 2008 2007 2006 2005 2004 2004 2003 2002 2001 2000 1999 1998 1997 Month May May May May May January May June June May May June May Dividend (%) 150 150 130 125 40 40 4025 30 55 80
Bonus announcement
Year 1995 1982 1979 1977 Month September April April April Ratio 3:5 2:5 2:5 1:5 Ex Bonus Date 04/10/1995 --
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Share holding
Share holding pattern as on : Face value 31/12/2008 30/09/2008 30/06/2008 10.00 10.00 No. Of % No. Of Shares Holding Shares Promoter's holding 187933595 41.78 128579405 187933595 41.78 128579405 Non promoter's holding Institutional investors 68416618 15.21 62195620 41290737 115540256 8871189 28452529 154995 407181 60347623 98233517 48125291 449832659 9.18 57644717 25.69 124779720 Other investors 1.97 3085547 6.33 0.03 0.09 13.42 21.84 10.70 100.00 28465436 131009 407181 58135967 90224440 42072714 385656279 10.00 % No. Of % Holding Shares Holding 33.34 33.34 128779405 33.40 128779405 33.40
Indian Promoters Sub total
Banks Fin. Inst. and Insurance FII's Sub total Private Corporate Bodies NRI's/OCB's/Foreign Others Directors/Employees Govt Others Sub total General public Grand total
16.13 14.95 32.36 0.80 7.38 0.03 0.11 15.07 23.39 10.91 100.00
59797758
15.51
58781935 15.24 126130346 32.71 3335177 28790628 118787 407181 56408669 89059742 41648530 385618023 0.86 7.47 0.03 0.11 14.63 23.10 10.80 100.00
Report card
PE ratio EPS (Rs) Sales (Rs crore) Face Value (Rs) Net profit margin (%) Last bonus Last dividend (%) Return on average equity 2.72 49.65 7,078.85 10 1.68 3:5 150 3.22 23/01/09 Mar, 07 Sep, 08 Mar, 99 28/09/95 16/05/08 Mar, 99
17
Capital structure
From Year 2007 2006 2005 2004 2003 2002 2001 1999 To Year Class Of Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Authorized Capital 450.00 450.00 410.00 400.00 400.00 350.00 350.00 350.00 Issued Capital 385.50 385.37 382.83 361.75 352.96 319.89 319.89 255.92 Paid Up Shares (Nos) 385503954 385373885 382834131 361751751 352958130 319784387 319782395 255856343
(Rs Crore)
Paid Up Face Value 10 10 10 10 10 10 10 10 Paid Up Capital 385.50 385.50 382.83 361.75 352.96 319.78 319.78 255.86
2008 2007 2006 2005 2004 2003 2002 2001
The Performance of the Company's Stock Price vis-à-vis Sensex and Auto Index
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Ratios
Mar ' 08 Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs.) Net operating income per share (Rs) Free reserves per share (Rs) Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) Long term debt / Equity Total debt/ Equity Owners fund as % of total source Fixed assets turnover ratio Current ratio Current ratio (inc. st loans) 42.91 61.50 52.63 71.22 15.00 77.84 202.54 203.20 745.47 Mar ' 07 Mar ' 06 Per share ratios 43.76 35.57 61.18 51.10 49.65 67.07 15.00 67.12 177.33 178.00 691.91 39.94 55.47 13.00 56.06 143.58 144.26 524.73 Mar ' 05 34.08 48.38 34.19 48.49 12.50 55.29 113.15 113.15 475.44
(Rs Crore)
Mar ' 04 23.24 35.54 22.96 35.26 8.00 48.94 101.08 101.08 369.11
182.38
157.16
123.34
93.85
81.54
10.44 8.17 6.96 8.13 21.18 25.98 22.73
Profitability ratios 9.70 10.68 7.50 6.94 8.55 24.67 28.00 31.18 8.09 7.35 9.41 24.77 27.81 28.65
11.62 9.01 7.02 9.94 30.12 30.21 28.72
13.25 10.32 6.10 9.45 22.98 22.71 32.21
0.50 0.80 55.43 2.68
Leverage ratios 0.31 0.41 0.58 63.05 3.08 0.53 65.23 2.55
0.59 0.60 62.22 2.62
0.32 0.35 74.02 2.18
0.89 0.64
Liquidity ratios 1.24 1.24 0.85 1.07
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0.99 0.98
0.72 0.69
Quick ratio Inventory turnover ratio Dividend payout ratio (net profit) Dividend payout ratio (cash profit) Earning retention ratio Cash earnings retention ratio Adjusted cash flow time total debt Financial charges coverage ratio Financial charges coverage ratio (post tax) Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp. in raw mat. consumed Long term assets / total Assets Bonus component in equity capital (%)
0.66 14.43
0.91 13.26 Payout ratios 35.34 26.16 59.90 71.32
0.96 12.63
0.76 14.06
0.47 14.91
32.51 24.02 60.13 72.18
37.13 26.73 58.31 70.98
41.68 29.39 58.18 70.54
39.27 25.57 61.20 74.63
2.65 7.19 6.82
Coverage ratios 1.70 1.50 7.62 6.67 8.08 7.06
