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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)


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Table of Contents:

1.Industry Overview

1.1. Current Issues

1.2. Major competitors

1.3. Market Position2.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 Rating7.Recommendation


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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 Marut

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 worlds 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.

1.1CURRENT 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. Worlds 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".


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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:

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 Motors 35,593cr. In the same

financial year Ashok Leyland earned a profit of about 423cr in comparison to Tata Motors 2,240cr.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)

Thus we see Tata motors and Ashok Leyland firmly holds the Indian automobile marketfor heavy vehicles.

Sales

Tata motors

Ashok Leyland

Swaraz Mazda

Others

Last Price Market Cap.(Rs. cr.) SalesTurnover Net Profit Total Assets

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 5,936.76Tata Motors (D) 783.50 5,028.16 - - -

Eicher Motors 1,244.90 3,332.30 378.01 37.53 413.30Swaraj Mazda 305.00 441.39 716.76 21.46 274.37


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2. Corporate Business Overview

2.1Tata motors

Tata Motors is a part of theTata Groupmanages its share-holding throughTata Sons. The company was

established in 1935 as a locomotive manufacturing unit and later expanded its operations to commercia

vehicle sector in 1954 after forming a joint venture withDaimler-BenzAG 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 onconsumerdemand, 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% ofAragoneseHispano Carroceragiving it controlling rights of the company. It has formed a joint venture

with Marcopoloof 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.

2.1.1Headquarters 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

y Ratan N Tata, Chairman;

y Ravi Kant, Vice-Chairman;

y JJ Irani

y R Gopalakrishnan

y N N Wadia

y S M Palia

y R A Mashelkar

y S Bhargava

y N Munjee


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y V KJairath

y Ranendra Sen

y Carl-Peter Forster,Chief Executive Officer & Managing Director;

y P M Telang,Managing Director- India Operations

Management Team

y C Ramakrishnan, Chief Financial Officer;

y Carl-Peter Forster,Chief Executive Officer & Managing Director;

y P M Telang,Managing Director- India Operations

y R Pisharody, President (Commercial Vehicles Business Unit);

y T Leverton, Head, Advanced and Product Engineering;

y S N Ambardekar, Sr. Vice President (Manufacturing Operations-CVBU);

y S Krishnan, Sr. Vice President (Commercial-PCBU);

y P Y Gurav, Sr. Vice President (Corp. Finance-Accounts and Taxation);

y S B Borwankar, Head (Jamshedpur-Plant);

y Vikram Sinha, Head (Car Plant-PCBU);

y B B Parekh, Chief (Strategic Sourcing);

y U K Mishra, Vice President (ADD and Materials-CVBU);

y A A Gajendragadkar, Vice President (Corp. Finance-Business Planning);

y N Pinge, Chief Internal Auditor;

y R Bagga, Vice President (Legal);

y R Ramakrishnan, Vice President - Sales & Marketing(CVBU);

y S Ravishankar, Vice President (Engg. Systems, ERC);

y Girish Wagh, Head (Small Car Project);

Company Secretary

y H K Sethna

Share Registrars

TSR Darashaw Limited6-10, Haji Moosa Patrawala Industrial Estate,

20, Dr. E. Moses Road, Mahalaxmi, Mumbai-400 011.

Corporate Identity Number (CIN)=L28920MH1945PLC004520


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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 Rovers 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


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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 commerciavehicle 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 technologica

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 thefirst in India's automobile history to win the ISO 9002 certification. The more comprehensive ISO


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9001 certification came in 1994, QS 9000 in 1998 and ISO 14001 certification for all vehicle manufacturing

units in 2002. It has also becomethe 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 its headquarter at : 1, Sardar Patel Road, Guindy, Chennai 600 032 .

The company has its manufacturing plants at:

y Chennai (Ennore & Ambattur);

y Hosur (Tamil Nadu);

y Bhandara (Maharashtra);

y Alwar (Rajasthan) and

y Pantnagar (Uttarakhand).

