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Submitted to Submitted by

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Contents Page no.
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2 3
3 5
4 9
5 10
6 12
7 20
8 28
9 32
10 37
11 37
12 38

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INTRODUCTION
INDIAN AUTOMOBILE INDUSTRY

The Indian automobile sector is growing at a rate of about 16% per annum and is now
going to be a second fastest growing automobile market in the world.

In the Indian automobile industry, SUVs today account for only 15 per cent of the total
market unlike western countries where it is almost 80 per cent.

Small car segment which contributes to more than 60% of the total car sales will remain a
key segment in the Indian car market. As of 2006, small cars made up more than two-
thirds of India's passenger car market. Currently India is the second largest manufacturer
of small car, second only to Japan.

• India ranks 12th in the list of the world's top 15 automakers.

• Entry of more international players.
• Concentrated in regions.
• Market size estimated to be of Rs.225 Thousand crores ( $45 Billion)
• Contributes 5% to the GDP.
• Production of four wheelers in India has increased from 9.3 lakh units in 2002- 03 to 23
lakh units in 2007-08.
• Targeted to be of $ 145 Billion by 2016.
• Exports increased from 84,000 units in 2002-03 to 280,000 units in 2007-08.

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SHARES OF INDIA IN GLOBAL AUTOMOBILE INDUSTRY

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 MARKET SHARE BY SEGMENTATION FOR CARS

Market Share (%) (2007-2008)

Economy Mid Size Premium Luxury

11.24 0.17

27.1
61.49

CHALLENGES IN INDIA’S AUTO SECTOR.

 Personnel - competition for talent is increasing, attrition rates are increasing, labor
reforms are overdue, unions add political risks and staff costs are rising

 Socio Cultural - expect un-kept promises and / un-met deadlines, short term
thinking and actions

 Bureaucracy - slow decision making, hierarchy, political interference, rampant

Corruption

 Others - delays in Infrastructure, cultural divide in poverty, key reforms are slow
in coming and shortage of electrical power.

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The Tata Group, a business conglomerate with a presence in over 80 countries and a work
force of around 290,000 people. The Tata Group comprised 98 companies of which 27
were publicly listed.

In 2003, the Tata Group had a presence in seven key industry business sectors - materials,
engineering, energy, consumer products, chemicals, communications and IT, and
services. The group consisted of some 80 companies.

The materials business included basic steel products, tubes, bearings, and agri tools. The
engineering business included passenger cars, utility vehicles, trucks and buses,
construction equipment, industrial machinery and commercial cooling equipment.

The energy business included hydroelectric power projects. The consumer products
business included the group's tea, coffee, food products, home appliances, watches and
clocks, jewellery, garments and home security solution, ceramics, water coolers and air
conditioners. The chemical business included agri products like insecticides, fungicides
and herbicides. The IT and telecommunications business included the group's software,
telecommunications, other IT-related services, and automation and control system
offerings. The services business included the group's financial services, mutual funds,
hospitality, publishing and export offerings.

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Expansion plan

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 multi utility vehicle.
After the launch of three more vehicles, Tata Estate (1992, a stationwagon design based
on the earlier 'TataMobile' (1989), a light commercial vehicle), Tata Sumo (LCV, 1994)
and Tata Safari (1998, India's first sports utility vehicle). Tata launched the Indica in
1998, the first fully indigenous passenger car of India. Though the car was initially
panned by auto-analysts, the car's excellent fuel economy, powerful engine and
aggressive marketing strategy made it one of the best selling cars in the history of the
Indian automobile industry. A newer version of the car, named Indica V2, was a major
improvement over the previous version and quickly became a mass-favourite. A badge
engineered version of the car was sold in the United Kingdom as the Rover CityRover,
which was a failure and was declared the worst car ever driven on BBC Top Gear show [8].
Tata Motors also successfully exported large quantities of the car to South Africa.The
success of Indica in many ways marked the rise of Tata Motors.

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PRESENT AND FUTURE CHALLENGES

The popular myththat Tata Motors have some distinct advantages in comparison to other
multi-national competitors especially a cost advantage as labor costs are not true as Tata
Motors has 8-9 percent of sales as compared similar percent for most multinational
companies. Also employee productivity in Tata Motors is less than 1/3rd (in $million
sales / employee) than Toyota. Another advantage in the increasing demand in its own
backyard, India due to infrastructure developments and rising GDP. India remains one of
the few developing auto markets where domestic brands have managed to keep a large
presence, Tata and fellow compatriots account for more than 60% of the passenger
vehicle sales and 95% of commercial vehicle sales. There are also favorable Government
polices and regulations in place in order to help boost the auto industry. However, Tata
has not been able to capitalize on its global presence. Tata relies heavily on its sales in
India and has not yet managed to create a foothold in international markets even though it
has a number of well reputed subsidiaries. However, Tata Nano may boost its
international presence, at least in developing economies.

