SUMMER TRAINING PROJECT REPORT  

ON 

“PROFITABILITY OF TATA MOTORS LTD.”  

SUBMITTED IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE  BACHELOR’S IN BUSINESS ADMINISTRATION 

OF 

INSTITUTE OF MANAGEMENT SCIENCE, GURHA

BRAHMANA  PATOLI(JAMMU) 
SUBMITTED TO:  

PROJECT SUPERVISOR: MR. MANMOHAN SINGH 

PROJECT GUIDE: DR.MINAKSHI SHARMA  
  
  
 SUBMITTED BY: DIKSHA RAINA    

BATCH: - 2018-2021
DECLARATION 

I hereby declare that the project titled “PROFITABILITY OF TATA MOTORS

LTD.” is an  original piece of research work carried out under the guidance of
supervisor the information has  been collected from genuine & authentic sources. The
work has been submitted in partial  fulfillment of the requirement of BBA (Batch 2018-
2021) of INSTITUTE OF  MANAGEMENT SCIENCES 

DIKSHA RAINA 

PLACE: JAMMU 

ACKNOWLEDGEMENT
Perseverance, inspiration and motivation have always played a key role in success of any
venture.  In the present world of competition there is a race of existing in which those
who are having willed  to come forward succeed. Project is like a bridge between
theoretical and practical working. With  willing I join this particular project. 
To design and compare a project report is very laborious work, which no student
complete without  taking any help from any professional. 
First of all, I would like to thank the supreme power of almighty God who is obviously
the one  who has always guided us to work on right path of our life. 
 I express my deep gratitude to my guide Mr. MANMOHAN SINGH for his invaluable
guidance  during the project. His unlimited guidance, innovative ideas and tireless efforts
helped along the  way in completing the project. I am also thankful to the staff members
for their encouragement  and cooperation in this successful completion of my project. 

In the end I would like to thank my parents whom greatly indebted for having me brought
me love  and encouragement of this stage. 

DIKSHA RAINA

INTERNAL GUIDE CERTIFICATE 

This is to certify that the project report titled “PROFITABILITY OF TATA MOTORS LTD.”
submitted in partial fulfillment for the award of BBA programme of INSTITUTE OF
MANAGEMENT  SCIENCES was carried out under guidance of Mr. MANMOHAN SINGH 

Mr. MANMOHAN SINGH 

(Project Supervisor) 
PLACE: BYE PASS ROAD, NARWAL JAMMU OPP.HOTEL RADISSON BLU-180004 

COMPANY TRAINING CERTIFICATE

 EXECUTIVE SUMMARY 

TATA Motors formerly known as TELCO (TATA engineering and Locomotive Company) fully
integrated  automobile manufacturer with a portfolio that covers trucks, buses, utility vehicles and
passenger cars,  which is now being famous for giving. The company's 22,000 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. Profitability is the primary goal of all business
ventures. Without profitability the business will not  survive in the long run. So, measuring
current and past profitability and projecting future profitability is  very important. 

Profitability is measured with income and expenses. Income is money generated from the
activities of the  business. For example, if crops and livestock are produced and sold, income is
generated. However, money 
coming into the business from activities like borrowing money does not create income. This is
simply a  cash transaction between the business and the lender to generate cash for operating the
business or buying  assets. 

The sales revenue of the TATA motors It was high, but it was observed that the gross profit
margin of the  company was not increasing as per or there was not proportionate change in that as
compare to net sales. 

Finally, the company is loss making or rather we can say decreasing their profitability but they
have good  future opportunities, it has taken carefully at controlling the costs of goods sold and
reduce its expenses to  avoid facing difficult financial conditions in the future. 
 TABLE OF CONTENTS
SR TOPIC NAME  PAGE NO
NO 
1.  TITLE PAGE,   1-5
CERTIFICATE OF  
ORIGINALITY,  
COMPANY 

CERTIFICATE,  
EXECUTIVE SUMMARY

2.  TABLE OF CONTENTS  6

3.  INTRODUCTION TO  THE COMPANY,   7-18

HISTORY&EVOLUTION,  MAJOR PRODUCTS OF  THE
COMPANY

4.  RESEARCH   19-

METHODOLOGY,   22
OBJECTIVES OF THE  STUDY,

5.  DATA ANALYSIS AND  INTERPRETATION 23-

34

6.  FINDINGS  35

7.  RECOMMENDATIONS  AND CONCLUSIONS 36-

37

CHAPTER 1 

INTRODUCTION TO COMPANY
 COMPANY PROFILE 

TATA Motors formerly known as TELCO (TATA engineering and Locomotive Company) fully
integrated automobile manufacturer with a portfolio that covers trucks, buses, utility vehicles and
passenger cars, which is now being famous for giving. TELCO is  established in 1945. In July
2003 TELCO changed its name into TATA Motors Ltd». TATA Motors  Limited is India's
largest automobile company, with revenues of US $ 6.0 billion in 2005-06. TATA  Motors is the
leader in commercial vehicles in each segment, and the second largest in the passenger  vehicles
market with winning products in the compact, midsize car and utility vehicle segments. The 
company is the world's fifth largest medium and heavy commercial vehicle manufacturer. The
company's  22,000 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. TATA Motors' presence indeed cuts across the length and breadth
of India.  Over 3.5 million TATA vehicles ply on Indian roads, since the first rolled out in
1954. The company's  manufacturing base is spread acrosss Jamshedpur, Pune and Lucknow
supported by a nation-wide de  alership; sales, services and spare parts network 
comprising about 1,200 touch points.
ABOUT THE VARIOUS PLANTS 
JAMSHEDPUR: Area: 700+ Acres- Strength: 14000 

• Oldest plant of Tata Motors. 

