Project Report - Anjali

A COMPARATIVE
STUDY ON
Financial Analysis of major INDIAN
AUTOMOBILE COMPANIES WITH
REFERENCE TO
“Tata Motors Ltd.”
Submitted in the partial fulfillment of the

Masters in Business Management
At
CAMBRIDGE INSTITUTE OF TECHNOLOGY TATISILWAI
Corporate Guide: Faculty Guide:

Name- Mr. Anil Jha Name- Lecturer
Department- Finance
Designation - Manager (CIT,TATISILWAI)
Organization –Tata Motors LTD
Submitted by:
ANJALI KUMARI
Roll No: 17MBA01002
ACKNOWLEDGEMENT
It’s a great privilege that I got an opportunity to do my project in such a well-reputed &
outstanding organization like TATA MOTORS LTD. I am very grateful to all those who helped
and supported me in completing my project.
First of all I would like to thank Mr. ANIL JHA (Manager at Finance Department of Tata Motors
Ltd.) for his guidance and support throughout my training period. I would also like to thank all
the other staff for their continuous guidance during my work without which I would have not
been able to complete my project successfully.
I would also like to thank Mr. GURWINDER SINGH AHUJA (HOD at Finance Department ,
Tata Motors Ltd.) for allowing me to conduct this project in his organization.
I am heartly thankful to Mrs. Shalini Singh (HOD of Management Department) for leading me
expertly in the direction throughout my endeavor with his experience and knowledge.
I am also very thankful to Mr. Sitaram Pandey (Senior Lecturer, CIT,Tatisilwai) to guide me in
proper way.
I extend my hearty thanks to all the teaching and non-teaching staff of our department for their
co-operation and encouragement.
Finally, I would like to express my heartfelt thanks to my parents, relatives and friends who were
a constant source of support and inspiration throughout this project.
Anjali Kumari
CIT, TATISILWAI
DECLARATION BY STUDENT
I, ANJALI KUMARI, hereby declare that the project report entitled “A Study of Financial
Analysis of Auto Major” is the outcome of my summer internship done by me under the
guidance of Mr. Anil Jha (mentor for the project) during May-June 2018. It is the original work
done by me and submitted to the Central University of Jharkhand in partial fulfillment of
requirements for the award of degree of Integrated Master of Business Administration from
School of Management Sciences, Centre for Business Administration. It is the original work
done by me and submitted to Tata Motors and Cambridge Institute of Technology, Tatisilwai.
This report is not submitted to any other Organization or University/Institution, either in full or
in part, for the award of any Degree/Diploma/Fellowship earlier.
Signature of the Student with Date
Name of the Student – Anjali Kumari

Roll No- 17MBA01002
MBA Batch 2017-19
ABSTRACT
Monetary proclamations are formal record of the money related exercises of a business, individual or
other element and give a review of a business or individual's monetary condition in both short and
long term. They give an exact photo of an organization's condition and working outcomes in a dense
shape. Money related articulations are utilized as an administration apparatus essentially by
organization official and speculator's in surveying the general position and working consequences of
the organization. Examination and Interpretation of monetary e++xplanations help in deciding the
liquidity position, long haul dissolvability, money related reasonability and benefit of a firm.
Proportion examination indicates whether the organization is enhancing or breaking down in past
years.
Additionally, examination of various parts of the considerable number of firms should be possible
adequately with this. It encourages the customers to choose in which firm the hazard is less or in
which one they ought to contribute with the goal that most extreme advantage can be earned. Ventures
are capital escalated; henceforth a considerable measure of cash is put resources into it. So before
putting resources into organizations one needs to deliberately ponder its monetary condition and value.
An endeavor has been done in this task to dissect and translate the monetary proclamations of an
organization and to analyze the budgetary articulations of the organization to know the execution of
the organizations.
The three companies compared in the analysis are
 Tata Motors

 Mahindra & Mahindra

 Ashok Leyland
EXECUTIVE SUMMARY
As a part of our university curriculum, we have to take up a summer project. For this purpose, I joined
Tata Motors Ltd. as a trainee for a period of 6 weeks from 11th May to 4th July 2018. I worked in the
Finance Department of the company to study about “Financial Analysis of Auto major”.
Financial analysis is the evaluation of a business in order to determine its profitability, liabilities,
strengths and future earnings potential. After studying this topic, I wanted to gain some practical
knowledge on the topic and try to find out the methods of financial analysis. Initially it appeared to me
as quite a simple project, but as I started working on it, only then I understood its real significance.
This report provides a detailed analysis of financial statement in today’s organizational set up at Tata
Motors Ltd.
The document contains a brief overview, objectives of the study and goes on to elaborate the causes
and effects of financial statement, and suggest measures to calculate ratios. It proceeds further with the
analysis and interpretation of various ratios of companies like Tata Motors, Ashok Leyland and
Mahindra and Mahindra and the feedback given by Head of the Department.
In this project, I have learned many things about the responsibilities of a financial department
regarding payment to the workers, earnings of the company, revenue for company and all financial
work to be done.
This project provided me with an opportunity to explore in the field of finance.

TABLE OF CONTENTS
Chapter Contents Page No.
Introduction 1-2
1.1 Introduction 1
1.
1.2 Objective 2
1.3 Limitations 2
Industry Profile 3-4
2. 2.1 A Brief History of Automobile Companies in India 3
2.2 Major Automobile Companies in India 4
Company Profile 5-7
3.1 Tata Group – An Overview 5
3.2 Tata Motors – A Profile 5
3.3 Mahindra & Mahindra – An Overview 6

3.
3.4 Mahindra & Mahindra – A Profile 6
3.5 Hinduja Group – An Overview 7
3.6 Ashok Leyland – A Profile 7
8
4. Research Methodology
5. Data Analysis , Interpretation , Balance Sheet and 9-37

