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CHAPTER - I INTRODUCTION

INTRODUCTION
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Cash flow analysis is a valuable aid to the financial executive and creditors for evaluating the uses of funds by the firm and in determining how these uses were financed. A cash flow statement indicates where funds came from and where it was used during the period under review. They are important tools for communication and Very helpful for financial executives in planning the intermediate and financing of the Firm. Cash flow statement is a statement of Cash flow. Cash flow signifies the movement of cash in and out of a business concern. In flow of cash is a known as source out flow of cash is called use of cash. The term cash here stands for and bank balance. Cash flow Statement shows the changes in position between two balance sheet dates. It provides the details in respect of cash generate and applied during the accounting period. The Transactions which increase the cash position of the business are known as in flows of cash (Ex: Sales of current and fixed assets, issue of shares and debentures etc.) The transactions which decrease the cash position are known as out flows (Ex: Purchase of current and fixed assets, redemption of debentures, and performance says and other long term depicts) Cash flow statements constants on transactions that have a direct impact on cash. This statement depicts factors responsible for such in flow and out flow of cash. In brief, cash flow statement summarizes process of changes in cash position between dates of balance sheets. A cash flow statement is like receipt and payments account in summary form. The net flow cash is equal to net profit but this cannot be true in all cases because of the presence of non-cash from operations certain adjustments are to be made to the net profit as disclosed by profit and loss account. There are three methods of determining cash from operations namely. 1. Cash sales method. 2. Net Profit/Net loss method. 3. Cash from operations: Cash sales – Cash purchases – Cash operating expenses.

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NEED AND IMPORTANCE OF THE STUDY
1. To know about The future plans of the company depend upon the cash flow analysis of the company. 2. This study helps in finding the comparison between the past and performance Of the company. 3. This study also helps up the goals and objectives for future in the content of cash flow control. 4. This analysis to these statements will provide the decision maker to understand strengths and weaknesses of the firm. 5 This analysis is important for the management and also for outside dealing with organization is moving

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OBJECTIVE OF THE STUDY
 To study the cash inflows and out flows of the TATA MOTORS  To study the how much cash is flow from operating activities.  To know the flow of cash from investing activities.  To determine the cash flow fluctuations in investing activities.  To know the profitability performance of the TATA MOTORS

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METHODOLOGY
The data collection of the study consists 1. Primary source of data This is first hand in nature and can be collected through • • • Officers of accounting section. Executives and staff of finance and accounts department. Personal observation.

2. Secondary data Methods of collection of the secondary data which is already exists are • • • • Financial management text books. Journal and magazines and newspapers. Text books. Worldwide webs.

3. Tools/Techniques used for analysis • Cash flow statement

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SCOPE OF THE STUDY
The study of cash flow analysis of TATA MOTORS Limited is a very wide topic. In the Study many factors that need detailed analysis could not be discussed in detail because Of the limitations regarding length of the project and available time. The scope of the Study has, therefore, been limited to the presentation of, cash flow statements and their Analysis.

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LIMITATIONS
The limitations of the present study are: 1. In the study many factors that need detailed analysis could not discussed in detail Because of the limitations regarding length of the project and available time. 2. The study is subject to limitations of the nature of cash flow analysis tools and Techniques. 3. It is not always possible to make future estimation on the basis of the past as it is always does not come true.

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CHAPTER-2 COMPANYPROFILE & INDUSTRTY PROFILE

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COMPANY PROFILE
Largest passenger automobile and commercial vehicle manufacturing company of India Tata Motors Limited, was formerly called TELCO (TATA Engineering and Locomotive Company), has its headquarters in Bombay, now Mumbai, India. Established in 1945, listed on the New York Stock Exchange in 2004 has created Rs. 320 billion wealth and was one of the top10 wealth creators in India, with manufacturing facilities in the towns of Jamshedpur, Luck now, and Pune. This company was founded by Jamshetji Tata and is run by Ratan Tata under the flagship company known as Tata and sons group. He commands 22000 employees working in three plants as well as other regional and zonal offices across the length and breadth of India. Tata motor’s passenger cars still need to reach acceptable international requirements. The company commands an imposing 65% share of the domestic commercial vehicle market and is trying to modernize this segment. The financial business of Tata motors was separated into a subsidiary company in sep. 2006, where it recorded a strong financial performance during the last 5 year period. From year 2005-2009, the profits of the company went up at a CAGR of 36.4%, to attain Rs. 331, 525 million in 2008from Rs. 95, 731 Million in 2003. By floating two rights issues at the end of Sep 2009 Tata Motors Ltd expected to raise Rs 4, 150 crores. They are offering one ordinary share valued at Rs. 340 every six shares expecting to net Rs. 2.90 Crores, the so called “A” share would have different voting and dividend rights, for every such 6 shares held at a face value of 305 would raise Rs. 1.960 Crores, these proceed would be utilized for an early repayment of the short term funding of 2.3 Billion $ (Rs. 10,189 Crores) Borrowed for Acquisition of jaguar and Land Rover from their principle “The Ford Motor Company’s”.

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As TATA MOTORS is regarded as one of the best fuel efficient cars. Hence I conducted a study on the consumer perception about small cars. Firstly, I took three brands of small cars; Zen estilo, Indica and Santro for a comparative study of small car segment. Later I went through the process of filling the questionnaires, to know exactly what the customer’s of small cars perceived about their cars. Tata motors were established on September 1, 1945, originally for the manufacture of Steam Locomotives at Jamshedpur. All the cars taken for the sample showed that the consumers perceived them as almost same in all the attributes like safety, comfort and luxury. But, at the end the research was limited due to small sample size, small sample area and time constraints.

TELCO (TATA Engineering and Locomotive Company) • Multinational Corporation. • Headquarters in Mumbai. • India's largest passenger automobile and commercial vehicle manufacturing company. • World's 19th largest automaker. • Sales: 19,654.41cr. 10

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Stock price: Rs. 347

In 1969 Tata motors had become an independent producer of Medium Commercial Vehicles. It had also developed the capability of designing, testing and manufacturing such vehicles. Leading commercial vehicle manufacturer and has significant presence in the multiutility and passenger car segments. With the Launch of Tata Indica, a Euro 2 compliant vehicle is the first indigenously designed, developed and manufactured passenger car. With the launch of Tata nano, Tata has penetrated the market to its extreme by making a car available for Rs. 132000 only. This is the cheapest car in India till date and with the announcement of its diesel variant it has made potential buyers to eagerly wait for it.

PRODUCTS OF TATA MOTORS

[1] Passenger cars and utility vehicles 11

[2]Commercial vehicles

MARKETING STRATEGIES

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TATA unveiled its long awaited 1 Lakh rupee car (actually a little over 1 lakh after tax) for the masses and they call it “The People’s Car”. It’s a sweet looking small car, just enough to take four people around the city. 1 Lakh rupees roughly translate to 2500 rupees monthly installment and because of this reason TATA is expect to sell record breaking numbers and leave Indian roads blocked.

TATA Nano will hit the roads and as it is a definite threat to Maruti 800. TATA stated that the initial production of this car will be of 250,000 a year. After about four years of hard efforts TATA Nano (1 lakh rupee car) was on road now.