1.43 10.24 8.49
1.00 8.69 6.51
72.69
Component ratios 74.55 72.84
71.19
65.84
4.10 9.89 4.60 0.58 28.86
4.00 10.18 3.88 0.45 28.87
3.78 11.87 4.64 0.39 29.06
3.48 8.70 2.30 0.47 30.76
3.49 7.80 2.43 0.62 31.52
20
Annual results in brief
Sales Operating profit Interest Gross profit EPS (Rs) Mar ' 07 31,884.69 3,228.70 313.07 3,160.82 49.65 Mar ' 06 24,004.12 2,505.91 226.35 2,568.67 39.93 Mar ' 05 20,482.57 2,103.97 154.15 2,115.91 34.19 Mar ' 04 15,493.52 1,830.16 161.26 1,727.80 22.71
(Rs Crores)
Mar ' 03 10,840.70 1,139.41 278.95 878.50 9.39
Annual results in details
Other income Stock adjustment Raw material Power and fuel expenses Excise Admin and selling expenses Research and development expenses Expenses capitalized Other expenses Provisions made Depreciation Taxation Net profit / loss Extra ordinary item Prior year adjustments Equity capital Equity dividend rate Agg. of nonprom. shares (Lacs) Agg. of non promote Holding (%) OPM (%) GPM (%) NPM (%) Mar ' 07 245.19 -349.68 19,374.93 - 1,143.13 4,349.45 Mar ' 06 289.11 -256.91 14,263.86 - 1,039.34 3,401.92 Mar ' 05 166.09 -144.00 11,929.48 -Employee 882.49 3,063.44 Mar ' 04 58.90 141.98 8,341.39 1,367.83 720.37 2,270.30 -
(Rs Crores)
Mar ' 03 18.04 -119.74 5,699.58
1,743.79 -
3,913.46 586.29 659.72 1,913.46 -1.35 385.41 2142.52
2,946.21 520.94 524.50 1,528.88 5.65 382.87 2539.98
2,490.34 450.16 414.95 1,236.95 -13.85 361.79 2447.18
2,027.20 382.60 482.00 810.34 -52.86 356.83 2352.40
1,657.29 362.13 210.03 300.34 -6.00 -0.23 319.83 2167.77
55.60
66.35
67.65
66.65
67.79
10.13 9.84 5.96
10.44 10.57 6.29
21
10.27 10.25 5.99
11.81 11.11 5.21
10.51 8.09 5.21
DATA ANALYSIS
Financial analysis refers to an assessment of the viability, stability and profitability of a business. Profitability is the ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statements, which reports on the company's results of operations. Four ratios are used to describe Profitability. Return on Investment is also known as Return on Assets and Rate Earned on Total Assets. It is defined as (Return on Investment = Net Profit / Total Assets). It measures the earning power of the company's assets and thus the effectiveness of its management. Return on Sales is also known as Profit Margin. It is defined as (Return on Sales = Net Profit after Taxes / Net Sales). It measures the profit per dollar of sales. The higher this ratio the better able the firm is able to weather adverse business condition such as falling prices and rising costs. Return on Equity also known as Rate Earned on Stockholders Equity and Return on Net Worth. It is defined as (Return on Equity = Net Profit / Equity). This ratio is as close as one can get on the true performance of a business. Return on Invested Capital is defined as (Return on Invested Capital = Net Profit after Taxes/Long Term Debt + Equity). The company has issued equity capital rather than going for preference share which means the company?s dividend will not be fixed but the company has provided a good amount of dividend to the share holder which can be seen very well as in 1997 it was 80% which has increased up-to 150% in 2008. Even though the company had enough reserves and surplus but still it has taken loan. The company had a good operating income which shows that the company has a sustainable growth. The company has more of loan funds and less of own funds which through secured and unsecured loan. The below chart shows the growth of the company over a period of time were one can clearly see that there has been a tremendous growth in terms of performance of the company in various sectors regarding profitability factor.
22
The current asset of the firm, as already stated. It represents those assets which can be, in the ordinary course of business, converted into cash within a short period of time. The higher the current ratio, the larger is the amount of rupees available per rupee of current liability, the more is the firm?s ability to meet current obligations and the greater is the safety of funds of short-term creditors, which could be very well seen in the chart above in the month March „05 and March „06.