2.2.2 Management Board of Ashok Leyland:

The company has 13 board of directors:

y RJ Shahaney, Chairman;

y D G Hinduja, Co-Chairman;

y R Seshasayee, Managing Director;

y Anil Harish ;

y D J Balaji Rao;

y A K Das ;

y P N Ghatalia;

y Ramachandran R Nair;

y F Sahami;

y Shardul S Shroff;

y Anders Spare;

y Dr V Sumantran;

y Vinod K Dasari, Chief Operating Officer ;

Executive directors of company are:

y A R Chandrasekharan, Executive Director and Company Secretary

y J N Amrolia

y Anup Bhat

y S Balasubramanian


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y A KJain

y Jayendra Parikh

y R R G Menon

y N Mohanakrishnan

y M Nataraj

y Rajinder Malhan

y Rajive Saharia

y Shekhar Arora

y 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-IIIViking CNG BS-III 12 M Bus - BS II

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


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

Vestibule Bus - BSIII

Double Decker Airport Tarmac coach

TRUCKS

4 X 2 Haulage Models

4 X 2 and Multi-axle TippersMulti-axle Vehicles

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.


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3.FINANCIAL ANALYSIS

Liquidity ratio

Current ratio = Current assets / Current liabilityQuick 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 assetsDebt-equity ratio = total liabilities/shareholders equityCapital 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 assetsReturn on Investment = ROI = Profit Margin X Total Asset Turnover = net income /total assetsReturn on Equity = net income / Total Equity(or net shareholders 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 / InventoryDebtor Turnover Ratio = Sales / debtorAssets Turnover Ratio =Sales / Net assets or capital employedWorking Capital Turnover Ratio=Sales / Net working capital

Net Working Capital =Current assets Current liability


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Financial Ratios of Tata Motorsmarch'08 march'09 march'10

Face Value 10 10 10

Dividend Per Share 15 6 15

Profitability Ratios

Operating Profit Margin(%) 10.53 6.71 11.74

Gross Profit Margin(%) 8.26 3.3 8.84

Cash Profit Margin(%) 8.13 6.97 7.12

Net Profit Margin(%) 6.96 3.77 6.28

Return On Capital Employed(%) 18.96 6.41 9.66Return on Assets ExcludingRevaluations 202.54 240.54 262.3Return on Assets IncludingRevaluations 203.2 241.09 262.3

Return on Long Term Funds(%)22.85 8.89 9.66

Liquidity Ratios

Current Ratio 0.64 0.44 0.62

Quick Ratio 0.66 0.58 0.46

Debt Equity Ratio 0.8 1.06 1.11

Long Term Debt Equity Ratio 0.5 0.49 1.11

Debt Ratios

Interest Cover 6.28 2.43 2.77

Total Debt to Owners Fund 0.8 1.06 1.11

Financial Charges Coverage Ratio 7.19 3.63 3.83Financial Charges Coverage RatioPost Tax 6.82 3.73 4.1

Management Efficiency Ratios

Inventory Turnover Ratio 14.44 13.47 13.07

Debtors Turnover Ratio 30.08 19.11 18.02

Investments Turnover Ratio 14.44 13.47 13.07

Fixed Assets Turnover Ratio 2.63 1.88 1.93

Total Assets Turnover Ratio 2.06 1.02 1.13

Asset Turnover Ratio 2.69 1.88 1.93

Earnings Per Share 52.63 19.48 39.26

Book Value 202.7 240.64 262.3


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Financial Ratios of Ashok

Leylandmarch'08 march'09 march'10

Face Value 1 1 1

Dividend Per Share 1.5 1 1.5


Operating Profit Margin(%) 10.09 7.66 10.23

Gross Profit Margin(%) 7.86 4.77 7.49

Cash Profit Margin(%) 7.73 5.77 7.69

Net Profit Margin(%) 5.83 3.04 5.66

Return On Capital Employed(%) 23.12 8.78 12.89Return on Assets ExcludingRevaluations 15.82 15.78 17.42Return on Assets Including

Revaluations15.99 26.04 27.45

Return on Long Term Funds(%) 23.15 8.78 12.89

Liquidity Ratios

Current Ratio 1.08 1.29 1.22

Quick Ratio 0.6 0.72 0.72

Debt Equity Ratio 0.42 0.93 0.98

Long Term Debt Equity Ratio 0.42 0.93 0.98

Debt Ratios

Interest Cover 8.33 2.27 5.83

Total Debt to Owners Fund 0.42 0.93 0.98

Financial Charges Coverage Ratio 10.46 3.41 7.83Financial Charges Coverage RatioPost Tax 8.74 3.34 7.16


