A

COMPREHENSIVE PROJECECT
REPORT
ON
A COMPARATIVE STUDY ON Financial performance
“TATA MOTORS LTD.” AND “BAJAJ AUTO LTD.”

SUBMITTED TO:
SARDAR PATEL UNIVERSITY
VALLABH VIDHYANAGR
FOR THE PARTIAL FULFILMENT OF THE DEGREE
BACHELOR OF BUSINESS ADMINISTATION (ITM)
SEMESTER-VI, 2021-2022

REPORT GUIDE:
MRS. PRIYA PATEL

SUBMITTED BY:
PATEL ROOCHITABEN DHEERUBHAI
ROLL NO: 543
BBA(ITM)(SEMESTER-VI)
COLLEGE NAME: SHRI D.N. INSTITUTE OF BUSINESS
ADMINISTRATION
 INTRODUCTION
Complete Planning that identifies the organization’s long-term ways of using
existing resources within the organization will make the organization or company
more competitive.

Business activities are generally divided into three; manufacturing, cost of goods
sold and profit margins. Speech trade in purchase of goods/Services, distribution
channels, and retail. And Services talk service fees, speed, convenience, security
and service benefits. All business activities must be profitable.

Financial ratios must be healthy. One healthy size-not a company is to look at

financial performance. How big the company is able to create profit, the ability to
pay the debt, control the debts, capital turnover, etc. Therefore, the financial
statements that are subject to the study. In fact the scale odd the company is
different, there are small, medium, and large. Starting from individual business,
families, joint ventures, corporations to conglomerates.

If the business scale is different than the measurement of financial performance is

also different cannot be equated. Theories with practice in the field are sometimes
different. Indeed, the theory is an ideal size, but sometimes empirical readings are
not the same as the theory desires. At least this empirical can approach they
should be according to the will of the theory.

The study of actual financial performance is to understand the ideal criteria

provided with input data from the empirical reality of the firm. This article tries to
examine what is meant by financial performance, financial reports, fundamental
analysis, technical analysis, and science what if want to learn finance.
 Meaning
Financial performance is a subjective measure of how well a firm can use
assets from its primary mode of business and generate revenues. The term is
also used as a general measure of a firm's overall financial health over a
given period.
Analysts and investors use financial performance to compare similar firms
across the same industry or to compare industries or sectors in aggregate.
Financial performance tells investors about the general well-being of a firm.
It's a snapshot of its economic health and the job its management is doing.
A key document in reporting corporate financial performance is Form 10-K,
which all public companies are required to publish annually.
Financial statements used in evaluating overall financial performance include
the balance sheet, the income statement, and the statement of cash flows.
Financial performance indicators are quantifiable metrics used to measure
how well a company is doing.
No single measure should be used to define the financial performance of a
firm.

Financial Statements:
Included in the three financial statements: the balance sheet, the income
statement, and the cash flow statement.

Balance Sheet:
The balance sheet is a snapshot of the finances of an organization as of a
particular date. It provides an overview of how well the company manages its
assets and liabilities. Analysts can find information about long-term vs. short-
term debt on the balance sheet. They can also find information about what
kind of assets the company owns and what percentage of assets are financed
with liabilities vs. stockholders' equity.

Income Statement:
The income statement provides a summary of operations for the entire year.
The income statement starts with sales or revenues and ends with net income.
Also referred to as the profit and loss statement, the income statement
provides the gross profit margin, the cost of goods sold, operating profit
margin, and net profit margin. It also provides an overview of the number of
shares outstanding, as well as a comparison against the performance of the
prior year.

Cash Flow Statement:

The cash flow statement is a combination of both the income statement and
the balance sheet. For some analysts, the cash flow statement is the most
important financial statement because it provides a reconciliation between net
income and cash flow. This is where analysts see how much the company
spent on stock repurchases, dividends, and capital expenditures. It also
provides the source and uses of cash flow from operations, investing, and
financing.

FINANCIAL PERFORMANCE MEASURES TO MONITOR

The metrics below are typically found in the financial statements
listed above and among the most important for managers and other
key stakeholders within an organization to understand.

1. Gross Profit Margin

Gross profit margin is a profitability ratio that measures what

percentage of revenue is left after subtracting the cost of goods
sold. The cost of goods sold refers to the direct cost of production
and does not include operating expenses, interest, or taxes. In other
words, gross profit margin is a measure of profitability,
specifically for a product or item line, without accounting for
overheads.