The turnover ratio is to determine how quick the current short asset can be converted in cash by which the liquidity of the firm can be measure where the cost of goods sold means sales minus gross profit. The ratio indicates how fast inventory is sold. A high ratio is good from the view point of liquidity and vice versa. A low ratio would signify that inventory does not sell fast and stays on the shelf or in the warehouse for a long time. Thus, in the years March ?08, ?07 and ?04 the ratio is more and which shows that the company has enough liquidity of cash in hand.
23
Gross profit ratio is the relationship between prices, sales volume and cost. A change in the gross margin can be brought about by changes in any of these factors. The gross margin represents the limit beyond which fall in sales prices are outside the tolerance limit. Further, the gross profit ratio can also be used in determining the extent of loss caused by theft, spoilage, damage, and so on in the case of those companies which follow the policy of fixed gross profit margin in pricing their products. A high ratio of grass profit to sales is a sign of good management as it implies that the cost of production of the firm is relatively low and a relatively low gross margin is definitely a danger signal warranting a careful and detailed analysis of the factors responsible for it. Where in the above chart we can see that in most of the year accept one the ratio is relatively high showing the sign of a good management in the company. The above analysis show that the profitability of the company is very well maintained as the amount of inventory, gross profit margin, current ratio and so on are in a healthy status by way providing a good picture of the internal management of the company and giving an investor a feel free to invest without risk factor.
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CONCLUSION
From the above information we come to know that financial management is very important as it is the life-blood of any organization as it deals with many issues such as for knowing the profitability and for future reference. Financial management has a close relationship with the financial accounting. It can be done by comparing the balance sheet, deriving the different ratio, knowing the share holdings and capital structure o f the organization. The financial projections are impossible to be 100% accurate but these projections serve a framework to analyse the company?s operations in detail and thus understand reasons for deviations from the forecast. It also reflects the financial strength and stability of the organization in the market which in turn is helpful for the investors. It also, influences various aspects such as nature of business, production and supply conditions and the standing in the market among the other competitors. The balance sheet shows a picture that the company has a lot of reserves and surplus but still has the loans are increasing year by year, in most of the years it can be seen that the current liability are more than the current assets. It is most important for the investors that the company ratios and the profitability are positive, so that they can invest their amount of share in the company without having the risk of losing the amount they had invested. These shows that for a company to proceed with an bright future should have a sound profitability which reflects the true picture of the company and which would help the company not only to have good investors investing in the company but also building up the organizations employees trust and building a better future for the company.
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LIMITATIONS OF THE STUDY
For me not being a professional, conducting such in-depth analyses is critical. It is hard to say what percentage of profits represents a profitable firm, as profits depend on such factors as the position of the company and its products on the competitive life cycle (for example profits will be lower in the initial years when investment is high), on competitive conditions in the industry, and on borrowing costs. Further, it is hard to reach a definite conclusion when some of the ratios are favourable and some are unfavourable. If a specific ratio is better than the average does not necessarily mean that the company is doing well; it is quite possible rest of the industry is doing very poorly. Ratios are based on financial statements that reflect the past and not the future. Unless the ratios are stable, it may be difficult to make reasonable projections about future trends. The financial statements such as the balance sheet indicate the picture at "one point" in time, and thus may not be representative of longer periods. Financial statements provide an assessment of the costs and not value. For example, fixed assets are usually shown on the balance sheet as the cost of the assets less their accumulated depreciation, which may not reflect the actual current market value of those assets.
26
RECOMMENDATIONS
The ratio analysis and industry analysis are very useful for individuals to instantly assess a company or industry by making two basic types of comparisons. First, the analyst can compare a present ratio with past (or expected) ratios for the organization to determine if there has been an improvement or deterioration or no change over time. Second, the ratios of one organization may be compared with similar organizations or with industry averages at the same point in time. This is a type of "benchmarking" so that one may determine whether the organization is "average" in performance or doing better or worse than others.
27
BIBLIOGRAGHY
www.google.com http://money.rediff.com/money http://www.tatamotors.com/ http://www.tata.com/
Books Referred:Financial Management by M Y KHAN and P K JAIN.
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doc_182786242.docx
financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form easy to understand. They typically include basic financial statements, accompanied by a management discussion and analysis
FINANCIAL REPORTS ON TATA MOTORS
TABLE OF CONTENT
Sr. No. 1. 2. 3. 4. 5. 5.1 5.2 6. 7. 8. 9. Content Introduction Objectives Methodology Company?s Profile Findings Data Collection Data analysis Conclusion Limitations Recommendation Bibliography Page Nos.