Though it has an advantage in India, thanks to low costs and government policies it soon
faces stiff competition from it multinational competitors all eyeing for a share in the ever
growing Indian auto sector. Earlier, a policy required majority-owned subsidiaries of
foreign car firms to invest at least US$50 million in equity if they wished to set up
manufacturing projects in India and mere car assembling operations were not
welcomed.An Indian cabinet panel has since announced a new automobile policy that sets
fresh investment guidelines for foreign firms wishing to manufacture vehicles in the
country. Investments in making auto parts by a foreign vehicle maker will also be
considered a part of the minimum foreign investment made by it in an auto-making
subsidiary in India. The move is aimed at helping India emerge as a hub for global
manufacturing and sourcing for auto parts. The policies adopted by Government will
increase competition in domestic market, motivate many foreign commercial vehicle
manufactures to set up shops in India, whom will make India as a production hub and

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export to nearest market. Thus Tata Motors will have to face tough competition in near
future, which might affect its growth negatively.
Currently, the presence of Suzuki through its subsidiary, Maruti Suzuki in the
Indian market may also be alarming. Maruti has aggressively launched family cars to
undermine the Tata models. Tata has continued to be strong in the MUV and SUV sector
due to lack of competition and correct pricing. However, Tata now faces stiff competition
from fellow compatriot Mahindra Group as well as multinational brand like Toyota and
Chevrolet.

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Value Chain

The value chain of the TATA Motors has been given as below:

Value C
The various primary activities of the value chain have been discussed below:

1. Inbound Logistics: The main features of inbound logistics have been discussed
below:

 Tata Motors believes in establishing long term contract with service

providers – transporters and agents.
 Talented Personnel have been deployed at regional offices for over
seeing the smooth transit of goods.

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  The company aims at maintaining transparency and monitoring
through deployment of IT – all transactions through SAP.
 DTL supplies for critical high value items.
 Efficient storage facilities – easy storage and retrieval

2. Operations: For the smooth functioning of operations TATA Motors has the
following features:

 Capital Equipment Manufacturing division – TATA Motors prides itself in

having tooling development capabilities of global standard.
 Apprentice Trainee Course – This helps the organization in ensuring
stable source of skilled manpower.
 Kaizen & TPM team – the two teams strive for continuous methods to
improve efficiencies.
 Automated manufacturing processes.
 Distributed manufacturing – Assembly units at South Africa, Thailand,
Bangladesh, Brazil etc.
 Maintenance – technical competence.
 Capacity Utilization – Mercedes Benz cars make use of Tata Motors paint
shop facilities.

3. Outbound Logistics: the following methods form a part of outbound logistics:

 Stockyards, all across the country to stock inventory

 Long term contracts with transporters– higher volume of business to
transporters ensures competitive price.
 Regional Sales Office and Vehicle Dispatch Section linked through SAP.
 Efficient security system for prevention of any kind of pilferage.

4. Marketing & sales: The important features of marketing and sales are:

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  Structured approach to understanding the requirements of individual
customers – QFD’s conducted at regular intervals.
 Clear identification of product requirements, leading to development of
innovative products – Tata 207 DI, Tata Ace
 Pan India presence and global footprint.
 Independent teams for addressing the requirements of institutional
customers – Defense, State Transport Units
 Helping to augment the scarce resources – Fiat selling vehicles through
Tata dealerships, in return Tata has access to Fiat’s technology and
unutilized capacity.
 Quick assessment of the changing market dynamics and consumer
preferences – Tata 407 LCV
 Large network of dealers – use of technology: DMS.

