“Financial Analysis of

Auto majors”
At

“Tata Motors Ltd.”

Corporate Guide: Submitted by: Hitesh Yadav

Name - Mr. Anil Jha NIIT University, Neemrana
Department - Finance
Organization - Tata Motors Ltd.
1
 ACKNOWLEDGEMENT

There is a famous saying:

“The theory without practical is lame and practical without theory is blind.”

I take the opportunity to express my gratitude to all of the person who in some or
other way helped me to accomplish this challenging project in Auto Profiles Ltd.
No amount of written expression is sufficient to show my deepest sense of
gratitude to them.

I extend my warm and heartiest thanks to my mentor Mr. Anil Jha (Manager,
Finance Department of Tata Motors Ltd.) for guiding me in completing my
project successfully.

They had been instrumental in the success of the project in a various ways and
has provided me with the adequate information and in helping me to upgrade my
learning process and skills required for completing this project.

I would also like to thank Mr. Gurwinder Singh Ahuja (HOD Finance
Department, Tata Motors Ltd.) for allowing me to do this project in the
organization.

A special appreciative “Thank you” to all the staff of “Tata Motors Ltd” for their
positive support.

I also acknowledge with a deep sense of reverence, my gratitude towards my

parents who always supported me morally as well as economically.

At last but not least gratitude goes to all of my friends and my seniors who directly
or indirectly helped me to complete this project report.

2
 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 4 weeks
from 26th May to 24th June 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 financial.

3
 TABLE OF CONTENTS

Sr. No. Topics Page no.

1. Introduction 5
1.1 Types of Financial Analysis 6
1.2 Role of Financial Analysis 7
1.3 History of Tata Motors 8-9
1.4 History of Ashok Leyland 10 - 11
1.5 History of Mahindra and Mahindra 12
1.6 Objectives of Study 13
2. Industry Profile 14 – 16

3. Research Methodology 17 – 31

4. Balance Sheet, Income statement 32 – 40

Data
5. Conclusion 41
6. Bibliography 42

4
 INTRODUCTION
Financial analysis is the evaluation of a business in order to determine its profitability, liabilities,
strengths and future earnings potential. A wide variety of techniques may be utilized to assess an
organization’s financial viability including the most common methodologies of horizontal analysis,
vertical analysis and ratio analysis.
Financial analysis is a critical aspect of all commercial activity as it provides actionable insights
into the organization’s health and future potential. Not only does this information provide investors
and lenders with critical data that may affect the price of stocks or interest rates, these reports also
allow company managers to gauge their performance with regard to expectations or industry
growth. From a management point of view, financial analysis are critical to the success of the
company because they highlight weaknesses and strengths that directly affect competitiveness.
FINANCIAL ANALYSIS OF TATA MOTORS LTD
Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive Company)
headquarter in Mumbai, is an Indian multinational automotive manufacturing company and a
member of the Tata Group. Its products include passenger cars, trucks, vans, coaches, buses, sports
cars, construction equipment and military vehicles.
Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow,
Sanand, Dharwad, and Pune in India, as well as in Argentina, South Africa, Great Britain and
Thailand. It has research and development centres in Pune, Jamshedpur, Lucknow, and Dharwad,
India and in South Korea, Great Britain and Spain. Tata Motors' principal subsidiaries purchased
the English premium car maker Jaguar Land Rover (the maker of Jaguar and Land Rover cars) and
the South Korean commercial vehicle manufacturer Tata Daewoo. Tata Motors has a bus-
manufacturing joint venture with Marcopolo S.A. (Tata Marcopolo), a construction-equipment
manufacturing joint venture with Hitachi (Tata Hitachi Construction Machinery), and a joint
venture with Fiat Chrysler which manufactures automotive components and Fiat Chrysler and Tata
branded vehicles.
Founded in 1945 as a manufacturer of locomotives, the company manufactured its first commercial
vehicle in 1954 in a collaboration with Daimler-Benz AG, which ended in 1969. Tata Motors
entered the passenger vehicle market in 1991 with the launch of the Tata Sierra, becoming the first
Indian manufacturer to achieve the capability of developing a competitive indigenous automobile.
In 1998, Tata launched the first fully indigenous Indian passenger car, the Indica, and in 2008
launched the Tata Nano, the world's cheapest car. Tata Motors acquired the South Korean truck
manufacturer Daewoo Commercial Vehicles Company in 2004 and purchased Jaguar Land Rover
from Ford in 2008.
Tata Motors is listed on the (BSE) Bombay Stock Exchange, where it is a constituent of the BSE
SENSEX index, the National Stock Exchange of India, and the New York Stock Exchange. The
company is ranked 226th on the Fortune Global 500 list of the world's biggest corporations as of
2016.
On 17 January 2017, Natarajan Chandrasekaran was appointed chairman of the company.

5
1.1 METHODS OF FINANCIAL ANALYSIS

There are a myriad of techniques that can be used to analyse the performance of a
commercial enterprise, but the most common methods use the following strategies:
 Horizontal Analysis - This method uses past performance as a baseline metric for the
success of the company. There are variations in this method that may use some number
of years as a standard; for example, if the company has been in existence for some time,
the two years prior may be used as a comparison. If the company is relatively new, it is
common to use the initial year as a baseline and plot performance in relation to it.

 Vertical Analysis - Also known as component percentages, this type of analysis

compares the profits to assets, liabilities and equities. This method is generally helpful
when comparing a large number of similar companies. The limitation of this method
is that it often does not weight factors that impact future viability appropriately, like
long-term partnerships, and one-time losses or investments.

 Stock Price Movement - This technique relies on analysing the performance of the
company’s stock rather than their financial health. In essence, this method uses the
financial markets as an analytical tool. Various methods may be used to evaluate the
stock’s performance including enlarging or narrowing the window of evaluation,
comparison to similar companies and trend analysis. There are some serious drawbacks
to this technique. If the markets are relying on inaccurate data or analytical
methodologies, it may be pricing stocks higher than their actual value. Stock analyses
often ignore the company’s intrinsic sustainability in order to profit from stock price
fluctuations, and are unreliable foundations for establishing long-term investment
relationships.