The introduction of the Nano received media attention due to its targeted low price. The is expected to boost the Indian economy, create entrepreneurial-opportunities across India, as well as expand the Indian car market by 65%. The car was envisioned by Ratan Tata, Chairman of the Tata Group and Tata Motors, who has described it as an eco-friendly "people's car". Nano has been greatly appreciated by many sources and the media for its low-cost and eco-friendly initiatives which include using compressed-air as fuel and an electric-version (E-Nano). Tata Group 13

is expected to mass manufacture the Nano, particularly the electric-version, and, besides selling them in India, to also export them worldwide. Critics of the car have questioned its safety in India (where reportedly 90,000 people are killed in road-accidents every year), and have also criticized the pollution that it would cause (including criticism by Nobel Peace Prize winner Rajendra Pachauri). However, Tata Motors has promised that it would definitely release Nano's eco-friendly models alongside the gasoline model. The Nano was originally to have been manufactured at a new factory in Singur, West Bengal, but increasingly violent protests forced Tata to pull out October 2008. Currently, Tata Motors is reportedly manufacturing Nano at its existing Pantnagar (Uttarakhand) plant and a mother plant has been proposed for Sanand Gujarat. The company will bank on existing dealer network for Nano initially. The new Nano Plant could have a capacity of 500,000 units, compared to 300,000 for Singur. Gujarat has also agreed to match all the incentives offered by West Bengal government.

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CURRENTS FACTS Today Advertising is one of the most common ways to make car buyer or car enthusiast aware of the new car with special promotion price. Another more important way of advertising is to create an image or brand image. Take BMW Z3 for example, it was introduced in 1996 and shortly the car has been used in the famous James Bond movie. Over the years Tata Motors have been successful in creating their brand image. The packaging, innovations, and quality control. Tata Motors provide many innovative features to attract car lover. One of these innovations is the Tata Safari 4X4 Dicor that has “Reverse Guide System”. A weather-proof camera is fixed to the rear car to help the driver while reversing the car. There are various factors to determine a price of a car. These factors are such as market condition (it can’t be too low or too high with the prices of same vehicle from competitors, it has to be at par), cost incurred to build a car, profit by company, dealer profit. Giving discount every month and special promotion for certain type of vehicle also one of the strong strategy use by Tata Motors. Discount can be made from Company’s profit or from dealer’s profit at certain range. Place of dealership does play an important role. The channel of distribution, physical location, and dealership method of distribution and sales is generally adopted. The distribution of vehicle must be in a very systematic way, from the plant to dealership and to end user. This is not only in India itself but also to the world-wide dealership. INDUSTRY PROFILE

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The industry witnessed a change in demand dynamics in last few years. The demand for LCVs in the <=3.5 tones segment is rising at the cost of demand in 5 to 7.5 tones category, while demand in 7.5 to 12 tones segment and 16.2 to 25 tones segment is booming at the cost of demand in 12 to 16.2 tones segment. Demand for trailers of >35.2 tones is witnessing a surge while demand for semi-trailers in 26.4 to 35.2 tones segment is suffering. This structural shift in demand dynamics is due to the evolution of Hub & Spoke model of distribution, which is now adopted by transportation players because of improved road infrastructure and also the ban on trucks in many cities by the authorities to tackle the traffic congestion issues. According to the Hub & Spoke model, HCVs plying over the highways to transport goods to different states and districts, while MCVs are used in distributing goods to different cities and the last leg of distribution in intra city is done by using <=3.5 tonner vehicles GLOBAL OPERATIONS Tata Motors has been aggressively acquiring foreign brands to increase its global presence. Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two iconic British brands that was acquired in 2008. Tata Motors has also acquired from Ford the rights to three other brand names: Daimler, Lanchester and Rover. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea’s second largest truck maker. The rechristened Tata Daewoo 17

Commercial Vehicles Company has launched several new products in the Korean market, while also exporting these products to several international markets. Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, giving it controlling rights of the company. Hispano’s presence is being expanded in other markets. On Tata's journey to make an international foot print, it continued its expansion through the introduction of new products into the market range of buses (Starbus & Globus) as well as trucks (Novus). These models were jointly developed with its subsidiaries Tata Daewoo and Hispano Carrocera. In May, 2009 Tata unveiled the Tata World Truck range jointly developed with Tata Daewoo. They will debut in South Korea, South Africa, the SAARC countries and the Middle-East by the end of 2009. In 2006, it formed a joint venture with the Brazil-based Marco polo, a global leader in body-building for buses and coaches to manufacture fully-built buses and coaches for India and select international markets. Tata Motors has expanded its production and assembly operations to several other countries including South Korea, Thailand, South Africa and Argentina and is planning to set up plants in Turkey, Indonesia and Eastern Europe. Tata also franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal. Tata has dealerships in 26 countries across 4 continents. Though Tata is present in many counties it has only managed to create a large consumer Post Purchase Satisfaction:The buyer, S satisfaction is a function of closeness between the buyer, S expectation and the products Perceiver performance. The larger the gap between expectation and performance, the greater the consumer dissatisfaction. Post purchase Action:The Consumer, S satisfaction or dissatisfaction with the product influence subsequent behavior. If the consumer satisfied, he or she will exhibit a higher probability of purchasing the product again. Dissatisfaction consumer may abandon and return the product. Post-Purchase Use or Disposal:The marketer should also monitor new buyers use and dispose of the product. If the consumer store the product in a close, the product is probably not very satisfying. If the 18

consumer throws the product away, the marketer needs to know how they dispose of it; especially it can be hurt the environment. Our Vision To be a world class corporate constantly furthering the interest of all its stakeholders. Our Mission Shareholders: To consistently create shareholder value by generating returns in excess of Weighted Average Cost of Capital (WACC) during the upturn and at least equal to Weighted Average Cost of Capital (WACC) during the downturn of the business cycle. Customers: To strengthen the Tata brand and create lasting relationships with the customers by working closely with business partners to provide superior value for money over the life cycle. Employees: To create a seamless organization that incubates and promotes innovation, excellence and the Tata core values. Vendor and Channel Partners: To foster a long-term relationship so as to introduce a broad range of innovative products and services, that would benefit our customers and other stakeholders. Community: To proactively participate in reshaping the country’s economic growth. To take a holistic approach towards environmental protection Mission To be passionate in anticipating and providing the best vehicles and experiences that excite our customers globally.

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INDUSTRY PROFILE

1) INDIAN AUTOMOBILE INDUSTRY PROFILE
In India there are 100 people per vehicle, while this figure is 82 in china. It is expected that India automobile industry will achieve mass motorization status by 2014.

INTRODUCTION
Since the first car rolled out on the streets of Mumbai (Bombay) in 1898, the Automobile Industry of India has come a long way. During its early stages the auto industry was overlooked by the government and the polices were also not favorable. The Liberalization police and various tax reliefs by the Govt. of India in recent years have made remarkable impact on Indian Automobile industry. Indian auto industry, which is currently growing at the pace of around 18% per annum, has become a hot destination for global auto player like Volvo, general motors and ford.

HISTORY
The automobile history dates back to the late 18th century. Nicolas Joseph Cugnot, a French engineer is credited with inventing the first self-propelled automobile. Cugnot's vehicle used steam power for locomotion. The vehicle found military application in the French army. Cugnot's automobile was never commercially sold. In the beginning automobile industry was dominated by steam-powered vehicles. The vehicles were expensive and difficult to maintain. The incidence of frequent boiler explosions also kept potential purchasers away. Commercial history of automobiles started with the invention of gasoline powered internal combustion engines. The German inventor, Karl Benz constructed his first gasoline powered vehicle in 1885 at Mannheim, Germany. Commercial production of Benz cars started in 1888. Levassor of France was the first company to exclusively build and sell motor cars from 1889.