6
INTRODUCTION
Profitability is expressed in terms of several popular numbers, which measure one of two generic types of performance: "how much they make with what they've got" and "how much they make from what they take in". The efficiency of a company or industry at generating earnings depends on various factors. The profitability ratio can be determined o the basis of either sales or investments.The Profitability measures the operating efficiency and the owners of the company invest their funds in the expectation of reasonable returns, which ensures adequate returns to the shareholders of the company. In other words the profitability ratios are designed to answer to questions such as rate of return does it indicate? What are the earnings per share? And so on. The chart below illustrates how Tata companies in each of these sectors contribute, in percentage terms, to the overall financial makeup of the Group. The table that follows shows the Group's sector-wise financial performance. And in as you can very well see that the major holding of 31% is by TATA MOTORS which shows that the profitability in this sector is more than the other sector of the company. NB: Group financials do not include Corus
7
OBJECTIVES
analysing the different aspects of the organization.
know the current position of the organization in the market. and also internationally with a constant and stable growth.
8
RESEARCH METHODOLOGY
Research is defined as a systematic gathering, recording and analysis of the data concerned with an objective. This whole activity is divided in to various parts & after compilation of that we reach at certain findings, which enable us to take financial decision. It involves the diagnosis of information needed and the selection of relevant and interrelated variables. Project Title: "Profitability of TATA Motors" The project was conducted to examine and understand the concept of Profitability and to determine the various key factors which affects in the growth of a company due to the financial reason.
DATA COLLECTION: Secondary Data: Data was collected from books, magazines, web sites, going through the records of the organisation, etc. It is the data which has been collected by individual or someone else for the purpose of other than those of our particular research study. Or in other words we can say that secondary data is the data used previously for the analysis and the results are undertaken for the next process.
9
COMPANY'S PROFILE Leadership with trust
Founded by Jamsetji Tata in 1868, the Tata group?s early years were inspired by the spirit of nationalism. Established in 1945, Tata Motors is India ?s largest automobile company, with a portfolio of commercial, passenger and utility vehicles. Tata Motors Limited is India?s largest automobile company, with revenues of Rs. 35651.48 crores (USD 8.8 billion) in 2007-08. It is the first Indian automobile company to list on the New York Stock Exchange. Tata Motors is India?s largest commercial vehicle manufacturer. It ranks among the world?s top five manufacturers of medium and heavy trucks and is the world?s second largest medium and heavy bus manufacturer. It is India?s second largest passenger vehicle player. Starting with commercial vehicles in 1954, it entered the passenger vehicles segment in 1991. The Tata Indica, India?s first indigenously designed car, was launched in 1998. In November 2007, the company rolled off the millionth car on the Indica platform. The company launched the Indigo in 2002, the Indigo Marina in 2004, and the Indigo XL in 2007. In January 2008, Tata Motors also launched the world?s least cost car, the Tata Nano. The Nano, Tata Motors? People?s Car, designed with a family in mind, has a roomy passenger compartment with generous leg space and head room. It can comfortably seat four persons. Its mono-volume design will set a new benchmark among small cars.
On January 3, 2008, Ford announced that it was "committed to focused negotiations at a more detailed level with Tata Motors concerning the potential sale of the combined Jaguar Land Rover business." The statement added: "There is still a considerable amount of work to do, and while no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned." Tata Motors plants are at Jamshedpur (Eastern India), Pune (West), Lucknow and Pantnagar (North).
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BOARD OF DIRECTORS
Mr. Ratan N Tata (Chairman) Mr. N A Soonawala Dr. J J Irani Mr. R Gopalakrishnan Mr. Nusli N Wadia Mr. S M Palia Dr. R A Mashelkar Mr. Nasser Munjee Mr. Subodh Bhargava Mr. Ravi Kant Mr. P M Telang
SENIOR MANAGEMENT
Mr. Ravi Kant - Managing Director Mr. P M Telang - Executive Director (Commercial Vehicles) Mr. Rajiv Dube - President (Passenger Cars) Mr. C Ramakrishnan - Chief Financial Officer Mr. S N Ambardekar - Plant Head (CVBU, Pune) Mr. S B Borwankar - Head (Jamshedpur - Plant) Mr. A M Mankad - Head (Car Plant) Mr. U K Mishra - Vice President (ADD and Materials-CVBU) Mr. S Krishnan - Vice President (Commercial - PCBU) Mr. P Y Gurav - Vice President (Corp. Finance - A/c and Taxation) Mr. S J Tambe - Vice President (Human Resources) Mr. R Pisharody - Vice President (Sales and Marketing - CVBU) Mr. A Gajendragadkar - Chief Internal Auditor
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MAJOR ACHIEVEMENTS
has recently acquired Jaguar and Land Rover. Hungary, Brazil, Uruguay and China, besides India. UK-based subsidiary Tetley. Tata Chemicals is the world?s second largest manufacturer of soda ash. ?s largest wholesale voice carriers. -based consultancy firm, recently valued the Tata brand at $11.4 billion and ranked it 57th amongst the Top 100 brands in the world. Business week ranked the group sixth amongst the „World?s Most Innovative Companies? and the Reputation Institute, USA, recently rated it as the „World?s Sixth Most Reputed Firm.? ?s plant employs 850 people in the city of Gunsan. Tata Motors now exports Korean-made trucks to key markets such as South Africa.
