PROJECT ON FINANCIAL ANALYSIS BETWEEN TATA

MOTORS AND ASHOK LEYLAN

SUBMITTED TO:
MRS. MUKTA MANI

SUBMITTED BY:

NAFISUR RAHMAN (7102209 A-2)

PRANAY DEEP (7102296 A-6)

ROHIT ANAND (7102313 A-6)

Table of Contents:
1. Industry Overview
1.1. Current Issues
1.2. Major competitors
1.3. Market Position
2. Corporate Business Overview
2.1. Tata motors
2.1.1.1. Headquarters Location
2.1.1.2. Management Team
2.1.1.3. Products: Current and future
2.2. Ashok Leyland
2.2.1.1. Headquarters and Manufacturing Plant
2.2.1.2. Management Board of Ashok Leyland
2.2.1.3. Products
3. Financial Analysis
4. Market Information Of Debt And Equity
5. Current Events
6. CRISIL Rating
7. Recommendation
1.Overview: Automobile Industry

Starting its journey from the day when the first car rolled on the streets of Mumbai in 1898, the Indian
automobile industry has demonstrated a phenomenal growth to this day. Today, the Indian automobile
industry presents a galaxy of varieties and models meeting all possible expectations and globally established
industry standards. Some of the leading names echoing in the Indian automobile industry include Maruti
Suzuki, Tata Motors, Mahindra and Mahindra, Hyundai Motors, Ashok Leyland in addition to a number of
others. The thriving market place in the country has attracted a number of automobile manufacturers
including some of the reputed global leaders to set their foot in the soil looking forward to enhance their
profile and prospects to new heights. Following a temporary setback on account of the global economic
recession, the Indian automobile market has once again picked up a remarkable momentum witnessing a
buoyant sale for the first time in its history in the month of September 2009. The automobile sector of India is
the seventh largest in the world. In a year, the country manufactures about 2.6 million cars making up an
identifiable chunk in the world’s annual production of about 73 million cars in a year. The country is the largest
manufacturer of motorcycles and the fifth largest producer of commercial vehicles. The figures published by
the Asia Economic Institute indicate that the Indian automobile sector is set to emerge as the global leader by
2012. In the year 2009, India rose to be the fourth largest exporter of automobiles following Japan, South
Korea and Thailand.  The two giants Tata Motors and Ashok Leyland compete with each other in heavy vehicle
sector.

1.1 CURRENT ISSUES:

The automotive Industry in India is now working in terms of the dynamics of an open market. Many joint
ventures have been set up in India with foreign collaboration, both technical and financial with leading
global manufacturers. Also a very large number of joint ventures have been set up in the auto-components
sector and the pace is expected to pick up even further. The Government of India is keen to provide a
suitable economic, and business environment conducive to the success of the established and prospective
foreign partnership ventures. $5.7 billion is the investment envisaged in the new vehicles projects.
Many foreign players are eyeing India as very potential market for their expansion. World’s largest bus
manufacturer Volvo recently showed their interest and released a statement that "We are very pleased with
the growth that we have posted over the years. With increasing spend on road infrastructure we expect
to see multifold growth in bus volumes in India".
1.2 Major competitors
There are many old players in the automobile field . Tata Motors being the oldest player in this field, other
companies have tried their best to compete with it. Certain big competitors in the field of automobile are as
follows:

Last Market Cap. Sales Net Total Assets

Price (Rs. cr.) Turnover Profit
Tata Motors 1,103.25 62,951.45 35,593.05 2,240.08 31,591.38
Ashok Leyland 73.20 9,738.08 7,244.71 423.68 5,936.76
Tata Motors 783.50 5,028.16 - - -
(D)
Eicher Motors 1,244.90 3,332.30 378.01 37.53 413.30
Swaraj Mazda 305.00 441.39 716.76 21.46 274.37

Tata Motors is the largest

player in commercial vehicle in India succeeded by Ashok Leyland. In the financial year 2010, the net sales of
Ashok Leyland was of 7244cr in comparison to Tata Motor’s 35,593cr. In the same financial year Ashok