 Ratio Analysis –This method analyse various aspects of the company’s financial
health. For example, a current ratio is the comparison of assets to liabilities. This type
of analysis is extremely popular due to the analyst’s ability to choose two key features
of businesses. Many analysts utilize this type of analysis to support their evaluations
of organizations even if conventional analytical methodologies may not be as positive.
The weakness in this type of analysis is that if the two characteristics are poorly chosen,
an unreliable estimation of financial viability may be produced.

6
 1.2 ROLE OF FINANCIAL ANALYSIS
Although many investors are eager for financial analysis to advance to the point that projections
of success and future earnings can be accurately provided, that is impossible to achieve. In the
real world there will always be unpredictable events that limit the accuracy of analyses and
projections. The financial community’s desire for perfect evaluation may be out of reach,
nevertheless the goal for financial analysts should be to attain perfection.
Financial analysts are rarely expected to predict the performance of organizations beyond a
few years into the future. By extrapolating from present circumstances, the reports provided by
financial analysts give investors and company managers enough information to prepare for the
short window ahead in time. Though these projections are subject to external or unforeseen
events, in most cases this is enough information to produce a business strategy that optimizes
impending opportunities and limits risks.
The role of the financial analyst is to provide reliable information that managers can utilize to
anticipate impending events. In larger companies, analysts may evaluate only a portion of the
organization’s performance, and then relay this information to the appropriate managers. They
must be able communicators who have the ear of influential managers. If their analyses predict
drastic perturbations in the immediate future, they must convince management to take
precautionary measures. On the other hand, if the company is expected to perform extremely
well, then the window of expectations may be elongated in order to emphasize that performance
in the long term may require careful re-investment of profits.
The analytical teams of some organizations may produce conflicting information, in which
case, managers must attribute more weight to certain analyses. This comprehensive evaluation
may involve placing more faith in multiple reports with similar outcomes or in reports that
produce the most problematic outcomes. In situations where analyses conflict, the financial
analyst may be asked to present their methodology and produce external support for their
findings. The analyst may be asked to take on the role of a critic and deconstruct their own
techniques as well as those of other analysts.
Within the larger financial community, analysts are responsible for providing insights into the
businesses they examine. These analyses must be accurate enough to determine the risks
associated with securities purchases and fees related to loans. Although internal and external
analysts are expected to produce accurate evaluations, the window of reliability for external
analysts may be shortened. Many investors may only wish to enter into a relationship with the
business for a short period of time, which may require a narrow analysis of viability.
The scope of external analyses may also be quite different than for internal analysts. While
managers require more broad based analyses to develop budgets and strategies, analyses for
investors and lenders may be only concerned with the broad outlines of success and
profitability. Banks may only wish to know if the company will remain in existence long
enough and reap enough profits to pay back a loan. The scope of financial analyses often
depend on the client’s impending relationship with business.

7
 1.3 HISTORY OF TATA MOTORS

Tata entered the commercial vehicle sector in 1954 after forming a joint venture with Daimler-
Benz of Germany. After years of dominating the commercial vehicle market in India, Tata
Motors entered the passenger vehicle market in 1991 by launching the Tata Sierra, a multi
utility vehicle. Tata subsequently launched the Tata Estate (1992; a station wagon design based
on the earlier TataMobile (1989), a light commercial vehicle), the Tata Sumo (1994; LCV) and
the Tata Safari (1998; India's first sports utility vehicle).

The first generation (1998–07) Tata Indica. Tata Tigor.

Tata launched the Indica in 1998, the first fully indigenous Indian passenger car. Although
initially criticized by auto analysts, its excellent fuel economy, powerful engine, and an
aggressive marketing strategy made it one of the best-selling cars in the history of the Indian
automobile industry. A newer version of the car, named Indica V2, was a major improvement
over the previous version and quickly became a mass favorite. Tata Motors also successfully
Exported a large numbers of the car to South Africa. The success of the Indica played a key
role in the growth of Tata Motors.
In 2004, Tata Motors acquired Daewoo's South Korea-based truck manufacturing unit, Daewoo
Commercial Vehicles Company, later renamed Tata Daewoo.

8
On 27 September 2004, Tata Motors rang the opening bell at the New York Stock Exchange
to mark the listing of Tata Motors.
In 2005, Tata Motors acquired a 21% controlling stake in the Spanish bus and coach
manufacturer Hispano Carrocera. Tata Motors continued its market area expansion through the
introduction of new products such as buses (Starbus and Globus, jointly developed with
subsidiary Hispano Carrocera) and trucks (Novus, jointly developed with subsidiary Tata
Daewoo).
In 2006, Tata formed a joint venture with the Brazil-based Marcopolo, Tata Marcopolo Bus, to
manufacture fully built buses and coaches.
In 2008, Tata Motors acquired the English car maker Jaguar Land Rover, manufacturer of the
Jaguar and Land Rover from Ford Motor Company.
In May 2009, Tata unveiled the Tata World Truck range jointly developed with Tata
Daewoo; the range went on sale in South Korea, South Africa, the SAARC countries, and the
Middle East at the end of 2009.
Tata acquired full ownership of Hispano Carrocera in 2009.
In 2009, its Lucknow plant was awarded the "Best of All" Rajiv Gandhi National Quality
Award.
In 2010, Tata Motors acquired an 80% stake in the Italian design and engineering company
Trilix for €1.85 million. The acquisition formed part of the company's plan to enhance its
styling and design capabilities.
In 2012, Tata Motors announced it would invest around ₹6 billion in the development of
Futuristic Infantry Combat Vehicles in collaboration with DRDO.
In 2013, Tata Motors announced it will sell in India, the first vehicle in the world to run on
compressed air (engines designed by the French company MDI) and dubbed "Mini CAT".
In 2014, Tata Motors introduced first Truck Racing championship in India "T1 Prima Truck
Racing Championship".
On 26 January 2014, the Managing Director Karl Slym was found dead. He fell from the 22nd
floor to the fourth floor of the Shangri-La Hotel in Bangkok, where he was to attend a meeting
of Tata Motors Thailand.
On 2 November 2015, Tata Motors announced Lionel Messi as global brand ambassador
at New Delhi, to promote and endorse passenger vehicles globally.
On 27 December 2016, Tata Motors announced the Bollywood actor Akshay Kumar as brand
ambassador for its commercial vehicles range.
On 8 March 2017, Tata Motors announced that it has signed a memorandum of understanding
with Volkswagen to develop vehicles for India's domestic market.
On 3 May 2018, Tata Motors announced that it sold its aerospace and defense business to
another Tata Group Entity, Tata Advanced Systems, to unlock their full potential.

