Tata Motors submitted a group project on the financial reporting and analysis of Tata Motors. The document included a company profile of Tata Motors which manufactures automobiles and commercial vehicles in India. It discusses the automotive industry context in India including key growth drivers, current market size, expected growth rates, and competition in the industry. Tata Motors faces high competition from other major automakers in India. The company's strategy focuses on increasing market share in commercial and passenger vehicles through new product launches and expanding sales and services while cutting costs.

1. Group Project
Financial Reporting and Analysis
Submitted by:
PGPEM 2019 students
Group 5
Shekar Kanodia AmitPoorva Rajesh Srinviasan Asheesh Gupta Ratna Kabiraj
1916026 1916046 1916064 1916019 1916023
Indian Institute of Management Bangalore
Bannerghatta Road, Bengaluru, India
Pin Code: 560 076
Phone Number: +91-80-26582450 / 26993996
Fax Number: +91-80-26584050 / 26584004 / 26584181 / 26581602
E-mail:info@iimb.ac.in

2. Table of Contents
Part I – Company Profile ...........................................................................................................3
Part II – Context.........................................................................................................................5
Market Overview .......................................................................................................................5
Competition................................................................................................................................6
Strategy ......................................................................................................................................7
Risks...........................................................................................................................................8
Part III – Financial Analysis ......................................................................................................9

3. Part I – Company Profile
1. Organization Name : Tata Motors Limited
2. Summary Description of Business:
Tata Motors Limited is the largest Indian automobile manufacturer, OEM,
headquartered in Mumbai. It manufactures cars and commercial automotive vehicles
in India. The company designs, manufactures and sells heavy commercial and small
commercial vehicles including trucks, tankers, vans buses,ambulances and minibuses.
Tata Motors also manufactures small cars and sports utility vehicles.
3. Sector : Mobility
4. Sub-Industry : Automotive Industry
5. NSE Stock Code (Symbol) : 1NE155A01022
6. Main Products and Services : Automobiles, sports cars, commercial vehicles, buses,
construction equipment, military vehicles.
7. Who are likely to be the company’s major suppliers?
Tata motors have more than 300 suppliers. Some of the prominent ones are Bharat
Forge Limited, Samvardhana Motherson Group, Sundaram group, Wabco India ltd,
SME Business services ltd.
8. Who are likely to be company’s major customers?
Majority of the customers are from Domestic middle-class segment of the population,
companies in transportation sector.
9. Does the company export its products? To which countries?
Yes. Tata motors exports to more than 40 countries which include most of the
countries in Africa, Russia, Latin America, Russia APAC, Middle East.
10. How many employees does it have?
The employee strength of Tata motors is 82,797 as on 07/19/2019
11. Identify 3 important news stories for your company from the last 6 months that are
likely to have a significant impact on its future.
 TATA JLR unveils major Electric Car investment plans for UK

4. The newBattery AssemblyCentre atHamsHall,operational in2020, will be the most
innovative andtechnologicallyadvancedinthe UKwithan installedcapacityof 150,000
units.Togetherwiththe WolverhamptonEngineManufacturingCentre (EMC),home of
Jaguar Land Rover'sglobal EDU production,these facilitieswill powerthe nextgenerationof
Jaguar and LandRover models,"JLRsaid.
Source :https://economictimes.indiatimes.com/industry/auto/cars-uvs/tata-jlr-unveils-major-electric-
carinvestment-
 Tata Motors ready to redefine small commercial vehicles (SCV) space with INTRA
compact truck
The truck promisestodeliversuperiorperformance,increasedpay-loadcapacity,highfuel
efficiencyanddurability,all leadingtosignificantincrease inrevenuesandthe lowestcostof
operationtothe discerningowners.
Source - Motor India20 June 2019
 Socially responsible business translated into action through Sustainability Policy-
Tata motors have implemented the principles of circular economy through Tata ProLife
business wherein they re-manufacture auto components at the end of their useful life. In
2017-18, an equivalentof 26,993 vehicleshave beenreusedorrecycledundertheir takeback
programme, thus generating revenue of Rs 215 crore.
Source :Auto Parts Asia June 2019
12. Key Statistics (source Bloomberg):
Topic Tata Motors Maruti Suzuki
12-month Total Return -38.89% -38.6197%
Market Capitalization
(current/LTM 3/31/2019)
484,582 INR 1742.7B INR
P/E N.A 22.78
Est P/E 10.95 (03/20) 22.88 (03/20)
Trailing 12M EPS -84.89 INR 253.26 INR
Est EPS 14.14 252.18
Dividend Yield N.A 1.39%
Price to Book ratio 0.87 3.70
Source: Bloomberg