1.3 Market Position

SHAREHOLDING PATTERN:

Domestic Market Share for 2008-09

Tata Motors 65%
Ashok Leyland 27%
Swaraz Mazda 5%
Others 3%
(As per 20009-10)

Sales

Tata motors
Ashok Leyland
Swaraz Mazda
Others

Thus we see Tata motors and Ashok Leyland firmly holds the Indian automobile market
for heavy vehicles.
2. Corporate Business Overview

2.1 Tata motors

Tata Motors is a part of the Tata Group manages its share-holding through Tata Sons. The company was
established in 1935 as a locomotive manufacturing unit and later expanded its operations to commercial
vehicle sector in 1954 after forming a joint venture with Daimler-Benz AG of Germany. Despite the success of
its commercial vehicles, Tata realized his company had to diversify and he began to look at other products.
Based on consumer demand, he decided that building a small car would be the most practical new venture. So
in 1998 it launchedTata Indica, India's first fully indigenous passenger car. Designed to be inexpensive and
simple to build and maintain, the Indica became a hit in the Indian market. It was also exported to Europe,
especially the UK and Italy. In 2004 it acquired Tata Daewoo Commercial Vehicle, and in late 2005 it acquired
21% of Aragonese Hispano Carrocera giving it controlling rights of the company. It has formed a joint venture
with Marcopolo of Brazil, and introduced low-floor buses in the Indian Market. Recently, it has acquired British
Jaguar Land Rover (JLR), which includes the Daimler and Lanchester brand names.

2.1.1 Headquarters Location:

Corporate Office: Tata Motors Limited, International Business, Block A, Shivsagar Estate,
Dr. Annie Besant Road, Worli, Mumbai – 400018
Registered Office: Tata Motors Limited, Bombay House, 24 Homi Modi Street
Mumbai - 400001

2.1.2 Management Team:

Board of director
 Ratan N Tata, Chairman;
 Ravi Kant, Vice-Chairman;
 J J Irani
 R Gopalakrishnan
 N N Wadia
 S M Palia
 R A Mashelkar
  S Bhargava
 N Munjee
 V K Jairath
 Ranendra Sen
 Carl-Peter Forster,Chief Executive Officer & Managing Director;
 P M Telang,Managing Director- India Operations
Management Team
 C Ramakrishnan, Chief Financial Officer;
 Carl-Peter Forster,Chief Executive Officer & Managing Director;
 P M Telang,Managing Director- India Operations
 R Pisharody, President (Commercial Vehicles Business Unit);
 T Leverton, Head, Advanced and Product Engineering;
 S N Ambardekar, Sr. Vice President (Manufacturing Operations-CVBU);
 S Krishnan, Sr. Vice President (Commercial-PCBU);
 P Y Gurav, Sr. Vice President (Corp. Finance-Accounts and Taxation);
 S B Borwankar, Head (Jamshedpur-Plant);
 Vikram Sinha, Head (Car Plant-PCBU);
 B B Parekh, Chief (Strategic Sourcing);
 U K Mishra, Vice President (ADD and Materials-CVBU);
 A A Gajendragadkar, Vice President (Corp. Finance-Business Planning);
 N Pinge, Chief Internal Auditor;
 R Bagga, Vice President (Legal);
 R Ramakrishnan, Vice President - Sales & Marketing(CVBU);
 S Ravishankar, Vice President (Engg. Systems, ERC);
 Girish Wagh, Head (Small Car Project);

Company Secretary

 H K Sethna
Share Registrars

TSR Darashaw Limited

6-10, Haji Moosa Patrawala Industrial Estate,
20, Dr. E. Moses Road, Mahalaxmi, Mumbai-400 011.
Corporate Identity Number (CIN)= L28920MH1945PLC004520