Income & Statement
6. Findings and Suggestions 38-39
Conclusion 40-41
Bibliography 42
1. INTRODUCTION
The way toward investigating and assessing an organization's money related articulations, (for
example, the asset report or benefit and misfortune explanation), accordingly picking up a
comprehension of the budgetary strength of the organization and empowering more powerful
basic leadership. Money related proclamations record budgetary information; be that as it may,
this data must be assessed through monetary articulation investigation to end up more valuable to
speculators, investors, chiefs and other invested individuals. Monetary examination (additionally
alluded to as money related proclamation investigation or bookkeeping investigation or Analysis
of fund) alludes to an appraisal of the feasibility, solidness and gainfulness of a business, sub-
business or undertaking. The monetary occasions and exercises that influence an organization
and that can be converted into bookkeeping numbers are reflected in the organization's money
related articulations.
Financial Statements: Financial statements are written records that convey the financial
activities and conditions of a business or entity and consist of four major components. Financial
statements are meant to present the financial information of the entity in question as clearly and
concisely as possible for both the entity and for readers. Financial statements for businesses
usually include income statements, balance sheets, statements of retained earnings and cash
flows but may also require additional detailed disclosures depending on the relevant accounting
framework. Financial statements are often audited by government agencies, accountants, firms,
etc. to ensure accuracy and for tax, financing or investing purposes.
Financial Statement Analysis: Financial statement analysis is the process of analyzing a

company's financial statements for decision-making purposes and to understand the overall
health of an organization. Financial statements record financial data; however, this data must be
evaluated through financial statement analysis to become more useful to investors, shareholders,
managers, and other interested parties.
Tata Motors Limited (Tata Motors) is an automobile company, which is active in manufacturing
passenger cars, utility vehicles, trucks, buses and defense vehicles. Analysis of Tata motors will
help to understand and respond to your competitors’ business structure and strategies with
Global Data’s detailed SWOT analysis. It analyses the company’s core strengths, weaknesses,
opportunities and threats, providing you with an up-to-date objective view of the company.
Examine potential investment and acquisition targets with this report’s detailed insight into the
company’s strategic, financial and operational performance.
Mahindra & Mahindra Limited (M&M) is an Indian multinational automobile manufacturing

corporation headquartered in Mumbai, Maharashtra, India. It is one of the largest vehicle
Page - 01
Manufacturers by production in India and the largest seller of tractors across the world. It is a
part of Mahindra Group, an Indian conglomerate.
Ashok Leyland is an Indian automobile company headquartered in Chennai, India. It is owned by

the Hinduja Group. Founded in 1948, it is the 2nd largest commercial vehicle manufacturer in
India, 4th largest manufacturer of buses in the world and 12th largest manufacturer of trucks
globally.
1.2 Objective of the Study
 To understand the concept of financial analysis.

 To ascertain financial position of selected companies on the basis key ratios parameters.
 To compare the ratios of different automobile companies like Tata Motors, Ashok Leyland
and Mahindra and Mahindra.
 To Find current ratio, quick ratio, return on asset, debt ratio etc.
 Plotting graphs on the basis of these ratio and determine which company is more suitable for
investing.


1.3 Limitations of the Study
 False accounting data gives false ratio

 Comparison is not possible if different firms adopt different accounting policies
 Ratio may be misleading in the absence of absolute data
 Window-dressing
 Ignores qualitative factors
 Secondary data given


