The document provides an overview of Tata Motors including general facts about the company, its mission and vision, subsidiaries, manufacturing locations, and dealership network. It also includes analyses of the political, economic, social, and technological factors impacting Tata Motors. Ratio analyses are presented covering profitability, liquidity, leverage, and valuation metrics for Tata Motors compared to competitors like Ford, GM, and Mahindra. The analyses show Tata Motors has struggled recently with negative profit margins but maintains better asset turnover than peers.

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2. GENERAL FACTS
 Company Name : Tata Motors Limited (formerly, TELCO)
 Parent Organisation : Tata Group
 Industry : Automotive
 Headquarters : Mumbai, Maharashtra, India
 Year of Foundation : 1945
 Founder : J.R.D. Tata
 Date of IPO : 3rd Jan 2000, NYSE since 2004
 IPO Price : Rs. 38.64
 Number of Employees : 67,485 (2014-15)
 Chairman : Cyrus Pallonji Mistry
 Division : Tata Motor Cars
 Subsidiaries : Jaguar Land Rover, Tata Daewoo, Tata
Hispano
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3. Mission, Vision & Values
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4. TATA MOTORS AT A
GLANCE
 Tata Motors Limited is India’s largest automobile company, with
consolidated revenues of INR 2,63,695 crores (USD 42.19 billion) in
2014-15.
 The company’s manufacturing base in India is spread across
Jamshedpur(Jharkhand), Pune(Maharashtra), Lucknow(U.P.),
Pantnagar(Uttarakhand), Sanand(Gujarat) and Dharwad(Karnataka).
 In 2005, it set up an industrial joint venture with Fiat Group
Automobiles at Rajangaon(Maharashtra) to produce both Fiat and
Tata cars and Fiat Powertrains.
 The company’s dealership, sales, services and spare parts network
comprises over 6,000 touch points, across the world.
 With over 4,500 engineers, scientists & technicians making
pathbreaking innovations at the company’s Engineering Research
Centre, established in 1966, have enabled pioneering technologies
and products.
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5. PEST ANALYSIS
 PEST Analysis is a simple and widely used tool that helps you
analyze the Political, Economic, Socio-Cultural, and
Technological changes in your business environment.
 It is useful for four main reasons :
1. It helps you to spot business or personal opportunities, and it
gives you advanced warning of significant threats.
2. It reveals the direction of change within your business environment.
This helps you shape what you're doing, so that you work with
change, rather than against it.
3. It helps you avoid starting projects that are likely to fail, for reasons
beyond your control.
4. It can help you break free of unconscious assumptions when you
enter a new country, region, or market; because it helps you
develop an objective view of this new environment.
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6. POLITICAL FACTORS
Since Tata Motors operates in multiple countries
across Europe, Africa, Asia, the Middle East, and
Australia, it needs to pay close attention on
following political factors in different regions :
◦ Political Climate or Stability
◦ Laws governing commerce, trade, growth, and
investment
◦ Labour Laws
◦ Tax policy
◦ Environmental Rules & Regulations
◦ Pricing Regulations
◦ Local Markets and Economies
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7. ECONOMIC FACTORS
Operating in numerous countries across the world, Tata Motors
functions with a global economic perspective while focusing on each
individual market. Because Tata is in a rapid growth period, expanding
or forming a joint venture in over five countries world-wide since 2004,
a global approach enables Tata Motors to adapt and learn from the
many different regions within the whole automotive industry. Major
economic factors are :
 Government taxes on manufacturers.
 Inflation Rate
 Population figures
 Buying capacity of people
 Prices of external resources (Ex: price of Steel will increase the price
of vehicle)
 Level of economic activities
 Interest Rates
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8. SOCIAL FACTORS
There are various socio-cultural factors which affect a company
belonging to automotive industry like TATA MOTORS in the market
down to consumers. The factors are :
 Different segments of Population
 Cultural Differences
 Social Responsibility
 Influence of Consumer Movement
 People concerns over the price, mileage, brand of the car, design
and style, after sales service when purchasing a vehicle.
 Also, depends on what other people think about their vehicle
 Satisfaction of different age groups
 Space and Safety
 Focus on Corporate Customers
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9. TECHNOLOGICAL
FACTORS
 Technological factors and innovations, Research &
development plays a most important role as they improve
standards of driving.
 Fuel consumption is one of a major problem at the moment,
hybrid engines has developed to reduce fuel consumption.
 One of a major requirement of the customer is safety. Seat
belts, air bags which protect passengers at a collision, ABS
brakes to stop the vehicle in short distance even in icy
surfaces.
 By investing for Research and development and innovating
new technologies can gain patented and boost sales.
 Technological development is support the driver to control the
vehicle more comfortable and easier. Ex: Auto gear, auto
parking, Navigation system.
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10. Porter’s Five Forces Model
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11. Barriers to Entry
 Economies of scale: Companies like Maruti, TATA Motors etc are present in
market from many years and had achieved the optimum level of production
through which these companies are enjoying the economies of scale. But for
a new player it will not be easy to get these benefits due to high price
competition from exiting players.