9
 1.4 History of Ashok Leyland

The origin of Ashok Leyland, a Hinduja group company can be traced to the urge for self–
reliance, felt by independent India. Pandit Jawaharlal Nehru, India's first Prime Minister
persuaded Raghunandan Saran, an industrialist, to enter automotive manufacture. In 1948,
Ashok Motors was set up in what was then Madras, for the assembly of Austin Cars. The
Company's destiny and name changed soon with equity participation by British Leyland and
Ashok Leyland commenced manufacture of commercial vehicles in 1955.
The Hinduja Group is a transnational conglomerate that provides a wide range of products in
over fifty countries worldwide. Today, the Hinduja Group has become one of the largest
transnational business conglomerates in the world with diversified operations, spanning all the
continents. The Group employs over 25,000 people and has offices in many key cities of the
world and all the major cities in India. Ashok Leyland vehicles have built a reputation for
reliability and ruggedness.
In the populous Indian metros, four out of the five State Transport Undertaking (STU) buses
come from Ashok Leyland. Some of them like the double–decker and vestibule buses are
unique models from Ashok Leyland, tailor–made for high–density routes.
In 1987, the overseas holding by Land Rover Leyland International Holdings Limited (LRLIH)
was taken over by a joint venture between the Hinduja Group, the Non–Resident Indian
transnational group and IVECO. (Since July 2006, the Hinduja Group is 100% holder of
LRLIH). The blueprint prepared for the future reflected the global ambitions of the company,
captured in four words: Global Standards, Global Markets. This was at a time when
liberalisation and globalisation were not yet in the air. Ashok Leyland embarked on a major
product and process upgradation to match world–class standards of technology.
For over five decades, Ashok Leyland has been the technology leader in India's commercial
vehicle industry, moulding the country's commercial vehicle profile by introducing
technologies and product ideas that have gone on to become industry norms. Eight out of ten
metro state transport buses in India are from Ashok Leyland. With over 60 million passengers
a day, Ashok Leyland buses carry more people than the entire Indian rail network!

10
Product range of the company includes:
 Buses
 Trucks
 Engines
Milestones:–
 1966 – Introduced full air brakes
 1967 – Launched double–decker bus
 1968 – Offered power steering in commercial vehicles
 1979 – Introduced multi–axle trucks
 1980 – Introduced the international concept of integral bus with air suspension
 1982 – Introduced vestibule bus
 1992 – Won self–certification status for defence supplies
 1993 – Received ISO 9002
 1997 – India's first CNG powered bus joined the BEST fleet
 2001 – Received ISO 14001 certification for all manufacturing units
 2002 – Launched hybrid electric vehicle
 2003 – Dheeraj Hinduja Elected Vice Chairman of Ashok Leyland Board
 2004 – The Government of National Capital Territory of Delhi and Ashok Leyland
signed an agreement for setting up a 'state–of–the–art' Driver Training Institute at
Burari
 2005 – State–of–the–art Driver Training Institute opens in Delhi
 2006 – Ashok Leyland and Bosch have joined hands with the Indian Institute of
Technology Madras (IITM) to set up the Ashok Leyland and Bosch Centre of
Excellence in Engineering Design at the IITM campus
 2007 – The company unveiled 4921 TT, a 6x4 tractor with a gross vehicle weight of
49 tonnes
 2008 – The company signed an agreement for a joint venture with John Deere, for
manufacturing and marketing of construction equipment.
 2009 – Ashok Leyland and Bank of Baroda signed a MoU wherein Bank of Baroda will
fund Ashok Leyland’s end–customers as well as finance its dealers? inventory
 2010 – Ashok Leyland has bagged an order for 600 vehicles from VRL Logistics that
comprise 500 numbers of 3123 Multi–Axle Vehicle (MAV) in the 8x2 configuration, a
newly developed, first of its kind for the Indian commercial vehicle industry, along with
100 nos. of the Company’s 12–metre buses
 2011–Ashok Leyland forays in small commercial vehicle segment; launches ‘DOST’
in JV with Nissan Motor.
 2013– Launched the STILE, a stylish Multi–Purpose Vehicle (MPV) based on a
contemporary, award–winning vehicle platform.
 2013– Launched the BOSS, an intermediate commercial vehicle (ICV), that seamlessly
combines the strength and ruggedness of a truck with the comfort of a car.
 2014 – Launched two new Light Commercial Vehicles (LCV) – PARTNER truck,
India’s first air–conditioned LCV goods vehicle and MiTR bus, a LCV bus with best–
in–class comfort. After the commercially successful Dost and the recently launched
STiLE, now PARTNER and MiTR are the latest offerings from the Ashok Leyland
Nissan Joint Venture.

11
 1.5 History of Mahindra and Mahindra

Mahindra & Mahindra was set up as a steel trading company in 1945 in Ludhiana as
Mahindra & Mohammed by brothers Kailash Chandra Mahindra and J.C.
Mahindra and Malik Ghulam Mohammed. After India gained independence and Pakistan was
formed, Mohammed immigrated to Pakistan where he became that country's first finance
minister. The company changed its name to Mahindra & Mahindra in 1948. It eventually saw
a business opportunity in expanding into manufacturing and selling larger MUVs, starting
with the assembly under licence of the Willys Jeep in India. Soon established as the Jeep
manufacturers of India, the company later commenced manufacturing light commercial
vehicles (LCVs) and agricultural tractors.
Over the past few years, the company has taken interest in new industries and in foreign
markets. They entered the two-wheeler industry by taking over Kinetic Motors in
India. M&M also has a controlling stake in the REVA Electric Car Company and acquired
South Korea's SsangYong Motor Company in 2011.
In 2010–11 M&M entered in micro drip irrigation with the takeover of EPC Industries Ltd in
Nashik.
In October 2014, Mahindra and Mahindra acquired a 51% controlling stake in Peugeot
Motocycles.
In December 2015, Mahindra and Mahindra Ltd and affiliate Tech Mahindra Ltd, through a
special purpose vehicle (SPV), have agreed to buy a 76.06% stake in Italian car designer
Pininfarina SpA, for €25.3 million (around Rs.186.7 crore).
In January 2017, Mahindra and Mahindra Ltd (M&M) acquired a 75.1 equity stake in
Hisarlar Makina Sanayi ve Ticaret Anonim Şirketi (Hisarlar), a farm equipment company,
marking its entry into Turkey.
In September 2017 Mahindra and Mahindra Ltd acquired Erkunt Traktor Sanayii AS, a
Turkish tractor maker and its foundry business for ₹800 crore.