• Initially manufacturing Locomotive Engines 
• Collaboration with Mercedes Benz 
• Started production of Trucks and Bus Chassis 
• Recently collaborated with M/s. Daewoo of Korea and manufacturing
Heavy Commercial Vehicles -Trucks/Buse s/Tippers under the brand
name of Novas 

LUCKNOW: Area: 600 Acres - Strength: 3500 

• Tata Sumo was initially assembled at Lucknow Plant. 

• Now the production of Sumo has been stopped and Trucks and Buses are
now manufactured/as sembled at Lucknow 
• The production is same as Jamshedpur. Except Daewoo
collaboration vehicles. Lucknow plant is under the Head -
Jamshedpur Plant 

 DHARWAD: Area: Around 530 Acres 

• A big piece of land has acquired in Dharwad. 

No plan finalized yet for any production/Assembly line.
PUNE: Area: 600 +600 (Residential) Acres -Strength: 12000 

• Flagship plant of Tata Motors 

• Manufacturing various types of Heavy Commercial Vehicles, Medium
Commercial Vehicles, Light Commercial Vehicles -Tata Sumo, Tata
Safari, Mini truck ACE and indigenously developed Small Car Indica,
Indigo 
and Marina. 

CHINCHWAD: Area 325 Acres 

• Casting & Aluminum Foundry as well as Tata Automation Ltd. 

CAR PLANT PIMPRI): Area: 150 Acres -Strength: 6500 

• Production of Small Car started in 1999. 

• Daily production at present is 750 Cars. 
• Tata Indica, Indigo and Marina are manufactured at Car Plant (K Block). It
is one of the ultra modem plants in India 

Global Scenario: 
The company's commercial and passenger vehicles are already being marketed
in several  countries in Europe, Africa, the Middle East, Australia, South 
East Asia and South Asia It has assembly operations in Malaysia, Kenya,
Bangladesh, Spain,  Ukraine, Russia and Senegal. 

• 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 a global
automotive company. 
• In 2004, it acquired the Daewoo Commercial Vehicles Company, Korea's second largest truck 
maker. The rechristened Tata Daewoo Commercial Vehicles Company has already begun to 
launch new products.
• In 2005, Tata Motors acquired a 21% stake in Hispano Carriera, a reputed Spanish bus and coach  
manufacturer, with an option to acquire the remaining stake as well. Hispano 's presence is
being  expanded in other markets. 

Subsidiaries: 

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.  

Over the years, Tata Motors has made substantial investments in building companies
that add  value, facilitate and support its diverse range of business activities: 
1) Telco Construction Equipment Co. Ltd. (Telcon) 
2) Tata Technologies Ltd. (TTL)) and Tata Technologies Ltd., USA
(TTUS) 3) HV Axles Ltd, (HVAL) 
4) HV Transmissions Ltd. (HVTL) 
5) TAL Manufacturing Solutions Ltd. (TAL) 
6) Sheba Properties Ltd. (Sheba) 
7) Concorde Motors (India) Ltd. (Concorde) [formerly known as Minicar 
(India) Ltd. 
8) Tata Daewoo Commercial Vehicle Company Ltd (TDWCV) 
9) Tata Motors Insurance Services Ltd. (TMISL) [formerly known as 
Concorde Motors Ltd.] 
10)Tata Motors European Technical Centre ple
HISTORY AND EVOLUTION 

Milestones 

Year Particulars 
1945 The establishment of Railway Engine factory in Jamshedpur  TATA collaborated
with Daimler-Benz for developing  1954 commercial vehicle. Launch of the first Tata
Mercedes Benz   Truck. 

1965 The first TATA branded truck roll out.   Collaboration with Daimler
Benz, Germany ends. 

1977 The First Commercial Vehicle Manufactured at the Pune  Plant. 

1986 First Light Commercial Vehicle from Telco, The Tata 407 is   launched. 

1991 The Millionth Tata Vehicle A million Indians are proud  owners  
 of Tata Vehicles. 

1992 Tata Estate Tel có s Second passenger Vehicle launched  To start third factory
in Lucknow. 

1994 TATA Sumo- Moves with growing with faster growth 1998 The First Tata

Indica launched.

2003 Change in name- From TELCO to TATA Motors Ltd. 2004-05: 

Tata Motors launches Branded buses and coaches under Globus and 
Starbus' brand name.Tata Motors acquires 21 % stake in Hispano Carrocera
SA, a well known international bus company 
Tata Motors listed its Depositary programme on the new York Stock 
Exchange 
 MAJOR PRODUCTS OF THE COMPANY 

1. ΤΑΤΑΝΑΝΟ: 

Announced as the most affordable production car in the world, Tata aimed for a price of one
lakh rupees,  or 100,000, Tata Motors announced in 2006 that the Nano would be manufactured
in Singur, West  Bengal. Local farmers soon began protesting the forced acquisition of their land
the new factory entailed.  Tata first delayed the Nano launch and later decided to build the car in
a different state, Gujarat, instead. 