Gross Profit Margin = (Revenue – Cost of Sales) / Revenue * 100

2. Net Profit Margin

Net profit margin is a profitability ratio that measures what

percentage of revenue and other income is left after subtracting all
costs for the business, including costs of goods sold, operating
expenses, interest, and taxes. Net profit margin differs from gross
profit margin as a measure of profitability for the business in
general, taking into account not only the cost of goods sold, but all
other related expenses.

Net Profit Margin = Net Profit / Revenue * 100

3. Working Capital

Working capital is a measure of the business’s available operating

liquidity, which can be used to fund day-to-day operations.

Working Capital = Current Assets – Current Liabilities

4. Current Ratio

Current ratio is a liquidity ratio that helps you understand whether

the business can pay its short-term obligations—that is, obligations
due within one year— with its current assets and liabilities.
Current Ratio = Current Assets / Current Liabilities

5. Quick Ratio

The quick ratio, also known as an acid test ratio, is another type of
liquidity ratio that measures a business’s ability to handle short-
term obligations. The quick ratio uses only highly liquid current
assets, such as cash, marketable securities, and accounts
receivables, in its numerator. The assumption is that certain current
assets, like inventory, are not necessarily easy to turn into cash.

Quick Ratio = (Current Assets – Inventory) / Current Liabilities

6. Leverage

Financial leverage, also known as the equity multiplier, refers to

the use of debt to buy assets. If all the assets are financed by
equity, the multiplier is one. As debt increases, the multiplier
increases from one, demonstrating the leverage impact of the debt
and, ultimately, increasing the risk of the business.

Leverage = Total Assets / Total Equity

7. Debt-to-Equity Ratio

The debt-to-equity ratio is a solvency ratio that measures how

much a company finances itself using equity versus debt. This ratio
provides insight into the solvency of the business by reflecting the
ability of shareholder equity to cover all debt in the event of a
business downturn.

Debt to Equity Ratio = Total Debt / Total Equity

8. Inventory Turnover

Inventory turnover is an efficiency ratio that measures how many

times per accounting period the company sold its entire inventory.
It gives insight into whether a company has excessive inventory
relative to its sales levels.

Inventory Turnover = Cost of Sales / (Beginning Inventory +

Ending Inventory / 2)

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9. Total Asset Turnover

Total asset turnover is an efficiency ratio that measures how

efficiently a company uses its assets to generate revenue. The
higher the turnover ratio, the better the performance of the
company.

Total Asset Turnover = Revenue / (Beginning Total Assets +

Ending Total Assets / 2)

10. Return on Equity

Return on equity, more commonly displayed as ROE, is a
profitability ratio measured by dividing net profit over
shareholders’ equity. It indicates how well the business can utilize
equity investments to earn profit for investors.

ROE = Net Profit / (Beginning Equity + Ending Equity) / 2

11. Return on Assets

Return on assets, or ROA, is another profitability ratio, similar to

ROE, which is measured by dividing net profit by the company’s
average assets. It’s an Indicator of how well the company is
managing its available resources and assets to net higher profits.

ROA = Net Profit / (Beginning Total Assets + Ending Total

Assets) / 2

12. Operating Cash Flow

Operating cash flow is a measure of how much cash the business
has as a result of its operations. This measure could be positive,
meaning cash is available to grow operations, or negative, meaning
additional financing would be required to maintain current
operations. The operating cash flow is usually found on the cash
flow statement and can be calculated using one of two methods:
direct or indirect.

13. Seasonality

Seasonality is a measure of how the period of the year is affecting

your company’s financial numbers and outcomes. If you’re in an
industry that’s affected by high and low seasons, this measure will
help you sort out confounding variables and see the numbers for
what they truly are.

It’s important to note there’s no absolute good or bad when it

comes to financial KPIs. Metrics need to be compared to prior
years or competitors in the industry to see whether your company’s
financial performance is improving or declining and how it’s
performing relative to others.
 BAJAJ AUTO LTD
 COMPANY HISTORY:
Bajaj Auto Ltd (BAL) is one of the leading two & three wheeler
manufacturers in India. The company is well known for its R&D
product development process engineering and low-cost
manufacturing skills. The company is the largest exporter of two
and three-wheelers in the country. The company has three overseas
subsidiaries namely Bajaj Auto International Holdings BVPT Bajaj
Indonesia and Bajaj Auto (Thailand) Ltd. On 29 November 1945
Bajaj Auto came into being under the name M/s Bachraj Trading
Corporation Private Limited. In 1948 Bajaj Auto started selling
imported two- and three-wheelers in India.
 Products: Manufacturers of scooters, motorcycles and three-
wheeler vehicles and spare parts.
o Bajaj Auto Holdings Ltd. – Investment Company.
o Bajaj Auto International Holdings BV – Bajaj Auto venture in
Netherlands.
o PT Bajaj Auto Indonesia (PTBAI) - Bajaj Auto venture in
Indonesia.
o Maharashtra Scooters Ltd. - Manufacturers of Scooters.
Figure I Bajaj Pulsar NS 200