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The early 1900s saw many automobile manufacturing companies coming into existence in a number of European countries and the United States. The first mass produced automobile in the United States was the curved-dash Oldsmobile. It was a three-horsepower machine and sold 5,000 units by 1904. The economics of the US car market was disrupted by the arrival of Henry Ford and his Model T car. The Model T was the world's first mass produced vehicle- a million units were sold by 1920- a space of 10 years.

INDIAN AUTOMOBILE INDUSTRY:Indi’s automobile sector consist of the passenger cars and utility vehicles, commercial vehicles, two wheelers and tractors segment. The total market size of the auto sector in India is approximately Rest 540 billion and has been growing at around 8 percent per annum for the last few years. Since the last four to five years, the two wheel segment has driven the overall volume growth on account of the spurt in the sales of the motorcycle. However, lately the passenger cars and commercial vehicles segment has also seen a good growth due to high discount lower financial rate and pickup in industrial activity respectively. The automobile industry is fairly concentrate as in most of the segment two or three players has cornered a major chunk of the total sales. For instance in passenger car segment, MUL, Tata Motors and Hyundai motors control around 85% of the total annual sales. Similarly, in the two wheelers segment the sales volume of Hero Honda, Bajaj auto and TVS motors constitute around 80% of the total sales and in the commercial vehicle segment the market leader Telco controls around 56% of the total annual sales. The auto components industry on the other hand is highly fragmented through there are dominate players in some of the critical segment.

Outlook
The expected rise in income levels, wide choice of models and easy availability of finance at low interest rates will drive growth in passenger cars segment, which is likely to be over 12 percent per annum for a next four to five years. Two wheelers growth is likely to marginally slow down, but still grow at an average annual growth rate of around 10 percent.

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The commercial vehicles segment is likely to grow at a rend rate of 6-8 percent driven mainly by the increase in industrial and economic activity on account of the expected growth in the economy, though annual growth rates may fluctuate widely with the cyclical ups and downs of the economy. Tractor industry growth is likely to turnaround and posts a growth in volume in 2005-06. However, it will likely to turnaround and posts a moderate growth of around 4-5 percent annual growth rate over the medium term.

Scope of Indian automobile sector
The Indian automobile industry is going through a phase of rapid change and high growth. With the new project coming up on a regular basis the industry is undergoing technological change. The major players are expanding their plants and focusing on mass customization, mass production, etc….. Nearly every automobile company is investing at a higher rate than ever before to achieve a high growth trajectory. The overall investment in the sector has been increasing quite rapidly. It is expected that by the end of the 2011 Indian automobile sector will be investing a huge amount 40,000 crores.

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THE KEY PLAYER IN INDIAN AUTOMOBILE INDUSTRY ARE:• • • • • • • • • • Maruti Udyog Limited Hero motors limited Tata groups Bajaj Auto limited Mahindra group Ashok Leyland Yamaha motors India Hyundai motors India limited Toyota kirloskar motors privates limited Honda Siel cars India limited

Background and inception of the company
Company Profile Tata Motors Limited 2 Headquarters - Mumbai. TML is currently headed by Ratan Tata. Tata Motors manufactures HCV, LCV, Passenger cars, MUV and Military Vehicles. Global operations - UK, South Korea, Thailand and Spain. TML - world's fourth largest truck manufacturer. World’s second largest bus manufacturer. Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs. 92,519 crores (USD 20 billion) in 2009-10. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The Company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer. The Company's 24,000 employees are guided by the vision to be "best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics."

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Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Over 5.9 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) and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The Company is establishing a new plant at Sanand (Gujarat). The Company's dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India. Tata Motors, the first Company from India's engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two iconic British brands that was acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea's second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has launched several new products in the Korean market, while also exporting these products to several international markets. Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, and subsequently the remaining stake in 2009. Hispano's presence is being expanded in other markets. In 2006, Tata Motors formed a joint venture with the Brazil-based Marcopolo, a global leader in body-building for buses and coaches to manufacture fully-built buses and coaches for India and select international markets. In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the Company's pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun production of the Xenon pickup truck, with the Xenon having been launched in Thailand in 2008. Tata Motors is also expanding its international footprint, established through exports since 1961. The Company's commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia, South Asia and 24

South America. It has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia, Senegal and South Africa. The foundation of the Company's growth over the last 50 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customerdesired offerings through leading edge R&D. With over 3,000 engineers and scientists, the Company's Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The Company today has R&D centres in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Spain, and the UK. 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. In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and the world have been looking forward to. The Tata Nano has been subsequently launched, as planned, in India in March 2009. A development, which signifies a first for the global automobile industry, the Nano brings the comfort and safety of a car within the reach of thousands of families. The standard version has been priced at Rs.100,000 (excluding VAT and transportation cost). Designed with a family in mind, it has a roomy passenger compartment with generous leg space and head room. It can comfortably seat four persons. Its mono-volume design will set a new benchmark among small cars. Its safety performance exceeds regulatory requirements in India. Its tailpipe emission performance too exceeds regulatory requirements. In terms of overall pollutants, it has a lower pollution level than twowheelers being manufactured in India today. The lean design strategy has helped minimise weight, which helps maximise performance per unit of energy consumed and delivers high fuel efficiency. The high fuel efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint. 25

In May 2009, Tata Motors introduced ushered in a new era in the Indian automobile industry, in keeping with its pioneering tradition, by unveiling its new range of world standard trucks called Prima. In their power, speed, carrying capacity, operating economy and trims, they will introduce new benchmarks in India and match the best in the world in performance at a lower life-cycle cost. Tata Motors is equally focussed on environment-friendly technologies in emissions and alternative fuels. It has developed electric and hybrid vehicles both for personal and public transportation. It has also been implementing several environment-friendly technologies in manufacturing processes, significantly enhancing resource conservation. Through its subsidiaries, the Company is engaged in engineering and automotive solutions, construction equipment manufacturing, automotive vehicle components manufacturing and supply chain activities, machine tools and factory automation solutions, high-precision tooling and plastic and electronic components for automotive and computer applications, and automotive retailing and service operations. Tata Motors is committed to improving the quality of life of communities by working on four thrust areas – employability, education, health and environment. The activities touch the lives of more than a million citizens. The Company's support on education and employability is focussed on youth and women. They range from schools to technical education institutes to actual facilitation of income generation. In health, our intervention is in both preventive and curative healthcare. The goal of environment protection is achieved through tree plantation, conserving water and creating new water bodies and, last but not the least, by introducing appropriate technologies in our vehicles and operations for constantly enhancing environment care. With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.