Page - 02
2. INDUSTRY PROFILE
2.1 A BRIEF HISTORY OF AUTOMOBILE COMPANIES IN INDIA
The primary auto kept running on India's streets in 1897.Until the point that the 1930s, autos
were transported in straightforwardly, however in little numbers.
Following the freedom, in 1947, the Government of India and the private area propelled
endeavors to make a car segment producing industry to supply to the car business. In any case,
the development was generally moderate in the 1960s because of nationalization and the permit
raj which hampered the Indian private part.
After 1970 the car business began to develop, yet the development was principally determined
by tractors, business vehicles and bikes. Autos were as yet a noteworthy extravagance. Japanese
producers entered the Indian market at last prompting the foundation of Maruti Udyog.
In the 1980, various Japanese makers propelled joint-wanders for building cruisers and light
business vehicles. It was as of now that the Indian government picked Suzuki for its joint-dare to
fabricate little autos.
Following the financial progression in 1991 and the continuous debilitating of the permit raj,
various Indian and multi-national auto organizations propelled activities. From that point
forward, car part and car producing development has quickened to meet local and fare requests.
A few Indian car producers, for example, Tata Motors, Maruti Suzuki and Mahindra and
Mahindra, extended their local and worldwide tasks. India's hearty monetary development
prompted the further extension of its residential car advertise which has pulled in noteworthy
India-particular venture by multinational vehicle makers.
In February 2009, month to month offers of traveler autos in India surpassed 100,000 units and
has since developed quickly to a record month to month high of 182,992 units in October 2009.
From 2003 to 2010, car sales in India have progressed at a rate of 13.7%, and with only 10% of
Indian households owning a car in 2009.
Page - 03
2.2 Major Automobile Companies in India
1. Tata Motors
2. Ashok Leyland
3. Mahindra & Mahindra
4. Maruti Suzuki
5. Hero MotoCorp Limited
6. Bajaj Auto Limited
7. Toyota Motor Corporation
8. MITSUBISHI MOTORS CORPORATION
9. Honda Motor Co Ltd. Company
10. Ford Motor Company
11. BHARATBENZ
12. Chevrolet
13. TVS Motors
14. Swaraj Mazda Limited
15. General Motors
Page - 04
3. COMPANY PROFILE
3.1 Tata Group – An Overview
Founded by JamsedJi Tata in 1868, the Tata group is a global enterprise, headquartered in India,
comprising over 100 independent operating companies. The group operates in more than 100
countries across six continents, with a mission 'To improve the quality of life of the communities
we serve globally, through long-term stakeholder value creation based on Leadership with Trust'.
Each Tata company or enterprise operates independently under the guidelines and supervision of
its own board of directors and shareholders. There are 29 publicly-listed Tata enterprises with a
combined market capitalization of about $130.13 billion (as on March 31, 2017). Tata companies
with significant scale include Tata Steel, Tata Motors, Tata Consultancy Services, Tata Power,
Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and
Indian Hotels. Going forward, Tata companies are building multinational businesses that seek to
differentiate themselves through customer-centricity, innovation, entrepreneurship,
trustworthiness and value-driven business operations, while balancing the interests of diverse
stakeholders including shareholders, employees and civil society.
3.2 Tata Motors – A Profile
TATA Motors is more familiar with its erstwhile acronym TELCO. TELCO became Tata Motors
in the year 2003.It is the leading manufacturer of commercial vehicle in India. This company
started its operation in an old workshop of east India railway at Jamshedpur on 1st June 1945 the
TATA Son’s purchased the Singhbhum Workshop for an amount of Rs. 25 lakh to setup the
manufacturing of steam locomotives, boiler & later on complete locomotives and other
engineering products. On 1st September of the same year the company was incorporated with the
name of TATA Engineering & Locomotives CO.
Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India.
Over 6.5 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The
company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune
(Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and
Dharwad (Karnataka).
It was Tata Motors, which developed the first indigenously developed Light Commercial
Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully
indigenous passenger car. Within two years of launch, Tata Indica became India's largest selling
car in its segment. In 2005, Tata Motors created a new segment by launching the Tata Ace,
India's first indigenously developed mini-truck.
Page - 05
3.3 Mahindra Group – An Overview
Mahindra and Muhammad was joined in 1945 by the siblings J.C. Mahindra and K.C. Mahindra
and Malik Ghulam Muhammad in Ludhiana, Punjab to exchange steel. Following the Partition of
India in 1947, Malik Ghulam Muhammad left the organization and emigrated to Pakistan where
he turned into the main fund pastor of the new state (and later the third Governor General in
1951). In 1948, K.C. Mahindra changed the organization's name to Mahindra and Mahindra.
Expanding on their skill in the steel business, the Mahindra siblings started exchanging steel with
UK providers. They likewise won an agreement to make Willys Jeeps in India and started
delivering them in 1947. By 1956, the organization was recorded on the Bombay Stock
Exchange, and by 1969 the organization had entered the world market as an exporter of utility
vehicles and extra parts.Like numerous Indian organizations, Mahindra reacted to the limitations
of the License Raj by venturing into different enterprises. Mahindra and Mahindra made a tractor
division in 1982 and a tech division (now Tech Mahindra) in 1986. It has kept on differentiating
its tasks as far back as through both joint endeavors and greenfield ventures.
3.4 Mahindra & Mahindra – A Profile
Mahindra and Mahindra, brands its items as "Mahindra", produces SUVs, cantina autos, pickups,
business vehicles, and two wheeled bikes and tractors. It claims get together plants in India,
Mainland China (PRC),the United Kingdom, and has three get together plants in the United
States. Mahindra keeps up business relations with remote organizations like Renault SA, France.
M&M has a worldwide nearness and its items are sent out to a few nations. Its worldwide
backups incorporate Mahindra Europe, situated in Italy, Mahindra USA Inc., Mahindra South
Africa and Mahindra (China) Tractor Co. Ltd.
In January 2011, the Mahindra Group propelled another corporate brand, Mahindra Rise, to bring
together Mahindra's picture crosswise over businesses and geographies. The mark positions
Mahindra items and administrations as optimistic, supporting clients' aspirations to 'Rise.'
Mahindra produces an extensive variety of vehicles, including MUVs, LCVs and three-wheelers.
It fabricates more than 20 models of autos, including bigger, multi-utility vehicles like the
Scorpio and the Bolero. It once had a joint wander with Ford called Ford India Private Limited to
fabricate traveler autos.
The Mahindra Automotive and Farm Equipment Sectors (AFS), is one of the biggest supporters
of the Mahindra Group income and incorporates 27 organizations, 18 backups and 9
organizations.
Page - 06
3.5 Hinduja Group – An Overview
The Hinduja Group is an Indian combination organization headquartered in London, United

Kingdom. They are engaged with an extensive variety of exercises including foundries, import
send out, exchanging, engine vehicles, saving money, call focuses and human services.
The organization was established in 1914 by Parmanand Deepchandh Hinduja, who was from a
Sindhi family situated in India.Initially working in Karachi and Mumbai, India, he set up the
organization's first universal activity in Iran in 1919. The central command of the gathering
moved to Iran where it stayed until 1979, when the Islamic Revolution constrained it to move to
Europe.
Srichand Hinduja and his sibling Gopichand moved to London in 1979 to build up the fare
business, Prakash deals with the gathering's accounts in Geneva, Switzerland while the most
youthful sibling, Ashok, administers the Indian premiums. The siblings are on the whole faithful
Hindu, veggie lover and teetotallers, and dress in comparable courses, with an inclination for
dark suits and round glasses.
In 2015 at The Asian Awards, the Hinduja siblings were regarded with the Business Leader of
the Year Award.
3.6 Ashok Leyland – A Profile
Ashok Leyland is an Indian automobile company headquartered in Chennai, India. It is owned by

the Hinduja Group.
Established in 1948, it is the second biggest business vehicle producer in India, fourth biggest
maker of transports on the planet and twelfth biggest producer of trucks all around. Working nine
plants, Ashok Leyland likewise makes save parts and motors for modern and marine
applications. It sold around 1,40,000 vehicles (M&HCV + LCV) in FY 2016. It is the second
biggest business vehicle organization in India in the medium and overwhelming business vehicle
(M&HCV) section, with a piece of the pie of 32.1% (FY 2016). With traveler transportation
alternatives extending from 10 seaters to 74 seaters (M&HCV = LCV), Ashok Leyland is a
market pioneer in the transport fragment. In the trucks portion Ashok Leyland essentially focuses
on the 16 to 25-ton go. Be that as it may, Ashok Leyland has a nearness in the whole truck run,
from 7.5 to 49 tons.
Headquartered in Chennai, India, our assembling impression spreads over the globe with 9
plants; including one each at Great Britain and Ras Al Khaimah (UAE). Our Joint Venture
accomplices incorporate John Deere (USA) for Construction Equipment, Continental AG
(Germany) for Automotive Infotronics and the Alteams Group for the make of high amazing
expelled aluminum segments for the car and broadcast communications parts.
Page -07
4. Research Methodology
Source of Data: The study is based on secondary data. Data regarding industries is collected
from the annual report of selected industries with the help of websites, books, journals,
magazines.
The ratios are computed with the help of
 Balance Sheet