5. Service: TATA Motors provides the following after sales services:

 Easy availability of spare parts throughout the country

 Efficient collection of data from field and communication to the
respective plants.
 Pan India presence, as well as global presence.
 Large network of workshops – Dealer workshops and sales workshops
 Training facilities – for dealer end and sales personnel

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Tata Motors Limited is India's largest automobile company, with consolidated revenues
of Rs. 92,519 crores (USD 20 billion) in 2009-10. It is the leader in commercial vehicles
in each segment, and among the top three in passenger vehicles with winning products in
the compact, midsize car and utility vehicle segments. The company is the world's fourth
largest truck manufacturer, and the world's second largest bus manufacturer.
The company's 24,000 employees are guided by the vision to be "best in the
manner in which we operate, best in the products we deliver, and best in our value system
and ethics."
Established in 1945, Tata Motors' presence indeed cuts across the length and
breadth of India. Over 5.9 million Tata vehicles ply on Indian roads, since the first rolled
out in 1954. The company's manufacturing base in India is spread across Jamshedpur
(Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and
Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an
industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to
produce both Fiat and Tata cars and Fiat powertrains. The company is establishing a new
plant at Sanand (Gujarat). The company's dealership, sales, services and spare parts
network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat
branded cars in India.
Tata Motors, the first company from India's engineering sector to be listed in the
New York Stock Exchange (September 2004), has also emerged as an international
automobile company. Through subsidiaries and associate companies, Tata Motors has
operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land
Rover, a business comprising the two iconic British brands that was acquired in 2008. In
2004, it acquired the Daewoo Commercial Vehicles Company, South Korea's second
largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has
launched several new products in the Korean market, while also exporting these products

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to several international markets. Today two-thirds of heavy commercial vehicle exports
out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in
Hispano Carrocera, a reputed Spanish bus and coach manufacturer, and subsequently the
remaining stake in 2009. Hispano's presence is being expanded in other markets. In 2006,
Tata Motors formed a joint venture with the Brazil-based Marcopolo, a global leader in
body-building for buses and coaches to manufacture fully-built buses and coaches for
India and select international markets. In 2006, Tata Motors entered into joint venture
with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and
market the company's pickup vehicles in Thailand. The new plant of Tata Motors
(Thailand) has begun production of the Xenon pickup truck, with the Xenon having been
launched in Thailand in 2008.
Tata Motors is also expanding its international footprint, established through
exports since 1961. The company's commercial and passenger vehicles are already being
marketed in several countries in Europe, Africa, the Middle East, South East Asia, South
Asia and South America. It has franchisee/joint venture assembly operations in Kenya,
Bangladesh, Ukraine, Russia, Senegal and South Africa.
The foundation of the company's growth over the last 50 years is a deep
understanding of economic stimuli and customer needs, and the ability to translate them
into customer-desired offerings through leading edge R&D. With over 3,000 engineers
and scientists, the company's Engineering Research Centre, established in 1966, has
enabled pioneering technologies and products. The company today has R&D centres in
Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Spain, and the UK.
It was Tata Motors, which developed the first indigenously developed Light Commercial
Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully
indigenous passenger car. Within two years of launch, Tata Indica became India's largest
selling car in its segment. In 2005, Tata Motors created a new segment by launching the
Tata Ace, India's first indigenously developed mini-truck.
In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and
the world have been looking forward to. The Tata Nano has been subsequently launched,

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as planned, in India in March 2009. A development, which signifies a first for the global
automobile industry, the Nano brings the comfort and safety of a car within the reach of
thousands of families. The standard version has been priced at Rs.100,000 (excluding
VAT and transportation cost).
Designed with a family in mind, it has a roomy passenger compartment with generous leg
space and head room. It can comfortably seat four persons. Its mono-volume design will
set a new benchmark among small cars. Its safety performance exceeds regulatory
requirements in India. Its tailpipe emission performance too exceeds regulatory
requirements. In terms of overall pollutants, it has a lower pollution level than two-
wheelers being manufactured in India today. The lean design strategy has helped
minimise weight, which helps maximise performance per unit of energy consumed and
delivers high fuel efficiency. The high fuel efficiency also ensures that the car has low
carbon dioxide emissions, thereby providing the twin benefits of an affordable
transportation solution with a low carbon footprint.
In May 2009, Tata Motors introduced ushered in a new era in the Indian automobile
industry, in keeping with its pioneering tradition, by unveiling its new range of world
standard trucks called Prima. In their power, speed, carrying capacity, operating economy
and trims, they will introduce new benchmarks in India and match the best in the world in
performance at a lower life-cycle cost.
Tata Motors is equally focussed on environment-friendly technologies in emissions and
alternative fuels. . It has developed electric and hybrid vehicles both for personal and
public transportation. It has also been implementing several environment-friendly
technologies in manufacturing processes, significantly enhancing resource conservation
Through its subsidiaries, the company is engaged in engineering and automotive
solutions, construction equipment manufacturing, automotive vehicle components
manufacturing and supply chain activities, machine tools and factory automation
solutions, high-precision tooling and plastic and electronic components for automotive
and computer applications, and automotive retailing and service operations.