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NATURE OF THE BUSINESS CARRIED
Tata Motors in one of the major players of the automobile manufacturing companies in India. It has three different manufacturing units in India they are, Jamshedpur in the East, Pune in the West and Lucknow in the North and all three manufacturing units specialize in the manufacturing of different automobile like Jamshedpur unit produces trucks, engines and axles, the Pune unit caters to the production of Medium Heavy Commercial vehicles and Heavy Commercial Vehicles, utility vehicles and passenger cars and the Lucknow unit produces MCVs, Tata Sumos along with a number of spare parts. Some of the well known cars manufactured by Tata Motors are: Tata Indica, Tata Indigo, Tata Indigo Marina, Tata Sumo and Tata safari. Tata Motors is a very significant contributor to the automobile industry in India. With a domestic sales record of 122,120 vehicles in 2009 and exports of 5220 vehicles across the globe it has managed to bag a current market share of 67.4% in the commercial vehicles segment and 12.5% in the passenger cars segment. The company has reported revenues of Rs 6404.63 crores with operating profits of Rs 728.0 crores. The company continues to upgrade its resources to leverage emerging opportunities be it in the commercial vehicles segment or passenger cars segment. In May 2009 the company unveiled its new range of world standard trucks comprising multi-axle trucks, tractortrailers, tippers, mixers and special purpose vehicles. In the passenger cars segment the company launched the much awaited Tata Manza , opened the first Jaguar and Land Rover showroom in Mumbai and long with the Fiat Linea, Fiat 500 and the Palio, the company commenced the distribution of the Fiat Grande Punto in June 2009. Diesel cars are becoming a more popular and feasible option these days due to the continuous rise in the price of petrol. People are also becoming more aware of the myths that surrounded diesel vehicles and are realizing that most myths are false. Tata manufactures all its cars in both the petrol and diesel versions but the Tata Indica V2 stands out as one of the most preferred diesel cars in the country. Intact it is among the country's top ten hottest selling diesel cars due to its exceptional performance of 14 kmpl and a price 27

tag of just Rs 2.6 lakhs.

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Tata Trucks are amongst the most sought-after heavy commercial vehicles (HCV) in India. Products of Tata Motors Limited – the largest automobile companies in India with a consolidated revenues of Rs. 70,938,85 crores (in 2008-09), Tata Trucks not only outplayed its competitors by its qualities, but also by its services. It's also the leading player in the list of TNS TruckTrak 2006 Customer Satisfaction Study in Trucks. Tata Motors is the fourth largest truck manufacturers in the world. Established in 1945, it first rolled out its vehicle in 1954. Since then, more than 4 million Tata vehicles run on the Indian roads. It has its manufacturing units located in various locations across the country including Jamshedpur, Pantnagar, Pune, Dharwad, and Lucknow. Another plant is coming up at Sanand in Gujarat With 2% of annual turnover being spend on research and development activities, Tata Motors Limited aims at delivering improved and environmentally sound technology for a better tomorrow. The group has recently established two domestic Engineering Research Centres in India that constitutes licensed Crash Test service. Tata Motors is the biggest automobile firm of India with combined profits of Rs.70, 938.85 crores registered in FY 2008-09. The group has spread its operations in international markets such as Thailand, UK, Spain and South Korea with the support of its associate firms. Among many of its sub-ordinates, Tata Motors Limited has industrial tie-up with Jaguar Land Rover, a joint venture between two renowned British trademarks. In February 2010, Tata Motors Group's international sales witnessed a growth of 59% against the figures of February 2009. The products which registered sales of 89,768 units are Tata Daewoo, Tata passenger vehicles, Land Rover, Hispano Carrocera and Jaguar. For the FY 2009 - 2010, the aggregate sales were higher by 17% and stood at 771,238 against the growth registered in 2008-09. Commercial vehicles and passenger vehicles sales in February 2010 were 42,660 units and 47,108 units respectively. It can also be translated as 70% growth in the commercial

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CHAPTER - III REVIEW OF LETERATURE

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REVIEW OF LETERATURE Cash plays a very important role in the economic life of a business. A firm needs cash to make payment to its suppliers, to incur day-to-day expenses and to pay salaries, wages, interest and dividends etc. In fact, what blood is to a human body, cash is to a business enterprise. Thus, it is very essential for a business to maintain an adequate balance of cash. For example, a concern operates profitably but it does not have sufficient cash balance topay dividends, what message does it convey to the shareholders and public in general. Thus, management of cash is very essential. There should be focus on movement of cash and its equivalents. Cash means, cash in hand and demand deposits with the bank. Cash equivalent consists of bank overdraft, cash credit, short term deposits and marketable securities. Cash Flow Statement deals with flow of cash which includes cash equivalents as well as cash. This statement is additional information to the users of Financial Statements. The statement shows the incoming and outgoing of cash. The statement assesses the capability of the enterprise to generate cash and utilize it. Thus a Cash-Flow statement may be defined as a summary of receipts and disbursements of cash for a particular period of time. It also explains reasons for the changes in cash position of the firm. Cash flows are cash inflows and outflows. Transactions which increase the cash position of the entity are called as inflows of cash and those which decrease the cash position as outflows of cash. Cash flow Statement traces the various sources which bring in cash such as cash from operating activities, sale of current and fixed assets, issue of share capital and debentures etc. and applications which cause outflow of cash such as loss from operations, purchase of current and fixed assets, redemption of debentures, preference shares and other long-term debt for cash. In short, a cash flow statement shows the cash receipts and disbursements during a certain period. The statement of cash flow serves a number of objectives which are as follows:

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Cash flow statement aims at highlighting the cash generated from operating activities. • • Cash flow statement helps in planning the repayment of loan schedule and replacement of fixed assets, etc. Cash is the centre of all financial decisions. It is used as the basis for the projection of future investing and financing plans of the enterprise. • Cash flow statement helps to ascertain the liquid position of the firm in a better manner. Banks and financial institutions mostly prefer cash flow statement to analyze liquidity of the borrowing firm. • Cash flow Statement helps in efficient and effective management of cash. The management generally looks into cash flow statements to understand the internally generated cash which is best utilized for payment of dividends. Definition of 'Cash Flow' 1. A revenue or expense stream that changes a cash account over a given period. Cash inflows usually arise from one of three activities - financing, operations or investing - although this also occurs as a result of donations or gifts in the case of personal finance. Cash outflows result from expenses or investments. This holds true for both business and personal finance. 2. An accounting statement called the "statement of cash flows", which shows the amount of cash generated and used by a company in a given period. It is calculated by adding noncash charges (such as depreciation) to net income after taxes. Cash flow can be attributed to a specific project, or to a business as a whole. Cash flow can be used as an indication of a company's financial strength.

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In business as in personal finance, cash flows are essential to solvency. They can be presented as a record of something that has happened in the past, such as the sale of a particular product, or forecasted into the future, representing what a business or a person expects to take in and to spend. Cash flow is crucial to an entity's survival. Having ample cash on hand will ensure that creditors, employees and others can be paid on time. If a business or person does not have enough cash to support its operations, it is said to be insolvent, and a likely candidate for bankruptcy should the insolvency continue. The statement of a business's cash flows is often used by analysts to gauge financial performance. Companies with ample cash on hand are able to invest the cash back into the business in order to generate more cash and profit. A cash flow statement is one of the most important financial statements for a project or business. The statement can be as simple as a one page analysis or may involve several schedules that feed information into a central statement. A cash flow statement is a listing of the flows of cash into and out of the business or project. Think of it as your checking account at the bank. Deposits are the cash inflow and withdrawals (checks) are the cash outflows. The balance in your checking account is your net cash flow at a specific point in time. A cash flow statement is a listing of cash flows that occurred during the past accounting period. A projection of future flows of cash is called a cash flow budget. You can think of a cash flow budget as a projection of the future deposits and withdrawals to your checking account. A cash flow statement is not only concerned with the amount of the cash flows but also the timing of the flows. Many cash flows are constructed 33