12
 1.6 Objective of Study

 To compare the ratios of different automobile companies

like Tata Motors, Ashok Leyland and Mahindra and
Mahindra.

 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.

13
 INDUSTRY PROFILE

INTRODUCTION
Manufacturing industry refers to those industries which involve in the manufacturing and
processing of items and indulge in either creation of new commodities or in value addition.
The manufacturing industry accounts for a significant share of the industrial sector in
developed countries. The final products can either serves as a finished good for sale to
customers or as intermediate goods used in the production process. It is the production of
merchandise for use or sale using labor and machines, tools, chemical and biological
processing, or formulation. The term may refer to a range of human activity, from handicraft
to high tech, but is most commonly applied to industrial production, in which raw materials are
transformed into finished goods on a large scale. Such finished goods may be used for
manufacturing other, more complex products, such as aircraft, household appliances or
automobiles, or sold to wholesalers, who in turn sell them to retailers, who then sell them to
end users and consumers.
Manufacturing has emerged as one of the high growth sectors in India. Prime Minister of India,
Mr. Narendra Modi, had launched the ‘Make in India’ program to place India on the world map
as a manufacturing hub and give global recognition to the Indian economy. India is expected
to become the fifth largest manufacturing country in the world by the end of year 2020.
The Government of India has set an ambitious target of increasing the contribution of
manufacturing output to 25 per cent of Gross Domestic Product (GDP) by 2025, from 16 per
cent currently.

14
MARKET SIZE
India’s manufacturing sector has the potential to touch US$ 1 trillion by 2025. There is
potential for the sector to account for 25-30 per cent of the country’s GDP and create up to 90
million domestic jobs by 2025. Business conditions in the Indian manufacturing sector continue
to remain positive.

INVESTMENTS
With the help of Make in India drive, India is on the path of becoming the hub for hi-tech
manufacturing as global giants such as GE, Siemens, HTC, Toshiba, and Boeing have either
set up or are in process of setting up manufacturing plants in India, attracted by India's market
of more than a billion consumers and increasing purchasing power.
Foreign Direct Investment (FDI) inflows in India’s manufacturing sector grew by 82 per cent
year-on-year to US$ 16.13 billion during April-November 2016.
India has become one of the most attractive destinations for investments in the manufacturing
sector. Some of the major investments and developments in this sector in the recent past are:
- Honda Motorcycle & Scooter India plans to invest around Rs 600 crore (US$ 90
million) to add a new line at its Narsapura facility at Karnataka, and launch at least 10-
15 products during FY 2016-17 in the country.
- Force Motors, a utility and commercial vehicles manufacturer, inaugurated its Rs 100
crore (US$ 15 million) manufacturing facility in Pune, which will supply engines and
axles to the Germany-based automobile manufacturer Mercedes-Benz.
- Isuzu Motors, the Japan-based utility vehicle manufacturer, has inaugurated its
greenfield manufacturing unit in Sri City, Andhra Pradesh, which was set up for Rs
3,000 crore (US$ 450 million), with an annual production capacity of 50,000 units and
is estimated to generate around 2,000-3,000 jobs.
- Boeing Company, an American plane maker, and Tata Advanced Systems Ltd (TASL),
a fully owned subsidiary of Tata Sons, have entered into a joint venture to set up a new
facility in Hyderabad to manufacture Boeing AH-64 Apache helicopter fuselages.
- Canada’s Magna International Incorporated has started production at two facilities in
Gujarat’s Sanand, which will supply auto parts to Ford Motor Co in India and will
employ around 600 people at both units.

GOVERNMENT INITIATIVES
In a bid to push the 'Make in India' initiative to the global level, Mr. Narendra Modi, Prime
Minister of India, pitched India as a manufacturing destination at the World International Fair
in Germany's Hannover in 2015. Mr. Modi showcased India as a business friendly destination
to attract foreign businesses to invest and manufacture in the country.

15
The Government of India has taken several initiatives to promote a healthy environment for
the growth of manufacturing sector in the country. Some of the notable initiatives and
developments are:
- The Union Cabinet has approved the Modified Special Incentive Package Scheme (M-
SIPS) in which, proposals will be accepted till December 2018 or up to an incentive
commitment limit of Rs 10,000 crore (US$ 1.5 billion).
- The Government of India has removed the 12.5 per cent excise duty and 4 per cent
special additional duty (SAD) on the manufacturing of point-of-sale (PoS) machines
till March 31, 2017, which is expected to give a boost to the cashless economy as more
PoS machines will be deployed in the future.
- The National Institution for Transforming India (NITI Aayog), after its recent push for
Rs 6,000 crore (US$ 900 million) textile sector package, aims to persuade the
Government for similar support in the manufacturing sectors with large-scale
employment generation opportunities, such as electrical and electronics engineering,
footwear and light manufacturing segments, which also have export potential.
- The Government of India plans to give a big boost to local manufacturing by
introducing the new 'Make in India green channel', which will reduce the time taken for
cargo clearance at ports from about a week to a few hours without any upfront payment
of duties.
- The Ministry of Heavy industries and Public Enterprises, in partnership with industry
associations, has announced creation of a start-up center and a technology fund for the
capital goods sector to provide technical, business and financial resources and services
to start-ups in the field of manufacturing and services.

ROAD AHEAD
The Government of India has an ambitious plan to locally manufacture as many as 181
products. The move could help infrastructure sectors such as power, oil and gas, and
automobile manufacturing that require large capital expenditure and revive the Rs 1,85,000
crore (US$ 27.75 billion) Indian capital goods business. India is an attractive hub for foreign
investments in the manufacturing sector. Several mobile phone, luxury and automobile brands,
among others, have set up or are looking to establish their manufacturing bases in the country.
With impetus on developing industrial corridors and smart cities, the government aims to
ensure holistic development of the nation. The corridors would further assist in integrating,
monitoring and developing a conducive environment for the industrial development and will
promote advance practices in manufacturing.
Exchange Rate Used: INR 1 = US$ 0.015 as on February 9, 2017
*
According to the Global Manufacturing Competitiveness Index published by Deloitte

16
 Research Methodology
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:
o Liquidity ratios measure the availability of cash to pay debt.