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 Tata Motors is committed to improving the quality of life of communities by
working on four thrust areas – employability, education, health and environment. The
activities touch the lives of more than a million citizens. The company's support on
education and employability is focused on youth and women. They range from schools to
technical education institutes to actual facilitation of income generation. In health, our
intervention is in both preventive and curative health care. The goal of environment
protection is achieved through tree plantation, conserving water and creating new water
bodies and, last but not the least, by introducing appropriate technologies in our vehicles
and operations for constantly enhancing environment care

Tata Motors, previously known as Tata Engineering and Locomotive Co Ltd

(TELCO) (Telco to tata motors in july 2003) is one of the largest companies in the Tata
Group, and one of India's largest business houses. Tata Motors is India's leading
commercial vehicle manufacturer and the third largest passenger car manufacturer. The
company is the sixth largest truck manufacturer in the world. Tata Motors, the largest
automobile company in India.

The history of Tata Motors, earlier Tata Engineering & Locomotive Company Ltd.
(Telco), can be traced back to the early 1920s. The Telco plant at Jamshedpur, originally
belonged to Peninsular Locomotive Company (Peninsular), which was established in
1923. In 1927, Peninsular was taken over by East India Railway to manufacture
passenger carriage underframes for the Indian Railways.

In 1945, Tata Sons purchased the plant from the Government of India and used it to
manufacture steam locomotive boilers and other engineering products, under the name
Telco. It tied-up with Daimler-Benz in 1954 to produce commercial vehicles (CV) and
later manufactured the same independently, after the tie-up ended in 1969.
Telco (Tata Engineering and Locomotive Company Ltd.) began production of medium
commercial vehicles in 1954. The company started manufacturing heavy commercial
vehicles in 1983 and light commercial vehicles in 1986.

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 Board of Directors
Mr. Ratan N Tata (Chairman)
Mr. Ravi Kant
Dr. J J Irani
Mr. Nusli N Wadia
Mr. S M Palia
Dr. R A Mashelkar
Mr. Nasser Munjee
Mr. Subodh Bhargava
Mr. V K Jairath
Mr. Ranendra Sen
Mr. Carl-Peter Forster
Mr. P M Telang

Senior Management
Mr. Carl-Peter
Chief Executive Officer & Managing Director
Forster
Mr. P M Telang Managing Director-India Operations
Mr. C Ramakrishnan Chief Financial Officer
Mr. R Pisharody President (Commercial Vehicles Business Unit)

Mr. T Leverton Head, Advanced and Product Engineering

Mr. S B Borwankar Sr. Vice President (Manufacturing Operations-CVBU)
Mr. S Krishnan Sr. Vice President (Latin America-Operations)
Mr. P Y Gurav Sr. Vice President (Corp. Finance-Accounts and Taxation)
Mr. Prabir Jha Sr. Vice President, Human Resources
Mr P K Chobe Head (Jamshedpur - Plant)
Mr. Vikram Sinha Head (Car Plant - PCBU)
Mr. B B Parekh Chief (Strategic Sourcing)
Mr. U K Mishra Vice President (ADD and Materials - CVBU)
Mr. A A
Vice President (Corp. Finance-Business Planning)
Gajendragadkar
Mr. N Pinge Chief Internal Auditor
Mr. R Bagga Vice President (Legal)

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 Mr. R Ramakrishnan Vice President - Sales & Marketing(CVBU)
Mr. S Ravishankar Vice President (Engg. Systems, ERC)
Mr. Girish Wagh Head (Small Car Project)
Mr. Atul Renavikar Head (Pantnagar Plant)

Awards
CVBU Pune receives Excellent Energy Efficient Unit award...
CVBU Lucknow bags Excellent Energy Efficient Unit-Award for the second time in a...
CVBU Pune declared winner of the MPCB Vasundhara Awards 2010...
Car Plant Pune won three awards at the 25th Annual Chapter Convention of Quality...
Tata Motors IT team bagged an award in IT Services Management category...
Tata Motors, CVBU was awarded the coveted Golden Peacock Award...
Land Rover double header at the Auto Express 2010 new car awards...
TDCV CEO, Dr. Kim Jong-Shik, honoured...
Golden Peacock Award for Occupational Health & Safety for the year 2010...
CVBU Lucknow bags 11 National Suggestion Summit awards...
Sanand makes a mark in the very first year at National Suggestion Summit awards...
Pantnagar sweeps National Suggestion Summit awards...
Award 200...
India CFO Award 2002...
Tata Engineering bags INSAAN awards...
National Best Training Establishment Award...
Envirointernational...
Good Corporate Citizen award...
Best Company Award at Workskills Competition...