with multiple time periods. For example, it may list monthly cash inflows and outflows over a year’s time. It not only projects the cash balance remaining at the end of the year but also the cash balance for each month. Working capital is an important part of a cash flow analysis. It is defined as the amount of money needed to facilitate business operations and transactions, and is calculated as current assets (cash or near cash assets) less current liabilities (liabilities due during the upcoming accounting period). Computing the amount of working capital gives you a quick analysis of the liquidity of the business over the future accounting period. If working capital appears to be sufficient, developing a cash flow budget may be not critical. But if working capital appears to be insufficient, a cash flow budget may highlight liquidity problems that may occur during the coming year. Cash flow analysis is a method of analyzing the financing, investing, and operating activities of a company. The primary goal of cash flow analysis is to identify, in a timely manner, cash flow problems as well as cash flow opportunities. The primary document used in cash flow analysis is the cash flow statement. Since 1988, the Securities and Exchange Commission (SEC) has required every company that files reports to include a cash flow statement with its quarterly and annual reports. The cash flow statement is useful to managers, lenders, and investors because it translates the earnings reported on the income statementhich are subject to reporting regulations and accounting decisions into a simple summary of how much cash the company has generated during the period in question. "Cash flow measures real money flowing into, or out of, a company's bank account," Harry Domash notes on his Web site, WinningInvesting.com. "Unlike reported earnings, there is little a company can do to overstate its bank balance." 34

THE CASH FLOW STATEMENT A typical cash flow statement is divided into three parts: cash from operations (from daily business activities like collecting payments from customers or making payments to suppliers and employees); cash from investment activities (the purchase or sale of assets); and cash from financing activities (the issuing of stock or borrowing of funds). The final total shows the net increase or decrease in cash for the period. Cash flow statements facilitate decision making by providing a basis for judgments concerning the profitability, financial condition, and financial management of a company. While historical cash flow statements facilitate the systematic evaluation of past cash flows, projected (or pro forma) cash flow statements provide insights regarding future cash flows. Projected cash flow statements are typically developed using historical cash flow data modified for anticipated changes in price, volume, interest rates, and so on. To enhance evaluation, a properly-prepared cash flow statement distinguishes between recurring and nonrecurring cash flows. For example, collection of cash from customers is a recurring activity in the normal course of operations, whereas collections of cash proceeds from secured bank loans (or the purchase of certain investments or capital assets) is typically not considered a recurring activity in the normal course of operations. In contrast to nonrecurring cash inflows or outflows, most recurring cash inflows or outflows occur (often frequently) within each cash cycle (i.e., within the average time horizon of the cash cycle). The cash cycle (also known as the operating cycle or the earnings cycle) is the series of transactions or economic events in a given company whereby: 35

1. Cash is converted into goods and services. 2. Goods and services are sold to customers. 3. Cash is collected from customers. To a large degree, the volatility of the individual cash inflows and outflows within the cash cycle will dictate the working-capital requirements of a company. Working capital generally refers to the average level of unrestricted cash required by a company to ensure that all stakeholders are paid on a timely basis. In most cases, working capital can be monitored through the use of a cash budget. Cash Flows are inflows and outflows of cash and cash equivalents. The statement of cash flow shows three main categories of cash inflows and cash outflows, namely : operating, investing and financing activities. (a) Operating activities are the principal revenue generating activities of the enterprise. (b) Investing activities include the acquisition and disposal of longterm assets and other investments not included in cash equivalents. (c) Financing activities are activities that result in change in the size and composition of the owner’s capital (including Preference share capital in the case of a company) and borrowings of the enterprise. As per AS-3 the inflow and outflow of cash are : Operating Activities Inflows Cash sale Cash received from debtors Cash received from commission and fees Royalty and other revenues Outflows Cash purchases Payment to creditors Cash operating expenses Payment of wages Income tax 36

Investing Activities Inflows Sale of fixed assets Sale of investment Interest received Dividend received Financing Activities Inflows Issue of shares Outflows Cash repayments of amounts Outflows Purchase of fixed assets Purchase of investment

borrowed Issues of debentures in cash Interest paid on loans/debentures Proceeds from long term short term Dividends paid on equity and borrowings preference share capital

Cash flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company's value and situation. Cash flow can e.g. be used for calculating parameters:
•

To determine a project's rate of return or value. The time of cash flows into and out of projects are used as inputs in financial models such as internal rate of return and net present value.

•

To determine problems with a business's liquidity. Being profitable does not necessarily mean being liquid. A company can fail because of a shortage of cash even while profitable.

•

As an alternative measure of a business's profits when it is believed that accrual accounting concepts do not represent economic realities. For example, a company may be notionally profitable but generating little operational cash (as may be the case for a company that barters its products rather than selling for cash). In such a case, the company may be deriving additional operating cash by issuing shares or raising additional debt finance. 37

•

Cash flow can be used to evaluate the 'quality' of income generated by accrual accounting. When net income is composed of large non-cash items it is considered low quality.

•

To evaluate the risks within a financial product, e.g. matching cash requirements, evaluating default risk, re-investment requirements, etc.

Cash flow is a generic term used differently depending on the context. It may be defined by users for their own purposes. It can refer to actual past flows or projected future flows. It can refer to the total of all flows involved or a subset of those flows. Subset terms include net cash flow, operating cash flow and free cash flow. How to Analyze a Company's Cash Flow Statement Although reported earnings (or losses) per share most often take the spotlight in the financial headlines, cash flow can be an even more valuable measure of a company's longterm financial health. Cash flow is exactly what it sounds like. It is cash generated and used by a company's business. It is reported in a financial statement showing three years of data in the company's annual 10-K filing with the Securities and Exchange Commission (SEC). It is also reported quarterly in a company's 10-Q filings with the SEC. Here is one method to quickly evaluate a company's cash flow statement. The cash flow statement has three sections, cash flow generated by or used by operations, cash flow generated by or used by investing activities, and cash flow generated by or used by financing activities. Cash flow generated by or used by operations reflects the cash produced by (or used by) the company's ongoing operations. It excludes noncash items such as depreciation, amortization and stock-based compensation that are expensed on the profit and loss statement. In addition, it takes into account cash generated by or used by working capital. Cash flow generated by (or used by) operations is one of the most important numbers on the cash flow statement, because it is the cash available from ongoing operations to reinvest in the business, repay debt, pay dividends, etc. Now look at cash generated by or used by investing activities. This category includes capital expenditures (often called additions to property and equipment), acquisitions or 38

sales of businesses or property for cash, and other investing activities. Most often it will be a negative number dominated by spending on capital projects but, depending on the nature of the business, that is not always the case. Finally, take a look at the impact of financing activities on cash. Cash inflows in this category could come from, among other things, bank borrowings, debt issuance, and the sale of equity. Uses of cash for financial purposes include principal payments on debt, share repurchases and cash dividend payments. The total of the cash generated by or used by these three categories is shown on the cash flow statement (after the effect of exchanges rates, if any, on cash) as the year's net change in cash and cash equivalents. This figure, when added to cash at the beginning of the reporting period, will result in the cash and cash equivalents held by the company at the end of the reporting period. In evaluating a company's three year cash-flow performance consider the following. First, do its operations consistently generate cash and what is the trend of this figure? Ideally, you would like to see solidly positive cash flow generated by operations. If this number is growing each year, that's even better. Second, to what extent is cash generated by operations sufficient to pay annual capital expenditures and cash dividends? This figure (cash flow from operations net of capital expenditures and dividends) is sometimes called free cash flow. This is a very useful measure because it tells you how much cash a company has left over each year, after reinvesting in its business and paying its shareholders, to take advantage of additional growth opportunities, increase the dividend, repurchase stock, or just put away for a rainy day. As a result, this figure can give you an idea of a company's ability to weather a slowdown or a downturn, to grow its business long term, and to maintain and grow its dividend. The free cash flow number discussed above excludes cash used to make acquisitions or from the sale of businesses. However, if acquisitions are a key part of a company's longterm growth strategy and, therefore, it regularly purchases other businesses, you may want to factor this into your cash flow analysis. This article only summarizes how to evaluate the cash flow statement in a rudimentary way based on historical numbers. A more sophisticated dissection of a company's cash flow 39

statement, taking into account the specific characteristics of its business and its industry, would often be more revealing. In addition, the cash flow statement does not tell you what cash requirements a company faces, such as a large principal payment on debt coming due or the need to build a new plant. Nevertheless, analyzing free cash flow, even in a basic way, can help you identify public companies worthy of further analysis and provide valuable insights into the financial health of companies in which you already own shares.

