A

PROJECT REPORT
ON

COMPARATIVE STUDY OF RATIO ANALYSIS OF TATA MOTORS LTD

For

By
MR.AMOL RANGNATH PAYMODE
Under the guidance of
MR.RAVINDRA KHORKALE(SR.MANAGER, CVBU FINANCE)

Submitted To

SAVITRIBAI PHULE PUNE UNIVERSITY.

In partial fulfillment of the requirement for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION (MBA)
Through
PDEA’S Institute Of Technical Education, Research and Management, Akurdi, Pune-
411035
 DECLARATION

I hereby declare that the project entitled a study of ratio analysis of Tata Motors Ltd. at
Tata Motors Ltd. Pune submitted in partial fulfillment of requirements for award of the degree of
MBA at PDEA’S Institute Of Technical Education, Research and Management affiliated to
Savitribai Phule Pune University Is an authentic work and has not been submitted to any other
university for award of any degree.
Preface

I have made this report file on the topic Ratio Analysis; I have tried my best to elucidate all

the relevant detail to the topic to be included in the report. While in the beginning I have tried

to give a general view about this topic.

My efforts and wholehearted co-corporation of each and everyone has ended on a

successful note. I express my sincere gratitude to …………..who assisting me throughout

the preparation of this topic. I thank him for providing me the reinforcement, confidence

and most importantly the track for the topic whenever I needed it.
 ACKNOWLEDGEMENT

I would like to express my deepest appreciation to all those who provided me the
possibility to complete this report. I have taken efforts in this project. However, it would not
have been possible without the kind support and help of many individuals and organization. I
would like to extend my sincere thanks to all of them.

I am highly indebted to my project guide Mr. Gaurav Chavan (Sr.Manager, CVBU

finance) for their guidance and constant supervision as well as for providing necessary
information regarding the project & also for their support in completing the project.

I would like to express my gratitude towards my parents & member of TATA MOTORS
LTD. for their kind co-operation and encouragement which help me in completion of this
project.
I would like to express my special gratitude and thanks to industry persons for giving me
such attention and time.
My thanks and appreciations also go to my colleague in developing the project and people
who have willingly helped me out with their abilities.

Priminary Pages
Sr.NO Particulars Page no

1. Title of the Project 1

2. Company Certificate
3. College Certificate
4. Declaration 2
5. Preface 3
6. Acknowledgement 4
INDEX
Sr.No Particulars Page No
1. Introduction 6
1.1. Need of study 7
1.2. Limitation of study 8
1.3 Objective of study 9
2. Literature Review 10-12
3. Methodology 13-15
3.1. Data Collection
3.2. Data Analysis
4. Industry profile 16-18
5. Company Profil 19-28
5.1.
6. Ratio Analysis 30
6.1 Liquidity Ratios : 31-33
6.1.1 Current Ratios
6.1.2 Quick Ratios 34-36
6.2 Solvency /Leverage Ratios
6.2.1. Debt Equity Ratio
6.2.2. Proprietary/Equity Ratio
6.3. Profitability Ratios 37-42
6.3.1. Gross Profit Ratio
6.3.2. Net Profit Ratio
6.3.3. Operating Profit Ratio
6.3.4. Expense Ratio
6.3.5. Return on Equity
6.3.6. Earnings Per Share
6.4. Activity /Turnover Ratios 43-47
6.4.1 Fixed Assets Turnover Ratio
6.4.2 Stock Turnover Ratio
6.4.3 Debtors Turnover Ratio
6.4.4. Creditors Turnover Ratio