5. Part II – Context
Market Overview
a. What are the drivers of sales in the Industry?
Demand fundamentals
 Rising per capita income and rural income
 A large young population
 High demand for commercial vehicles due to increased road constructions
 Easy auto financing by private banks
Favourable policy
 Automatic approval of foreign equity in the sector
 Encourage rebates on auto companies R&D expenditure
 Clear vision of Indian government to make Indian auto manufacturing hub.
Support Infrastructure and high investments:
 Capacity additions in power generation and increase road infrastructure
spending in India
 5% of total FDI inflows to India went into auto sector
b. What is the size of the market/industry?
 The automotive manufacturing industry comprises the production of commercial
vehicles, passenger cars, three & two-wheelers.
 India became the 4th largest auto market in 2017 with sales (excluding two-
wheelers) increasing 9.5 percent year-on-year to 4.02 million units in
2017.Overall domestic automobiles sales increased at 7.01 percent CAGR
between FY13-18 with 24.97 million vehicles getting sold in FY18.
 Domestic automobile production increased at 7.08 percent CAGR between FY13-
18 with 29.07 million vehicles manufactured in the country in FY18.During April-
November 2018 ,automobile production increased 12.53 percent year-on-year to
reach 21.95 million units.
 During April-November 2018,highest year-on-year growth in domestic sales
among all the categories was recorded in commercial vehicles at 31.49 percent
followed by 25.16 percent year-on-year growth in the sales of three-wheelers.
c. At what rate is your market expected to grow in the next year, five years?
In the Automotive Mission Plan 2026, the government and industry set a target to triple
industry revenues, to $300 billion, and expand exports sevenfold, to $80 Billion
d. What do you think are the key expected growth areas?
 Luxury segment with increasing disposable income

6.  Electric cars with advancement of technology, environment concerns,
government incentives and fuels costs
 Commercial vehicles with increasing GDP
 Increased exports due to government policies and india been considered as auto
hub where existing plant capacities,eco-systemcan be more and more leveraged
for export markets
Competition
a. Are there imminent substitutes that can reduce sales of your industry / company?
 Self driving vehicles
 Electric Vehicles – Tata motors are working on this
 Aerial vehicles
 Hybrid Vehicles – Tata motors are working on this
a. Who are the closest competitors for your company?
 Maruti.
 Hyundai.
 Volkswagen.
 Toyota.
 Honda.
 Ford.
 Renault.
 Mahindra.
 Nissan.
b. Measure competition: 4-firm concentration ratio
Passenger vehicles market share 2018:
 Maruti Suzuki India – 51%
 Hyundai Motor India – 16.2%
 Mahindra and Mahindra – 7.3%
 Tata Motors – 7%
Source: Economic Times
c. How would you rate the degree of competition in your industry (high, medium, low)
based on threat of new entrants and existing players
The degree of competition is high in the auto sector. Almost every year there are new
product launches by every existing player. Likewise recently, a few new entrants such as
Kia Motors and MG Hector have also entered the market. Similarly, the government has

