ENGINEERING ECONOMICS(CV6C05)
REPORT
Under the Supervision of;
Mr K C Manjunath
Department of civil engineering
THE NATIONAL INSTITUTE OF ENGINEERING,
MYSURU-570008
( Autonomous under VTU, Belgaum )
Academic year : 2022-2023
SUBMITTED BY:
NAME : Deekshith gowda mn
USN :4NI19CV022
CLASS : VI semester ‘ B’ section
ABSTRACT
The purpose of this project is to financially study the company ‘TATA MOTORS
LIMITED’ by doing ratio analyses and research. Both quantitative and qualitative methods
were used for this report. Qualitative methods are introduction and literature review.
Quantitative methods are analyses and charts. Information is taken from their website and
finance for three years: 2020, 2021 , 2022. This report shows whether the changes are major or
minor and the financial position of TATA MOTOR LIMITED.
INTRODUCTION
Tata Motors Limited is the major manufacturer of automotive commercial buses, cars, and
trucks and protection (Business Standard Private Ltd., n.d.). Tata Motors Limited took over
the Jaguar Land Rover business from Ford Motors in June 2008. Jaguar Land Rover are
international automobile corporations developing, producing, and selling luxury sedans and
sports cars, and premium Landrover, all-terrain vehicles, and related parts.(Tata Motors
Limited). The corporation became the first car firm from India to be listed on the New York
stock exchange in September 2004. (Tata Motors Limited). Tata Motors' sudden drop in price
was paradoxical as most observers still assume the worth of their stock, the assumption that
Tata Motors is underestimated is nearly justified. (Kotak Securites, n.d.). All other
operations segment of the corporation involves information technological services, and
machine tools and factory automotive services. (Reuters, n.d.). Ratio analyses are one of the
common techniques for checking financial statements. Banks and other borrowers built it to
help take credit from rival firms. (Prachi Juneja, n.d.). Worldwide sales of Jaguars and Land
Rovers have been more than doubled since Tata bought them. They add up to one billion
dollars in pretax profits for Tata in its most recent quarter. (Bill Vlasic, 2015). 77-year-old
retired chairman, Ratan Tata envisioned to branch out into autos by building low-cost cars for
its home market. (Bill Vlasic, 2015). Tata Motors receives profit firstly from its Jaguar Land
Rover segment which is assumed to make 73% total profit In the year 2020. (Trefis Team,
2019). Jaguar Land Rover owned by Tata Motors hopes to stop the spread of antibiotic-
resistant superbugs by ventilation installed cars in the future. (Anna Tobin, 2019). Tata
Motors is committed to social responsibility in letter and spirit. It is a signatory to the UN
Global Compact and participates in community and society projects in line with the
principles of the World Compact on labor and environmental standards. Therefore, it plays an
active role in the growth of communities serving rural populations adjacent to its factories.
(NDTV Profit, n.d.). "With the general economic slump, higher axle loads, the stress in
liquidity and low cargo availability, growth continues to have an impact on subdued
demand," said P.B. Balaji, Tata Motors group CFO, said at a call conference. (The Hindu,
2020). Rate analyses could be defined as the inspection and interpretation process for a
company's operational and financial condition (AlKaabi and Nobanee, 2020). Ratio
analyses is considered significant since it measures a company's economic positioning and
helps companies to prepare themselves for the future, using multiple ratios like the current
ratio and the Time Ratio. (AlBreiki & Nobanee, 2020). Ratio analyses frequently allow
businesses to assess their efficiency and decide the costs and disadvantages of their
operations. (AlDhaheri & Nobanee, 2020).The financial statements of the two groups can be
hard to analyze. Being in two different industries that follow different styles for running
businesses makes it difficult to finalize which company has a better investment value.
Creditors use Ratio analyses to solve these problems. (Prachi Juneja, n.d.).
METHODOLOGY
The ratio analyses done for this project were done with the help of the extraction of the
balance sheet, income statement from the their official website. Accurate information were
available only for three years which are: 2017,2018,2019. Hence, we used these three years
for the analysis.
Financial Data (Tata Motors Limited)
Item 2019 2018 2017
Current Assets 1,228,275,200 1,362,648,300 1,163,336,400
Current Liabilities 1,447,750,600 1,427,782,700 1,152,886,200
Inventories 390,015,900 424,296,200 352,953,800
Cash 410,723,400 492,394,200 509,206,700
Receivables 189,961,700 198,933,000 140,755,500
Total Assets 2,987,119,900 3,235,937,200 2,666,646,000
Total Liabilities 2,429,052,500 2,321,989,900 2,127,803,800
Total Equity 552,738,700 908,589,800 534,197,000
Sales 2,993,662,400 2,882,951,100 2,656,495,100
Cost of Goods Sold 1,978,855,800 1,869,682,900 1,670,895,400
EBIT -203,091,700 -115,737,500 -63,956,100
Interest 57,586,000 46,365,000 42,365,700
Net Income/Loss -293,142,700 66,660,800 61,210,500
RATIO ANALYSES:
Current Ratio:
Year 2019 2018 2017
Current assets 1,228,275,200 1,362,648,300 1,163,336,400
Current Liabilities 1,447,750,600 1,427,782,700 1,152,886,200
Total 0.84 0.95 1.009
The current ratio was at its highest in 2017 out of three years. It has fallen at a
constant rate to 0.85 as seen in the figure. It shows how the liquidity has fallen since
2017 with a ratio difference of 0.169.