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Advantages of Cash Flow Statement: 1. It helps the newly formed companies to know their inflow and outflow of cash. 2. It helps the investors to judge whether the company is financially sound or not. 3. It helps the company to know whether it will be able to cover the payroll and other expenses. 4. It helps the lenders to know the company’s ability to repay. 5. A cash flow statement is provided on monthly basis or quarterly basis or six monthly basis or yearly basis. 6. These statements help to have an accurate analysis of the firm’s ability to meet its current liabilities. 7. A cash flow statement is helpful for planning and managing future financial commitments. 8. A cash flow statement summarizes the company’s cash receipts and cash payments over a period of time. 9. It is useful for determining the short term ability of the concern to meet its liabilities as it does not include non cash items. 10. A cash flow statement gives vital information not only about the company’s performance but also about its major activities during the year. Disadvantages of Cash Flow Statement: 1. By itself, it cannot provide a complete analysis of the financial position of the firm. 2. It can be interpreted only when it is in confirmation with other financial statements and other analytical tools like ratio analysis.

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Cash Flow Indicator Ratios: Introduction This section of the financial ratio tutorial looks at cash flow indicators, which focus on the cash being generated in terms of how much is being generated and the safety net that it provides to the company. These ratios can give users another look at the financial health and performance of a company.

At this point, we all know that profits are very important for a company. However, through the magic of accounting and non-cash-based transactions, companies that appear very profitable can actually be at a financial risk if they are generating little cash from these profits. For example, if a company makes a ton of sales on credit, they will look profitable but haven't actually received cash for the sales, which can hurt their financial health since they have obligations to pay. The ratios in this section use cash flow compared to other company metrics to determine how much cash they are generating from their sales, the amount of cash they are generating free and clear, and the amount of cash they have to cover obligations. We will look at the operating cash flow/sales ratio, free cash flow/operating cash flow ratio and cash flow coverage ratios. Cash Flow Indicator Ratios: Operating Cash Flow/Sales Ratio This ratio, which is expressed as a percentage, compares a company's operating cash flow to its net sales or revenues, which gives investors an idea of the company's ability to turn sales into cash. It would be worrisome to see a company's sales grow without a parallel growth in operating cash flow. Positive and negative changes in a company's terms of sale and/or the collection experience of its accounts receivable will show up in this indicator. Formula:

Cash Flow Coverage Ratios This ratio measures the ability of the company's operating cash flow to meet its obligations - including its liabilities or ongoing concern costs. 42

The operating cash flow is simply the amount of cash generated by the company from its main operations, which are used to keep the business funded. The larger the operating cash flow coverage for these items, the greater the company's ability to meet its obligations, along with giving the company more cash flow to expand its business, withstand hard times, and not be burdened by debt servicing and the restrictions typically Formulas: included in credit agreements.

Free Cash Flow/Operating Cash Flow Ratio The free cash flow/operating cash flow ratio measures the relationship between free cash flow and operating cash flow. Free cash flow is most often defined as operating cash flow minus capital expenditures, which, in analytical terms, are considered to be an essential outflow of funds to maintain a company's competitiveness and efficiency.

The cash flow remaining after this deduction is considered "free" cash flow, which becomes available to a company to use for expansion, acquisitions, and/or financial stability to weather difficult market conditions. The higher the percentage of free cash flow

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embedded in a company's operating cash flow, the greater the financial strength of the company. Formula:

Dividend Payout Ratio This ratio identifies the percentage of earnings (net income) per common share allocated to paying cash dividends to shareholders. The dividend payout ratio is an indicator of how well earnings support the dividend payment.

Here's how dividends "start" and "end." During a fiscal year quarter, a company's board of directors declares a dividend. This event triggers the posting of a current liability for "dividends payable." At the end of the quarter, net income is credited to a company's retained earnings, and assuming there's sufficient cash on hand and/or from current operating cash flow, the dividend is paid out. This reduces cash, and the dividends payable liability is eliminated.

The payment of a cash dividend is recorded in the statement of cash flows under the "financing activities" section. Formula:

A) Product profile:-

Product Profile Tata Motors Limited • Passenger Cars & Utility vehicles 44

Tata Sumo/Spacio Tata Safari Tata Indica Tata Indigo Tata Winger Tata Magic Tata Nano Tata Xenon XT Tata Xover (2009) Tata Manza (2009) • Commercial Vehicles are Tata Ace Tata Starbus Tata Globus Tata Marco polo Bus Tata Novus Tata 407 EX Military Vehicles Tata LSV Tata 407 Troop Carrier Tata Winger Passenger Mini Bus •

Defence Vehicles
Tata 407 (4 x 4) Soft Top Troop Carrier

B) AREA OF OPERATION:-

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The kind of market segmentation followed by Tata motors is fully market coverage. This means that the entire products manufactured by the company are sold in various markets. a) Global b) National c) Regional Global:Global operations - UK, South Korea, Thailand and Spain. TML - world's fourth largest truck manufacturer. World’s second largest bus manufacturer. Tata motors a growing global footprint and has established itself in market across the world as one of the world’s most prestigious auto brands. The emphasis is now on establishing a solid local presence in these countries as this was the key to long-term success and building trust with the customer. With subsidiaries in south Africa, Europe and strong presence in over 15 countries , it aspire to be globally renowned in utility vehicles. NATIONAL:The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat power trains. The company is establishing a new plant at Sanand (Gujarat). The company's dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India.

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CHAPTER-iv
DATA ANALYSIS
&

INTERPRERTATIONS

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DATA ANALYSIS AND INTERPRETATION
Year Operating Cash Flow/Sales Ratio 2008 82.07 2009 20.16 201 0 12.4 9 201 1 7.7 201 2 5.9 8

Interpretation: From the above graph the operating cash flow is decreasing trend from the year 2008 to 2012 it indicates that company sales growth rate is also decreasing which is not favourable to the company.

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Cash Flow Coverage Ratios This ratio measures the ability of the company's operating cash flow to meet its obligations - including its liabilities or ongoing concern costs. The operating cash flow is simply the amount of cash generated by the company from its main operations, which are used to keep the business funded. The larger the operating cash flow coverage for these items, the greater the company's ability to meet its obligations, along with giving the company more cash flow to expand its business, withstand hard times, and not be burdened by debt servicing and the restrictions typically Formulas: included in credit agreements.