2. TATA BOLT: 

Tata Bolt is a new hatchback created by Tata Motors under its Falcon programme. The
car was  revealed at Indian Auto Expo 2014 along with its sedan version, the Tata Zest.
The car is  expected to be launched in Indian markets in the latter half of 2014 after the
launch of its sedan  version. The diesel version of Tata Bolt will be fitted with 1.3-litre
quadrajet diesel engine which  is already being used on Indica Vista and Manza where as
the petrol version of Tata Bolt will be  powered by a new 1.2-litre turbocharged, 89 bhp
engine. The new car is based on existing  platforms on which Vista and Manza are built.
Tata Bolt will be built at Tata Motor's Pimpri  Chinchwad plant alongside the Tata Vista
and the Tata Indica
3. ΤΑΤΑ VISTA: 

The Tata Indica Vista can be considered as the new, improved version of this really
popular car  Tata Indica has sold a lot of units in the country, and the country's
premium car manufacturer  realized that it was high time that they improved the car, so
that the net is cast wider. The Tata  Indica Vista managed to cater to a wider range of
consumers and it come fitted with lot of  different features as well. 

4. ΤΑΤΑ INDICA: 

The Tata Indica is a supermini car produced by the Indian manufacturer Tata Motors since 1998.
It is the  first passenger car from Tata Moto Rs and it is also considered India's first indigenously
developed  passenger car. As of August 2008, more than 910,000 units were produced and the
platform had spawned  off close to 1.2 million vehicles. The annual sales of Indica have been as
high as 144,690 units in 2006- 07. As of July 2009, monthly sales of Indica were around 8000
units. The models have also been exported  to Europe, Africa and other countries since late in
2004.
5. TATA MANZA: 
Tata Manza is next generation sedan from the Indian car company Tata Motors Limited. The
Tata Manza  is also known as The Club Class Sedan. There are eight variants available currently,
four each in petrol  and diesel. 
Manza was first launched on 14 October 2009. It was made available in 4 variants namely
Aquamar, Aura  ABS and Elan, Aqua being the entry level variant and Elan being the top most
variant. In October 2012,  Manza was re-launched as Manza Club Class. 

6. TATA WINGER: 

The Winger is offered in six variants and two seating configurations: long or short
wheelbase,  high and low roof versions and also specialised ambulance and school bus
versions, as well as the  plain panel van. The top of the range is a flat roof, air-
conditioned variant is a ten-seater while the  remaining five versions are offered as either
13 or 14 seaters, taking the total number of variants  to 11. 
The Winger is powered by a modified version of the 2.0 litre diesel engine that is
currently  offered on the Tata sumo. This 1948 cc engine comes with a turbo- charged,
inter-cooled (TCIC)  version in all the variants, except in the smaller length, entry-level
Winger van. The non-turbo  charged version of the engine develops a peak power of 68
PS (50 kW) compared to the 90 PS  (66 kW) that the TCIC version puts out. The Winger
meets Bharat Stage III emission standards,  except for the base variant, which is BS-II
compliant.
7. TATA ACE ZIP: 

After the runaway success of Tata Ace, Tata Motors decided to launch a truck smaller
than the  Ace and at the price point of the three-wheeled goo ds carriers. It was to be a
simple design with  truck-like aggre gates and was to replace the anachroni stic three-
wheeled cargo auto rickshaws in  the Indian market. After the success of tata ace and
incorporation of the customer/user feedback,  Tata has come up with a new ace in Tata
Ace Zip. 

8. TATA PRIMA: 

Tata Daewoo (officially Tata Daewoo Commercial Vehicle Company and formerly
Daewoo  Commercial Vehicle Company) is a commercial vehicle manufacturer
headquartered in  Gunsan,Jeollabuk-do, South Korea, and a wholly owned subsidiary
of Tata Motors. It is the  second largest heavy commercial vehicle in 2004. The
principal reasons behind the acquisition  were to reduce Tata's dependence on the
Indian commercial vehicle market (which was  responsible for around 94% of its sales
in the MHCV segment and around 84% in the light  commercial vehicle segment) and
expand its product portfolio by leveraging on Daewoo's  strengths in the heavy-
tonnage sector. 
Manufacrtuer in South Korea and was acquired by Tata Motors. Tata Motors has jointly
worked  with Tata Daewoo to develop trucks such as Novus and World. 
Truck and buses including GloBus and StarBus. In 2012, Tata began developing a new
line to  manufacture competitive and fuel-efficient commercial vehicles to face the
competition posed by  the entry of international brands such as Mercedes- B enz, Volvo,
and Navistar into the Indian  market.
 CHAPTER 2 

INTRODUCTION TO THE ΤΟΡIC 

Profitability is the primary goal of all business ventures. Without profitability the
business will  not survive in the long run. So measuring current and past profitability
and projecting future  profitability is very important. 

Profitability is measured with income and expen ses. Income is money generated from
the  activities of the business. For example, if crops and livestock are produced and sold,
income is  generated. However, money coming into the bu siness from activities like
borrowing money does  not create income. This is simply a cash transaction between the
business and the lender to  generate cash for operating the business or buying assets. 

Expenses are the cost of resources used up or consumed by the activities of the
business. For  example, seed corn is an expense of a farm business because it is used up
in the production  process. A resource such as a machine whose useful life is more than
one year is used up over a  period of years. Repayment of a loan is not an expense; it is
merely a cash transfer between the  business and the lender. 