2.1.3 Products: Current and future

Current products
a) PASSENGER CARS AND UTILITY VEHICLES
Tata Sumo Grande, Tata Safari, Tata Indica Vista, Tata Indica, Tata Winger, Tata Indigo, Tata Nano, Jaguar XF,
Land Rover‟s Range Rover.

b) COMMERCIAL VEHICLES
Tata 1616 Starbus

Tata Marcopolo Buses

Tata Ace

Tata 407 Ex and Ex2

Tata 709 Ex

Tata 809 Ex and Ex2

c) CONCEPT VEHICLES
Aria Roadstar

Aria Coupe

Tata Cliffrider

Tata Elegante

Tata Prima

d) MILITARY VEHICLES
Tata LSV (Light Specialist Vehicle)

Tata 2 Stetcher Ambulance

Tata 407 Troop Carrier

Tata LPTA 709E

Tata SD 1015 TC

Tata LPTA 1615 TC

Tata LPTA 1615 Tc

FUTURE PRODUCTS

Xenon Petrol

Xenon Tipper

Marcopolo range of buses.

Indigo Marina

Tata Motors pavilion

Tata Indiva

SFC 407 Ex Turbo Truck

2.2 Ashok Leyland

Ashok Leyland, the Hinduja Group flagship in India, is the second largest player in the Indian commercial
vehicle with about 27% of market share under its belt. The major function of this company is to manufacture
commercial vehicles and spare parts. This also specializes in making special engines for industrial, marine
requirements, genset and other automobile spare parts. With its six manufacturing units, the company can
produce 77,000 vehicles and 87,000 engines annually.

In 1948, Mr. Raghunandan Saran, an industrialist, set up Ashok Motors in what was then Madras, for the
assembly of Austin Cars. The Company's destiny and name changed soon with equity participation by British
Leyland and Ashok Leyland commenced manufacture of commercial vehicles in 1955. Since then Ashok
Leyland has been a major presence in India's commercial vehicle industry with a tradition of technological
leadership, achieved through tie-ups with international technology leaders and through vigorous in-house
R&D. Access to international technology enabled the Company to set a tradition to be first with technology. Be
it full air brakes, power steering or rear engine busses, Ashok Leyland pioneered all these concepts.
Responding to the operating conditions and practices in the country, the Company made its vehicles strong,
over-engineering them with extra metallic muscles.
"Designing durable products that make economic sense to the consumer, using appropriate technology",
became the design philosophy of the Company, which in turn has moulded consumer attitudes and the brand
personality.

In the journey towards global standards of quality, Ashok Leyland reached a major milestone in 1993 when it
became the first in India's automobile history to win the ISO 9002 certification. The more comprehensive ISO
9001 certification came in 1994, QS 9000 in 1998 and ISO 14001 certification for all vehicle manufacturing
units in 2002. It has also become the first Indian auto company to receive the latest ISO/TS 16949 Corporate
Certification (in July 2006) which is specific to the auto industry.

2.2.1 Headquarters and Manufacturing Plant:

The company has it’s headquarter at : 1, Sardar Patel Road, Guindy, Chennai 600 032 .
The company has its manufacturing plants at:
 Chennai (Ennore & Ambattur);
 Hosur (Tamil Nadu);
 Bhandara (Maharashtra);
 Alwar (Rajasthan) and
 Pantnagar (Uttarakhand).

2.2.2 Management Board of Ashok Leyland:

The company has 13 board of directors:
 R J Shahaney, Chairman;
 D G Hinduja, Co-Chairman;
 R Seshasayee, Managing Director;
 Anil Harish ;
 D J Balaji Rao;
 A K Das ;
 P N Ghatalia;
 Ramachandran R Nair;
 F Sahami;
 Shardul S Shroff;
 Anders Spare;
 Dr V Sumantran;
  Vinod K Dasari, Chief Operating Officer ;
Executive directors of company are:
 A R Chandrasekharan, Executive Director and Company Secretary
 J N Amrolia
 Anup Bhat
 S Balasubramanian
 A K Jain
 Jayendra Parikh
 R R G Menon
 N Mohanakrishnan
 M Nataraj
 Rajinder Malhan
 Rajive Saharia
 Shekhar Arora
 B M Udayashankar
Chief Financial Officer: K Sridharan