7. also introduced subsidies for electric vehicles that will further intensify the competition
among the players and may lead to the entry of new players.
Strategy
a. How would you describe your company's corporate strategy? That is, what strategies
are your company employing to increase its ROE? Specifically, what are some recent
initiatives that your company is employing or plans to employ to increasemarket share
and ROE?
 In the Indian context, the automotive industry is expected to emerge as the world’s third
largest passenger vehicle market by 2021, driven by the underlying economic growth,
increasing consumption demand and mass urbanization. However, in the short to medium
term, the sector faces some challenges due to the ongoing credit crunch, low consumer
spendingandthe transitionfromBSIV toBSVIemissionnormsbyApril 1,2020. The growthin
the commercial vehiclemarketislikelytopick-updrivenbyincreasedinfrastructurespending,
growth of new-age industries like E-Commerce and further progress in the hub and spoke
model of distribution.
 In the passenger vehicles segment, the company delivered a performance by growing its
volumes at 13.9% compared to the industry growth rate of 2.8% in FY2018-19 and achieved
the highestunitsalesandmarketshareoverthepastfiveyears.Companylaunchedaportfolio
of successful products including Nexon, which is the only car in India with a “5-star” safety
rating from GNCAP and the second most selling SUV in India.The Tata Harrier was launched
in January 2019 to an overwhelmingly positive customer reaction.
 In the CV segment, company needs to grow and secure the sustainable cashflow from the
businessandensure smoothtransitiontoBSVIemissionnorms.Inthe PV segment,company
needs to enhance its sales and service offering which is a key to growth in volumes and
execute its plan to achieve profitability at PBT level.
 JLR is takingsteps to cut costs while takinga calibratedapproachtowards future investment
in the product portfolio. The company is actively looking at partnerships and prioritising its
investments while ensuring that it is not compromising its future. These are critical
interventions and JLR is committed to deliver cost and cash improvements
 Tata Motors recorded sales of 6,79,288 vehicles,a growth of 16.2% over FY 2017-18, higher
than the IndianAutoIndustrywhichgrew by5.9%.The Company’smarketshare increasedto
15.5% in FY 2018-19 from 14.1% in FY 2017-18. The Company’s exports on standalone basis
were marginally higher by 1.4% to 53,140 vehicles in FY 2018-19 as compared to 52,404
vehicles in FY 2017-18.

8. Risks
Identify three of the most important risks that your company faces that might cause it to not
achieve its goals and / or implement its strategies.
 General slowdown in the auto market:
o In June 2019, Tata Motors reporteda14% decline inIndiasales,whilea5% drop was
seen in global sales. Cumulatively,Tata Motors sales in the first quarter of 2019 fell
by 20%.
o Brexit,US-Chinatrade warandgeneralslowdowninthe automarketare likelyreasons
for losses incurred by JLR.
 Diesel uncertainty:
o Adverse publicperceptionof diesel-poweredvehicles,largelydrivenbythemediaand
government policy, could sustain declining diesel sales and customer uncertainty,
primarily in the UK and Europe. It has also created uncertainty for customers, which
could further affect future sales.
o Inadditiontothe financial impactof fallingsales,asignificantlylowerdieselsalesmix
wouldcreate a challenge inachievingCO2compliance andcause major disruptionto
our supply base.
 Rapid technology change:
o The fast pace of technological development together with the scarcity of specialist
resourcescouldresultinasignificantchange intheautomotiveindustryandincreases
the riskof deliveringsuperiorproductsdemandedby current and future customers.
Sources:
 www.businessreader.in
 Annual report of Tata Motors Limited 2018-19