7. Findings 48
8 Conclusions 49
9. Suggestions 50-51
10. Bibliography 52
11. Annexure 53-58

1. INTRODUCTION

Performance evaluation of a company is usually related to how well a company can

use it assets, shareholder equity and liability, revenue and expenses. Financial ratio analysis
is one of the best tools of performance evaluation of any company. In order to determine
the financial position of the manufacturing company and to make a judgment of how well
the manufacturing company efficiency, its operation and management and how well the
company has been able to utilize its assets and earn profit. We used ratio analysis for easily
measurement of liquidity position, turnover condition, profitability and leverage value
situation of the manufacturing company for performance evaluation. It analysis the
company use of its assets and control of its expenses. It determines the greater the coverage
of liquid assets to short-term liabilities and it also compute ability to pay manufacturing
company monthly mortgage payments from the cash generate. It measures manufacturing
company overall efficiency and performance. It determines of share market condition of
manufacturing company. It also used to analysis the manufacturing company past financial
performance and to establish the future trend of financial position. We are choosing two
manufacturing companies in Pune.
The purpose of financial analysis is to diagnose the information contained in
financial statement as to judge the profitability and financial soundness of the firm. Just
like a doctor examine his patient by recording his body temperature, blood pressure etc.,
before making his conclusion regarding the illness before giving his treatment, a financial
analyst analysis the financial statement with various tools of analysis before commenting
upon the financial health or weakness of an enterprise. The analysis and interpretation of
financial statement is essential to bring out the mystery behind the figures of financial
statements. Financial statement analysis is an attempt to determine the significance and
meaning of the financial statement data so that forecast may be made of the future earnings,
ability to pay interest and debt maturities (both current and long-term) and profitability of
sound dividend policy.
The term ‘financial statement analysis’ includes both ‘analysis’ and ‘interpretation’.
A distinction should, therefore be made between the two terms. While the term analysis is
used to mean the simplification of financial data by methodical classification of the data
given in the financial statement, ‘interpretation’ means, explaining the meaning and
significance of the data simplified however both analysis and interpretation are in the
terlinked and complementary to each other analysis is useless without interpretation and
interpretation without analysis is difficult or even impossible most of the authors.

1.1 Need For The Study

 The interest of the various groups related to a firm is affected by the financial performance
of the firm. So it is much of significance for these groups to analyze the financial
performance of the firm they are interested in. The study focus on overall financial position
of particular Tata Motors and Mahindra & Mahindra companies during the specific period
based on the selected variables, which may interest not only for the respective companies in
the industry but also brings a process of development operational aspects of the entire
industry. The study is much important to the management from the point of decision-making
purpose, to identify the strength, weakness areas of the company and finally helps to
maximize the intrinsic value of the company.

1
1.1.2 Limitations:
Ratio analysis is very important in revealing the financial position and
soundness of the business. But, inspite of its advantages, it has some
limitations
which restrict its use. These limitations should be kept in mind while making
use of ratio analysis for interpreting the financial the financial statements.
The
following are the main limitations of ratio analysis:
1. False results:-
Ratios are based upon the financial statement. In case financial statement
are in correct or the data of on which ratios are based is in correct, ratios
calculated will all so false and defective. The accounting system it self suffers
from many inherent weaknesses the ratios based upon it cannot be said to be
Limited comparability:-
The ratio of the one firm cannot always be compare with the performance
of other firm, if uniform accounting policies are not adopted by them. The
difference in the methods of calculation of stock or the methods used to record
the deprecation on assets will not provide identical data, so they cannot be
compared.
3. Absence of standard universally accepted terminology:-
Different meanings are given to a particular term, egg. Some firms take
profit before interest and tax; others may take profit after interest and tax.
4 bank overdraft is taken as current liability but some firms may take it as
noncurrent liability. The ratios can be comparable only when all the firms adapt

The comparability of ratios suffers, if the prices of the commodities in

two different years are not the same. Change in price effect the cost of
production, sale and also the value of assets. It means that the ratio will
be
meaningful for comparison, if the prices do not change.
5. Ignoring qualitative factors:-
Ratio analysis is the quantitative measurement of the performance of
the
business. It ignores qualitative aspect of the firm, how so ever
important it may
be. It shoes that ratio is only a one sided approach to measure the
efficiency of
the business.
6. Personal bias:-
Ratios are only means of financial analysis and an end in it self. The
ratio
has to be interpreted and different people may interpret the same ratio
in
different ways.
7. Window dressing:-
Financial statements can easily be window dressed to present a better
picture of its financial and profitability position to outsiders. Hence, one
has to
be very carefully in making a decision from ratios calculated from such
financial statements.
8. Absolute figures distortive:-
Ratios devoid of absolute figures may prove distortive, as ratio analysis
is
primarily a quantitative analysis and not a qualitative analysis.