Profitability is measured with an "income statement". This is essentially a listing of

income and  expenses during a period of time (usually a year) for the entire business. An
Income Statement is  traditionally used to measure profitability of the business for the
past accounting period.  However, a "proforma income statement" measures projected
profitability of the business for the  upcoming accounting period. A budget may be used
when you want to project profitability for a  particular project or a portion of a business.
CHAPTER 3 

OBJECTIVES OF THE STUDY 

OBJECTIVES OF THE STUDY: 

There are different objectives for which the study has been completed. They are as follows:- 

1. To study and evaluate the profit in relation to sales. 

2. To study the profitability in relation to investment.
CHAPTER 4  

RESEARCH METHODOLOGY
RESEARCH METHODOLOGY 

Research methodology is a way to systematically solve the research problems. It may

be  understood as a science of studying how research is done scientifically. It includes
the overall  research design, the sampling procedure, data collection method and
analysis procedure. A research design is the arrangement of conditions for collection
and analysis of data in a design  includes an outline of what the researcher will do from
writing the hypothesis and its operational  implications to the final analysis of data. 
 Research Design: 

A research design is the arrangement of conditions for collection and analysis of data in a
manner  that aims to combine relevance to the research purpose with economy in
procedure. The research design is the conceptual structure within which research is
conducted; it is  constitutes the blue prints for the collection, measurement and analysis
of data. As such the  design includes an outline of what the researcher will do from
writing the hypothesis and its  operational implications to the final analysis of data. 

Features of research design: 

• It is the plan that specifies the source and types of information relevant to the research
problem. • It is a strategy specifying which approach will be used for gathering and
analyzing the data. 
• It also includes the time and cost budgets since most studies are done under these two constraints.
POPULATION: 

All automobile companies which are listed in stock market. 

SAMPLING: 

The sample was drawn from the list of companies coming under the automobile industry
listed on  the Bombay stock exchange which is TATA MOTORS LIMITED. 

SAMPLE DESIGN: 

Simple random sampling 

COVERAGE: 

The selected study unit focuses on a number of profitability variables covering a time
period of  five years. 

DATA COLLECTION : 

I have used secondary data in my analysis. 

(Annual reports, balance sheet and profit & loss account).
CHAPTER 5 

DATA ANALYSIS & INTERPRETATION

DATA ANALYSIS & INTERPRETATION 
(1 )Gross Profit Ratio 

This is the ratio of Gross Profit to Net Sales and expressed as a percentage. It is
also  called Turnover Ratio. It reveals the amount of Gross Profit for each rupee of
sale. It is  highly significant and important since the earning capacity of the
business can be  ascertained by taking the margin between cost of goods and
sales. The higher the ratio,  the greater will be the margin, and this is why it is
called Margin Ratio. Management is  always interested in a high margin in order to
cover the operating expenses and  sufficient return on the Proprietor ‘s Fund. It is
very useful as a test of profitability and  management efficiency . 20% to 30%
Gross profit Ratio may be considered normal: 

 Gross Profit Ratio= Gross Profit/Net Sales *100  

INTERPRETATION AND SIGNIFICANCE 

This ratio reveals the efficiency of the firm about the goods produced.Since gross
profit  is the difference between selling price and cost of goods sold the higher the
profit, better  will be the financial performances.  

NET PROFIT RATIO 

This is the ratio of Net Profit to Net Sales and is also expressed as a percentage.
It  indicates the amount of sales left for shareholders after all costs and
expenses have  been met. 

The higher the ratio, the greater will be profitability---and the higher the return
to the  shareholders. 5% to 10% may be considered the normal. It is a very useful
tool to  control the cost of production as well as to increase sales: 

 Net Profit Ratio=Net Profit /Net Sales*100 

This ratio measures the overall efficiency of the management. Practically ,it
measures the  firm’s overall profitability. It is the difference between Gross Profit
and operating and  non-operating income minus operating and non-operating
expenses after deduction of  tax. This ratio is very significant as, if it is found to be
very low, many problems may  arise, dividend may not be paid, operating expenses
may not be paid etc. Moreover,  higher profit earning capacity protects a firm
against many financial hindrances(e.g. 
adverse economic condition) and, naturally, higher the ratio, the better will
be the  profitability. 

OPERATING RATIO  

This is the ratio of operating expenses or operating cost of sales. It may be

expressed  as a percentage and it reveals the amount of sales required to cover the
cost of goods  sold plus operating expenses. The lower the ratio the higher is the
profitability and the  better is the management efficiency. 80% to 90% may be
considered as normal. 

 Operating Ratio= Cost of goods sold+Operating Expenses/Sales *100 

Operating Expenses consist of (i)Office and Administrative expenses, and (ii) Selling
and  Distribution expenses and the two components of this ratio are Operating
Expenses and  Net Sales. 

INTERPRETATION AND SIGNIFICANCE 

 The primary purpose of this ratio is to compare the different cost components in
order  to ascertain any change in cost composition, i.e. increase or decrease and to
see which  element of cost has increased and which one decreased. Moreover,
there is no standard  or norm about this ratio since it varies from firm to firm---
depending on the nature and  type of the firm and its capital structure. For a better
performance, a trend analysis of  the ratios for some consecutive years many
present a valuable information. If non operating expenses are considered by
mistake, the same may present a wrong  information. 