9. Part III – Financial Analysis
1. Compute yourfirm’sReturnonEquityforthe last3 years.Discussthe trendinROE 1-2
sentences
Mar 19 Mar 18 Mar 17
Returnon Equity 1.06% 9.14% 9.25%
The ROE hasdeclineddrasticallyinthe lastyear by8.08% , the major reasonisthat lastyear
the profitaftertax isrelativelylesserthanthe previoustwoyears.The expenseshave risen
inthe lastyear,mostlydue to positive changesininventoriesof finishedgoods,work-in-
progressandproducts forsale and a higheremployee benefitsandthe revenuesdidnot
increase atthe rate of increase of expensesandhence the returnsare lower.
2. Discussthe trendsinthe three driversof ROE – profitmargin,assetturnover,leverage.
Mar 19 Mar 18 Mar 17
Returnon SalesorProfitMargin 0.27% 2.41% 2.35%
AssetTurnover 94.57% 96.36% 99.72%
Leverage – Measure 1 410.36% 394.23% 394.77%
The return onsalesor profitmarginhas reducedinthe currentyear by 2.14%. The previous
twoyears hadseenrelatively similarreturnsonsales.Thisagainisdrivendirectlybythe
profitforthat year.The lowprofitsare directlyreflectedinthisratio.
The asset turnoverratiohasbeendecliningcontinuouslyforthe lastthree yearswhichisdue
to the fact that the increase intotal assetsismore than the increase inthe sales.This
denotesthatthe increase isliabilitiesisgreaterthanincrease inowner’sequities.
The leverage hasincreasedinthe lastyearoveran almostconstantleverage of the previous
twoyears.This isagaindue to the fact thatincrease inassetsisgreaterthan increase in
owner’sequity.Thisverifiesourabove statementthatthe increase inliabilitiesismore than
the increase inowner’sequity.
3. Whichof the three driverscontributedthe mostthe change inROEin the most recentyear?
The return onsalesor profitmarginhas impactedthe ROEthe mostsince assetturnoverfall
isnot considerable andthe leverage hasonlyincreased. Basically, the profitsforthe current
yearare too lessandhence theyare drivingthe change inROE and hence returnon salesis
the major contributorforthe fall inROE.
4. Compute yourfirm’sROA forthe lastthree years
Mar 19 Mar 18 Mar 17
Returnon Assets 0.26% 2.32% 2.34%

10. The return onassetshas fallenforthe lasttwoyears.The fall wasminorinthe year ending
March 2018, butlast yearhas seena verydrasticfall onthe returnsonassets and has fallen
by 2.06%. Thisis mostlydrivenbythe extremely low profitsforthisyear.
5. Compute yourfirm’sRNOA forthe lastthree years. Reconcile ROEandRNOA usingthe
AdvancedDupontModel. Didleverage helporhurtthe shareholders?Byhow much?
Mar 19 Mar 18 Mar 17
ROE (as perAdvancedDupont) 1.06% 9.14% 9.25%
Returnon Equity 1.06% 9.14% 9.25%
Returnon NetOperatingAssets 2.99% 6.73% 6.81%
The year the RNOA has fallenby 8.08%. It hasbeenfallingforthe lastthree yearsbutthe fall
was drasticinthe lastyear.Thisis againdue to extremelylow profitsforthe lastyearwhich
isimpactingthe NetOperatingProfitsandhence isimpactingthe RNOA.
The ROE andRNOA reconciliationisshowninthe attachedspreadsheet.
Leverage ishurtinginthe lastyear whereasitwashelpinginthe previoustwo years.Thisis
because Spread= (RNOA – NBC) isnegative forthe lastyear whereasitwaspositive forthe
previoustwoyears.Leverage isbringingdownthe RNOA by1.78 timesthe leverage value,
whichisroughly1.94%. Hence ROE is reducedby1.94% byleverage.
As showninthe belowtable,the (ROE-RNOA) isnegativeforthe lastyearwhereasitwas
positive forthe previoustwoyearsandhence leverage hasstartedtohurtthe companyin
the last year.
Mar 19 Mar 18 Mar 17
Returnon Equity 1.06% 9.14% 9.25%
Returnon NetOperatingAssets 2.99% 6.73% 6.81%
6. Compute yourcompany’sgrossmarginfor the lasttwo years. Indicate the itemsthatyou
includedinyourestimate of costof goodssold.
Cost of GoodsSold Mar 19 Mar 18
Cost of materialsconsumed 1,81,009.08 1,71,992.59
Purchase of stock-in-trade 13,258.83 15,903.99
Change ininventoriesof finishedgoods,work-in-
progressandstock-in-trade
2,053.28 -2,046.58
Employee benefitsexpense*37% 12300.2319 11211.0333
Depreciationand amortization expense*37% 8728.5331 7974.8283
Processingcharges 1634.36 1339.08
Consumptionof stores,sparesandothermaterials 2444.15 2210.56
Power& Fuel 1585.93 1308.08
Engineeringexpense 5275.58 5278.84