 Statement of Profit and Loss

 Notes of Accounts
Sample Size: Three industries are taken into consideration.
Those are as follows:
 Tata Motors

 Mahindra & Mahindra

 Ashok Leyland
Duration of the study: For the purpose of the analysis the data is taken from the year
 2015-2016

 2016-2017
Tools used for analysis
 Bar Charts
Page – 08
5. Data Analysis, Interpretation, Balance Sheet and income & statements
Financial Ratios:
A financial ratio (or accounting ratio) is a relative magnitude of two selected numerical values taken
from an enterprise's financial statements i.e. it may be a balance sheet, income statement or a cash flow
statement. Financial ratios may be used by managers within a firm, by current shareholders (owners) of a
firm. Financial ratios are used to compare strengths and weaknesses in a company.
Types:
Liquidity ratios:
Liquidity ratios measure the availability of cash to pay debt.
Profitability ratios:
Profitability ratios measure the firm's use of its assets and control of its expenses to
generate an acceptable rate of return.
Activity ratios:
Activity ratios measure how quickly a firm converts non-cash assets to cash assets.
Leverage Ratio:
Leverage Ratio measures the level of debt incurred by a business entity.
Page – 09
Liquidity ratio:
A company’s liquidity is its ability to meet its short-term financial obligations. Liquidity ratios attempt
to measure a company's ability to pay off its short-term debt obligations. This is done by comparing a
company's most liquid assets, those that can be easily converted to cash, with its short-term liabilities.
Liquidity ratios are based on different portions of the company’s current assets and current liabilities
taken from the firm’s balance sheet.
1). Current ratio:
Current Ratio=Current assets /current liabilities.
Relatively high ratio values mean that the business is liquid, but cash is not working.
A current ratio of 1.0 or greater is an indication that the company is well-positioned to cover its current
or short-term liabilities.
A current ratio of less than 1.0 could be a sign of trouble if the company runs into financial difficulty.
For TATA Motors the current ratio is:

For financial year 2016&2017
Mar 17 Mar 16
Current 12,588 11,862

Assets
Current 21,648 18,702
Liabilities
Current 0.58 0.63
Ratio
Page – 10
For Ashok Leyland the current ratio is:
Mar 17 Mar 16
Current 5737 5181

Assets
Current 6181 4890
Liabilities
Current 0.92 1.05
Ratio
For Mahindra and Mahindra current ratio is:

Mar 17 Mar 16
Current 12456 11633

Assets
Current 9459 10694

Liabilities
Current 1.31 1.08

Ratio
Page – 11
Comparison of current ratio between the 3 automobile companies:
1.4
1.2
0.8 TATA MOTORS

ASHOK LEYLAND
0.6
MAHINDRA & MAHINDRA
0.4
0.2
0
2016 2017
The current ratio of Ashok Leyland and Mahindra & Mahindra is higher than Tata Motors.
Companies with a seemingly high current ratio may not be safer than a company with a
relatively low current ratio. Beyond just looking at the current ratio, an analyst would need to look at the
composition and quality of the company’s current assets.
Page – 12
2.) Quick Ratio:
(Cash equivalents + marketable securities + accounts receivables) / Current liabilities
The quick ratio is also known as the acid-test ratio. It is a liquidity ratio that further refines the current
ratio by measuring the level of the most liquid current assets available to cover current liabilities. The
quick ratio is more conservative than the current ratio because it excludes inventory and other current
assets, which generally are more difficult to turn into cash.
A rule of thumb is that a quick ratio greater than 1.0 means that a company is sufficiently able to meet its
short-term obligations.
For TATA Motors the quick ratio is:

For financial year 2015-2017
Mar 17 Mar 16
Quick Assets 2645 3318
Current Liabilities 21,648 18,702
Quick Ratio 0.12 0.17
For Ashok Leyland the quick ratio is:

Mar 17 Mar 16
Current Liabilities 6181 4890
For Mahindra and Mahindra quick ratio is:

Mar 17 Mar 16
Current Liabilities 9459 10694
Page – 13
Comparison of quick ratio between the 3 automobile companies:
0.6
0.5
0.4
TATA MOTORS
0.3 ASHOK LEYLAND
0.2 MAHINDRA &MAHINDRA
0.1
0
2016 2017
A low and/or decreasing quick ratio could be telling us that the company’s balance sheet is over-
leveraged. Or it could be saying the company’s sales are decreasing, the company is having a hard time
collecting its account receivables or perhaps the company is paying its bills too quickly.
A company with a high and/or increasing quick ratio is likely experiencing revenue growth, collecting
its accounts receivable and turning them into cash quickly and likely turning over its inventories quickly.
Page – 14
Profitability Ratios
We find accounting profitability exclusively on the income statement, which teases out four levels of
profit or profit margins: gross profit, operating profit, profit before tax and net profit.
The Major Margins
Gross Profit Margin = Gross Profit / Net Sales (Revenue)
Operating Profit Margin = Operating Profit / Net Sales (Revenue)
Pretax Profit Margin = Pretax Profit / Net Sales (Revenue)
Net Profit Margin= Net Income / Net Sales (Revenue)
1. Gross Profit Ratio
Gross Profit Ratio: It is a profitability ratio that shows the relationship between gross profit and
total net sales value. It is a popular tool to evaluate the operational performance of the business.
There is no norm or standard to interpret gross profit ratio. Generally a higher ratio is
considered better.
Gross Profit Ratio = (Gross Profit / Net Sales) *100
Where,
Gross profit = Net sales – Cost of goods sold
Net sales = Gross sales – Sales returns
Cost of Goods Sold = Opening Stock + Purchases – Closing Stock
Page – 15
For TATA Motors the G.P Ratio is:
For financial year 2016 & 2017
Mar-17 Mar-16
Gross Profit 76869 63773
Net Sales 273,015 269,693
G.P Ratio 28.16% 23.64%
For Ashok Leyland the G.P Ratio is:

Mar-17 Mar-16
Net Sales 21,260 22,749
G.P Ratio 22.28% 26.45%
For Mahindra & Mahindra the G.P Ratio is:

Mar-17 Mar-16
Net Sales 78,016 88,773
G.P Ratio 29.73% 27.32%
Page – 16
Comparison of quick ratio between the 3 automobile companies:
30
25
20
15
10
0
2016 2017
The gross profit ratio of Mahindra & Mahindra is higher than Ashok Leyland and Tata Motors. From the
above figure we can make the interpretation that the GP ratio of Mahindra & Mahindra is the highest
among the three companies and Tata Motors have the lowest GP ratio, which means that profit margin of
Mahindra and Mahindra is the highest.
Page – 17
2.) Return on Equity:
ROE = Net income / shareholder’s equity

Return on equity (ROE) is the amount of net income returned as a percentage of shareholders equity.
Return on equity measures a corporation's profitability by revealing how much profit a company
generates with the money shareholders have invested.
Net income is for the full fiscal year (before dividends paid to common stock holders but after dividends
to preferred stock.) Shareholder's equity does not include preferred shares.
Also known as "return on net worth".
Return on equity of Tata Motors:

Mar 17 Mar 16
Net Income 61211 95883
Shareholder’s 20,809 23,262

Equity
Return on equity 0.294 0.412
Return on equity of Ashok Leyland:

Mar 17 Mar 16
Net Income
15894 6819
Equity
Return on equity of Mahindra and Mahindra:

Mar 17 Mar 16
Net Income
36980 32113

Equity
Page – 18
Comparison of Return on Equity of Tata Motors, Ashok Leyland and Mahindra and Mahindra:
0.45
0.4
0.35
0.3
TATA MOTORS
0.25
ASHOK LEYLAND
0.2
MAHINDRA & MAHINDRA
0.15
0.1
0.05
0
2016 2017
A high return on assets shows than the business was able to successfully utilize the resources provided
by its equity investors and the company’s accumulated profits in generating income. Nonetheless, just
like any other financial ratio, the ROE is more useful if it is compared to a benchmark such as the
average ROE in the industry where the company operates or the company's ROE in the past years.
So, ROE of Tata Motors is higher than Ashok Leyland and Mahindra & Mahindra.
Page – 19
Activity Ratio
Activity ratios measure a firm's ability to convert different accounts within its balance sheets into cash or
sales. Activity ratios measure the relative efficiency of a firm based on its use of its assets, leverage, or
other similar balance sheet items and are important in determining whether a company's management is
doing a good enough job of generating revenues and cash from its resources.
1. Inventory Turnover Ratio
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
COGS = Net Sales – Gross Profit

Average Inventory = Opening Inventory + Closing Inventory / 2
Inventory Turnover Ratio: This ratio indicates the relationship between the cost of revenue from
operations during the year and average inventory kept during that year. This ratio indicates
whether inventory has been efficiently used or not.
Inventory Turnover Ratio of Tata Motors:
2016 2017
Net Sales 273046 269693
Cost Of Goods Sold 196177 205920
Average Inventory 4960 5,311
Inventory Turnover Ratio 39.55181 38.77236
Inventory Turnover Ratio of Ashok Leyland:

2016 2017
net sales 21260 22749
gross profit 4736 6017
cost of goods sold 16524 16732
average inventory 2702 2,563
inventory turnover ratio 6.11547 6.528287
Inventory Turnover Ratio of Mahindra & Mahindra:

2016 2017
net sales 78016 88773
gross profit 23197 24250
cost of goods sold 54819 64523
average inventory 2063 1,512
inventory turnover ratio 26.57247 42.67394
Page – 20
Comparison of Inventory Turnover Ratio of Tata Motors, Ashok Leyland and Mahindra and Mahindra:
45
40
35
30
TATA MOTORS
25
ASHOK LEYLAND
20
MAHINDRA & MAHINDRA
15
10
0
2016 2017
If we look at the inventory turnover ratio (ITO) of Tata Motors is maximum than Mahindra &
Mahindra and Ashok Leyland.
So it could be interpreted that Tata Motors has the maximum efficiency of utilizing their
inventory in the best possible way.
Page – 21
2. Debtors Turnover Ratio
Debtors Turnover Ratio = Net Credit Sales / Average Debtors
If, Net credit sales or average debtors are unavailable,
Debtors Turnover Ratio = Net Sales / Closing Debtors
Debtors Turnover Ratio: This ratio indicates the relationship between credit sales and average
Debtors during a year. Trade Receivable includes Debtors and Bills Receivables. This ratio
indicates the evaluation of liquidity of receivables.
Debtors Turnover Ratio of Tata Motors:
2016 2017
Net Sales 273046 269693
Average Debtors 2087 1580
Debtors Turnover Ratio 130.83 170.69
Debtors Turnover Ratio of Ashok Leyland:
2016 2017
Net Sales 273046 269693
Average Debtors 1,056 1,255
Debtors Turnover Ratio of Mahindra & Mahindra:
2016 2017
Net Sales 21260 22749
Average Debtors 2,715 2,535
Page – 22
Comparison of Debtors Turnover Ratio of Tata Motors, Ashok Leyland and Mahindra and Mahindra:
300
250
200
TATA MTORS
150 ASOK LEYLAND
MAHINDRA & MAHINDRA
100
50
0
2016 2017
If we look at the Debtors Turnover Ratio of Ashok Leyland, it has the highest ratio, and then
the ratio of Tata Motors and Mahindra & Mahindra.
So it could be interpreted that Ashok Leyland is the fastest among the three in receiving the
amount to the debtors and bills receivables.
Page – 23
Leverage Ratio
A leverage ratio is any one of several financial measurements that look at how much capital comes in the
form of debt (loans), or assesses the ability of a company to meet its financial obligations. The leverage
ratio is important given that companies rely on a mixture of equity and debt to finance their operations
and knowing the amount of debt held by a company is useful in evaluating whether it can pay its debts
off as they come due.
1. Debt ratio:
The debt ratio is calculated as follows:

Debt ratio = Total Liabilities / Total Assets
It tells us the degree of leverage used by the company.