 Activity ratios:
o Activity ratios measure how quickly a firm converts non-cash assets to cash
assets.

 Debt ratios:
o Debt ratios measure the firm's ability to repay long-term 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.

 Market ratios:
Market ratios measure investor response to owning a company's stock and also the
cost of issuing stock.
Financial ratios allow for comparisons
 between companies
 between industries
 between different time periods for one company
 between a single company and its industry average

We will be analysing the financial ratios between the companies.

17
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 assets divided by 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 2013-2017
Mar 17 Mar 16 Mar 15 Mar 14 Mar 13

Current 12,588.06 11,861.69 8,572.97 6739.06 10134.96

Assets
Current 21,647.80 18,701.74 20,370.63 18797.53 21104.61
Liabilities
Current Ratio 0.58 0.63 0.42 0.35 0.48

For Ashok Leyland the current ratio is:

For financial year 2013-2017
Mar 17 Mar 16 Mar 15 Mar 14 Mar 13

Current 5736.61 5180.95 4693.00 3855.44 4296.53

Assets
Current 6181.23 4890.18 5035.52 4586.60 5296.10
Liabilities
Current Ratio 0.92 1.05 0.93 0.84 0.81

For Mahindra and Mahindra current ratio is:

18
For financial year 2013-2017
Mar 17 Mar 16 Mar 15 Mar 14 Mar 13

Current 12455.99 11633.20 10128.21 11288.92 8943.43

Assets
Current 9458.95 10693.67 8974.27 8766.79 8150.39
Liabilities
Current Ratio 1.31 1.08 1.12 1.28 1.09

Comparison of current ratio between the 3 automobile companies:

Current Ratio
1.4

1.2

0.8

0.6

0.4

0.2

0
Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

Tata Motors Ashok Leyland Mahindra and Mahindra

19
 Current Ratio

1.4

1.2

0.8

0.6

0.4
Mahindra and Mahindra
0.2 Ashok Leyland
Tata Motors
0
Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

Tata Motors Ashok Leyland Mahindra and Mahindra

The current ratio inherently assumes that the company would or could liquidate most of its
current assets and convert them to cash to cover the liabilities. In reality, this is unlikely if the
company is to remain as a going concern.

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.

So from the current ratio graph plotted above, it can be said that Tata Motors having a low
current ratio is much safer to invest in than Ashok Leyland and Mahindra & Mahindra.

20
2.) Quick Ratio:
(Cash equivalents + marketable securities + accounts receivables) divided by 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 2013-2017
Mar 17 Mar 16 Mar 15 Mar 14 Mar 13

Quick Assets 2645.35 3318.44 3633.64 2666.62 3812.99

Current 21,647.80 18,701.74 20,370.63 18797.53 21104.61

Liabilities
Quick Ratio 0.12 0.17 0.178 0.14 0.18

For Ashok Leyland the quick ratio is:

For financial year 2013-2017
Mar 17 Mar 16 Mar 15 Mar 14 Mar 13

Quick Assets 1775.33 2914.68 2577.8 2111.41 2324.33

Current 6181.23 4890.18 5035.52 4586.60 5296.10

Liabilities
Quick Ratio 0.28 0.59 0.51 0.46 0.43

For Mahindra and Mahindra quick ratio is:

For financial year 2013-2017
Mar 17 Mar 16 Mar 15 Mar 14 Mar 13

Quick Assets 5681.51 5988.33 5395.9 6404.06 4753.16

Current 9458.95 10693.67 8974.27 8766.79 8150.39

Liabilities

21
 Quick Ratio 0.60 0.55 0.601 0.73 0.58

Comparison of quick ratio between the 3 automobile companies:

Quick Ratio

0.8

0.6

0.4

0.2 Mahindra and Mahindra

Ashok Leyland
Tata Motors
0
Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

Tata Motors Ashok Leyland Mahindra and Mahindra

Quick Ratio
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

Tata Motors Ashok Leyland Mahindra and Mahindra

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.

22
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

1). Return on assets:

The most common formula for ROA is this:

Higher ROA indicates more asset efficiency.

ROA variation 1: Net Income + (Interest Expense*(1-tax rate)) / Total Assets

ROA variation 2: Operating Income*(1-tax rate) / Total Assets

For TATA Motors the return on assets is:

For financial year 2014-2017
Mar 17 Mar 16 Mar 15 Mar 14

Net Income $958,400 $1,462,800 $2,062,600 $2,196,500

Operating
$1,614,100 $2,669,600 $4,063,700 $3,363,600
Income
Interest
$652,400 $723,500 $834,600 $889,000
Expense

23
 Tax Rate 36.43% 22.12% 34.88% 26.88%

Total Assets
$41,066,400 $39,563,300 $37,481,600 $36,582,100

Return on 0.0333 0.05105 0.0695 0.0777

Assets based on
net income
Return on assets 0.024 0.0519 0.0704 0.0671
based on
operating
income

Return on Asset
0.09

0.08

0.07

0.06

0.05

0.04

0.03

0.02

0.01

0
Jan-14 Jan-15 Jan-16 Jan-17

Return on Assets based on net income Return on assets based on operating income

For Ashok Leyland the return on assets is:

For financial year 2014-2017
Mar 17 Mar 16 Mar 15

Net Income 15893.55 6819.33 1338.9

Operating Income 27458.38 20436.17 3335.84

Interest Expense 10432.67 9984.93 6787.78

24
 Tax Rate 10.69% 41.08% 414.88%

Total Assets
264278.1 221987.07 195246.25

Return on Assets 0.0954 0.0572 -0.1023

based on net income
Return on assets 0.0928 0.0543 -0.0536
based on operating
income

Return on Asset
0.25

0.2

0.15

0.1

0.05

0
Jan-15 Jan-16 Jan-17
-0.05

-0.1

-0.15

-0.2

Return on assets based on operating income

Return on Assets based on net income

For Mahindra and Mahindra return on assets is:

For financial year 2014-2017
Mar 17 Mar 16 Mar 15 Mar 14

Net Income 36980 32113 31375 46669

Operating
Income 6017 7363 8284
28399

25
Interest 36,485 33,676 31,567 29,539
Expense
Tax Rate 36.21% 43.96% 39.88% 25.70%

Total Assets 1,148,256 1,006,321 952,492 886,009

Return on 0.0525 0.0509 0.0531 0.0776

Assets based on
net income
Return on assets 0.0033 0.0041 0.0053 0.0239
based on
operating
income

