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Ratio Analysis
Presented by:Vaishali Rochan Vijayakumar Benny Solomon Ashish Sharma Uday Kiran

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History

Started in 1945 in Mumbai, India. Original production was on locomotives. 1954

First car rolled off of the assembly line.

Tata Motors is Indias owns the largest independent company in India. Mercedes and Tata teamed up to create a truck line.
- First major business deal with another firm.
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Tatas are a family of Indian industrialists and philanthropists.

 Together both companies started their commercial vehicle operations in 1960. In 1986 the company created and sold the first LCV
LCV = light commercial vehicle Was the Tata 407

Tata Motors decided to pursue joint ventures.

Cummins Engine Co., Inc., was the first company to jointly venture with Tata in 1993.

TATA began creating new product lines in the late 1990s and early 2000s.

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Corporate Social Responsibility

A Company that cares about the future

TATA signed the United Nations Global Compact

TATA plays a significant role in community development

TATA deals with Environmentally-friendly products and technology

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Growth and Expansion

Tata Motors today said its global sales increased 21 per cent in July to 1,01,605 units over the same period last year. Sales of luxury brands from Jaguar Land Rover were at 26,921 units in July, up 41 per cent from the same month last year. Sales of luxury sedans of Jaguar brand stood last month at 4,064 units.
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 sales were at 22,857 units, Tata Motors said in a statement. The company said total passenger vehicles sales stood at 53,829 units in July, 2012, a jump of 45 per cent from the same month last year. Commercial vehicle sales were up by 1 per cent to 47,776 units from the same month last year
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Comparatively Speaking

Brand: Sales:

Tata $7.6 billion

Ford $172 billion 246,000

GM $181 billion 266,000

No of employees 33,900

Profit Margin

20%

17%

6.7%

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Current Ratio Current Ratio : It is the relationship

between the current and current liabilities . assets Current Ratio = Current Assets Current Liabilities It is the most important and widely used test of liquidity of a business.

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Years Total Current Assets Years

2012

2011

2010 40,881.17 2010 55,125.62 2010 1.01737286 in Rs. 42,445.64

56,935.30 2012 2011 73,268.07

Total Current Liabilities 41,720.83

Year Current ratio

2012

2011

0.77708202

0.741600185

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Cr.

Current Ratio = Current Assets Current Liabilities

Current ratios
12 10 8 6 4 2 0

The higher the current ratio the better the liquidity/ short term solvency.

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Acid Test Ratio/Quick Ratio It is the ratio between Quick Current

Assets and Current Liabilities. Ideally, quick ratio should be 1:1 Acid Test/Quick Ratio = Quick Current Assets Current Liabilities
Quick Current Assets : Cash/Bank Balances + Receivables up to 6 months + Quickly realizable securities like Govt. Securities and Bank Fixed Deposits .
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Year

2012

2011

2010

Sundry Debtors
Year

2012

8,236.84

2011

6,525.65

2010

7,191.18 8,743.32 41,720.83

Cash and Bank

Year

18,238.13
2012

2011

11,409.60

2010

Total Current Liabilities years

73,268.07 2012

55,125.62 2011

2010

Acid test ratio

0.361343 in Rs. 9 0.32535235 0.38193152 Cr.

Acid test ratio

Acid Test/Quick Ratio = Quick Current Assets 12 10 Current Liabilities

This is the most rigorous and conservative test of a firm's

8 6 4 2 0

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Debt Equity Ratio

It is the relationship between borrowers fund (Debt) and Owners Capital (Equity). Debt Equity Ratio = Long Term Debt Shareholders Equity OR Debt Equity Ratio = Total Debt Shareholders Equity
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Year Total Debt Year

2012

2011 27,962.48 2012

2010 35,108.36 2010 8206.48

17,256.00 2011

Total Shareholders Funds

33,149.93

19171.47

years debt equity ratio

2012

2011

2010

in Rs. 0.84351551 0.900087474 4.27812655Cr.

Debt Equity Ratio = Total Debt Shareholders A high debt equity Equity

debt equity ratio

12 10 8 6 4 2 0

ratio has a serious implication from the firms point of view. High proportion of

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Inventory Turnover Ratio Inventory turnover ratio = Cost of

goods sold average inventory Average Inventory = (Opening Stock + Closing Stock) 2 In days = 365days Inventory turnover ratio This ratio indicates the number of times the inventory is rotated during the relevant accounting period
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Year COGS Year

2012

2011

2010 85,109.48 2010 11,131.32

1,46,495.24 2012

1,07,035.24 2011

average inventory

16,143.27

12,691.27

Years

2012

2011

2010

Inventory turnover in Rs. ratio 9.0746971 8.43376904 7.64595019 Cr.