Figure II BAJAJ Pulsar 220

 Bajaj manufactures and sells motorcycles, scooters, auto-rickshaws
and cars. As of 2004, Bajaj Auto was India's largest exporter of
motorcycles.
Bajaj is the first Indian two-wheeler manufacturer to deliver 4-
stroke commuter motorcycles with sporty performance for the
Indian market. Bajaj achieved this with the 150cc and 180cc
Pulsar.
Motorcycles produced by Bajaj include the CT 100 Platina,
Discover, Pulsar, Avenger, and Dominar. In FY 2012–13, it sold
approximately 37.6 lakh (3.76 million) motorcycles which
accounted for 31% of the market share in India. Of these,
approximately 24.6 lakh (2.46 million) motorcycles (66%) were
sold in India, and the remaining 34% were exported.

 Auto rickshaw (three wheeler)

 Figure III A BAJAJ Auto rickshaw

Bajaj is the world's largest manufacturer of auto rickshaws and

accounts for almost 84% of India's three-wheeler exports. During the
FY 2012–13, it sold approx. 4,80,000 three-wheelers which was 57%
of the total market share in India. Out of these 4,80,000 three-
wheelers, 47% were sold in the country and 53% were exported. In
Indonesia, point that the word Bajaj is used to refer to auto rickshaws
of any kind.

 Balance Sheet:
 Balance Sheet Mar Mar '20 Mar '19 Mar '18 Mar '17  
 '21
Investment Valuation Ratios          
Face Value 10 10 10 10 10  
Dividend Per Share 140 120 60 60 55  
Operating Profit Per Share (Rs) 170.32 176.12 172.17 165.31 152.83  
1,033.9
Net Operating Profit Per Share (Rs) 958.68 3 1,045.38 869.65 752.22  
Free Reserves Per Share (Rs) -- -- -- -- --  
Bonus in Equity Capital 89.45 89.45 89.45 89.45 89.45  
Profitability Ratios          
Operating Profit Margin(%) 17.76 17.03 16.46 19 20.31  
Profit Before Interest And Tax
Margin(%) 16.09 15.32 14.78 16.85 17.9  
Gross Profit Margin(%) 16.83 16.2 15.59 17.75 18.9  
Cash Profit Margin(%) 16.58 16.89 14.41 16.65 17.98  
Adjusted Cash Margin(%) 16.58 16.89 14.41 16.65 17.98  
Net Profit Margin(%) 16.41 17.04 15.45 16.16 17.58  
Adjusted Net Profit Margin(%) 15.69 16.11 14.65 15.34 16.64  
Return On Capital Employed(%) 23.59 33.03 29.22 30.25 31.11  
Return On Net Worth(%) 18.07 25.59 21.46 21.29 22.46  
Adjusted Return on Net Worth(%) 18.07 25.59 19.89 21.46 22.46  
Return on Assets Excluding
Revaluations 870.94 688.59 752.67 660.19 588.67  
Return on Assets Including
Revaluations 870.94 688.59 752.67 660.19 588.67  
Return on Long Term Funds(%) 23.59 33.03 29.22 30.25 31.11  
Liquidity And Solvency Ratios          
Current Ratio 1.14 0.99 1.14 0.94 1.1  
Quick Ratio 0.9 0.77 0.97 0.77 0.9  
Debt Equity Ratio -- -- -- 0.01 0.01  
Long Term Debt Equity Ratio -- -- -- 0.01 0.01  
Debt Coverage Ratios          
2,083.3 3,812.1
Interest Cover 892.74 4 1,420.90 4,439.60 6  
Total Debt to Owners Fund -- -- -- 0.01 0.01  
2,161.3 4,031.6
Financial Charges Coverage Ratio 931.67 3 1,480.21 4,679.91 6  
Financial Charges Coverage Ratio 1,692.9 2,954.4
Post Tax 723.8 0 1,103.87 3,346.73 6 
Management Efficiency Ratios          
Inventory Turnover Ratio 18.57 28.13 31.46 34.42 31.7  
Debtors Turnover Ratio 12.49 13.97 14.93 20.58 26.05  
Investments Turnover Ratio 1.1 1.5 1.39 34.42 31.7  
Fixed Assets Turnover Ratio 6.56 7.34 7.11 5.58 4.88  
Total Assets Turnover Ratio 1.1 1.5 1.39 1.31 1.27  
Asset Turnover Ratio 1.23 1.43 1.48 1.38 1.43  
             