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SERVICES
Legend has it that it all started in the early 1900s when an Indian took umbrage at not being allowed entry to a hotel because he had the wrong skin colour. Jamsetji Tata, the founder of the Tata Group, responded by creating India?s first luxury hotel, the Taj Mahal Palace and Tower. Those following in his footsteps have built on the legacy with enterprises across the services spectrum, including insurance and other financial services. At the Tata Group our purpose is to improve the quality of life of the communities we serve. The heritage of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. This heritage will be continuously enriched by formalising the high standards of behaviour expected from employees and companies. The Tata name is a unique asset representing leadership with trust. Leveraging this asset to enhance group synergy and becoming globally competitive is the route to sustained growth and long- term success.
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DATA COLLECTION Balance Sheet
Mar ' 08 Source of fund Owner?s fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-inprogress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity shares outstanding (Lacs) Mar ' 07 Mar ' 06 Mar ' 05
(Rs Crore)
Mar ' 04
385.54 7,428.45 2,461.99 3,818.53 14,094.51
385.41 6,458.39 2,022.04 1,987.10 10,852.94
382.87 5,127.81 822.76 2,114.08 8,447.52
361.79 3,749.60 489.81 2,005.61 6,606.81
353.00 3.83 3,236.77 942.65 317.12 4,853.37
10,830.83 25.51 5,443.52 5,361.80 5,064.96 4,910.27 10,781.23 12,029.80
8,775.80 25.95 4,894.54 3,855.31 2,513.32 2,477.00 10,318.42 8,321.20
7,971.55 26.39 4,401.51 3,543.65 951.19 2,015.15 9,812.06 7,888.65
6,611.95 3,454.28 3,157.67 538.84 2,912.06 7,248.88 7,268.80
5,985.40 3,023.69 2,961.71 286.09 3,056.77 3,835.78 5,309.17
-1,248.57 6.05 14,094.51 4,145.82
1,997.22 10.09 10,852.94 2,117.86
1,923.41 14.12 8,447.52 1,648.57
-19.92 18.16 6,606.81 2,480.15
-1,473.39 22.19 4,853.37 2,778.87
2,530.55 5,590.83 3855.04
1,323.08 5,196.07 3853.74
1,550.00 2,185.63 3828.34
1,260.05 1,450.32 3617.52
732.76 896.07 3529.58
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Profit and Loss Account
Mar ' 08 Income: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Administrative expenses Expenses capitalized Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Nonrecurring items Other non cash adjustments Reported net profit Earnings before appropriation Equity dividend Preference dividend 28,738.30 20,931.81 1,230.14 1,544.57 1,179.48 1,982.79 -1,131.40 25,737.39 3,000.91 389.03 3,389.94 471.56 652.31 64.35 2,201.72 547.55 1,654.17 374.75 - -0.07 2,028.92 3,042.75 578.43 -- 69.84 2,383.07 615.80 Mar ' 07 26,664.25 19,529.88 1,200.36 1,367.83 1,068.56 1,488.16 -577.05 24,077.74 2,586.51 887.23 3,473.74 455.75 586.29 85.02 2,346.68 660.37 1,686.31 227.15 - -1.54 1,913.39 2,690.15 578.07 - -Dividend tax 63.42 2,013.83 Mar ' 06 20,088.63 14,376.11 929.82 1,143.13 759.54 1,042.52 -308.85 17,942.27 2,146.36 685.18 2,831.54 350.24 520.94 73.78 1,886.58 524.93 1,361.65 167.23 -3.02 1,528.88 2,094.54 Mar ' 05 17,199.17 12,101.28 830.45 1,039.34 598.75 911.73 -282.43 15,199.12 2,000.05 399.94 2,399.99 234.30 450.16 67.12 1,648.41 415.50 1,232.91 4.04
(Rs Crore)
Mar ' 04 13,028.17 8,720.10 628.73 882.49 455.56 758.90 -144.89 11,300.89 1,727.28 235.65 1,962.93 225.96 382.60 51.64 1,302.73 482.55 820.18 -6.82
1,235.41 1,601.21
810.34 934.05 282.11
497.94 452.19 81.25 98.25 36.14 Retained earnings 1,526.76 1,085.60
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Cash Flow
Profit before tax Net cash flowoperating activity Net cash used in investing activity Net cash used in fin. Activity Net income/dec in cash and equivalent Cash and equivalent begin of year Cash and equivalent end of year Mar ' 08 2,028.92 6,174.50 -5,721.86 1,132.46 1,585.10 Mar ' 07 1,913.46 2,210.13 -2,805.10 303.58 -291.39 Mar ' 06 1,528.88 -221.03 -1.06 -855.27 -1,077.36 Mar ' 05 1,236.95 1,249.82 -956.57 940.67 1,233.92