Return on asset
0.09

0.08

0.07

0.06

0.05

0.04

0.03

0.02

0.01

0
Jan-14 Jan-15 Jan-16 Jan-17

Return on Assets based on net income Return on assets based on operating income

26
Comparison of return on assets of Tata Motors, Ashok Leyland and Mahindra and Mahindra
on the basis of net income

Comparision of return on assets

0.15

0.1

0.05

0
Jan-14 Jan-15 Jan-16 Jan-17
-0.05

-0.1

-0.15

Return on Assets based on net income OF Tata Motors

Return on Assets based on net income of Ashok Leyland
Return on Assets based on net income of Mahindra and Mahindra

Comparison of return on assets of Tata Motors, Ashok Leyland and Mahindra and Mahindra
on the basis of operating income

Return on Asset on the basis of Operating Income

0.15

0.1

0.05

0
Jan-14 Jan-15 Jan-16 Jan-17
-0.05

-0.1

Return on assets based on operating income of Tata Motors

Return on assets based on operating income of Ashok Leyland
Return on assets based on operating income of Mahindra and Mahindra

27
2.) Return on Equity:

ROE = Net income divided by shareholders’ 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 Mar 15 Mar 14

Net Income 61211 95883 128291 130717

Shareholder’s 20,809.15 23,262.11 14,862.59 19,176.65

Equity

Return on equity 0.294 0.412 0.863 0.681

Return on equity of Ashok Leyland:

Mar 17 Mar 16 Mar 15

Net Income
15893.55 6819.33 1338.9

Shareholder’s 6,126.07 5,407.15 5,118.69

Equity

Return on equity 0.259 0.126 0.026

28
Return on equity of Mahindra and Mahindra:
Mar 17 Mar 16 Mar 15 Mar 14

Net Income 46669

36980 32113 31375

Shareholder’s 25,669.56 21,707.19 19,255.09 16,791.19

Equity

Return on equity 0.144 0.147 0.162 0.277

Comparison of Return on Equity of Tata Motors, Ashok Leyland and Mahindra and Mahindra:

Comparision of Return on Equity

Jan-17

Jan-16

Jan-15

Jan-14

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

Return on equity of Mahindra and Mahindra Return on equity of Ashok Leyland

Return on equity of Tata Motors

Activity Ratios:

29
A company’s debt ratio is the ratio of total debt to total assets. Total debt includes both short-
term and long-term debt. There are several debt ratios, which give users a general idea of the
company's overall debt load as well as its mix of equity and debt.
Debt ratios can be used to determine the overall level of financial risk a company and its
shareholders face. In general, the greater the amount of debt held by a company, the greater the
potential level of financial risk the company could face, including bankruptcy.

1). Debt ratio:

The debt ratio is calculated as follows:
Debt ratio = Total Liabilities divided by 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 Mar 15 Mar 14

Total Liabilities 37727.45 33413.89 35080.58 30557.77

Total Assets 58,536.60 56,676.00 49,943.17 49,734.42

Debt Ratio 0.644 0.589 0.702 0.614

Debt ratio of Ashok Leyland:

Mar 17 Mar 16 Mar 15 Mar 14

Total Liabilities 7673.49 7,366.61 8,192.80 8,360.11

Total Assets 13,799.56 12,773.75 13,311.49 12,808.00

Debt Ratio 0.556 0.576 0.615 0.652

30
Debt Ratio of Mahindra and Mahindra:
Mar 17 Mar 16 Mar 15 Mar 14

Total Liabilities 13,668.75 14,705.15 13,689.78 14,497.46

Total Assets 39,338.31 36,412.34 32,944.87 31,288.65

Debt Ratio 0.347 0.403 0.415 0.463

Comparision of Debt Ratios

0.8

0.6

0.4

0.2

0
Jan-14 Jan-15 Jan-16 Jan-17

Debt Ratio of Tata Motors

Debt Ratio of Ashok Leyland
Debt Ratio of Mahindra and Mahindra

Debt Ratio

0.8

0.6

0.4

0.2

0
Jan-14 Jan-15 Jan-16 Jan-17

Debt Ratio of Tata Motors Debt Ratio of Ashok Leyland

Debt Ratio of Mahindra and Mahindra

31
Balance Sheet for Tata Motors (in Rs. Cr.)
Mar 17 Mar 16 Mar 15 Mar 14

12 months 12 months 12 months 12 months

EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share Capital 679.22 679.18 643.78 643.78

Total Share Capital 679.22 679.18 643.78 643.78

Revaluation Reserves 0.00 0.00 22.87 22.87

Reserves and Surplus 20,129.93 22,582.93 14,195.94 18,510.00

Total Reserves and 20,129.93 22,582.93 14,218.81 18,532.87

Surplus
Total Shareholders 20,809.15 23,262.11 14,862.59 19,176.65
Funds
NON-CURRENT
LIABILITIES
Long Term 13,686.09 10,599.96 12,318.96 9,746.45
Borrowings
Deferred Tax 97.95 71.39 0.00 43.11
Liabilities [Net]
Other Long Term 1,444.90 3,289.91 286.80 1,155.48
Liabilities
Long Term Provisions 850.71 750.89 2,104.19 815.20

Total Non-Current 16,079.65 14,712.15 14,709.95 11,760.24

Liabilities
CURRENT
LIABILITIES
Short Term 5,375.52 3,654.72 7,762.01 4,769.08
Borrowings
Trade Payables 7,015.21 5,141.17 8,852.65 9,672.36

Other Current 8,789.09 9,455.58 3,142.88 2,463.18

Liabilities
Short Term Provisions 467.98 450.27 613.09 1,892.91

Total Current 21,647.80 18,701.74 20,370.63 18,797.53

Liabilities

32
 Total Capital And 58,536.60 56,676.00 49,943.17 49,734.42
Liabilities
ASSETS

NON-CURRENT
ASSETS
Tangible Assets 17,364.77 17,573.25 12,260.50 12,133.50

Intangible Assets 2,872.78 3,502.56 3,522.73 3,107.07

Capital Work-In- 1,870.93 1,557.95 1,349.95 1,716.85

Progress
Intangible Assets 5,366.03 4,128.58 4,690.84 4,638.22
Under Development

Fixed Assets 27,474.51 26,762.34 21,824.02 21,595.64

Non-Current 15,307.24 15,217.48 16,966.95 18,357.57

Investments
Long Term Loans 389.61 252.93 2,403.56 2,918.30
And Advances
Other Non-Current 2,777.18 2,581.56 175.67 123.85
Assets
Total Non-Current 45,948.54 44,814.31 41,370.20 42,995.36
Assets
CURRENT ASSETS