Average Raw Material Holding -- -- -- -- --  
Average Finished Goods Held -- -- -- -- --  
Number of Days In Working Capital -13.54 -16.64 -6.94 -17.7 -22.37  
Profit & Loss Account Ratios          
Material Cost Composition 73.21 72.11 73.95 70.68 69.03  
Imported Composition of Raw
Materials Consumed -- -- -- -- --  
Selling Distribution Cost Composition 0.89 1.63 1.6 1.73 1.81  
Expenses as Composition of Total
Sales 43.91 39.68 37.79 36.88 33.7  
Cash Flow Indicator Ratios          
Dividend Payout Ratio Net Profit -- 102.12 37.13 39.12 3.77  
Dividend Payout Ratio Cash Profit -- 97.42 35.13 36.31 3.49  
Earning Retention Ratio 100 -2.12 59.94 61.19 96.23
Cash Earning Retention Ratio 100 2.58 62.25 63.96 96.51  
Adjusted Cash Flow Times -- -- -- 0.03 0.03  

TATA MOTORS LTD.

 Company Profile:
Tata Motors Limited is an Indian multinational automotive
manufacturing company, headquartered in the city of Mumbai,
India which is part of Tata Group. The company produces
passenger cars, trucks, vans, coaches, buses, luxury cars, sports
cars, construction equipment.
 Operations:
Tata Motors has vehicle assembly operations in India, the United
Kingdom, South Korea, Thailand, Spain, and South Africa. It
plans to establish plants in Turkey, Indonesia, and Eastern
Europe.

 Products:
 Automobiles
 Luxury Vehicles
 Commercial Vehicles
 Automotive parts
 Pickup trucks
  SUVs

 MISSION:
We innovate mobility solutions with passion to enhance the
quality of life

 VISION:
By FY 2024, we will become the most aspirational Indian auto
brand, consistently winning, by

 Delivering superior financial returns

 Driving sustainable mobility solutions
 Exceeding customer expectations, and
 Creating a highly engaged work force

 History:
 Tata Sierra (1991-2000)

Tata Sumo (1994-2019)

Tata Motors was founded in 1945, as a locomotive manufacturer.
Tata Group entered the commercial vehicle sector in 1954 after
forming a joint venture with Daimler-Benz of Germany. After
years of dominating the commercial vehicle market in India, Tata
Motors entered the passenger vehicle market in 1991 by launching
the Tata Sierra, a sport utility vehicle based on the Tata Mobile
platform.

Tata subsequently launched the Tata Estate (1992; a station wagon

design based on the earlier Tata Mobile), the Tata Sumo (1994, a
5door SUV) and the Tata Safari (1998).

Tata Indica
Tata launched the Indica in 1998, a fully indigenous Indian
passenger car tailor-made to suit Indian consumer needs
though styled by I.D.E.A, Italy. Although initially criticised by
auto analysts, its excellent fuel economy, powerful engine, and an
aggressive marketing strategy made it one of the best-selling cars
in the history of the Indian automobile industries.
A newer version of the car, named Indica V2, was a major
improvement over the previous version and quickly became a
mass favorite. Tata Motors also successfully exported large
numbers of the car to South Africa. The success of the Indica
played a key role in the growth of Tata Motors.

In 2004, Tata Motors acquired Daewoo's South Korea-based truck

manufacturing unit, Daewoo Commercial Vehicles Company, later
renamed Tata Daewoo.

On 27 September 2004, Ratan Tata, the Chairman of Tata Motors,

rang the opening bell at the New York Stock Exchange to mark the
listing of Tata Motors.

In 2005, Tata Motors acquired a 21% controlling stake in the

Spanish bus and coach manufacturer Hispano Carrocera. Tata
Motors continued its market area expansion through the
introduction of new products such as buses and trucks.

In 2006, Tata formed a joint venture with the Brazil-based

Marcopolo, Tata Marcopolo Bus, to manufacture fully built buses
and coaches.
  Balance Sheet:
BALANCE SHEET OF TATA
MOTORS (in Rs. Cr.) 21-Mar 20-Mar 19-Mar 18-Mar 17-Mar
EQUITIES AND LIABILITIES          
SHAREHOLDER'S FUNDS          
Equity Share Capital 765.81 719.54 679.22 679.22 679.22
TOTAL SHARE CAPITAL 765.81 719.54 679.22 679.22 679.22
Reserves and Surplus 18,290.16 16,800.61 21,483.30 19,491.76 20,483.39
TOTAL RESERVES AND
SURPLUS 18,290.16 16,800.61 21,483.30 19,491.76 20,483.39