Inventory turnover = Cost of goods sold ratio average inventory This ratio indicates how

Inventory turnover ratio

12 10 8 6 4 2 0

fast inventory is sold. A high ratio is good, as it shows liquidity and low ratio shows that

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Debtors Turn Over ratio = Net Credit Sales Average debtors Net credit sales = (Gross credit sales) (Sales returns) Average Debtors = (Opening Debtors + Closing Debtors) 2 (including bills receivable)
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Debtor Turnover Ratio

Year sales Year average debtors

2012

2011

2010 92,519.25 2010 5,993.02

1,65,654.49 2012

1,22,127.92 2011

7,381.25

6,858.42

Years

2012

2011

2010

debtor turnover in Rs. ratio 22.4426218 17.80701809 15.4378343 Cr.

Debtors Turn Over ratio = Net Credit Sales Average 12 debtors A high ratio shows 10

debtor turnover ratio

short time lag between credit sales and cash collection and a Low ratio

8 6 4 2 0

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TOTAL ASSET TURNOVER RATIO

Total Assets Turnover Ratio = Cost of Goods sold Avg. total Assets COGS= Particulars
Total fixed charge ratio

Sales-Gross profit 2012 2011

3.98

2010 3.21 8/30/12 3.04

total asset turnover ratio

12 10 8 6 4 2 0

As the Total Assets turnover is high, it implies that the investment made on asset has yielded the firm with high returns when compared to the previous year i.e., it has utilized the assets effectively. So it is favorable to the investors to invest when this ratio is taken into account. 8/30/12

FIXED ASSET TURNOVER RATIOS

Fixed Assets Turnover Ratio = Cost of Goods sold/ Avg. Fixed Assets
2011
2.08

Particulars 2012
Fixed asset turnover ratio

2010
1.72

2.34

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Fixed asset turnover ratio

12 10 8 6 4 2 0

The Ratio is high when compared to the previous year which implies that the firm is utilizing the fixed assets effectively to obtain best returns which is beneficial to the firm as well as to the investors.

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CREDITORS TURNOVER RATIO

CTR=Net credit purchases / Average creditors. Net credit purchases = (Gross credit purchases) (Purchase return). Avg creditors = (Opening Crs + Closing Crs) / 2. (including bills payable)

- A business organisation has to pay creditors if it buys goods on credit. Any new creditor will give us the goods on credit if he knows that we pay our creditors' bill within short period of time. So, for knowing this time period, both parties calculate creditor turnover ratio. 8/30/12

DIVIDEND PAYOUT RATIO

Dividend payout ratio = Dividend per equity share/Earnings per share 2011 2010 Particular 2012
Dividend payout ratio

11.01

15.97

38.96

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Dividend payout ratio

12 10 8 6 4 2 0

Dividend payout ratio measures the proportion of dividends paid to earning available to shareholders. The dividend payout ratio is an important and widely used ratio. The payout ratio can be compared with the trend over the years or an inter firm and intra industry comparison would throw light on its adequacy. Here in the graph it tells us that the companys ratio is declining which discourages the investors to invest in the company as only less dividend is being paid to them 8/30/12

PROFITABILITY RATIOS

Net Profit Ratio NPR = (Net Profit/ Net sales)*100 NP ratio is used to measure the overall profitability and hence it is very useful to proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall not be able to achieve a satisfactory return on its investment.
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NPR
12 10 8 6 4 2 0 2012 2011 2010 8.1941093 7.5501081 2 16 2.72039603 8/30/12

Net Profit Ratio

Gross profit Ratio

GPR = (Gross Profit/ Sales)*100

Gross profit ratio may be indicated to what extent the selling prices of goods per unit may be reduced without incurring losses on operations. It reflects efficiency with which a firm produces its products. As the gross profit is found by deducting cost of goods sold from net sales, higher the gross profit better it is. 8/30/12

GPR
12 10 8 6 4 2 0

2012 GPR 11.5657897

2011 12.35809142 8/30/12

2010 8.00889545

 Operating profit Margin Operating profit= Operating income/ Net sales

Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt. Ifa company's margin is increasing, it is 8/30/12 earning more per dollar of sales. The higher the

OPM
12 10 8 6 4 2 0 2012 OPM 2011 2010

13.3660549

14.3111829
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10.6735517

Coverage Ratios
Interest Coverage ratio
ICR = EBIT / Interest expense A ratio used to determine how easily a company can pay interest on outstanding debt. The lower the ratio, themore the company is burdened by debt expense. When a company's interest coverage ratio is 1.5or lower,its ability to meet interest expenses 8/30/12 may be questionable.