OPERATING PROFIT RATIO 

It is a modified version of Net Profit to Sales Ratio. Here, the non-operating incomes
and  expenses are to be adjusted (i.e. to be excluded) with the net profit in order to
find out  the amount of operating net profit. It indicates the amount of profit earned
for each  rupee of sales after dividing Operating Net Profit by Net Sales. It is also
expressed as a  percentage: 

 Operating Profit Ratio= Operating Net Profit/Net Sales*100 

Here, Operating Net Profit=Net Profit-Income from external securities and others
(i.e. non trading incomes)+Non-operating expenses(i.e. Interest on Debentures
etc.).
(I) DIVIDEND COVERAGE RATIOS  

 a) Preference Shareholders’ Coverage Ratio 

 It indicates the number of times the Preference Dividends are covered by the
Net  Profit (i.e.,  

 Net Profit after Interest and Tax but before Equity Dividend). The higher the
coverage  the better will be the financial strength. It reveals the safety margin
available to the  Preference Shareholders: 

 Prefernce Shareholders’ Coverage Raito 

 = Net Profit( after Interest and Tax but before Equity Dividend) /Preference 
Dividend 

(ii)Equity Shareholders’ Coverage Ratio 

It indicates the number of times the equity dividends are covered by the Net Profit
(i.e.  Net Profit after Interest, Tax and Pref. Dividend).The higher the coverage, the
better will  be the financial stenghth and the fairer the return for the shareholder
since maintenance  of dividend is assured. 

 Equity Shareholders’ Coverage Ratio 

 = Net Profit(after Interest, Tax and Pref. Dividend)/ Equity Dividend 

(b) INTEREST COVERAGE RATIO 

It indicates the number of times the fixed interest charges (Debenture Interest,
Interest  on Loans etc.) are covered by the Net Profit (i.e. Net Profit before Interst
and Tax).  

 Net Profit (before Tax and Interest)(EBIT) 

Interest Coverage Ratio= 

 Fixed Interest and Charges 

(c)TOTAL COVERAGE RATIO 

The coverage ratio is a measure of a company's ability to meet its financial

obligations. In broad  terms, the higher the coverage ratio, the better the ability of the
enterprise to fulfill its obligations  to its lenders. The trend of coverage ratios over
time is also studied by analysts and investors to  ascertain the change in a
company's financial position.
(d) OVERALL PROFITABILITY RATIO 

i)Return on Capital Employed/Return on Investment 

Return on capital employed (ROCE) is a financial ratio that measures a company's

profitability  and the efficiency with which its capital is employed. ROCE is
calculated as: ROCE = Earnings  Before Interest and Tax (EBIT) / Capital
Employed.  

Return on Investment (ROI) is a performance measure, used to evaluate the

efficiency of an  investment or compare the efficiency of a number of different
investments. ROI measures the  amount of return on an investment, relative to the
investment’s cost. To calculate ROI, the  benefit (or return) of an investment is
divided by the cost of the investment. The result is  expressed as a percentage or
a ratio. 

ii)Return on Equity 

Return on equity (ROE) is the amount of net income returned as a percentage of

shareholders equity. Return on equity measures a corporation's profitability by
revealing how  much profit a company generates with the money shareholders
have invested. 

iii)Return on Common Equity 

Return on equity measures a corporation's profitability by revealing how much profit

a company  generates with the money shareholders have invested. Net income is for
the full fiscal year  (before dividends paid to common stock holders but after
dividends to preferred stock.) 

iv)Return on Assets 

Return on Assets (ROA) is an indicator of how profitable a company is relative to its

total assets. ROA gives an idea as to how efficient management is at using its
assets to  generate earnings. Calculated by dividing a company's annual earnings by
its total assets, ROA  is displayed as a percentage.  

v)Cash return on Asset 

Definition. Cash ROA (TTM) is the amount of cashflow from operations (CFO) over
a firm's  total assets. Typically, a ROA compares net income (NI) to a firm's total
assets. The difference  between using CFO and NI is that CFO is harder to
manipulate than NI, thus a better indicator  of true return. 
vi) Return on Proprietor’s Fund/Earning Ratio 

Return on shareholders' investment ratio is a measure of overall profitability of the

business and  is computed by dividing the net income after interest and tax by
average stockholders' equity. ...  The ratio is usually expressed in percentage. 

vii) Return on Ordinary Shareholder’s Equity 

Return on equity (ROE) is the amount of net income returned as a percentage of

shareholders equity. Return on equity measures a corporation's profitability by
revealing how  much profit a company generates with the money shareholders
have invested.  

viii) Net profit to Fixed Asset ratio:- This is the ratio of Net Profit to Fixed Assets
which indicates  whether or not the fixed assets have been effectively utilized in the
business. 

ix) Net Profit to Total Assets:- This is the ratio of net profit to total assets. It also
indicates  whether the total assets of the business have been properly used or not.
If not properly used, it  proves inefficiency on part of the management. It also helps
to measure the profitability of the  firm. 

x) Price Earning Ratio:- It is the ratio which relates to the market price of the shares
to earning  per equity shares. A high ratio satisfies the investors and indicates the
share prices that are  comparatively lower in relation to recent earning per share.  

xi) Earning Price Ratio/Earning Yield:- Yield is expressed in terms of market value per
share. This  ratio is calculated by dividing earning per share by the market price per
share. 

xii) Earning Per Share:- This is calculated by dividing the net profit (after tax and
pref.dividend)  available to the share holders by the number of ordinary share. It
indicates the profit available  to the ordinary share holders on per share basis.  
xiii) Dividend Yield Ratio:- It is calculated by cash dividend per share by the
market value per  share. It is very important to the new investors. 