If a company has a high debt ratio is an indication that the company must commit a significant portion of
its ongoing cash flow to the payment of principal and interest on this debt.
On the other hand, a company that employs very little debt, especially if this is low compared to other
companies in the same industry, may not be properly using leverage that might increase its level of
profitability.
Debt ratio of Tata Motors:
Mar 17 Mar 16
Total Liabilities 37727 33414
Total Assets 58,537 56,676
Debt Ratio 0.644 0.589
Page – 24
Debt ratio of Ashok Leyland:
Mar 17 Mar 16
Total Liabilities 7673 7,367
Debt Ratio of Mahindra and Mahindra:
Mar 17 Mar 16
Total Liabilities 13,669 14,705
Page – 25
Comparison of Debt Ratio of Tata Motors, Ashok Leyland and Mahindra and Mahindra:
0.7
0.6
0.5
0.4
TATA MOTORS
0.3 ASHOK LEYLAND

MAHINDRA & MAHINDRA
0.2
0.1
0
2016 2017
The debt ratio of Tata Motors is higher than Ashok Leyland and Mahindra & Mahindra.
So, Tata Motor’s Debt of funding is higher than all the three companies means it leverages on outside
of sources financial.
Page – 26
Debt to Equity Ratio
Debt to Equity Ratio = Total Liabilities / Shareholder’s Fund
Debt to Equity Ratio: This ratio expresses the relationship between long term debts and
shareholder’s fund. This ratio is calculated to assess the ability of the firm to meet its long term
liabilities.
Debt to Equity Ratio of Tata Motors:
2017 2016
total liabilities 37728 30792
shareholder's fund 20809 23262
debt to equity
ratio 1.81 1.32
Debt to Equity Ratio of Ashok Leyland:
2017 2016
debt to equity ratio 1.25 1.36
Debt to Equity Ratio of Mahindra & Mahindra:
2017 2016
debt to equity ratio 0.53 0.68
Page – 27
Comparison of Debt Equity Ratio of the Tata Motors , Ashok Leyland and Mahindra & Mahindra
2
1.8
1.6
1.4
1.2
TATA MOTORS
1
ASHOK LEYLAND
0.8
MAHINDRA & MAHINDRA
0.6
0.4
0.2
0
2016 2017
If we look at the debt-equity ratio of the three companies we can make out that the best ratio
maintained is of Tata Motors. Mahindra & Mahindra and Ashok Leyland both also have a good
debt equity ratio.
As a whole all the three companies should focus on maintaining the ratio as low as possible for the
betterment of business.
Page – 28
Balance Sheet of Tata Motors (in Rs. Cr.)
Particulars Mar 17 Mar 16
12 months 12 months
EQUITIES AND
LIABILITIES
SHAREHOLDER’S FUNDS
Equity Share Capital 679 679
Total Share Capital 679 679
Revaluation Reserves NIL NIL
Reserves and Surplus 20,130 22,583
Total Reserves and Surplus 20,130 22,583
Total Shareholder’s Funds 20,809 23,262
NON-CURRENT
LIABILITIES
Long Term Borrowings 13,686 10,600
Deferred Tax Liabilities [Net] 98 71
Other Long Term Liabilities 1,445 3,290
Long Term Provisions 851 751
Total Non-Current Liabilities 16,080 14,712
CURRENT LIABILITIES
Short Term Borrowings 5,376 3,655
Trade Payables 7,015 5,141
Other Current Liabilities 8,789. 9,456
Short Term Provisions 467.98 450.27
Total Current Liabilities 21,648 18,702
Total Capital And Liabilities 58,537 56,676

ASSETS
NON-CURRENT ASSETS
Tangible Assets 17,365 17,573
Intangible Assets 2,873 3,503
Capital Work-In-Progress 1,871 1,558
Intangible Assets Under 5,366 4,129

Development
Fixed Assets 27,475 26,762
Non-Current Investments 15,307 15,217
Long Term Loans And Advances 390 253
Other Non-Current Assets 2,777 2,582
Total Non-Current Assets 45,949 44,814
CURRENT ASSETS
Current Investments 2,401 1,746
Inventories 5,504 5,118
Trade Receivables 2,128 2,046
Cash And Cash Equivalents 286 788
Short Term Loans And Advances 231 484
Other Current Assets 2,037 1,679
Total Current Assets 12,588 11,862
Page – 30
Balance Sheet of Ashok Leyland (in Rs. Cr.)
Mar 17 Mar 16
12 months 12 months
EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Revaluation Reserves NIL NIL

Total Shareholders Funds 6,126 5,407
NON-CURRENT
LIABILITIES
Deferred Tax Liabilities [Net] 127 329
Other Long Term Liabilities 86 203
Long Term Provisions 132.55 122.81
CURRENT LIABILITIES
Short Term Borrowings 199 25
Other Current Liabilities 2,446 2,113

Short Term Provisions 484 189
ASSETS
NON-CURRENT ASSETS
Intangible Assets 315 338
Capital Work-In-Progress 158 55

Intangible Assets Under 48 21
Development
Long Term Loans And Advances NIL 98
Other Non-Current Assets 762 647
CURRENT ASSETS
Current Investments 877 NIL
Trade Receivables 860 1,251
Cash And Cash Equivalents 912 1,593.13

Short Term Loans And Advances 3 71
Other Current Assets 706 641

Page – 32
Balance Sheet of Mahindra and Mahindra (in Rs. Cr.)
Mar 17 Mar 16
12 months 12 months
EQUITIES AND
LIABILITIES
SHAREHOLDER'S FUNDS
Revaluation Reserves NIL 11
Total Shareholders Funds 25,670 21,707
NON-CURRENT LIABILITIES
Deferred Tax Liabilities [Net] 695 1,248
Other Long Term Liabilities 581 596
Long Term Provisions 700 672
CURRENT LIABILITIES
Short Term Borrowings 503 348
Other Current Liabilities 1,140 2,243
Short Term Provisions 659 1,339