 Demand side benefit of scale: Company like Bajaj, TATA etc have the large
number of customer base and had build the trust in the product. So new
players will find it difficult to a make place among the customer.
 Customer switching cost: A customer after buying a vehicle once usually
do not replace it before two or three years so the switching cost in this
industry is high. It will be a barrier for new player.
 Capital requirements: Capitals required to start an automobile company is
very high. High land, machinery and human resource requirement also
impose a big problem.
 Distribution channels: In any industry to capture the huge market you
should have a big distribution network not only for sales of vehicles but also
for the services. Like Maruti due to the oldest company in India have the
advantage over the competitors. Even existing players are not able to
overcome this who are trying from so many years so a very big barrier for
new entrance.
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12. Threat of Substitutes
 For automotive industry, there are only two main substitutes
available i.e. Railways and Airlines.
 But both of these will not be substitutes for every customer
and in every situation. Like for a short journey airlines will not
be substitutes. And journey to a place where railway can't
reach in this position railway will not be substitute. But these
can be threat in near future as airlines industry trying their
hard best to cheap their fair and start as much as local
airlines.
 However, within the automobile industry lot of completion and
substitutes are available like for two wheels any car can be
substitute after the launch of Nano the price factor also
removed and owned car or car on rent are the substitute for
each other. This is great advantage to TATA as now two
wheeler customer can also go for car which mean new
segment of customer.
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13. Bargaining Power of
Suppliers
 To manufacture a vehicle number of inputs is used like steel,
seat covers, technology, and tyre etc. Input which add value
to the vehicle supplier of those inputs are always have high
bargaining power like tyres of MRF will add value to the
final product so company using the MRF tyre can't change
the supplier easily due to high switch cost.
 Steel, which is the most important raw material of the industry
and in India, the demand of steel is higher than supply. So,
most of the steel is imported from abroad, hence in this case
also the bargaining power of suppliers is high.
 However, inputs like Seat cover, plastics etc can be easily
switched with nil cost of switching. So in this case, bargaining
power of supplier is low.
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14. Bargaining Power of Buyers
 The bargaining power of buyers is generally low ,because the big
companies dominate the market with their quality and reputation of
so many years.
 However, when a automobile company goes for backward
integration in that case buyer have the high bargaining power. Like
Tata which have its own steel plants so can face the problem of
shortage of raw material.
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15. Industry Rivalry
 Strong
 The market is dominated by a few number of large scale companies
like Maruti Suzuki, Hyundai, Tata Motors comprising about 60%
market share.
 Rivalry is somewhat reduced due to a degree of differentiation,
luxury and budget.
 Since, industry competitiveness is high, Tata Motors will have to
differentiate its products and have clear position in market.
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16. SWOT ANALYSIS
 A SWOT analysis (alternatively SWOT matrix) is a structured
planning method used to evaluate the Strengths, Weaknesses,
Opportunities and Threats involved in a project or in a business
venture.
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18. RATIO ANALYSIS
 Ratio analysis is quantitative analysis of information contained in a
company's financial statements.
 Ratio analysis is used to evaluate various aspects of a company’s
operating and financial performance such as its efficiency,
liquidity, profitability and solvency.
 Ratios are also compared across different companies in the same
sector to see how they stack up, and to get an idea of comparative
valuations.
 In our analysis, we will evaluate five aspects of the company and its
competitors :
1. Operating Performance(EBT margin, Net Profit margin, Return on
Assets, Return on Equity)
2. Activity Levels(Total Asset turnover)
3. Liquidity Position (Current Ratio)
4. Leverage (Debt to Equity)
5. Stock Valuation Multiples ( Price to Earnings Ratio, Price to Sales
Ratio)
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19. EBT Margin
 Tata Motors Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
4.66 % 2.46 % 0.39 % -2.99 % -10.95 %
• Competitors Performance in FY-2015
Tata Motors Ford GM Mahindra
-10.95 % 3.69 % 4.79 % 7.86 %
• EBT margin shows company’s earnings before tax as a percentage of
net sales (revenues).
• Tata Motors is performing poorly in current financial year as compared to
previous years. Negative EBIT margin indicates that the company isn’t
selling enough to cover its fixed costs. It’s only tolerable in a early stage
growth company or a Startup.
• As compared to its competitors, it is at the bottom. Mahindra leading in
the market.
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20. Net Profit Margin
 Tata Motors Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
3.84 % 2.28 % 0.67 % 0.97 % -13.05 %
• Competitors Performance in FY-2015
Tata Motors Ford GM Mahindra
-13.05 % 2.97 % 3.00 % 7.74 %
• The net profit margin takes all costs associated with the firm’s
continuing operations into account, and so tells us how much it is able
to keep as profit for each dollar of sales it makes. Usually, higher is
better.
• Tata Motors net profit margin has decreased drastically over the years.