xiv) Dividends Payout Ratio:- The dividend payout ratio is the amount of
dividends paid to  stockholders relative to the amount of total net income of a
company. The amount that is not  paid out in dividends to stockholders is held
by the company for growth. The amount that is  kept by the company is called
retained earnings.  

xv) Dividend per share:- Dividend per share (DPS) is the sum of declared
dividends issued by  a company for every ordinary share outstanding. The figure is
calculated by dividing the 
total dividends paid out by a business, including interim dividends, over a period of
time by the  number of outstanding ordinary shares issued. 

xvi) Capital Turnover Ratio:- The working capital turnover ratio is also referred to
as net sales  to working capital. It indicates a company's effectiveness in using its
working capital. The  working capital turnover ratio is calculated as follows: net
annual sales divided by the average  amount of working capital during the same 12
month period. 

xvii) Turnover to Proprietors fund Ratio:- 1) Ratio of fixed assets  

to shareholders or proprietors' funds. 2) Ratio of current assets  
to shareholders or proprietors' funds.  

xviii) Assets to Proprietorship Ratio:- Proprietary ratio. Equity ratio. The

proprietary ratio (also  known as the equity ratio) is the proportion of
shareholders' equity to total assets, and as  such provides a rough estimate of
the amount of capitalization currently used to support a  business.  

xix) Price-book Ratio:- The price-to-book ratio (P/B Ratio) is a ratio used to
compare a stock's  market value to its book value. It is calculated by dividing the
current closing price of the stock  by the latest quarter's book value per share. A
lower P/B ratio could mean that the stock is  undervalued.  

xx) Market price per share:- The Price-Earnings Ratio is calculated by dividing
the  current market price per share of the stock by earnings per share
(EPS). (Earnings per  share are calculated by dividing net income by the
number of shares outstanding.) 

xxi) Book-value per share:- The book value per share formula is used to
calculate the per  share value of a company based on its equity available to
common shareholders. The term  "book value" is a company's assets minus its
liabilities and is sometimes referred to as  stockholder's equity, owner's equity,
shareholder's equity, or simply equity. 
FORMULAS:- 
i) Return on Capital Employed = Net profit(after tax) / Capital
employed ii) Return on Equity = Net Income / Avg. Shareholders (
including pref.  shareholders fund) 
iii) Return on Common Equity = Earning after Tax-Pref. Div / Equity  
Shareholder’s Fund * 100  
 iv) Return on Assets = Earning before interest and tax / Total Assets * 100
v) Cash Return on Assets = Cash flows from Operating activities / Total
Assets *  100 
vi) Return on proprietors fund/earning ratio=net profit(after tax) / propreitors  fund 
vii) Return on ordinary share holders equity (ROE)=net profit (after tax and pref. 
dividend)/proprietors equality(less Pref. share capital) 
viii) Net profit to fixed assets ratio= Net profit / Fixed Assets 
ix) Net Profit to Total Assets Ratio= Net Profit/ Total Assets 
x) Price Earning Ratio= Market Price of Share / Earning per Share 
xi) Earning price Ratio/Earning Yield = Earning per share / Market price per  Share 
xii) Earning Per Share = Net Profit available to Ord. Shareholders / No. of 
Ordinary Shares 
xiii) Dividend Yield Ratio = Dividend per Share / Earnings per Share 
xiv) Dividend Pay-out Ratio= Dividend per Share / Earnings Per share 
xv) Dividend Per Share = Dividend paid to Ordinary Shareholders / No. of 
Ordinary shares 
xvi) Capital Turnover Ratio= Sales( Turnover) / Average Capital
Employed xvii) Turnover to Proprietor’s Fund Ratio= Sales( Turnover)
/ Proprietor’s Fund xviii) Assets to Proprietorship Ratio= Total
Assets / Proprietor’s Fund 
xix) Price-Book Value Ratio= MPS / Book Value Per Share

General Profitability Ratios: 

OPERATING PROFIT RATIO 

It is a modified version of Net Profit to Sales Ratio. Here, the non-operating incomes
and  expenses are to be adjusted (i.e. to be excluded) with the net profit in order to
find out  the amount of operating net profit. It indicates the amount of profit earned
for each  rupee of sales after dividing Operating Net Profit by Net Sales. It is also
expressed as a  percentage: 

 Operating Profit Ratio= Operating Net Profit/Net Sales*100 

Here, Operating Net Profit=Net Profit-Income from external securities and others
(i.e. non trading incomes)+Non-operating expenses(i.e. Interest on Debentures
etc.).

A) i)OPERATING PROFIT RATIO= OPERATING PROFIT/ NET SALES *

100 

 ii)OPERATING PROFIT= SALES – OPERATING COST 

MARCH’1 MARCH’1 MARCH’1 MARCH’1 MARCH’
7  6  5  4  13
 SALES 44363.60  42845.47  36294.74  34288.11  44765.72

OPERATING  COST 43117.41  39898.91  37532.22  35199.26  43047.74

OPERATING  1246.19  2946.56  -1237.48  -911.15  1717.98

PROFIT

OPERATING  2.80  6.87  -3.40  -2.65  3.83

PROFIT  
RATIO

INTERPRETATION: 

In 2013, sales was 44,765.72 , it had decreased by 10,477.61 amount in 2014 and
sales dropped  down to 34,288.11. In 2015, it had increased a little bit i.e, by
2,006.63 and sales came up to to  36,294.74. In 2016 sales had increased by
6,550.73 and sales came up to 42845.47. In 2017  again sales had increased by
1518.13 and sales became 44363.60.  