11. Althoughthe NetSaleshave increasedinthe lastyear,the COGS have alsoincreasedsothe
difference inNetSalesandCOGSisalmostsimilar.There hasbeenaslightdecrease of 0.7%
inthe grossmarginof thisyearcomparedto the last year.
7. Discusstwo factors that couldhave contributedtothe change ingross margininthe most
recentyear(3/31/2019)
The change ininventoriesof finishedgoods,work-in-progressandstock-in-tradeandthe
Freight,transportation,portcharges etc. are the two mostimportantchangesinthe
calculationsforCOGS,the change in inventorieshasactuallyincreasedandturnedpositive
fromnegative,whereasthe freightexpenseswere lesserthisyearthanlastyear.
Two majorfactors whichcouldhave contributedtothe change ingross marginmaybe as
following:
I. Recessioninautomobile industryasahas impactedYoY salesgrowth.Lastyear it
grewby only3.5%. IncreasedemphasisonElectricVehiclesandBS6compliance
normswouldhave impactedsalesof diesel vehicles.
II. COGS have alsoincreasedby4.5% thisyear.The changesininventoriesof finished
goods,work-in-progressandstock-in-trade have increasedby200% thisyearand is
the major factorfor increase inCOGS.
8. ReportEarningsper share (basic) forthe lastthree years.Were there anychangesin shares
outstandingduringthe lastthree years?How didtheyaffectEarningspershare?
The Earnings perShare reportedare as below:
Mar 19 Mar 18 Mar 17
EarningsPerShare (INR) -84.89 26.46 21.94
Sharesoutstanding(million) ~2887.35 2887.35 2887.35
Share of Profit/(loss) forEPS(INR
Crores)
(24509) 7638 6335
In all these 3 years,there has beenpractically verylessvariationinsharesoutstanding.They
have remainedat~2887 million.The hugenegativeonEPSin2019canbe explainedasfollows.
As we can observe, there has been a net loss increase in 2019 after provisioning for
Extraordinaryitems.Amongstseveralitems providedfor,theimpairmentinJaguarLandRover
Freight,transportation,portchargesetc. 7804.47 10742.12
COGS 2,36,094.45 2,25,914.54
NetSales 3,01,938.40 2,91,550.48
Gross Margin 65,843.96 65,635.94
Gross Margin % 21.81% 22.51%