ASSETS
NON-CURRENT ASSETS
Intangible Assets 1,234 1,050
Capital Work-In-Progress 409 235
Intangible Assets Under 1,628 1,331

Development
Long Term Loans And 768 4,057

Advances
Other Non-Current Assets 2,146 59
CURRENT ASSETS
Current Investments 3,607 2,376
Trade Receivables 2,918 2,512
Cash And Cash Equivalents 1,687 2,297
Short Term Loans And 1,076 1,179

Advances
Other Current Assets 452 581
Page – 34
Income statement of Tata motors
Period Ending: 2017 2016
Total Revenue 40,910,100 40,848,800
Cost of Revenue NIL NIL
Gross Profit 40,910,100 40,848,800
Operating Expenses
Research and Development NIL NIL
Sales, General and Admin. 40,910,100 40,848,800
Non-Recurring Items NIL NIL
Other Operating Items 2,809,000 2,538,000
Operating Income 1,614,100 2,669,600
Add'l income/expense items 316,100 (155,100)
Earnings Before Interest and Tax 2,160,100 2,601,800
Interest Expense 652,400 723,500
Earnings Before Tax 1,507,700 1,878,300
Income Tax 549,300 415,500
Minority Interest NIL NIL
Equity Earnings/Loss Unconsolidated Subsidiary 229,900 87,200
Net Income-Cont. Operations 1,188,300 1,550,000
Net Income 958,400 1,462,800
Net Income Applicable to Common Shareholders 958,400 1,462,800
Page – 35
Income statement of Ashok Leyland (INR in Million)
Period Ending: 2017 2016
Total Revenue 240683 223196
Cost of Revenue, Total 160364 150335
Total Operating Expenses 213225 202760
Operating Income 27458 20436
Interest Income (Expense), Net Non-Operating -10433 -9985
Gain (Loss) on Sale of Assets NIL NIL
Other, Net 1307 1636
Net Income Before Taxes 18333 1208++7
Provision for Income Taxes 1961 4966
Net Income After Taxes 16371 7122
Minority Interest -436 -302
Equity In Affiliates NIL NIL
U.S GAAP Adjustment NIL NIL
Net Income Before Extraordinary Items 15936 6819
Total Extraordinary Items -42 NIL
Net Income 15894 6819
Page – 36
Income statement of Mahindra and Mahindra (INR in Million)
Period Ending 2017 2016
Sales/Revenue 8,31,507 7,54,794

Sales Growth 10.16% 6.72%
Cost of Goods Sold (COGS) incl. D&A 6,33,877 5,65,799
COGS excluding D&A 6,05,786 5,41,383
Depreciation & Amortization Expense 28,091 24,417
Depreciation 21,422 19,850
Amortization of Intangibles 6,669 4,567
COGS Growth 12.03% 2.55%
Gross Income 1,97,630 1,88,995
Gross Income Growth 4.57% 21.56%
Gross Profit Margin 23.77% NIL
SG&A Expense 1,21,929 1,14,897
Research & Development 13,527 14,593
Other SG&A 1,08,403 1,00,304
SGA Growth 6.12% 15.73%
Other Operating Expense -6,224 -3,620
EBIT 81,924 NIL
Unusual Expense -789 100
Non Operating Income/Expense 4,847 1,067
Non-Operating Interest Income 3,432 3,251
Interest Expense
Interest Expense Growth 36,485 33,676
Gross Interest Expense 36,485 33,676
Pretax Income 54,509 48,260
Pretax Income Growth 12.95% 11.90%
Pretax Margin 6.56% NIL
Income Tax 22,997 21,175
Income Tax - Current Domestic 20,593 18,250
Income Tax - Deferred Domestic 2,404 387
Equity in Affiliates 8,994 8,460
Other After Tax Income (Expense) NIL -824
Consolidated Net Income 40,505 34,721
Minority Interest Expense 3,525 4,061
Net Income 36,980 30,661
Page – 37
FINDINGS AND SUGGETIONS
FINDINGS
 The current ratio of all the three companies inherently assumes that the
company would or could liquidate most of its current assets and convert them
to cash to cover the liabilities. 
 Quick Ratio of all the three companies is less than 1.0 means that a company
is sufficiently able to meet its short-term obligations. 
 Gross Profit Ratio of the three companies is somewhere on an equal range
which is good for the company because they are performing well in the
market.
 Return on Equity of all the three companies is high means the business was
able to successfully utilize the provided by its equity investors and the
company’s accumulated profits in generating income. 
 Inventory Turnover Ratio of Tata Motors is the highest which means that the
inventory of the company is used in the best possible way as compared to the
other two companies.
 Debtors Turnover Ratio tells us that the ratio of Ashok Leyland is the highest
Compared to other two companies
 High debt ratio is an indication that all the companies must commit a
significant portion of its ongoing cash flow to the payment of principal and
interest on this debt. 
 Debt to Equity Ratio of all the three companies is less than the ideal ratio and
this shows that the companies are operating well in the business.
Page – 38
SUGGESTIONS
 All the companies should focus on increasing their current assets and reducing their
current liabilities, this would help the companies in maintaining the current ratio.-
 All the three companies should focus on increasing their sales and bills receivables and
reducing their bills payables.
 Gross profit ratio of Tata Motors is the least among the companies and hence it
should try to increase the sales.
 Return on Equity of Tata Motors is the highest; Mahindra & Mahindra and Ashok
Leyland should focus on more profitable areas to invest in order to get more
returns on equity.
 Inventory Turnover Ratio shows the utilization of the inventory in the best possible way.
Mahindra & Mahindra has the best ratio; Tata Motors & Ashok Leyland should look into
the inventory management and try to increase the ratio.
 Debtors Turnover Ratio of Ashok Leyland should be increased by receiving to
their debtors and bills receivables, in-fact rest two companies should also focus
on this.
 Debt Ratio of Tata Motors is Highest hence other two companies should focus on
increasing their sources of fund.
 Debt to equity ratio of the companies is less hence the companies should focus on
doing external financing as the companies are maintaining.
Page – 39
CONCLUSION
The conclusion of this project has been very useful to me because I learned how to
analyze the balance sheet and the statement of profit and loss of the company and how to
compute the ratios. This has improved the knowledge of financial statements which is
very useful in business and commerce every day. The work I did in the project has
helped me to understand the techniques, applications, and usefulness of financial
statements to understand the performance of a company or enterprise without much
difficulty and also understand how to prepare them in future.
The following conclusion came to know while preparing the project:
 From the ratio analysis of the firm we come to know about the profitability of the firm.
Leverage ratios indicate the composition of long term debts and its impact on overall
financial position of the firm. Liquidity ratios give idea maintenance of liquid assets in
the company. The company is earning huge profits and is in good financial health. This
indicates the managerial efficiency of the company. As there is a trade-off between
profitability and liquidity the firm maintains current assets up to the level necessary for
the smooth functioning of the business. On the current liabilities side, there are various
non-cash provisions for employees of the company. Sundry creditors are managed by
keeping a close check on the deferral period.
 From the current ratio, it can be said that Tata Motors having a low current ratio is much
safer to invest in than Ashok Leyland and Mahindra & Mahindra.
 There is an increasing quick ratio in the case of Mahindra and Mahindra followed by Tata
Motors so, it is likely experiencing revenue growth, collecting its accounts receivable and
turning them into cash quickly and likely turning over its inventories quickly.
 Gross Profit Ratio of Mahindra& Mahindra is higher than other two companies
which is good for the company because they are performing well in the market.
Other two companies have to increase their GP ratio.