ICR
12 10 8 6 4 2 0 2012 ICR 2011 2010

7.42449249

7.3274514

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4.00560171

Fixed charge coverage ratios Fixed charge coverage ratio = EBIT + Fixed Charge Fixed charge+ Interest
A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. For example, since leases are a fixed charge, the calculation determining a company's ability leases would be (EBIT + Lease Expenses)8/30/12 Expenses + / (Lease Interest).

FCCR
12 10 8 6 4 2 0 2012 FCCR 2011 2010 8/30/12

7.42449249 7.3274514 4.00560171

 Debt service coverage ratio DSCR = Net operating Income Total Debt service
In corporate finance, it is the amount of cash flow available to meet annual interest and principal payments on debt, including sinking fund payments. A DSCR of less than 1 would meana negative cash flow.A DSCR ofless than1, say.95,would mean that there is only enough net operating income to cover 95% ofannualdebtpayments.
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DSCR
12 10 8 6 4 2 0 2012 DSCR 2011 2010

6.81749655 7.43791873 2 3.5976425

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Analysis of share prices

Live BSE Quotes Price (Rs) 247.15 % Change 0.80 Open (Rs) 242.50 Volume 806,880 Aug 29, 2012 2:53:00 PM High (Rs) Low 248.00 (Rs) 241.35 Value (Rs) 52199,420,392 Week H/L 320.60 / 137.65 P/BV (x) 2.02

Valuation EPS (Rs)* P/E Ratio (x) Market Cap (Rs m) 6.63 37.28 669,215.47 8/30/12

Analysis 1)

Tata Motor's luxury Jaguar Land Rover (JLR) models disappointed on the margins front in the March quarter. Margins in the fiscal fourth quarter grew at 14.6 per cent against expectations of 18.2 per cent growth. 2) Margins were hit on account ofhigher staff costspost fresh hiring.Higher ad-spend and incentivesalso led to the fall .Weak EBIT margins were driven by higher other expenses. 3)One-off tax creditofRs.1,826 crore in Q4 contributed to Tata's 139 per cent quarterly profit leap.
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4)Core domestic business performance was lacklustre. Domestic car market grew just 2.2 % in the last financial year. High interest rates and slowing economic growth have dampened demand in Asia's third-largest economy. 5) frontloading of purchases ahead of the unveiling of the federal budget for the 2012/13 that, as widely expected, raised excise duties for vehicles. 6) Brokerages downgraded the stockor cut their target price post earnings.
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Market capitalization

Market capitalization(ormarket cap) is the total value of the tradablesharesof apublicly traded company. In the case of TATA Motors market cap as on August 23, 2012 is
Rs Cr Tata Motors 77,820 $ Billion 14.08

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Corporate Governance
Tata Motors being part of the Tata conglomerate has its philosophy deeply linked to the core philosophy of the Tata group. It has fair, ethical and transparent governance practices along with highest standards of professionalism, honesty, integrity and ethical behaviour. The company gives maximum importance to the3 value creation and sustainability of all the other stakeholders viz. customers, creditors, employees, vendors, community and the Government.Tata Motors have implemented the Tata Business Excellence model which is a part of Tata 8/30/12 codeofconductapplicabletoallsubsidiar

Future outlook of the company crossed the The overall Tata Motors Group sales
1 million mark in 2010-11, higher by 24.2% compared to the previous year. Nano sales increased to 70,431 vehicles, a growth of 129% from 30,763 vehicles in the previous year. But the company still concentrated Nano to increase its sale as it was when launched. The company also plans to launch a diesel version of Nano in future. The concept car of TATA is PIXEL. It has the feature of Tablet activated key less entry, touch screen information selection, voice activated media functions, zero turn and space efficient parking. The volume growth, market sales, vehicle sales keeps increasing for Tata motor Ltd. R&D expenditure and as a % 8/30/12 net turn over

Conclusion
The automobile industry in India the tenth largest in the world with an annual production of approximately 2 million units is expected to become one of the major global automotive industries in the coming years. The global automobile industry production in 2010, registering a growth of about 22% and 38% respectively over the previous year. The Tata motors ltd. recorded sale growth of 22.8% over the previous year in the Indian domestic market representing a 24.3% market share in the Indian industry. It exported 58,089 vehicles from India, a growth of 70.3% over the previous year. Tata Motors is has done of a very good job in the past five years of strengthening its position in the market. It appears to have an excellent opportunity for future. 8/30/12 The company must focus on combining its unique

THANK YOU
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By Group 5

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