(Rs Crore)
Mar ' 04 810.34 2,717.53 -2,043.19 -149.20 525.14
806.21 2,391.31
1,118.15 826.76
2,196.79 1,119.43
771.12 2,005.04
245.35 770.49
Dividend
Year 2008 2007 2006 2005 2004 2004 2003 2002 2001 2000 1999 1998 1997 Month May May May May May January May June June May May June May Dividend (%) 150 150 130 125 40 40 4025 30 55 80
Bonus announcement
Year 1995 1982 1979 1977 Month September April April April Ratio 3:5 2:5 2:5 1:5 Ex Bonus Date 04/10/1995 --
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Share holding
Share holding pattern as on : Face value 31/12/2008 30/09/2008 30/06/2008 10.00 10.00 No. Of % No. Of Shares Holding Shares Promoter's holding 187933595 41.78 128579405 187933595 41.78 128579405 Non promoter's holding Institutional investors 68416618 15.21 62195620 41290737 115540256 8871189 28452529 154995 407181 60347623 98233517 48125291 449832659 9.18 57644717 25.69 124779720 Other investors 1.97 3085547 6.33 0.03 0.09 13.42 21.84 10.70 100.00 28465436 131009 407181 58135967 90224440 42072714 385656279 10.00 % No. Of % Holding Shares Holding 33.34 33.34 128779405 33.40 128779405 33.40
Indian Promoters Sub total
Banks Fin. Inst. and Insurance FII's Sub total Private Corporate Bodies NRI's/OCB's/Foreign Others Directors/Employees Govt Others Sub total General public Grand total
16.13 14.95 32.36 0.80 7.38 0.03 0.11 15.07 23.39 10.91 100.00
59797758
15.51
58781935 15.24 126130346 32.71 3335177 28790628 118787 407181 56408669 89059742 41648530 385618023 0.86 7.47 0.03 0.11 14.63 23.10 10.80 100.00
Report card
PE ratio EPS (Rs) Sales (Rs crore) Face Value (Rs) Net profit margin (%) Last bonus Last dividend (%) Return on average equity 2.72 49.65 7,078.85 10 1.68 3:5 150 3.22 23/01/09 Mar, 07 Sep, 08 Mar, 99 28/09/95 16/05/08 Mar, 99
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Capital structure
From Year 2007 2006 2005 2004 2003 2002 2001 1999 To Year Class Of Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Authorized Capital 450.00 450.00 410.00 400.00 400.00 350.00 350.00 350.00 Issued Capital 385.50 385.37 382.83 361.75 352.96 319.89 319.89 255.92 Paid Up Shares (Nos) 385503954 385373885 382834131 361751751 352958130 319784387 319782395 255856343
(Rs Crore)
Paid Up Face Value 10 10 10 10 10 10 10 10 Paid Up Capital 385.50 385.50 382.83 361.75 352.96 319.78 319.78 255.86
2008 2007 2006 2005 2004 2003 2002 2001
The Performance of the Company's Stock Price vis-à-vis Sensex and Auto Index
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Ratios
Mar ' 08 Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs.) Net operating income per share (Rs) Free reserves per share (Rs) Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) Long term debt / Equity Total debt/ Equity Owners fund as % of total source Fixed assets turnover ratio Current ratio Current ratio (inc. st loans) 42.91 61.50 52.63 71.22 15.00 77.84 202.54 203.20 745.47 Mar ' 07 Mar ' 06 Per share ratios 43.76 35.57 61.18 51.10 49.65 67.07 15.00 67.12 177.33 178.00 691.91 39.94 55.47 13.00 56.06 143.58 144.26 524.73 Mar ' 05 34.08 48.38 34.19 48.49 12.50 55.29 113.15 113.15 475.44
(Rs Crore)
Mar ' 04 23.24 35.54 22.96 35.26 8.00 48.94 101.08 101.08 369.11
182.38
157.16
123.34
93.85
81.54
10.44 8.17 6.96 8.13 21.18 25.98 22.73
Profitability ratios 9.70 10.68 7.50 6.94 8.55 24.67 28.00 31.18 8.09 7.35 9.41 24.77 27.81 28.65
11.62 9.01 7.02 9.94 30.12 30.21 28.72
13.25 10.32 6.10 9.45 22.98 22.71 32.21
0.50 0.80 55.43 2.68
Leverage ratios 0.31 0.41 0.58 63.05 3.08 0.53 65.23 2.55
0.59 0.60 62.22 2.62
0.32 0.35 74.02 2.18
0.89 0.64
Liquidity ratios 1.24 1.24 0.85 1.07
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0.99 0.98
0.72 0.69
Quick ratio Inventory turnover ratio Dividend payout ratio (net profit) Dividend payout ratio (cash profit) Earning retention ratio Cash earnings retention ratio Adjusted cash flow time total debt Financial charges coverage ratio Financial charges coverage ratio (post tax) Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp. in raw mat. consumed Long term assets / total Assets Bonus component in equity capital (%)