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TATA MOTORS PERCENTAGE OF SHARE IN INDIAN
AUTOMOBILE INDUSTRY

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SWOT ANALYSIS

Strengths

• Strong presence in the commercial vehicle market

• Brand recognition
• High investment in R&D
• Wide distribution channels

Weaknesses

• Limited product portfolio in the passenger segment

• Operations mainly restricted to India

Opportunities

• Increasing demand for cars in India

• Expansion in international markets

Threats

• Increase in prices of raw materials

• Intense competition from global players

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 OPERATIONS MANAGEMENT AT TATA MOTORS

INTRODUCTION
A comprehensive quality improvement and cost cutting initiative in September 2000,
has played an important role in the company's turnaround, from a loss of Rs
500 crores in the year ended March 2001 to a profit of Rs 28 crores in the first
quarter of 2002-2003. In 2003, Tata Motors recorded net sales of Rs.9093.2
crores and a net profit of Rs.300 crores.

If you introduce a new vehicle, for example, and the management cannot adequately
determine what the market wants, the company is in trouble. Theoretically, the top
managers of a company should take up the role of that ideal customer. They should be
driving their competitors' vehicles, they should be driving the best-of-breed vehicles, and
they should be making cost comparisons. "While a top manager should be the ideal
customer, he should also be the greatest critic of his company's products. If the CEO
compromises, or is only looking at the margins, then even if he is successful, the
company's success will be short lived.

- Ratan Tata, the Chairman, Tata Group

1) MANUFACTURING

Tata Motors had all along believed in developing strong in house design, engineering,
and manufacturing capabilities. Tata Motors performed a large part of its manufacturing
activities in-house. It had installed facilities to manufacture engines, gearboxes and
transmission mechanisms, body panels, castings and forgings and important components
& sub-assemblies. It even manufactured its own machine tools, dies and fixtures, in its
machine tools division.
Tata Motors owes its leading position in the Indian automobile industry to its
strong focus on indigenization. This focus has driven the Company to set up world-class
manufacturing units with state-of-the-art technology. Every stage of product evolution-

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design, development, manufacturing, assembly and quality control, is carried out
meticulously. Our manufacturing plants are situated at Jamshedpur in the East, Pune in
the West and Lucknow in the North.

Jamshedpur:

Established in1945, the Jamshedpur unit was the company's first unit and is spread over
an area of 822 acres. It consists of 4 major divisions - Truck Factory, Engine Factory,
Cab & Cowl Factories, and the Novus. The divestments in March 2000 hived off the Axle
and Engine plants into independent subsidiaries viz. HVAL &HVTL, respectively.

The Truck Division boasts of two assembly lines. The main assembly line, measuring
180m in length has 20 work stations with a vehicle rolling out every 8 mins. The other
line is dedicated to special purpose vehicles and for meeting the requirements of the
Indian Army.

Tata Motors, Jamshedpur, plays an active role in serving rural communities surrounding
its Works through various community centres. While striving to create a culture for self-
help amongst the local populace, it has made significant progress in community and
social forestry, sustainable development of wastelands, road construction, rural health and
education, development of rural industries, water supply and family planning. A signatory
to the UN Global Pact, it also takes various initiatives in human rights protection, labour
standards, environmental issues, modern effluent treatment facilities, sanitation drives,
soil and water conservation programmes, tree plantation drives, etc.

Pune:
The Pune unit is spread over 2 geographical regions- Pimpri (800 acres) and Chinchwad
(130 acres). It was established in 1966 and has a Production Engineering Division, which
has one of the most versatile tool making facilities in the Indian sub-continent. It houses a
Vehicle manufacturing complex which is one of the most integrated automotive
manufacturing centers in the country producing a large variety of individual items and

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aggregates. It is engaged in the design and manufacture of sophisticated press tools, jigs,
fixtures, gauges, metal pattern and special tools, as well as models for the development of
new ranges of automobile products. Its capabilities have enabled Tata Motors to
introduce new products and improve existing ones without resorting to imports of dies or
fixtures.
Four assembly lines have been established, one each for MCVs and HCVs,
LCVs, Utility vehicles and one for Passenger Cars (Indica and Indigo). The shops are
fully automated ensuring that there is minimal chance for error in the manufacturing
processes. After the car is completely assembled, it goes through several checks like
wheel alignment, sideslip test, brake test, shower test, and a short test run before it is
ready for dispatch. All systems such as materials management, maintenance and other
activities are computerized, enabling smooth operations and minimum inventory needs.