2.2.3 Products
Current products: The Company currently produces range of buses and trucks for use in different terrain and
purpose. It is one of the two contractors of Low Floor CNG Buses being supplied to Delhi. The company
develop a large range of truck and other heavy duty vehicles including trippers, dumpers, multi axel trucks and
tractors. Company also manufacture a large number of trucks for army and defence forces. It also manufactures
special vehicles like cranes and fire brigade vehicle. Apart from these, company also manufacture engines for
its vehicles and to sell to another companies.
BUSES

Viking BS - II Viking BS - III Viking BS II

 Viking SLF BS-III
Viking CNG BS-III 12 M Bus - BS II

Cheetah BS - II 12 M Bus BS-II Cheetah BS-III

Cheetah BS - II Panther BS - II Lynx BS-II

Vestibule Bus - BSIII

Double Decker Airport Tarmac coach

TRUCKS

4 X 2 Haulage Models Multi-axle Vehicles

4 X 2 and Multi-axle Tippers
 Tractors ecomet

DEFENCE VEHICLES

Special Vehicles Defence Vehicles

Future products:
The Company is in process of launching new series of light weight and medium weight trucks of Ecomet and
Comet series. The company is also launching heavy duty trucks of Avia and U series. It is also launching luxury
multipurpose buses of iBus series and developing Hybrid engine for its Hybus series.

3. FINANCIAL ANALYSIS

Liquidity ratio

Current ratio = Current assets / Current liability

Quick Ratio = C.A. - Invent. / C.L.
Quick Ratio= [Accounts Receivables + Cash &Equivalents+] / Current Liabilities
Assets Turnover= Net Revenues / Total Assets

Debt Ratio

Debt ratio = total liabilities/total assets

Debt-equity ratio = total liabilities/shareholders’ equity
Capital equity ratio= Capital employed / net worth

Profitability Ratio

Gross profit Margin= Gross profit / Sales(net sales or total revenue)

Operating profit margin = operating profit/net sales(revenues)
Net profit margin = PM=net income/net sales(total revenues)
Total Asset Turnover = TAT = sales(total revenues) /total assets
Return on Investment = ROI = Profit Margin X Total Asset Turnover = net income /total assets
Return on Equity = net income / Total Equity(or net shareholder’s equity)
Return on Assets= Net Income / Total Assets
Return on Invested Capital= Net Income / Net Invested Capital
Activity Ratio

Inventory Turnover Ratio= Cost of goods sold / Inventory

Debtor Turnover Ratio = Sales / debtor
Assets Turnover Ratio =Sales / Net assets or capital employed
Working Capital Turnover Ratio=Sales / Net working capital
Net Working Capital =Current assets – Current liability

Financial Ratios of Tata Motors

march'08
Face Value 10
Dividend Per Share 15
Profitability Ratios
Operating Profit Margin(%) 10.53
Gross Profit Margin(%) 8.26
Cash Profit Margin(%) 8.13
Net Profit Margin(%) 6.96
Return On Capital
Employed(%) 18.96
Return on Assets Excluding
Revaluations 202.54
Return on Assets Including
Revaluations 203.2
Return on Long Term
Funds(%) 22.85
Liquidity Ratios
Current Ratio 0.64
Quick Ratio 0.66
Debt Equity Ratio 0.8
Long Term Debt Equity Ratio 0.5
Debt Ratios
Interest Cover 6.28
Total Debt to Owners Fund 0.8
Financial Charges Coverage
Ratio 7.19
Financial Charges Coverage
Ratio Post Tax 6.82
Management Efficiency Ratios
Inventory Turnover Ratio 14.44
Debtors Turnover Ratio 30.08
Investments Turnover Ratio 14.44
Fixed Assets Turnover Ratio 2.63
Total Assets Turnover Ratio 2.06
Asset Turnover Ratio 2.69