Similarly with respect to 2013 Operating cost got reduced by 7848.48 amount in
2014. And with  respect to 2014 operating cost 2332.96 in 2015. Again in 2016 it had
increased by 2366.69  amount. Also in 2017 it had increased by 2366.69 amount.
Also in 2017 it had increased by  2366.69 amount.  

In 2014 it had decreased by 6,48% with respect to 2013.In 2015 it raised up by

0.75% and in  2016 it again raised up sharply by 10.27%. In 2017 it got reduced
by 4.07% with respect to  2016. 

In 2017, proper control measures are necessary in Operating Cost.

(2 )Gross Profit Ratio 

This is the ratio of Gross Profit to Net Sales and expressed as a percentage. It is
also  called Turnover Ratio. It reveals the amount of Gross Profit for each rupee of
sale. It is  highly significant and important since the earning capacity of the
business can be  ascertained by taking the margin between cost of goods and
sales. The higher the ratio,  the greater will be the margin, and this is why it is
called Margin Ratio. Management is  always interested in a high margin in order to
cover the operating expenses and  sufficient return on the Proprietor ‘s Fund. It is
very useful as a test of profitability and  management efficiency . 20% to 30%
Gross profit Ratio may be considered normal: 

 Gross Profit Ratio= Gross Profit/Net Sales *100  

INTERPRETATION AND SIGNIFICANCE 

This ratio reveals the efficiency of the firm about the goods produced.Since gross
profit  is the difference between selling price and cost of goods sold the higher the
profit, better  will be the financial performances.  
B)GROSS PROFIT RATIO= GROSS PROFIT/NET SALES 
MARCH’17  MARCH’16  MARCH’15  MARCH’14  MARCH’13

SALES 44363.60  42845.47  36294.74  34288.11  44765.72

GROSS   887.33  2533.96  -967.75  1584.36  2418.42

PROFIT

GROSS   2.00  5.91  -2.66  4.62  5.40

PROFIT  
RATIO
INTERPRETATION: 

From the above data we can see that sales was 44,765.72 in 2013.In 2014, sales got
reduced by  10,477.61 amount and sales came down to 34,288.11. In 2015 again
sales had increased a little  bit i.e. by 2,006.63 amount and it became 36,294.74.In
2016, it had increased quite a bit i.e. by  6,550.73 and sales became 42,845.47.In
2017, it again had increased by 1,518.13 amount and it  
raised upto 44,363.60 

Similarly with respect to 2013, Gross Profit Ratio reduced by 0.78% in 2014.And with
respect to  2014 Gross Profit Ratio again got decreased by 7.28% in 2015.Again in
2016 it had increased  by 8.57% with respect to 2015.With respect to 2016 Gross
Profit Ratio got reduced by 3.91%.

(3)NET PROFIT RATIO 

This is the ratio of Net Profit to Net Sales and is also expressed as a percentage.
It  indicates the amount of sales left for shareholders after all costs and
expenses have  been met. 

The higher the ratio, the greater will be profitability---and the higher the return
to the  shareholders. 5% to 10% may be considered the normal. It is a very useful
tool to  control the cost of production as well as to increase sales: 

 Net Profit Ratio=Net Profit /Net Sales*100 

This ratio measures the overall efficiency of the management. Practically ,it
measures the  firm’s overall profitability. It is the difference between Gross Profit
and operating and  non-operating income minus operating and non-operating
expenses after deduction of  tax. This ratio is very significant as, if it is found to be
very low, many problems may  arise, dividend may not be paid, operating expenses
may not be paid etc. Moreover,  higher profit earning capacity protects a firm
against many financial hindrances(e.g. 
adverse economic condition) and, naturally, higher the ratio, the better will
be the  profitability. 
C) NET PROFIT RATIO=NET PROFIT / NET SALES*100 
MARCH’17  MARCH’16  MARCH’15  MARCH’14  MARCH’13
 SALES 44363.60  42845.47  36294.74  34288.11  44765.72

NET   -2479.99  -62.30  -4738.95  334.52  301.81

PROFIT

NET   -5.59  -0.14  -13.05  0.97  0.67

PROFIT  
RATIO

INTERPRETATION: 

From the above data we can find that sales was 44,765.72 in 2013 with respect to
2013 sales  got reduced by 10,477.61 amount in 2014 and sales came down to
34,288.11.In 2015, again  sales had increased a little bit i.e. by 2,006.63 amount
and it became 36,294.74.In 2016, it had  increased quite a bit i.e. by 6,550.73 and
sales became 42,845.47.In 2017, it again had  increased by 1,518.13 and it raised
upto 44,363.60. 

Similarly in 2013, with respect to 2013 we can find that it had increased a little bit
by 0.3% in  2014.In 2015 it decreased by 14.02% with respect to 2014.With respect
to 2015 it raised up by  12.91% and in 2017 it came down by 5.45% so we can find
that Net Profit Ratio is maximum in  2014. 