It has gone negative in FY-2015,which indicates cost of production
exceeds net sales.
• However, in the market Mahindra is doing outstanding as compared to
everyone.
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21. Return on Assets(ROA)
 Tata Motors Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
5.23 % 4.05 % 0.90 % 0.99 % -13.57 %
• Competitors Performance in FY-2015
Tata Motors Ford GM Mahindra
-13.57 % 1.73 % 2.49 % 5.67 %
• The return on assets shows the percentage of how profitable a
company's assets are in generating revenue. This ratio tells us how
much profit a company is able to generate for each dollar of assets
invested.
• Tata Motors’ ROA is decreasing year by year and has fallen drastically
in recent financial year. Negative ROA shows that company is
investing a high amount of capital into its production while
simultaneously receiving little income.
• Mahindra & Mahindra leading the market strongly, with a much better
position.
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22. Return on Equity(ROE)
 Tata Motors’ Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
9.06 % 6.33 % 1.57 % 1.74 % -31.93 %
• Competitors’ Performance in FY-2015
Tata Motors Ford GM Mahindra
-31.93 % 13.92 % 12.29 % 21.57 %
• Return on equity measures the rate of return for ownership interest of
common stock owners. It measures the efficiency of a firm at
generating profits from each unit of shareholder equity.
• High ROEs can be caused by the firm taking on excessive leverage,
which can prove disastrous for the firm’s shareholders in the long run.
Hence, high ROE is not always better.
• Tata Motors recent financial year ROE shows that its shareholders are
loosing, instead to gaining value. Investors may avoid placing their
money in , but they may also overlook, as the company is well-
positioned for long-term growth.
• M&M high ROE might be due to excessive leverage.
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23. Total Assets Turnover
 Tata Motors’ Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
1.35 1.77 1.34 1.01 1.039
• Competitors’ Performance in FY-2015
Tata Motors Ford GM Mahindra
1.039 0.66 0.84 0.9
• The asset turnover ratio tells us how many dollars of sales a
company is able to generate for each dollar of assets.
• A high asset turnover is an indicator of good performance provided
the company’s assets are not in a state of advanced depreciation.
• Tata Motors has a very good asset turnover ratio over its
competitors.
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24. Current Ratio
 Tata Motors’ Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
0.54 0.45 0.40 0.39 0.55
• Competitors’ Performance in FY-2015
Tata Motors Ford GM Mahindra
0.55 3.03 1.22 1.44
• The current ratio is a financial ratio that measures whether or not
a firm has enough resources to pay its debts over the next 12
months. It compares a firm's current assets to its current
liabilities.
• A current ratio of 2 or above is usually considered safe.
• Tata Motors is in a poor condition to pay back its debts, while
Ford is in a very safe situation as compared to its competitors.
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25. Debt to Equity Ratio
 Tata Motors’ Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
0.73 0.56 0.74 0.75 1.35
• Competitors’ Performance in FY-2015
Tata Motors Ford GM Mahindra
1.35 4.18 1.11 1.09
• The debt-to-equity ratio (D/E) is a financial ratio indicating the relative
proportion of shareholders' equity and debt used to finance a
company's assets.
• The most widely used measure of a company’s leverage, debt to equity
ratios greater than 1 indicate the company may be overleveraged.
• Tata Motors having a D/E ratio greater than 1, indicates the company is
stretching itself financially. However, Ford as compared to its
competitors is most overleveraged.
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26. Price to Earnings Ratio(P/E)
 Tata Motors Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
27.62 339.17 1823.13 2739.68 -112.21
• Competitors Performance in FY-2015
Tata Motors Ford GM Mahindra
-112.21 14.88 11.12 22.01
• P/E tells us how many years a company will need to earn back what
investors are currently paying for the stock.
• It is generally high for companies considered to have huge growth
potential, and low for mature (‘unexciting’) companies.
• Tata Motors, being a very old company has reached a saturation stage in
FY-2104 and not able to make earnings, indicating a very low growth
potential.
• Mahindra & Mahindra on the other hand, has been able to evolve
continuously with the market and shows a huge potential to grow in FY-
2015.
• However, Tata Motors has done immensely great in previous years, due
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27. Price to Sales Ratio(P/S)
 Tata Motors’ Performance
FY - 2011 FY - 2012 FY - 2013 FY - 2014 FY - 2015
1.06 7.74 12.34 26.74 14.64
• Competitors’ Performance in FY-2015
Tata Motors Ford GM Mahindra
14.64 0.387 0.329 0.176
• The price-to-sales (per share) ratio is more stable than the price-to-
earnings ratio.
• is
• It is preferred for the relative valuation of companies which are still
growing and do not have positive earnings.
• As Tata Motors, has negative earnings in the FY-2015, it has a very high
price to sales ratio as compared to its competitors ,which have positive
earnings.
• However, the P/S ratio has decreased from FY-2014 to FY-2015.
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Thank You
- Anmol Agrawal
ERI Student
Birla Institute of Technology, Mesra, Ranchi,
India