Current Investments 2,400.92 1,745.84 20.22 100.85

Inventories 5,504.42 5,117.92 4,802.08 3,862.53

Trade Receivables 2,128.00 2,045.58 1,114.48 1,216.70

Cash And Cash 286.06 788.42 944.75 226.15

Equivalents
Short Term Loans 231.35 484.44 1,574.41 1,223.77
And Advances
Other Current Assets 2,037.31 1,679.49 117.03 109.06

Total Current Assets 12,588.06 11,861.69 8,572.97 6,739.06

Total Assets 58,536.60 56,676.00 49,943.17 49,734.42

Source: https://www.moneycontrol.com/financials/tatamotors/balance-sheetVI/TM03#TM03

33
Balance Sheet for Ashok Leyland (in Rs. Cr.)
Mar 17 Mar 16 Mar 15 Mar 14

12 months 12 months 12 months 12 months

EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share Capital 284.59 284.59 284.59 266.07

Total Share Capital 284.59 284.59 284.59 266.07

Revaluation Reserves 0.00 0.00 1,021.81 1,173.93

Reserves and Surplus 5,841.48 5,122.56 3,812.30 3,007.89

Total Reserves and 5,841.48 5,122.56 4,834.11 4,181.82

Surplus
Total Shareholders 6,126.07 5,407.15 5,118.69 4,447.88
Funds
NON-CURRENT
LIABILITIES
Long Term 1,146.32 1,821.04 2,566.34 3,296.51
Borrowings
Deferred Tax 126.90 329.10 510.27 406.77
Liabilities [Net]
Other Long Term 86.48 203.47 2.06 2.37
Liabilities
Long Term 132.55 122.81 78.61 67.87
Provisions
Total Non-Current 1,492.26 2,476.43 3,157.28 3,773.51
Liabilities
CURRENT
LIABILITIES
Short Term 198.64 25.00 25.00 587.41
Borrowings
Trade Payables 3,052.18 2,562.69 2,828.32 2,214.15

Other Current 2,446.03 2,113.44 1,926.15 1,696.91

Liabilities
Short Term 484.38 189.05 256.05 88.13
Provisions
Total Current 6,181.23 4,890.18 5,035.52 4,586.60
Liabilities
Total Capital And 13,799.56 12,773.75 13,311.49 12,808.00
Liabilities

34
 ASSETS

NON-CURRENT
ASSETS
Tangible Assets 4,656.10 4,453.70 4,882.48 5,221.93
Intangible Assets 314.71 338.28 373.07 437.94

Capital Work-In- 157.60 54.75 69.80 155.13

Progress
Intangible Assets 48.27 21.11 50.35 26.40
Under Development
Fixed Assets 5,176.67 4,867.84 5,375.70 5,841.39

Non-Current 2,001.68 1,980.44 2,240.38 2,405.31

Investments
Long Term Loans 0.00 97.62 982.92 672.77
And Advances
Other Non-Current 761.60 646.90 19.50 33.09
Assets
Total Non-Current 7,939.95 7,592.80 8,618.50 8,952.56
Assets
CURRENT
ASSETS
Current Investments 877.17 0.00 408.45 384.37

Inventories 2,501.12 1,625.01 1,398.53 1,188.70

Trade Receivables 859.90 1,250.95 1,257.69 1,299.01

Cash And Cash 911.97 1,593.13 751.29 11.69

Equivalents
Short Term Loans 3.46 70.60 568.82 800.71
And Advances
Other Current Assets 705.98 641.25 308.21 170.95

Total Current 5,736.61 5,180.95 4,693.00 3,855.44

Assets
Total Assets 13,799.56 12,773.75 13,311.49 12,808.00

Source: https://www.moneycontrol.com/financials/ashokleyland/balance-sheetVI/AL#AL

35
Balance Sheet for Mahindra and Mahindra (in Rs. Cr.)
Mar 17 Mar 16 Mar 15 Mar 14

12 months 12 months 12 months 12 months

EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share Capital 296.81 296.32 295.70 295.16

Total Share Capital 296.81 296.32 295.70 295.16

Revaluation Reserves 0.00 10.79 10.79 10.79

Reserves and Surplus 25,372.75 21,400.08 18,948.60 16,485.24

Total Reserves and 25,372.75 21,410.87 18,959.39 16,496.03

Surplus
Total Shareholders 25,669.56 21,707.19 19,255.09 16,791.19
Funds
NON-CURRENT
LIABILITIES
Long Term 2,233.99 1,495.42 2,514.13 3,744.42
Borrowings
Deferred Tax 694.86 1,247.51 979.70 889.65
Liabilities [Net]
Other Long Term 580.50 596.41 614.34 586.27
Liabilities
Long Term 700.45 672.14 607.34 510.33
Provisions
Total Non-Current 4,209.80 4,011.48 4,715.51 5,730.67
Liabilities
CURRENT
LIABILITIES
Short Term 503.44 348.13 106.25 0.74
Borrowings
Trade Payables 7,156.26 6,763.63 5,365.45 6,068.80

Other Current 1,139.87 2,242.57 2,041.13 1,133.56

Liabilities
Short Term 659.38 1,339.34 1,461.44 1,563.69
Provisions
Total Current 9,458.95 10,693.67 8,974.27 8,766.79
Liabilities

36
 Total Capital And 39,338.31 36,412.34 32,944.87 31,288.65
Liabilities
ASSETS

NON-CURRENT
ASSETS
Tangible Assets 6,400.84 6,902.60 5,795.44 5,706.30

Intangible Assets 1,233.80 1,050.26 134.02 170.65

Capital Work-In- 409.45 234.90 755.67 394.86

Progress
Intangible Assets 1,628.49 1,330.62 1,423.09 833.58
Under Development
Fixed Assets 9,672.58 9,518.38 8,108.22 7,105.39