Lucknow:
Tata Motors Lucknow is one of the youngest production facilities among all the Tata
Motors locations and was established in 1992 to meet the demand for Commercial
Vehicles in the Indian market. The plant, rolls out commercial vehicles and is specialized
in the designing and manufacturing of a range of modern buses which includes Low-
floor, Ultra Low-floor, CNG & RE Buses. Our plant, rolls out commercial vehicles and is
specialized in the designing and manufacturing of a range of modern buses which
includes Low-floor, Ultra Low-floor, CNG & RE Buses.

Uttarakhand:

The company has set up a plant for its mini-truck Ace and the passenger carrier Magic
(based on the Ace platform) at Pantnagar in Uttarakhand. The plant began commercial
production in August 2007. This is the company's fourth plant, after Jamshedpur
(commercial vehicles), Pune (commercial vehicles and passenger vehicles) and Lucknow
(commercial vehicles).

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NANO Plant:
The company was in the process of constructing a plant in Singur, West Bengal , but due
to continued agitations and hostility at Singur, TATA Motors decided to shift the NANO
Plant at Sanand in the state of Gujrat on 3rd Oct 2008. The integrated project manufacture
of the Nano in Sanand will have an initial capacity of about 250000 cars per annum.

2) PRODUCT DEVELOPMENT
Sumant Moolgaokar, Chairman Tata Motors, from 1970 to 1988, had played an important
role in shaping Tata Motors's R&D philosophy. Moolgaokar once commented:
"We spend a lot of money, Rs.10 to Rs.12 Crores (US$7 to 8 million at prevailing
exchange rates) on R & D. It is our strong point...in a manufacturing industry research
and development is a series of mistakes by which you benefit. It gives our people
excitement and real knowledge. My singular contribution has been to build a team. We
regard our whole operation as one big training facility".
Tata Motors’ Engineering Research Centre has over 900 scientists and engineers
dedicated to product and process development, technology upgradation and new product
introduction. Besides, the Company works with leading international design and styling
houses.
Tata Motors has over 1400 engineers and scientists in six R&D centers in India, South
Korea, Spain and the UK.
The company's R&D facilities include India's only crash-test facility and a hemi-anechoic
chamber for testing of noise and vibration.
The company draws on the expertise of leading international design and styling houses
such as the Institute of Development in Automotive Engineering and Stile Bertoni in
Italy.

TATA Motors starts working on new products that would be required by the market after
3-5 years.

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3) VENDOR MANAGEMENT
In 1997, Tata Motors promoted Tata Autocompsystems Limited (TACO) with the
objective of forming joint ventures with international auto component manufacturers and
giving a special thrust to vendor development.

4) COST CUTTING
To cut costs, Tata Motors tried innovative techniques such as zero-based costing. The
company's engineers re-worked the cost of components all over again. For example,
earlier, Tata Motors paid for its forged components on a cost-plus basis as claimed by a
vendor. Under the new system, it paid a price depending on the weight of the forging,
leading to savings of 25%.

5) QUALITY MANAGEMENT
Tata Motors started a comprehensive quality improvement initiative in September 2000.
The initiative played an important role in the company's turnaround, from a loss of
Rs.500 crores in the year ended March 2001 to a profit of Rs.28 crores in the first quarter
of 2002-03. Every year, about a quarter of Tata Motors' workforce went through training
courses, which were rated highly in the Indian engineering industry.
Personnel were trained before building workshops. In case of imported machines,
engineers and workers were sent to the foreign manufacturer's facilities to receive training
well before the arrival of the machine.
TATA Motors is focused on Improving Product Quality and upgrading product features.

6) Acquisition for inorganic growth

1993-TATA Cummins Ltd.
1994-TATA Holset Ltd.
1994-Mercedes-Benz India Ltd
1997-Concorde Motors Ltd.
2004- Daewoo commercial vehicles comp.
2008-Jaguar Land Rover

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7) CUT IN ENERGY CONSUMPTION
Energy Cost as % of Manufacturing Cost has come down. This resulted in saving of Rs
10.7 crores in energy during 2003-04.