Earnings Per Share 52.63

Book Value 202.7

Financial Ratios of Ashok

Leyland
march'08
Face Value 1
Dividend Per Share 1.5
Profitability Ratios
Operating Profit Margin(%) 10.09
Gross Profit Margin(%) 7.86
Cash Profit Margin(%) 7.73
Net Profit Margin(%) 5.83
Return On Capital
Employed(%) 23.12
Return on Assets Excluding
Revaluations 15.82
Return on Assets Including
Revaluations 15.99
Return on Long Term Funds(%) 23.15
Liquidity Ratios
Current Ratio 1.08
Quick Ratio 0.6
Debt Equity Ratio 0.42
Long Term Debt Equity Ratio 0.42
Debt Ratios
Interest Cover 8.33
Total Debt to Owners Fund 0.42
Financial Charges Coverage Ratio 10.46
Financial Charges Coverage Ratio
Post Tax 8.74
Management Efficiency Ratios
Inventory Turnover Ratio 7.9
Debtors Turnover Ratio 17.74
Investments Turnover Ratio 7.6
Fixed Assets Turnover Ratio 2.77
Total Assets Turnover Ratio 2.7
Asset Turnover Ratio 2.77

Earnings Per Share 3.53

Book Value 15.99

Financial Ratios of Tata Motors V/s Ashok Leyland

march'08 march'08
Tata
motors Ashok Leyland
Face Value 10 1
Dividend Per Share 15 1.5
Profitability Ratios
Operating Profit Margin(%) 10.53 10.09
Gross Profit Margin(%) 8.26 7.86
Cash Profit Margin(%) 8.13 7.73
Net Profit Margin(%) 6.96 5.83
Return On Capital Employed(%) 18.96 23.12
Return on Assets Excluding Revaluations 202.54 15.82
Return on Assets Including Revaluations 203.2 15.99
Return on Long Term Funds(%) 22.85 23.15
Liquidity Ratios
Current Ratio 0.64 1.08
Quick Ratio 0.66 0.6
Debt Equity Ratio 0.8 0.42
Long Term Debt Equity Ratio 0.5 0.42
Debt Ratios
Interest Cover 6.28 8.33
Total Debt to Owners Fund 0.8 0.42
Financial Charges Coverage Ratio 7.19 10.46
Financial Charges Coverage Ratio Post Tax 6.82
Management Efficiency Ratios
Inventory Turnover Ratio 14.44 7.9
Debtors Turnover Ratio 30.08 17.74
Investments Turnover Ratio 14.44 7.6
Fixed Assets Turnover Ratio 2.63 2.77
Total Assets Turnover Ratio 2.06 2.7
Asset Turnover Ratio 2.69 2.77

Earnings Per Share 52.63 3.53

Book Value 202.7 15.99

4.MARKET INFORMATION OF DEBT

AND EQUITY

TATA MOTORS
MARKET SHARE INFORMATION OF TATA
MOTORS
 ASHOK LEYLAND

MARKET SHARE INFORMATION OF ASHOK

LEYLAND
5. CURRENT EVENTS
Nano car caughting fire has bad impact on the company

I feel the fire incidence can not be ignored.  Investigation and

safety certification by TATA MOTORS is not sufficient

as they have a vested interest.  Investigation and safety report

should be made by an independent agency such as

Automotive Research association of india located at pune.or it can

be by a specially constittuted group of experts in

automobiles drawn from a cross section of professional engineers

who have retired from active service with auto
companies.  Let unbiassed truth come out human life is very
valuable and it is not a matter of statistics.
6. CRISIL RATING
TATA MOTORS
Tata Motors Limited (formerly Tata Engineering & Locomotive Automobiles 4
Company Ltd.) wheelers

ASHOK LEYLAND
Ashok Leyland Ltd. Automobiles 4 wheelers Cash Credit Limit

Long Term Bank Loan

Working Capital Demand Loan

Letter of Credit and Bank Guarantees

Short-Term Loan

Commercial Paper