1.2.3 Objectives of the study:

To examine the financial performance of the Vijai Electricals Ltd.
for the period of 2003 to 2007.
To analyses interpret and to suggest the operational efficiency of the
Vijai Electricals Ltd. by comparing the balance sheet& profit & loss
Ratio analysis is indispensable part of interpretation of results revealed by the financial
statements. It provides users with crucial financial information and points out the areas which
require investigation. Ratio analysis is a technique which involves regrouping of data by
application of arithmetical relationships, though its interpretation is a complex matter. It requires
a fine understanding of the way and the rules used for preparing financial statements. Once done
effectively, it provides a lot of information which helps the analyst:
1. To know the areas of the business which need more attention;
2. To know about the potential areas which can be improved with the effort in the desired
direction;
3. To provide a deeper analysis of the profitability, liquidity, solvency and efficiency levels in
the business;
4. To provide information for making cross-sectional analysis by comparing the performance
with the best industry standards; and
5. To provide information derived from financial statements useful for making projections and
estimates for the future.

Review Of Literature
Financial statements have two major uses in financial analysis .first, they are
used to present a historical recover of the firm’s financial development. Second,
they are used for a course of action for the firm.
A performance financial statement is prepared for a future period. It is the
financial manager’s estimate of the firm’s future performance.
The operation and performance of a business depends on many individuals are
collective decisions that are continually made by its management team. Every
one of these decisions ultimately causes a financial impact, for better or works
on the condition and the periodic results of the business. In essence, the process
of managing involves a series of economic choices that activates moments of
financial resources connected with the business.
Some of the decisions made by management one will be the major, such as
investment in a new facility, raising large amounts of debts or adding a new line
of products or services. Most other decisions are part of the day to day process
in which every functional area of the business is managed. The combine of
effect of all decisions can be observed periodically when the performance of the
business is judged through various financial statements and special analysis.
These changes have profoundly affected all our lives and it is important
for corporate managers, share holders, tenders, customers and suppliers to
investment and the performance of the corporations on which then relay. All
who depend on a corporation for products, services, or a job must be med about
their company’s ability to meet their demands time and in this changing world.
The growth and development of the corporate enterprises is

LIQUIDITY AND PROFITABILITY:

Liquidity and profitability are two important demanders in determining the

soundness of an enterprise.

Liquidity means ability of a firm to meet its current obligations when they

become due for payment. It has two aspects – quantitative and qualitative.

Qualitative aspect implies the quantum of current assets a firm possesses

irrespective of making any difference b/w various types of current assets such

as inventories, cash and so on. Qualitative aspect reforms the quality of current

in terms of their realization in to cash considering time dimension involved in

maturing different components of current assets.

Profitability is the capacity of earning profits and due most important

measure of performance of affirms. It is generally assumed that there is

negative relationship b/w liquidity and profitability i.e. higher liquidity results

in lower profitability and vice-versa.

The objectives of the study:

To study the growth and development of the company.

To study the behavior of liquidity and profitability of the companies.

To analyze the factors determining the liquidity and profitability.

To comparative study of selected companies on the basis of selected

ratios.