Inventory Turnover Ratio 7.9 5.36 5.11

Debtors Turnover Ratio 17.74 9.25 7.51

Investments Turnover Ratio 7.6 5.36 5.11

Fixed Assets Turnover Ratio 2.77 1.26 1.25

Total Assets Turnover Ratio 2.7 1.54 1.65

Asset Turnover Ratio 2.77 1.26 1.25

Earnings Per Share 3.53 1.43 3.18

Book Value 15.99 15.85 17.46


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Financial Ratios of Tata Motors V/s Ashok Leylandmarch'08 march'08 march'09 march'09 march'10 marc

Tata motors Ashok Leyland Tata motors Ashok Leyland Tata motors

Ashok

Leyland

Face Value 10 1 10 1 10

Dividend Per Share 15 1.5 6 1 15


Operating Profit Margin(%) 10.53 10.09 6.71 7.66 11.74 1

Gross Profit Margin(%) 8.26 7.86 3.3 4.77 8.84

Cash Profit Margin(%) 8.13 7.73 6.97 5.77 7.12

Net Profit Margin(%) 6.96 5.83 3.77 3.04 6.28

Return On Capital Employed(%) 18.96 23.12 6.41 8.78 9.66 1

Return on Assets Excluding Revaluations 202.54 15.82 240.54 15.78 262.3 1

Return on Assets Including Revaluations 203.2 15.99 241.09 26.04 262.3 2

Return on Long Term Funds(%) 22.85 23.15 8.89 8.78 9.66 1

Liquidity Ratios

Current Ratio 0.64 1.08 0.44 1.29 0.62

Quick Ratio 0.66 0.6 0.58 0.72 0.46

Debt Equity Ratio 0.8 0.42 1.06 0.93 1.11

Long Term Debt Equity Ratio 0.5 0.42 0.49 0.93 1.11

Debt Ratios

Interest Cover 6.28 8.33 2.43 2.27 2.77

Total Debt to Owners Fund 0.8 0.42 1.06 0.93 1.11

Financial Charges Coverage Ratio 7.19 10.46 3.63 3.41 3.83

Financial Charges Coverage Ratio Post Tax 6.82 8.74 3.73 3.34


Inventory Turnover Ratio 14.44 7.9 13.47 5.36 13.07

Debtors Turnover Ratio 30.08 17.74 19.11 9.25 18.02

Investments Turnover Ratio 14.44 7.6 13.47 5.36 13.07

Fixed Assets Turnover Ratio 2.63 2.77 1.88 1.26 1.93

Total Assets Turnover Ratio 2.06 2.7 1.02 1.54 1.13

Asset Turnover Ratio 2.69 2.77 1.88 1.26 1.93

Earnings Per Share 52.63 3.53 19.48 1.43 39.26

Book Value 202.7 15.99 240.64 15.85 262.3 1


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4.MARKET INFORMATION OF DEBT AND EQUITY

TATA MOTORSMARKET SHARE INFORMATION OF TATA MOTORS


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ASHOK LEYLAND

MARKET SHARE INFORMATION OF ASHOK LEYLAND


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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 suffici

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.


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6. CRISIL RATING

TATA MOTORSTata Motors Limited (formerly Tata Engineering & Locomotive

Company Ltd.)

Automobiles 4

wheelers

Cash Credit Limit AA- Stable

Fund based limits AA- Stable

Non-Fund Based Limit P1+

Short-Term Bank

FacilityP1+

Short Term Debt P1+

Structured Debt

ObligationAA(so)

Pass Through

CertificateAA+(so)

Pass Through

CertificateAAA(so)

Structured Debt

ObligationAAA(so)

Structured Debt

ObligationAAA(so) Stable

Pass Through

CertificateBBB(so)

Structured Debt

ObligationBBB(so)

ASHOK LEYLANDAshok Leyland Ltd. Automobiles 4 wheelers Cash Credit Limit AA- Stable

Long Term Bank Loan AA- Stable

Working Capital Demand Loan AA- Stable

Letter of Credit and Bank Guarantees P1+

Short-Term Loan P1+

Commercial Paper P1+


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