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Short-term debt coverage ratio:
Year Short-term debt coverage ratio 2008 0.71 2009 0.14 201 0 0.0 6 201 1 0.0 4 2012 0.02

Interpretation: From the above information short term debt coverage ratio is decreasing trend from the year 2008 to 2012.it indicates that the ability of the company to meet its short term obligations is also decreasing.

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CAPITAL EXPENDITURE COVERAGE RATIO:
Year Capital expenditure coverage ratio 200 8 1.4 4 2009 0.34 2010 0.19 2011 0.09 2012 0.06

Interpretation: From the above information capital expenditure ratio is also decreasing trend from the2008 to 2012.. It indicates that company is not using the capital effectively which is not good for the company.

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DIVIDEND COVERAGE RATIO:
Year Dividend coverage ratio 2008 102.4 2009 19.26 2010 11.4 2011 5.9 2012 7.03

Interpretation: From the above information the dividend coverage ratio is decreasing from the year 2008 to 2012. It indicates that the payment of dividends to the shareholders is also decreasing. Which not favourable to the share holders.

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CAPITAL EXPENDITURE + CASH DIVIDENDS COVERAGE: Year 2007 Capital expenditure + Cash dividends 1.42 coverage 2008 0.33 2009 0.18 2010 0.09 2011 0.06

Interpretation: From the above information the capital expenditure and cash dividends coverage ratio is decreasing from the year 2008 to 2012 which indicates that the expenditure of capital is not maintaining the proper way.

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Free Cash Flow/Operating Cash Flow Ratio The free cash flow/operating cash flow ratio measures the relationship between free cash flow and operating cash flow. Free cash flow is most often defined as operating cash flow minus capital expenditures, which, in analytical terms, are considered to be an essential outflow of funds to maintain a company's competitiveness and efficiency. The cash flow remaining after this deduction is considered "free" cash flow, which becomes available to a company to use for expansion, acquisitions, and/or financial stability to weather difficult market conditions. The higher the percentage of free cash flow embedded in a company's operating cash flow, the greater the financial strength of the company. Formula:

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FREE CASH FLOW/OPERATING CASH FLOW RATIO

Year operating cash flow ratio

2008 0.82

2009 0.2

2010 0.12

2011 0.07

2012 5.98

Interpretation: From the above graph the operating cash flow ratio is increasing g from the year 2008 to 2012 it indicates that the usage of cash to operating activities is also increasing. This is not satisfactory to the company.

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Dividend Per Share: Dividend Per Share (DPS) ratio relates the dividends announced for the year to the number of shares issued for that year. It is an indication of the cash return that shareholders receive from holding shares in the listed company.

Year Dividend per share ratio

2008 0.5

2009 0.75

201 0 0.8

201 1 0.8 5

2012 0.5

Interpretation: The dividend per share ratios is increasing from the year 2008 to 2012 and it was decreasing in the year 2011.it shows the decrease in the amount of dividend received by the shareholders for their shares.

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Earnings Per Share: An earnings per share ratio (EPS Ratio) is a small variation of return on equity capital ratio and is calculated by dividing the net profit after taxes and preference dividend by the total number of equity shares. The formula of earnings per share is:

Year Earnings per share ratio

2008 11.7

2009 12.5

2010 23.2

2011 2.32

2012 -3.67

Interpretation: From the above information the earnings per share ratio is increasing from the year 2008 to 2012and it was decrease in the year 2010 again it was fall in the negative value .which show the earning capacity of the company is decreasing.

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Dividend Payout Ratio: Dividend payout ratio is calculated to find the extent to which earnings per share have been used for paying dividend and to know what portion of earnings has been retained in the business. It is an important ratio because ploughing back of profits enables a company to grow and pay more dividends in future. Following formula is used for the calculation of dividend payout ratio

Year Dividend payout ratio

2008 0.04

2009 0.05

2010 0.03

2011 0.36

2012 -0.13

Interpretation: From the above information the dividend payout ratio is increasing and decreasing trend and it the ratio was highest in the year 2010 and it was decrease in year 2012 which shows the company’s dividend is more compared to its earnings.

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Gross Profit Margin (%) The gross profit margin is a measurement of a company's manufacturing and distribution efficiency during the production process. The gross profit tells an investor the percentage of revenue / sales left after subtracting the cost of goods sold. A company that boasts a higher gross profit margin than its competitors and industry is more efficient. Investors tend to pay more for businesses that have higher efficiency ratings than their competitors, as these businesses should be able to make a decent profit as long as overhead costs are controlled (overhead refers to rent, utilities, etc.) Gross profit margin=

Year Dividend payout ratio

2008 0.04

2009 0.05

2010 0.03

2011 0.36

2012 -0.13

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Net Profit Margin (%)

Year Net profit ratio

2008 18.8

2009 17.4

201 0 31. 8

201 1 3.5

2012 -6.24

Interpretation: From the above graph the gross profit ratio is increasing trend from the year 2008 to 2012 and it was decrease in the year 2010 finally it was decreasing in 2011.which is indicates that the company sales are decreased.

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Net Profit Margin (%) Net profit margin is one of the profitability ratios and an important tool for financial analysis. It is the final output; any business is looking out for. Net profit ratio is a ratio of net profits after taxes to the net sales of a firm. All the efforts and decision making in the business is to achieve a higher net profit margin with increase in net profits. Net profit margin shows the margin left for the equity and preference shareholders i.e. the owners. Unlike the gross profit which measures the operating efficiency of the business, net profit margin measures the overall efficiency of the business. An adequate margin of net profits will be generated only when most of all the activities are being done efficiently. The activities may be production, administration, selling, financing, pricing or tax management. Net Profit Margin or Ratio=

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CHAPTER-5
FINDINGS:SUGGESTIONS& CONCLUSION:

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FINDINGS: 1. Operating cash flow is decreasing trend from the year 2008 to 2012 it indicates that company sales growth rate is also decreasing. 2. Short term debt coverage ratio is decreasing trend from the year 2008 to 2012 it indicates that the ability of the company to meet its short term obligations is also decreasing. 3. Capital expenditure ratio is also decreasing trend from the 2008 to 2012. It indicates that company is not using the capital effectively. 4. Dividend coverage ratio is decreasing from the year 2008 to 2012. It indicates that the payment of dividends to the shareholders is also decreasing. 5. Earnings per share ratio is increasing from the year 2007 to 2009 and it was decrease in the year 2010 again it was fall in the negative value .which show the earning capacity of the company is decreasing. 6. Dividend per share ratios is increasing from the year 2008 to 2012 and it was decreasing in the year 2011.it shows the decrease in the amount of dividend received by the shareholders for their shares. 7. Dividend payout ratio was decrease in year 2011 which shows the company’s dividend is more compared to its earnings. 8. Gross profit ratio was decreasing in 2011.which is indicates that the company sales are decreased. 63

9. Net profit ratio was fall in negative value in the year 2011.it indicate that profit position of the company is not favourable to the company. SUGGESTIONS: 1. The company has to increase the dividend coverage ratio which will help to get satisfaction of share holders. 2. In the recent years, the company is increasing its retained earnings for future purpose. For this, the company is decreasing its share for its shareholders which will indirectly impacts on the revenue of the company. Hence the company needs to concentrate on its dividends. 3. The company should increase its gross profit ratio which reveals the efficiency in the production. 4. The company should concentrate on net profit ratio which reveals the profit margin on each sales dollar. 5. The company should increase the operating cash flow which will generate more revenue to the company.