12. isINR 27838 Crores whichhas contributedheavilytothe reportedloss.Anotherminorfactor
is the provision for employee separation cost of INR 1371 crores
9. Compute the A/RTurnoverandDays Receivable foryourfirmforthe lastthree years.
Commentonthe trendsinthis ratio– isyour firmimprovinginitsabilitytoconvert
receivablestocash?
The A/R turnoveranddays receivableare asbelow:
Mar 19 Mar 18 Mar 17
DebtorTurnover 15.53 17.17 19.51
DebtCollectionPeriod 23.18 20.97 18.45
The company hasnot beenable toimprove itsabilitytoconvertreceivablestocashfrom
2017 to 2019. In fact,it isdeterioratingslowly.
The average receivablestrendwithrespecttopreviousyears has been 23% in 2018 and 14%
in 2019. On collectiontrendof absolute numbers,there hasbeenwhopping41% increase in
2018 anda 5% reductionin2019 frompreviousyears.The companyhasbeenable toimprove
the collectionsin2019as comparedto2018. The averaginghascausedamitigationeffect.On
the other hand,Salesincrease trendwithrespecttopreviousyearshas been 8% in 2018 and
4% in 2019. The net result of this is a reduction in Debt turnover and hence an increase in
collection period from 2017 to 2019.
10. Compute the InventoryTurnoverandDays Inventoryforyourfirmforthe last three years.
Commentonthe trendsinthis ratio – isyour firmimprovinginitsabilitytoconvert
inventoriestocustomers?
The InventoryturnoveranddaysInventoryare as below:
Mar 19 Mar 18 Mar 17
InventoryTurnover 5.82 5.85 5.96
InventoryHoldingPeriod 61.87 61.53 60.43
The company hasbeenmaintainingitsabilitytoconvertinventoriestocustomers.
The COGS increases andcorrespondinginventoryincreaseshave beenalmostinthe same
proportiononYoY and hence the daysturnoverratiohas beenpractically constantsince
2017.
Mar 19 Mar 18 Mar 17
COGS 2,36,094 2,25,915 2,01,782
Inventories 39,014 42,138 35,085
Average inventory 40576 38611 33871
Inventoryturnover 5.82 5.85 5.96

13. COGS increase frompreviousyear 5% 12% 0.5%
Average inventory increases frompreviousyear 5% 14%
It isto be notedthatthere has beenasubstantial increase ( ~200%) in inventoriesof finished
goods,work-in-progressandstock-in-trade in2019 as comparedto2018, howeverthe effect
of thiscomponentinoverall Costof GoodsSold isonlyabout1% andhas not made much
difference towardsthe overall daysturnover.
As perthe industrystandards,the firmhasmaintainedareasonable balance betweenthe
inventoryanddemandforthe years.However,the inventoryturnoverratioissteadily
decliningoverthe last3years.The firmisstockingmore inthe lastyearthan the previous2
years.
It currentlytakesabout61.87 days to sell itsaverage inventory.Thisnumberhasnotseen
much change inthe last 3 yearsbutis marginallyincreasingyearonyear.The companyisnot
improvinginitsabilitytoconvertinventoriestocash but has beenable tomaintainitsability
for conversion.
11. Compute the Payable TurnoverandDaysPayable foryourfirmfor the lastthree years.
Commentonthe trendsinthis ratio – isyour firmpayingsuppliersfaster?
Mar 19 Mar 18 Mar 17
Payables Turnover 2.75 2.91 3.00
Days Payable 130.72 123.67 119.95
The decline inthe Payablesturnoverratiooverthe 3 yearsmeansthat the firmhas
decreaseditsabilitytopayitsdebtstoits suppliers.Itmayleadtosuppliersincreasingtheir
cost.
The days payable forthe firmhas increasedoverthe yearsandisnow about 131 days. It
indicatesthatthe firmtakeslongertime thanthe previousyearstopayits bills.Itcouldbe
that theyhave negotiatedbetterpaymenttermswiththe suppliers,and are holdingonto
theircash fora longertime period.However,if theyare payinglaterthanthe agreedcredit
terms,thiscouldstrainthe relationshipwiththe suppliers.Itmayadverselyaffectthe future
deliveryof goods.Toimprove the rationegotiatethe paymenttermswiththe suppliersand
improve the paymentschedules(offerdiscountsforearlypayment,change paymentterms,
setup paymentreminders).
12. How hasyour firm’scash-to-cashcycle changedinthe lastthree years?
Mar 19 Mar 18 Mar 17
Cash to CashCycle -45.66 -41.16 -41.07