8) DISTRIBUTION NETWORK
The new subsidiary company TATA Motors had formed, which is the TML distribution
company, which will be a central focal point for sales and distribution operations and
logistics operations for Tata Motors.
9) The Tata Indigo was declared the best value for money car at the prestigious CNBC
Auto Car Auto Awards 2003. Tata Indica had also received the voice of the customer
award for the best diesel small car at NFO Automotive India 2002. In October 2003, Tata
Motors received the Balanced Scorecard Collaborative Hall of Fame Award for having
achieved a significant turnaround in its overall performance.
10) The Bureau Veritas Quality International (BVQI) for ISO 9001:2000 Quality
Management System (QMS) as well as ISO 14001:1996 Environmental Management
System (EMS) recently certified Tata Motors' passenger car unit, Pune.

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 Research Design & Methodology:

Research Design
The research design of this project is exploratory. Though each research study has its own
specific purpose but the research design of this project on AIRTEL is exploratory in
nature as the objective is the development of the hypothesis rather than their testing.
The research designs methods of financial analysis. Through of comparative
balance sheet in comparative statement, I am studying on balance sheet of AIRTEL of
five year. So taking comparative statement, I am going to analyzed of five years balance
sheet of AIRTEL

Methodology
Every project work is based on certain methodology, which is a way to systematically
solve the problem or attain its objectives. It is a very important guideline and lead to
completion of any project work through observation, data collection and data analysis.
The word research is derived from the Latin word meaning to know, it is a
systematic and a replicable process which identifies and defines problems, with specified
boundaries. It employs well designed method to collect the data and analyses the result. A
research methodology defines what the activity of research is, how to proceed, how to
measure progress, and what constitutes success. A methodology is a jumbled mess.
Different methodologies define distinct schools which wage religious wars against each
other. Research methodology also considered as a movement, a movement from the
known to the unknown. It is actually a journey of discovery.

According to Clifford Woody,

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 “Research Methodology comprises of defining &
redefining problems, collecting, organizing & evaluating data,
making deductions & researching to conclusions.”

Accordingly, the methodology used in the project is as follows: -

Defining the objectives of the study

Framing of questionnaire keeping objectives in mind (considering the objectives)

Feedback from the employees

Analysis of feedback

Conclusion, findings and suggestions.

Sampling Technique Used:

This research has used convenience sampling technique.

Convenience sampling technique: Convenience sampling is used in exploratory

research where the researcher is interested in getting an inexpensive approximation of the
truth. As the name implies, the sample is selected because they are convenient

Selection of Sample Size:

For the survey of departments.

Sources of Data Collection:

Research will be based on two sources:
1. Primary data
2. Secondary data

1) Primary Data:
Survey: Primary data was collected by departmental survey for AIRTEL.

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2) Secondary Data:
Secondary data will consist of different literatures like books which are published,
articles, internet, the company manuals and websites of company- www.AIRTEL.com.
In order to reach relevant conclusion, research work needed to be designed in a
proper way.
This research methodology also includes:-
 Familiarization with the concept of finance and its various merits, demerits.
 Thorough study of the information collected.
 Conclusions based on findings.

Statistical Tools Used

The main statistical tools used for the collection and analyses of data in this project are:
 Pie Charts
 Bar Diagrams
 Line Charts

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Limitations of Study
Technical analysis is a powerful mechanism of determining financial strengths and
weaknesses of a firm but, the analysis is based on the information available in the
Technical statements. We has also careful about the impact of price level chances,
windows-dressing of Technical statements, changes in accounting policies of AIRTEL,
accounting concepts and conventions, and personal judgments etc.
Due to the following unavoidable and uncontrollable factors the factors, the result
might not be accurate. Some of the problems faced while conducting the survey are as
follows:-
 Time and cost constraints were also there.
 Chances of some biasness could not be eliminated.
 A majority of respondents show lack of cooperation and are biased towards their
own opinions.
Some of the important Limitations of Technical analysis are however, summed up as
below:
 It is only a study of interim reports.
 Technical analysis is based upon only monetary information and non-monetary
factors are ignored.
 It does not consider changes in price level.
 As the Technical statements are prepared on the basis of a going concern, it does
not give exact position. Thus accounting concepts and conventions cause a serious
limitation to Technicals analysis.
 Changes in accounting procedure by a firm may often make Technical analysis
misleading.
 Analysis is only a means and not an end in itself. We has to make interpretation
and draw own conclusion
Different people may interpret the same analysis in different ways.