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CONCLUSION: The study on the Cash flow analysis at TATA MOTORS was undertaken with an objective of getting an insight into the concept of cash flow analysis. The study aims to evaluate the cash inflows and out follows of the TATA MOTORS and to study how much cash is flow from operating activities. It also aimed to study the cash flow fluctuations in investing activities. The study is done using the Balance sheet, Profit and Loss account and other financial information of Reliance communications. The entire study is based on the secondary data only. The analytical tools used for the study are Cash Flow coverage ratios like short-term debt coverage ratio, capital expenditure ratio, dividend coverage ratio etc,. The study is done at Hyderabad for a period of 45 days. The study had few limitations which were taken care of. The financial information obtained was analyzed using the appropriate techniques and it was found that the both operating cash flow and short term debt coverage ratio is in decreasing trend. It is also found that earnings per share and dividend per share is in increasing trend. It is suggested to the company to retain the earnings for future purpose. For this, the company is decreasing its share for its shareholders which will indirectly impacts on the revenue of the company. Hence the company needs to concentrate on its dividends and to increase the operating cash flow which will generate more revenue to the company.

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6. Bibliography: 1. I M Pandey, Financial Management, 10th edition, Vikas publishing House, 2010. 2. M Y Khan, P K Jain, Financial Management: Text, Problems and cases, 6th edition, Tata Mcgraw Hill Education Pvt. Ltd., 2006. 3. R M Srivastava, Multinational Financial Management, 1st edition, Excel Books, 2008. Websites: www.wikipedia.com www.scribd.com www.zainbooks.com www.citehr.com www.indiainfoline.com www.investioedia.com

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BALANCE SHEET OF TATA MOTORS
------------------- in Rs. Cr. ------------------BALANCE SHEET OF TATA MOTORS

2008
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 1,032.01 1,032.01 0 0 47,112.47 0 48,144.48 15,226.02 16,226.72 31,452.74 79,597.22 Mar '11 40,904.17 12,063.27 28,840.90 9,907.66 32,102.13 306.11 1,969.25 3,813.21 6,088.57 13,065.25 0 19,153.82 0 7,551.94 2,855.35 10,407.29 8,746.53 0 79,597.22 1,958.61 233.26

2009
1,032.01 1,032.01 0 0 49,466.88 0 50,498.89 3,000.00 21,478.28 24,478.28 74,977.17 Mar '10 39,838.17 9,225.69 30,612.48 1,683.52 31,898.60 298.34 1,738.63 81.92 2,118.89 17,886.79 0.26 20,005.94 0 5,836.53 3,386.84 9,223.37 10,782.57 0 74,977.17 3,274.83 244.66

2010
1,032.01 1,032.01 0 0 50,658.31 0 51,690.32 3,000.00 27,903.61 30,903.61 82,593.93 Mar '09 37,941.15 6,533.38 31,407.77 3,643.86 31,364.75 253.14 1,482.22 534.89 2,270.25 23,272.50 0.26 25,543.01 0 5,774.74 3,590.72 9,365.46 16,177.55 0 82,593.93 6,555.82 250.43

2011
1,032.01 1,032.01 0 0 23,808.02 0 24,840.03 950 19,336.43 20,286.43 45,126.46 Mar '08 21,576.32 4,688.69 16,887.63 7,117.56 13,844.14 201.22 1,093.21 192.65 1,487.08 17,028.20 0.01 18,515.29 0 7,214.31 4,023.85 11,238.16 7,277.13 0 45,126.46 4,392.73 120.35

2012
1,022.31 1,022.31 0 0 19,503.23 0 20,525.54 5,113.57 9,454.27 14,567.84 35,093.38 Mar '07 20,625.82 2,527.37 18,098.45 2,185.60 5,434.43 98.51 802.11 28.08 928.7 19,137.97 40.37 20,107.04 0 6,309.33 4,422.81 10,732.14 9,374.90 0 35,093.38 3,781.30 100.39

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PROFIT & LOSS ACCOUNT BALANCE SHEET OF TATA MOTORS Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

2008
12,129.7 7 0 12,129.7 484.25 0 12,614.0 64.92 159.79 608.07 9,102.95 0 1,772.15 0 11,707.8 421.89 906.14 178.11 728.03 2,855.62 0 -2,127.59 1,369.60 -757.99 0 -757.99 11,642.9 6 0 103.2 17.14 20,640.2 -3.67 10 233.26

2009
13,554.6 0 0 13,554.6 2,455.17 0 16,009. 50.39 144.27 672.39 7,850.49 1,974.73 668.9 0 11,361.1 2,193.43 4,648.60 1,253.84 3,394.76 1,511.24 0 1,883.52 0 1,883.52 1,404.59 478.93 11,310.7 8 0 175.44 29.14 20,640.2 2.32 17 244.66

2010
15,086.6 6 0 15,086.6 4,148.13 0 19,234.7 29.95 138.32 754.56 5,837.25 2,197.84 898.81 0 9,856.73 5,229.93 9,378.06 1,153.24 8,224.82 1,933.51 0 6,291.31 0 6,291.31 1,488.64 4,802.67 9,826.78 0 165.12 28.06 20,640.2 23.27 16 250.43

2011
14,792.0 5 0 14,792.0 520.53 0 15,312.5 15.15 91.76 858.65 4,052.45 2,622.58 978.17 0 8,618.76 6,173.29 6,693.82 870.05 5,823.77 1,843.66 0 3,980.11 0 3,980.11 1,393.66 2,586.45 8,603.61 0 154.8 26.31 20,640.2 12.53 15 120.35

2012
12,756.3 0 0 12,756.3 231.89 0 12,988.1 16.48 266.74 684.4 3,091.60 2,841.53 342.54 0 7,243.29 5,513.01 5,744.90 456.55 5,288.35 1,836.12 0 3,452.23 0 3,452.23 1,043.38 2,408.85 7,226.81 0 102.23 17.37 20,446.1 11.78 10 100.39

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CASH FLOW STAT EMENT Net Income Operating Activities, Cash Flows Provided By or Used In Depreciation Adjustments To Net Income Changes In Accounts Receivables Changes In Liabilities Changes In Inventories Changes In Other Operating Activities Total Cash Flow From Operating Activities Investing Activities, Cash Flows Provided By or Used In Capital Expenditures Investments Other Cash flows from Investing Activities Total Cash Flows From Investing Activities Financing Activities, Cash Flows Provided By or Used In Dividends Paid Sale Purchase of Stock Net Borrowings Other Cash Flows from Financing Activities Total Cash Flows From Financing Activities Effect Of Exchange Rate Changes Change In Cash and Cash Equivalents

31-Mar-12 25,711,000 32,166,000 -43,426,000 -12,445,000 -5,211,000 93,269,000 -84,754,000 -

31-Mar-11 -25,053,000 23,086,000 6,560,000 6,933,000 2,945,000 7,498,000 -99,708,000 -

31-Mar-10 21,677,000 7,421,000 -6,984,000 -1,229,000 -528,000 55,956,000 -52,804,000 -

31-Mar-09 21,973,000 6,673,000 -7,841,000 -6,840,000 -39,331,000 -8,755,000 -27,588,000 -24,065,000

-75,331,000 -188,164,000 -53,974,000

-1,830,000 25,119,000 -1,159,000 41,484,000

19,832,000 177,631,000 -8,265,000 1,505,000

-12,158,000 24,869,000 -240,000 26,789,000

2,534,000 30,536,000 -32,000 -2,322,000

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