TOTAL SHAREHOLDERS FUNDS 19,055.97 18,387.65 22,162.52 20,170.98 21,162.61

NON-CURRENT LIABILITIES          
Long Term Borrowings 16,326.77 14,776.51 13,914.74 13,155.91 13,686.09
Deferred Tax Liabilities [Net] 266.5 198.59 205.86 154.61 147.58
Other Long Term Liabilities 1,786.93 1,646.56 404.11 502.37 1,451.47
Long Term Provisions 1,371.94 1,769.74 1,281.59 1,009.48 892.18
TOTAL NON-CURRENT
LIABILITIES 19,752.14 18,391.40 15,806.30 14,822.37 16,177.32
CURRENT LIABILITIES          
Short Term Borrowings 2,542.50 6,121.36 3,617.72 3,099.87 5,158.52
Trade Payables 8,115.01 8,102.25 10,408.83 14,225.63 11,462.24
Other Current Liabilities 14,550.50 10,180.46 7,765.57 6,030.53 4,440.42
Short Term Provisions 1,043.54 1,406.75 1,148.69 862.92 477.17
TOTAL CURRENT LIABILITIES 26,251.55 25,810.82 22,940.81 24,218.95 21,538.35

TOTAL CAPITAL AND LIABILITIES 65,059.66 62,589.87 60,909.63 59,212.30 58,878.28

ASSETS          
NON-CURRENT ASSETS          
Tangible Assets 19,922.06 19,540.25 18,316.61 18,192.52 17,897.13
Intangible Assets 6,501.04 5,667.73 3,970.22 3,411.23 2,875.80
Capital Work-In-Progress 1,400.82 1,755.51 2,146.96 1,371.45 1,902.61
Other Assets 0 0 0 0 0
FIXED ASSETS 29,429.56 29,702.78 28,573.42 26,800.35 28,043.92
Non-Current Investments 16,114.91 15,730.86 15,434.19 14,260.79 14,858.39
Deferred Tax Assets [Net] 0 0 0 0 0
Long Term Loans And Advances 126.05 138.46 143.13 143.96 391.46
Other Non-Current Assets 3,534.55 3,449.01 3,529.59 3,035.54 2,827.44

TOTAL NON-CURRENT ASSETS 49,205.07 49,021.11 47,680.33 44,240.64 46,121.21

CURRENT ASSETS          
Current Investments 1,578.26 885.31 1,433.18 2,502.78 2,437.42
Inventories 4,551.71 3,831.92 4,662.00 5,670.13 5,553.01
Trade Receivables 2,087.51 1,978.06 3,250.64 3,479.81 2,128.00
Cash And Cash Equivalents 4,318.94 3,532.19 1,306.61 795.42 326.61
Short Term Loans And Advances 185.42 232.14 200.08 140.27 215.96
Other Current Assets 3,132.75 3,109.14 2,376.79 2,383.25 2,096.07
TOTAL CURRENT ASSETS 15,854.59 13,568.76 13,229.30 14,971.66 12,757.07
TOTAL ASSETS 65,059.66 62,589.87 60,909.63 59,212.30 58,878.28
OTHER ADDITIONAL
INFORMATION          
CONTINGENT LIABILITIES,
COMMITMENTS          
Contingent Liabilities 5,354.18 4,737.19 7,246.04 5,269.63 4,787.17
CIF VALUE OF IMPORTS          
Raw Materials 0 0 0 0 0
Stores, Spares And Loose Tools 0 0 0 0 0
Trade/Other Goods 0 0 0 0 0
Capital Goods 0 0 0 0 0
EXPENDITURE IN FOREIGN
EXCHANGE          
Expenditure In Foreign Currency 2,159.77 2,946.64 0 3,079.76 0
REMITTANCES IN FOREIGN
CURRENCIES FOR DIVIDENDS          
Dividend Remittance In Foreign
Currency -- -- -- -- --
EARNINGS IN FOREIGN
EXCHANGE          
FOB Value Of Goods -- -- -- -- --
Other Earnings 2,181.66 3,144.88 -- 5,422.47 --
BONUS DETAILS          
Bonus Equity Share Capital 111.29 111.29 111.29 111.29 111.29
NON-CURRENT INVESTMENTS          
Non-Current Investments Quoted
Market Value 446.23 140.96 270.17 -- 218.18
Non-Current Investments Unquoted
Book Value 521.42 407.61 393.21 310.19 310.19
CURRENT INVESTMENTS          
Current Investments Quoted Market
Value -- -- 0.91 303.84 --
Current Investments Unquoted Book
Value