 Return on equity measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested. So, from the analysis we
found out that Tata Motors make more profit with the money shareholders have invested
when compared with Ashok Leyland and Mahindra and Mahindra.
Page – 40
 Inventory Turnover Ratio of Tata Motors is higher than other two companies which
means Tata motors has maximum utilisation of inventories compared to other two
companies.
 Debtors Turnover Ratio of Ashok Leyland is highest compared to other two companies
means the fastest among the three in receiving the amount to the debtors and bills
receivables.
 Debt Ratio of Tata motors is highest than Tata Motors and Mahindra & Mahindra means
it leverages on outside of sources financial.
 Debt to equity ratio of the three companies we can make out that the best ratio
maintained is of Tata Motors. Mahindra & Mahindra and Ashok Leyland both
also have a good debt equity ratio.
Page – 41
BIBLIOGRAPHY
For the completion of this project report, I have taken help from a number of books,
magazines and internet web sites to collect information. Some of such sources are-
Books:

 D.K. Goel (2014) from New ISC Accountancy , Arya Publication
  S.K. Singh(2010) from Accountancy , SBPD publication

The following sites were of great help for me in complete this project-
https://www.moneycontrol.com/financials/mahindramahindra/balance-sheetVI/MM#MM
https://www.moneycontrol.com/financials/ashokleyland/balance-sheetVI/AL#AL
https://www.moneycontrol.com/financials/tatamotors/balance-sheetVI/TM03#TM03
https://www.nasdaq.com/symbol/ttm/financials?query=income-statement
https://in.investing.com/equities/ashok-leyland-income-statement
https://www.investopedia.com/university/ratios/
https://www.nasdaq.com/quotes/company-financials.aspx
http://www.ashokleyland.com/performance-reports
Company Report:
Annual Report of Tata Motors (2016-2017 and 2015-2016)
Annual Report of Mahindra and Mahindra (2016-2017 and
2015-2016)
Annual Report of Tata Ashok Leyland (2016-2017 and 2015-
2016)
Page – 42

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A COMPARATIVE

Submitted in the partial fulfillment of the

CAMBRIDGE INSTITUTE OF TECHNOLOGY TATISILWAI

Corporate Guide: Faculty Guide:

Signature of the Student with Date

Name of the Student – Anjali Kumari

The three companies compared in the analysis are

This project provided me with an opportunity to explore in the field of finance.

Chapter Contents Page No.

Industry Profile 3-4

2. 2.1 A Brief History of Automobile Companies in India 3

2.2 Major Automobile Companies in India 4

Company Profile 5-7

3.1 Tata Group – An Overview 5

3.2 Tata Motors – A Profile 5

3.3 Mahindra & Mahindra – An Overview 6

3.5 Hinduja Group – An Overview 7

3.6 Ashok Leyland – A Profile 7

5. Data Analysis , Interpretation , Balance Sheet and 9-37

6. Findings and Suggestions 38-39

Financial Statement Analysis: Financial statement analysis is the process of analyzing a

Mahindra & Mahindra Limited (M&M) is an Indian multinational automobile manufacturing

Ashok Leyland is an Indian automobile company headquartered in Chennai, India. It is owned by

1.2 Objective of the Study

 To understand the concept of financial analysis.

1.3 Limitations of the Study

 False accounting data gives false ratio

2.1 A BRIEF HISTORY OF AUTOMOBILE COMPANIES IN INDIA

3. Mahindra & Mahindra

5. Hero MotoCorp Limited

6. Bajaj Auto Limited

7. Toyota Motor Corporation

8. MITSUBISHI MOTORS CORPORATION

9. Honda Motor Co Ltd. Company

10. Ford Motor Company

13. TVS Motors

14. Swaraj Mazda Limited

15. General Motors

3.1 Tata Group – An Overview

3.2 Tata Motors – A Profile

3.4 Mahindra & Mahindra – A Profile

The Hinduja Group is an Indian combination organization headquartered in London, United

3.6 Ashok Leyland – A Profile

Ashok Leyland is an Indian automobile company headquartered in Chennai, India. It is owned by

The ratios are computed with the help of

Sample Size: Three industries are taken into consideration.

Those are as follows:

Tools used for analysis

1). Current ratio:

Current Ratio=Current assets /current liabilities.

For TATA Motors the current ratio is:

Current 12,588 11,862

Current 5737 5181

For Mahindra and Mahindra current ratio is:

Current 12456 11633

Current 9459 10694

Current 1.31 1.08

0.8 TATA MOTORS

(Cash equivalents + marketable securities + accounts receivables) / Current liabilities

For TATA Motors the quick ratio is:

Quick Assets 2645 3318

Current Liabilities 21,648 18,702