0.66 14.43
0.91 13.26 Payout ratios 35.34 26.16 59.90 71.32
0.96 12.63
0.76 14.06
0.47 14.91
32.51 24.02 60.13 72.18
37.13 26.73 58.31 70.98
41.68 29.39 58.18 70.54
39.27 25.57 61.20 74.63
2.65 7.19 6.82
Coverage ratios 1.70 1.50 7.62 6.67 8.08 7.06
1.43 10.24 8.49
1.00 8.69 6.51
72.69
Component ratios 74.55 72.84
71.19
65.84
4.10 9.89 4.60 0.58 28.86
4.00 10.18 3.88 0.45 28.87
3.78 11.87 4.64 0.39 29.06
3.48 8.70 2.30 0.47 30.76
3.49 7.80 2.43 0.62 31.52
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Annual results in brief
Sales Operating profit Interest Gross profit EPS (Rs) Mar ' 07 31,884.69 3,228.70 313.07 3,160.82 49.65 Mar ' 06 24,004.12 2,505.91 226.35 2,568.67 39.93 Mar ' 05 20,482.57 2,103.97 154.15 2,115.91 34.19 Mar ' 04 15,493.52 1,830.16 161.26 1,727.80 22.71
(Rs Crores)
Mar ' 03 10,840.70 1,139.41 278.95 878.50 9.39
Annual results in details
Other income Stock adjustment Raw material Power and fuel expenses Excise Admin and selling expenses Research and development expenses Expenses capitalized Other expenses Provisions made Depreciation Taxation Net profit / loss Extra ordinary item Prior year adjustments Equity capital Equity dividend rate Agg. of nonprom. shares (Lacs) Agg. of non promote Holding (%) OPM (%) GPM (%) NPM (%) Mar ' 07 245.19 -349.68 19,374.93 - 1,143.13 4,349.45 Mar ' 06 289.11 -256.91 14,263.86 - 1,039.34 3,401.92 Mar ' 05 166.09 -144.00 11,929.48 -Employee 882.49 3,063.44 Mar ' 04 58.90 141.98 8,341.39 1,367.83 720.37 2,270.30 -
(Rs Crores)
Mar ' 03 18.04 -119.74 5,699.58
1,743.79 -
3,913.46 586.29 659.72 1,913.46 -1.35 385.41 2142.52
2,946.21 520.94 524.50 1,528.88 5.65 382.87 2539.98
2,490.34 450.16 414.95 1,236.95 -13.85 361.79 2447.18
2,027.20 382.60 482.00 810.34 -52.86 356.83 2352.40
1,657.29 362.13 210.03 300.34 -6.00 -0.23 319.83 2167.77
55.60
66.35
67.65
66.65
67.79
10.13 9.84 5.96
10.44 10.57 6.29
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10.27 10.25 5.99
11.81 11.11 5.21
10.51 8.09 5.21
DATA ANALYSIS
Financial analysis refers to an assessment of the viability, stability and profitability of a business. Profitability is the ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statements, which reports on the company's results of operations. Four ratios are used to describe Profitability. Return on Investment is also known as Return on Assets and Rate Earned on Total Assets. It is defined as (Return on Investment = Net Profit / Total Assets). It measures the earning power of the company's assets and thus the effectiveness of its management. Return on Sales is also known as Profit Margin. It is defined as (Return on Sales = Net Profit after Taxes / Net Sales). It measures the profit per dollar of sales. The higher this ratio the better able the firm is able to weather adverse business condition such as falling prices and rising costs. Return on Equity also known as Rate Earned on Stockholders Equity and Return on Net Worth. It is defined as (Return on Equity = Net Profit / Equity). This ratio is as close as one can get on the true performance of a business. Return on Invested Capital is defined as (Return on Invested Capital = Net Profit after Taxes/Long Term Debt + Equity). The company has issued equity capital rather than going for preference share which means the company?s dividend will not be fixed but the company has provided a good amount of dividend to the share holder which can be seen very well as in 1997 it was 80% which has increased up-to 150% in 2008. Even though the company had enough reserves and surplus but still it has taken loan. The company had a good operating income which shows that the company has a sustainable growth. The company has more of loan funds and less of own funds which through secured and unsecured loan. The below chart shows the growth of the company over a period of time were one can clearly see that there has been a tremendous growth in terms of performance of the company in various sectors regarding profitability factor.