D) RETURN ON NET WORTH= NET PROFIT/EQUITY SHARE  

CAPITAL+RESERVES AND SURPLUS 
MARCH’1 MARCH’1 MARCH’1 MARCH’1 MARCH’1
 7  6  5  4  3

NET   -2479.99  -62.30  -4738.95  334.52  301.81

PROFIT

EQUITY   679.22  679.18  643.78  643.78  638.07

SHARE  
CAPITAL

RESERVES  20129.93  22582.93  14195.94  18510.00  18496.77

AND  
SURPLUS

RETURN   -11.91  -0.26  0.03  1.74  1.57

ON NET  
WORTH

INTERPRETATION: 

In 2013 return on net worth was 1.57 and with respect to 2013 it increased by
0.17% in 2014.  In 2015 it again got decreased by 1.71% with respect to 2014. In
2016 and 2017 return on net  worth fell down by 0.29% and 11.65% repectively.  
In 2017, return on net worth is negative . It implies that there is a capital erosion by 11.91
%. 

E) RETURN ON LONG TERM FUNDS= PBDIT-

DEPRECIATION/SECURED  LOAN+UNSECURED LOAN 
MARCH’17  MARCH’16  MARCH’15  MARCH’14  MARCH’1
3

PBDIT 225.03  4348.87  643.93  2921.88  3806.18

DEPRECIATIO 2969.39  2329.22  2603.22  2070.30  1817.62

N

SECURED   3124.12  3925.63  4803.26  4450.01  5877.72

LOAN

UNSECURED   15937.49  10329.05  15277.71  10065.52  8390.97

LOAN

RETURN ON   -14.3  14.16  -11.14  5.86  13.93

LONG TERM  
FUNDS
 INTERPRETATION: 

In 2013, return on long term funds was 13.93%, with respect to 2013 it got
decreased by 8.07%  in 2014. 

In 2015 it fell down by 17 % .Again in 2016 it raised up by 25.3%. With respect

to 2016 it is  reduced by 28.46 %. 

 CONCLUSION 
From the above analysis of the company’s financial statement it is concluded that
the  company’s financial position is not good because the company’s profitability
positions are  critically low and the company’s have to raise its profitability
positions for better performance. 

  SUGGESTIONS 
In 2017 operating cost had sharply raised so it’s my advice to firm proper measures
should be  taken .In 2016 the cost of goods sold was good enough but in 2017 it
became huge, as a result  Gross Profit got reduced with respect to 2016. Maximum
measures should be taken to control  cost of goods sold. If it doesn’t happen, then
the company’s profitability will get poor. 
  

FINDINGS 
1. In year 2010 the company having the gross profit margin 33.46 which is highest
but after a  while there is decrease in that because there was not a proportionate
change in gross profit in  comparison of net sales of the company. 

2. Operating profit margin represents pure profit of the company. It increase negatively
from 11.4  to 2.56 for the given period which is bad indication of the company
performance.
3. Net profit margin which measures how profitable a company's sales are after
deducting all expenses interest, taxes & preferred stock dividends declines from
6.33 to 0.97  during the given period, which implies lower level of profitability of
company. 

4. Return on total assets is a pure measure of the efficiency of a company in generating

returns  from its assets. So here there are declines from 7.13 to 0.99 during the given
period, which shows  negativity of the profitability of the company. 

5. Return on net worth which measures the returns earn ed on the common stock
holder's investment in the company which is decrease from 15.14 to 1.74 within given
period. This indication reflects the bad performance of the management on the invested
financial  resources. 

6. The overall performance of TATA motors regarding profitability was bad, the
company's customer base has been growing, and it has been declining earning an
acceptable  return on invested capital. 

CHAPTER 7 

RECOMΜΕNDAΤIONS & CONCLUSION

RECOMMENDATIONS & CONCLUSION 
1. The sales revenue of the TATA motors Itd was high, but it was
observed that the gross profit margin of the company was not increasing
as per or there was not proportionate change in that as compare to net
sales. 

2. Operating profit which represents the profit earned from producing and selling
product was  also low as compared to the sales volume of the company. Therefore,
the company needs to  reduce its expenses to be able to pay its debts and gain more
earnings after taxes. 

3. Net profit margin which measures how profitable a company's sales are after
deducting all expenses interest, taxes & preferred stock dividends declines from
6.33 to 0.97  during the given period, which implies lower level of profitability of
company.
4. Earning taxes, which are available for common stockhoId ers, were also low as
compared to the sales volume of the company. This is due to effect of high expenses on
the cost  of goods sold and other expenses. 

5. Finally the company is loss making or rather we can say decreasing their profitability
but they  have good future opportun ities, it has took carefully at controlling the costs of
goods sold and  reduce its expenses to avoid facing difficult financial conditions in the
future. 

CHAPTER 8 

BIBLIOGRAPHY
BIBLIOGRAPHY 
BOOKS: 
Lazaridis, I.,& Tryfonidis, D. (2006) "Relationship between working capital
management and profitability of listed companies in stick exchange, Journal of financial
management and analysis  19(1),pp26-35 

Pandey, IM.(2006). "Financial management Text and Cases." 9h Edition, Vikas

Publishing House, New Delhi ,pp.43-49
Ruistagi, R.P.(1999). "Financial Management, Theory Concepts and problems."
Galgotia publisshing company, New Delhi, p.70 

Pandey,S.(2012). "Financial structure and Profitability of IFCI Ltd,: an emperical

analysis."  Indian 
journal of finance, 6(10), pp.32-38. 

WEBSITES: 

www.google.com 
www.tatamotors.com 
http://www.tatamotors.com/about-us/company-profile/ 
http:://en.wikipedia.org/wiki/Tata_Motors#History 

CHAPTER 9 

APPENDIX
QUESTIONAIRE  
Q1. What was the sales of 2016-2020 during

pandemic? Q2. Does sales effect gross profit

during this pandemic?