Statement of the problem:

  Company Profile
Name of company=
Universal Engneering & Manufacturing
Nature of buisness = Manufacturer
Additional Business
 Trader
 service provider
Company CEO=Ravindra khokrale
Registered Adress=
S.No.767,Pawar vasti,kudalwadi chikhali
pune.412114, Mahrastra, India
Industry=Material handling equipment
Total No Of Employee=50 to150 people
Year Of Establishment=2009
Standerd & Quailty Certificate
SSI Registration No(270251106832)
Legal Status Of Firm=Partnership Form
Annual Turnover=Rs 6 -7 crore
Provide After Sales Support=
Operational Trainning
GST NO=
27AACFU5700B1ZN
Customize Packing= Yes
Shipment Mide=By Road

Establish in year 1995 we “Universal engneering and

equipment A partnership firm ,are renowned
manufacturer and supplier of wide array of material
handling equipment and feeding system these are
renewed for their energy officency robust construction
and high local carrying capacity further these require less
maintenance and are at same time, cirtasion resistant
our product are extensively used in vaious industries
such as sugar,chemical, distillers, cement and ready mix
concrete further these also find useages in the processs
plant ,starth plant , coal wash ray “TURKEY PROJECT” for
various system we provide valuable services in the same
domain to our estimed patron we are looking for queries
from PUNE MAHARASTRA

We procure the raw material from the most trust worthy

vendor of the market who are known for supplying
qualitative material with the help of our state-of-the-art
Infastructure and high-tech machine we have been able
to process bulk order of the client within the stipulated
time frame
 PRODUCT PORTFOLIO
We are enaged in in manufacturing &supplying a wide range of
Material Handling Equipment and Feeding System Also we
specialize in undertaking Turnkey Project for various system.
Further we also render varied services to the client in same
domain. Out quality product are abraisn product are abraisn &
corrasion resistant, have a high tensile strength and robust
construction.These are applicable various industries such as
cement ,sugar,chemical, ready mix concrete morever these are
used in vaious plant such as starch plant coal washrey process
plant and steel plant
Category product material handling equipment belt conveyer
&feeder screw conveyor & freeder screw blender drag chain
conveyor & freeder rotary reprocating freeder submerged
conveyor slat chain conveyor portable belt conveyor roller
conveyor return bagasse bucket elvetaor skip hoist bag
diverters stacker bagasse belt breaker rotary air lock valves
slide gate sector gate pin gate plug
Mix magma Mixer Sugar Elivetor Grasshopper Mowers
Pnuematic Spreader coal Spredar Agro Spreader Apron
Conveyer/ Feeder Fuel spreader Gate Air Lock Valve Turnkey
Project System Coal Handling system Crushing Screening
Handling & Storage Coal Feeding Baggase Handling Baggase
feeding Ash Handling
 Our Infrastructure
We have established a state- of- the infrastructure
,which has helped us in carraying out all the buisnesss
operation smoothly and systematically .it has been
segmented into various unit such as manufacturing
unit,quality testing unit,warehousing & packaging unit
and research & development unit.The export in the
various units coordinated with one another to offer
product
That are according to the latest market trends and
client demand .Our manufacturing units is equipped
with the most advanced and sophisticated machine
and technology .These machine enable us to fulfill the
bulk requirements of the client within the promised
deadlines.The quality testing unit is outfitted with all
the requisite amenties of facilitate proper checking of
the raw material as well as the product.Owing to our
well facilitated facility , we are able to bring forth for
the client,A qualitative range of the product lime
handling aggregate handling been finding cemement &
fly Ash handling for RMC plant gain handling sugar
hand handling
 OUR TEAM
We have appointed diligent & highly skilled
professional,who are expert in the respective areas.All
the employees work in coordination with is other so as to
attain the present goal & objective of the organization
our professional experience work hard to meet the
specific requirements and need of the client .Due to their
constant endeavors and commitment to serve the client
of most efficient manner , we have been able to make
timely delivery of all bulk & urgent consignment at the
client end

Our efficient team member as follow =

 Engineers
 Quality analysts
 Research and development expert
 Sales and marketing executives
 Skilled laborers
 Unskilled laborers