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The current asset of the firm, as already stated. It represents those assets which can be, in the ordinary course of business, converted into cash within a short period of time. The higher the current ratio, the larger is the amount of rupees available per rupee of current liability, the more is the firm?s ability to meet current obligations and the greater is the safety of funds of short-term creditors, which could be very well seen in the chart above in the month March „05 and March „06.
The turnover ratio is to determine how quick the current short asset can be converted in cash by which the liquidity of the firm can be measure where the cost of goods sold means sales minus gross profit. The ratio indicates how fast inventory is sold. A high ratio is good from the view point of liquidity and vice versa. A low ratio would signify that inventory does not sell fast and stays on the shelf or in the warehouse for a long time. Thus, in the years March ?08, ?07 and ?04 the ratio is more and which shows that the company has enough liquidity of cash in hand.
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Gross profit ratio is the relationship between prices, sales volume and cost. A change in the gross margin can be brought about by changes in any of these factors. The gross margin represents the limit beyond which fall in sales prices are outside the tolerance limit. Further, the gross profit ratio can also be used in determining the extent of loss caused by theft, spoilage, damage, and so on in the case of those companies which follow the policy of fixed gross profit margin in pricing their products. A high ratio of grass profit to sales is a sign of good management as it implies that the cost of production of the firm is relatively low and a relatively low gross margin is definitely a danger signal warranting a careful and detailed analysis of the factors responsible for it. Where in the above chart we can see that in most of the year accept one the ratio is relatively high showing the sign of a good management in the company. The above analysis show that the profitability of the company is very well maintained as the amount of inventory, gross profit margin, current ratio and so on are in a healthy status by way providing a good picture of the internal management of the company and giving an investor a feel free to invest without risk factor.
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CONCLUSION
From the above information we come to know that financial management is very important as it is the life-blood of any organization as it deals with many issues such as for knowing the profitability and for future reference. Financial management has a close relationship with the financial accounting. It can be done by comparing the balance sheet, deriving the different ratio, knowing the share holdings and capital structure o f the organization. The financial projections are impossible to be 100% accurate but these projections serve a framework to analyse the company?s operations in detail and thus understand reasons for deviations from the forecast. It also reflects the financial strength and stability of the organization in the market which in turn is helpful for the investors. It also, influences various aspects such as nature of business, production and supply conditions and the standing in the market among the other competitors. The balance sheet shows a picture that the company has a lot of reserves and surplus but still has the loans are increasing year by year, in most of the years it can be seen that the current liability are more than the current assets. It is most important for the investors that the company ratios and the profitability are positive, so that they can invest their amount of share in the company without having the risk of losing the amount they had invested. These shows that for a company to proceed with an bright future should have a sound profitability which reflects the true picture of the company and which would help the company not only to have good investors investing in the company but also building up the organizations employees trust and building a better future for the company.
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LIMITATIONS OF THE STUDY
For me not being a professional, conducting such in-depth analyses is critical. It is hard to say what percentage of profits represents a profitable firm, as profits depend on such factors as the position of the company and its products on the competitive life cycle (for example profits will be lower in the initial years when investment is high), on competitive conditions in the industry, and on borrowing costs. Further, it is hard to reach a definite conclusion when some of the ratios are favourable and some are unfavourable. If a specific ratio is better than the average does not necessarily mean that the company is doing well; it is quite possible rest of the industry is doing very poorly. Ratios are based on financial statements that reflect the past and not the future. Unless the ratios are stable, it may be difficult to make reasonable projections about future trends. The financial statements such as the balance sheet indicate the picture at "one point" in time, and thus may not be representative of longer periods. Financial statements provide an assessment of the costs and not value. For example, fixed assets are usually shown on the balance sheet as the cost of the assets less their accumulated depreciation, which may not reflect the actual current market value of those assets.
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RECOMMENDATIONS
The ratio analysis and industry analysis are very useful for individuals to instantly assess a company or industry by making two basic types of comparisons. First, the analyst can compare a present ratio with past (or expected) ratios for the organization to determine if there has been an improvement or deterioration or no change over time. Second, the ratios of one organization may be compared with similar organizations or with industry averages at the same point in time. This is a type of "benchmarking" so that one may determine whether the organization is "average" in performance or doing better or worse than others.
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BIBLIOGRAGHY
www.google.com http://money.rediff.com/money http://www.tatamotors.com/ http://www.tata.com/
Books Referred:Financial Management by M Y KHAN and P K JAIN.
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