Non-Current 14,295.47 11,144.66 11,372.74 9,787.73

Investments
Long Term Loans 768.21 4,057.44 3,232.26 3,018.12
And Advances
Other Non-Current 2,146.06 58.66 103.44 88.49
Assets
Total Non-Current 26,882.32 24,779.14 22,816.66 19,999.73
Assets
CURRENT
ASSETS
Current Investments 3,606.70 2,375.71 1,765.42 1,592.12

Inventories 2,715.60 2,687.93 2,437.57 2,803.63

Trade Receivables 2,918.45 2,512.05 2,558.03 2,509.84

Cash And Cash 1,687.00 2,297.03 2,064.77 2,950.39

Equivalents
Short Term Loans 1,076.06 1,179.25 773.10 945.83
And Advances
Other Current Assets 452.18 581.23 529.32 487.11

Total Current 12,455.99 11,633.20 10,128.21 11,288.92

Assets
Total Assets 39,338.31 36,412.34 32,944.87 31,288.65

Source: https://www.moneycontrol.com/financials/mahindramahindra/balance-sheetVI/MM#MM

37
Income statement of Tata motors
Period Ending: 3/31/2017 3/31/2016 3/31/2015 3/31/2014

Total Revenue $40,910,100 $40,848,800 $42,327,800 $39,210,700

Cost of Revenue $0 $0 $0 $0

Gross Profit $40,910,100 $40,848,800 $42,327,800 $39,210,700

Operating Expenses
Research and Development $0 $0 $0 $0

Sales, General and Admin. $36,487,000 $35,641,100 $36,114,900 $33,863,000

Non-Recurring Items $0 $0 $0 $134,500

Other Operating Items $2,809,000 $2,538,000 $2,149,100 $1,849,600

Operating Income $1,614,100 $2,669,600 $4,063,700 $3,363,600

Add'l income/expense items $316,100 ($155,100) ($33,500) $560,900

Earnings Before Interest and $2,160,100 $2,601,800 $4,002,200 $3,893,000

Tax
Interest Expense $652,400 $723,500 $834,600 $889,000

Earnings Before Tax $1,507,700 $1,878,300 $3,167,600 $3,004,000

Income Tax $549,300 $415,500 $1,105,000 $807,500

Minority Interest $0 $0 $0 $0

Equity Earnings/Loss $229,900 $87,200 ($27,900) ($31,400)

Unconsolidated Subsidiary
Net Income-Cont. Operations $1,188,300 $1,550,000 $2,034,700 $2,165,000

Net Income $958,400 $1,462,800 $2,062,600 $2,196,500

Net Income Applicable to $958,400 $1,462,800 $2,062,600 $2,196,500

Common Shareholders

Source: https://www.nasdaq.com/symbol/ttm/financials?query=income-statement

38
Income statement of Ashok Leyland (INR in Million)
Period Ending: 2017 2016 2015
31/03 31/03 31/03

Total Revenue 240683.48 223195.79 153408.88

Cost of Revenue, Total 160364.48 150334.7 106000.66

Gross Profit 80319 72861.09 47408.21

Total Operating Expenses 213225.1 202759.62 150073.04

Operating Income 27458.38 20436.17 3335.84

Interest Income (Expense), Net Non-Operating -10432.67 -9984.93 -6787.78

Gain (Loss) on Sale of Assets - - 3112.88

Other, Net 1306.92 1636.21 -76.52

Net Income Before Taxes 18332.62 12087.44 -415.58

Provision for Income Taxes 1961.19 4965.71 1724.16

Net Income After Taxes 16371.43 7121.73 -2139.74

Minority Interest -435.55 -302.4 3386.2

Equity In Affiliates - - 92.44

U.S GAAP Adjustment - - -

Net Income Before Extraordinary Items 15935.89 6819.33 1338.9

Total Extraordinary Items -42.33 - -

Net Income 15893.55 6819.33 1338.9

Source: https://in.investing.com/equities/ashok-leyland-income-statement

39
Income statement of Mahindra and Mahindra (INR in Million)
Period Ending 2017 2016 2015 2014

Sales/Revenue 8,31,507 7,54,794 7,07,236 7,27,041

Sales Growth 10.16% 6.72% -2.72% 8.02%
Cost of Goods Sold (COGS) incl. 6,33,877 5,65,799 5,51,756 5,72,179
D&A
COGS excluding D&A 6,05,786 5,41,383 5,30,518 5,50,483
Depreciation & Amortization 28,091 24,417 21,238 21,696
Expense
Depreciation 21,422 19,850 18,013 18,009
Amortization of Intangibles 6,669 4,567 3,225 3,687
COGS Growth 12.03% 2.55% -3.57% 6.37%
Gross Income 1,97,630 1,88,995 1,55,480 1,54,862
Gross Income Growth 4.57% 21.56% 0.40% 14.62%
Gross Profit Margin 23.77% - - -
SG&A Expense 1,21,929 1,14,897 99,280 86,667
Research & Development 13,527 14,593 14,195 6,752
Other SG&A 1,08,403 1,00,304 85,085 79,916
SGA Growth 6.12% 15.73% 14.55% 11.44%
Other Operating Expense -6,224 -3,620 1,725 1,568
EBIT 81,924 - 54,475 66,627
Unusual Expense -789 100 30 593
Non Operating Income/Expense 4,847 1,067 17,227 18,612
Non-Operating Interest Income 3,432 3,251 3,023 3,090
Interest Expense
Interest Expense Growth 36,485 33,676 31,567 29,539
Gross Interest Expense 36,485 33,676 31,567 29,539
Pretax Income 54,509 48,260 43,127 58,196
Pretax Income Growth 12.95% 11.90% -25.89% 4.29%
Pretax Margin 6.56% - - -
Income Tax 22,997 21,175 17,200 14,962
Income Tax - Current Domestic 20,593 18,250 16,774 13,032
Income Tax - Deferred Domestic 2,404 387 426 1,930
Equity in Affiliates 8,994 8,460 7,887 8,304
Other After Tax Income (Expense) - -824 - -
Consolidated Net Income 40,505 34,721 33,814 51,538
Minority Interest Expense 3,525 4,061 2,439 4,869
Net Income 36,980 30,661 31,375 46,669

Source: https://in.investing.com/equities/ashok-leyland-income-statement

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 CONCLUSION
 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.

 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.

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 Bibliography
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

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