14. A negative cashtocash cycle impliesthatthe firmhasalreadyreceivedcashfromitsdebtors
by 45.66 days on an average duringthe lastfinancial year.Itfundsitsgrowthinsalesby
effectivelyborrowingfromsuppliersandcustomers.
The percentage decrease inthe cash-to-cashcycle overthe last3 yearsfrom0.2% to 11%.
Althoughthe debtcollectionperiodisincreasingoverthe lastthree years,ithasa large days
payable andtherebykeepsitsownmoneylonger.
The firmis efficientandhasa favorable supplychainfinance arrangement.
13. Commentonyour firm’sshort-termliquidityratios.
Mar 19 Mar 18 Mar 17
CurrentRatio 0.85 0.95 1.00
QuickRatio 0.58 0.66 0.70
The current ratiohas beenfallingcontinuouslyforthe lastthree years. Moreoveritisless
than one forthe lasttwoyears whichisnot a goodsign.The company hascurrent assetsto
coveronly85% of the currentliabilitiesandif we excludethe inventories,itwouldbe able to
coveronly58% of it’scurrent liabilities.The trendoverthe lastthree yearssuggestthatthe
companymay notbe able tohandle shortterm liquiditycrisisandthe predictioniseven
worse.
14. Commentonyour firm’slong-termsolvencyratios.
Mar 19 Mar 18 Mar 17
Debtto EquityRatio 1.50 0.81 1.27
InterestCoverage -0.32 1.94 1.91
LiabilitiestoEquity 4.06 2.45 3.68
Operatingcashflowtototal liabilities 0.09 0.12 0.17
The company maynot be able to withstandlongtermsolvencycrisisaswell.The debtto
equityratioisat itshighestvalue of 1.5 last yearas comparedto previousthree years,
moreoveritismore than one so incase of bankruptcythe equitywouldfall shorttopayall
the debt. Similarly, the liabilitiestoequityratioforlastyearwasat 4.06 whichishighestin
the last three years.These trendssuggestthatthe companyhasbeenborrowingheavilyand
isgettingfundamentallyweakoverthe years.
The interestcoverage isnegative forthisyeardue tolossesseeninthe yearhence the
companywouldnotbe able to pay forthe interestexpensesfrom itsprofitsandmayhave to
furtherrelyondebtfor payingthe interests,thisisaviciouscycle ordebttrap for the
company.
The operatingcashflowsare alsonotsufficienttopaythe total liabilitiesof the companyand
the ratio has beendecliningconsiderablyinthe lastthree years.The companyisnot
generatingenoughoperatingcashtopay forthe total liabilities.

15. 15. Basedon yourfirsttwo submissionsandthe above 14 questionswouldyourecommenda
buy, hold,or sell recommendationonyourstock?
ProfitabilityCriteria: Score
Positive NetIncome (1point) 1
Increase in returnon assets inthe current year(1 point) 0
Positive operatingcashflow inthe currentyear(1 point) 1
Cash flowfromoperations beinggreaterthannetIncome (qualityof earnings)
(1 point)
1
Leverage,LiquidityandSource of FundsCriteria:
Lowerratio of long-termdebtinthe currentperiod,comparedtothe previous
year(decreasedleverage)(1point)
0
Highercurrentratio thisyearcomparedto the previousyear(more liquidity) (1
point)
0
No newshareswere issuedinthe lastyear(lackof dilution)(1point). 1
OperatingEfficiency Criteria:
A highergrossmargin comparedto the previousyear(1point) 1
A higherassetturnoverratio compared tothe previousyear(1 point) 0
Total 5
Fundamentallythe companyisata veryfragile stage atthispointof time,ithas reported
negative earningspershare andoverthe lastthree years the liquidityratiosandsolvency
ratiosare exposingthe weakfundamentals of the company. Likewise, leverage hasalso
startedto take a toll onthe company and has damagedthe returnslastyear. Moreover,
giventhe factthat the automobileindustryitself isfacingslowdowndue tovariousreasons
such as BS6 compliance norms,shifttoElectricVehicleetc.,itisrecommendedto exitthis
stock and purchase stocksof companiesinnovatingonthe electricvehiclefront.