Quick Ratio:
Year 2019 2018 2017
Current assets - 838,259,300 938,352,100 810,382,600
Inventory
Current Liabilities 1,447,750,600 1,427,782,700 1,152,886,200
Total 0.28 0.65 0.70
This diagram has shown the drastic fall of quick ratio for the corporation since 2017.
From 0.7 to 0.28 is a drastic downfall of ratio for the company. It decreased with a
0.05 difference in 2018.
Cash Ratio:
Year 2019 2018 2017
Cash 410,723,400 492,394,200 509,206,700
Current Liabilities 1,447,750,600 1,427,782,700 1,152,886,200
Total 0.28 0.34 0.44
This figure shows the downfall of the figure since 2019. It shows the liquidity has decreased
over time from 0.44 to 0.28.
Inventory Turnover Ratio:
Year 2019 2018 2017
COGS 1,978,855,800 1,869,682,900 1,670,895,400
inventory 390,015,900 424,296,200 352,953,800
5.07 4.40 4.73
This figure shows the activity of the corporation is inconsistent. It fell slightly in 2018 with a
rate of 4.40 and drastically improved to 5.07. It shows that the activity of the company has
improved over time and they should maintain stability.
RECEIVABLE TURNOVER RATIO:
Item 2019 2018 2017
Sales 2,993,662,400 2,882,951,100 2,656,495,100
Receivables 189,961,700 198,933,000 140,755,500
15.75 14.49 18.87
This figure shows the average amount of time needed to collect accounts receivables for the
company has been lowering down. From 18.87 in 2017, the ratio fell to 14.47 which is its
lowest in all the 3 years. Improved in the final year at 5.75 in 2019.
Debt Ratio:
Year 2019 2018 2017
Total Liabilities 2,429,052,500 2,321,989,900 2,127,803,800
Total assets 2,987,119,900 3,235,937,200 2,666,646,000
0.813 0.717 0.797
This figure shows the proportion of total assets financed by Tata Motor’s creditors. The debt
ratio is at its highest in 2019 and lowest in 2018. It shows that debt-financed is more now.
Time Interest Earned Ratio:
Year 2019 2018 2017
EBIT -203,091,700 -115,737,500 -63,956,100
Interest 57,586,000 46,365,000 42,365,700
-3.52 -2.49 -1.50
This figure shows that the company’s ability to make contractual interest payments is
massively negative and decreasing. From negative 1.50 in 2017 to negative 3.52 in 2019.
Shows that the company isn’t in a good position to make payments.
Return on equity ratio:
2019 2018 2017
Net income -293,142,700 66,660,800 61,210,500
Equity 552,738,700 908,589,800 534,197,000
-0.530 0.073 0.114
This figure shows that the return on equity rate has had a massive decline since 2017. From
positive 0.114 to -530. It is showing a very bad performance for its return on equity.
Return on Total assets:
Year 2019 2018 2017
Net income -293,142,700 66,660,800 61,210,500
Total assets 2,987,119,900 3,235,937,200 2,666,646,000
Total -0.0981 0.0206 0.022
This figure shows that its return on total assets ratio has declined poorly in the last year. It
had a stable rate in 2017 and 2018 until it fell to negative 0.981 showing a huge decline for its
return of total assets.
Profit Margin ratio:
Year/Item 2019 2018 2017
Net Income -293,142,700 66,660,800 61,210,500
Sales 2,993,662,400 2,882,951,100 2,656,495,100
-0.097 0.023 0.023
This figure shows that the profit margin was a little bit healthy in the years 2017 and 2018,
with a stable rate of 0.023. Although they managed to be consistent with profit margin
accurately for two years, it fell horribly in the year 2019 coming to -0.097. A huge change
for the profit margin as shown in the figure.
CONCLUSION
To conclude, the Tata Motors company has shown its impact on the industry. We can see the
downfall of tata motors, but it is expected, as it is such a big company. In this report, we have
seen that there is an abnormal amount of debt from Tata motors. Their ability to make the
contractual payment has also been hugely decreased. Looking at all the three years, 2017 is
considered the best financial year out of the three years. It had the highest current and quick
ratio in the year 2017 and the rate has fallen ever since, which clearly shows that liquidity has
decreased over time. If the company manages its assets well and finances its debt properly, it
is expected to recover from the loss.