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Introduction
Financial Management is that managerial activity which is concerned with the
planning and controlling of the firms financial resources.
Financial management focuses on finance manager performing various tasks as
Budgeting, Financial Forecasting, Cash Management, Credit Administration,
Investment Analysis, Funds Management, etc. which help in the process of decision
making.
Financial management includes management of assets and liabilities in the long
run and the short run.
The management of fixed and current assets, however, differs in three important
ways: Firstly, in managing fixed assets, time is very important; consequently discounting
and compounding aspects of time element play an important role in capital budgeting and
a minor one in the management of current assets. Secondly, the large holdings of current
assets, especially cash, strengthen firm’s liquidity position but it also reduces its overall
profitability. Thirdly, the level of fixed as well as current assets depends upon the
expected sales, but it is only the current assets, which can be adjusted with sales
fluctuation in the short run.
Here, we will be focusing mainly on management of current assets and current liabilities.
Management of current assets needs to seek an answer to the following question:
1. Why should you invest in current assets?
2. How much should be invested in each type of current assets?
3. What should be the proportion of short term and long-term funds to
finance the current assets?
4. What sources of funds should be used to finance current assets?

CONCEPT OF WORKING CAPITAL

Working Capital Management is the process of planning and controlling the
level and mix of current assets of the firm as well as financing these assets. Specifically,
Working Capital Management requires financial managers to decide what quantities of
cash, other liquid assets, accounts receivables and inventories the firm will hold at any
point of time.

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Working capital is the capital you require for the working i.e. functioning of your
business in the short run.
Gross working capital refers to the firm’s investment in the current assets and includes
cash, short term securities, debtors, bills receivables and inventories.
It is necessary to concentrate on the fact that the investment in the current assets should
be neither excessive nor inadequate.
WC requirement of a firm keeps changing with the change in the business activity and
hence the firm must be in a position to strike a balance between them. The financial
manager should know where to source the funds from, in case the need arise and where to
invest in case of excess funds.
The dangers of excessive working capital are as follows:
1. It results in unnecessary accumulation of inventories. Thus the chances of
inventory mishandling, waste, theft and losses increase
2. It is an indication of defective credit policy and slack collection period.
Consequently higher incidences of bad debts occur which adversely affects the
profits.
3. It makes the management complacent which degenerates into managerial
inefficiency
4. Tendencies of accumulating inventories to make speculative profits grow. This
may tend to make the dividend policy liberal and difficult to copes with in
future when the firm is unable to make speculative profits.
The dangers of inadequate working capital are as follows:
1. It stagnates growth .It becomes difficult for the firms to undertake profitable
projects for non-availability of the WC funds.
2. It becomes difficult to implement operating plans and achieve the firms
profit targets
3. Operating inefficiencies creep in when it becomes difficult even to meet
day-to-day commitments.
4. Fixed assets are not efficiently utilized. Thus the rate of return on
investment slumps.
5. It renders the firm unable to avail attractive credit opportunities etc.

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 6. The firm loses its reputation when it is not in position to honor its short-term
obligations. As a result the firm faces a tight credit terms.

Net working capital refers to the difference between the current assets and the current
liabilities. Current liabilities are those claims of outsiders, which are expected to mature
for payment within an accounting year and include creditors, bills payable, bank overdraft
and outstanding expenses.
When current assets exceed current liabilities it is called Positive WC and when current
liabilities exceed current assets it is called Negative WC.

The Net WC being the difference between the current assets and current liabilities is a
qualitative concept. It indicates:
• The liquidity position of the firm
• Suggests the extent to which the WC needs may be financed by permanent
sources of funds
It is a normal practice to maintain a current ratio of 2:1. Also, the quality of current assets
is to be considered while determining the current ratio. On the other hand a weak liquidity
position poses a threat to the solvency of the company and implies that it is unsafe and
unsound. The Net WC concept also covers the question of judicious mix of long term and
short-term funds for financing the current assets.

Permanent and variable working capital:

The minimum level of current assets
required is referred to as permanent working
capital and the extra working capital needed
to adapt to changing production and sales
activity is called temporary working capital.

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 NEED AND IMPORTANCE OF WORKING CAPITAL MANAGEMENT
The importance of working capital management stems from the following reasons:
1. Investment in current assets represents a substantial portion of the total investment.
2. Investments in current asset and the level of current liabilities have to be geared
quickly to change in sales, which helps to expand volume of business.
3. Gives a company the ability to meet its current liabilities
4. Take advantage of financial opportunities as they arise.

A firm needs WC because the production, sales and cash flows are not instantaneous. The
firm needs cash to purchase raw materials and pay expenses, as there may not be perfect
matching between cash inflows and outflows. Cash may also be held up to meet future
exigencies. The stocks of raw materials are kept in order to ensure smooth production and
to protect against the risk of non-availability of raw materials. Also stock of finished
goods has to be maintained to meet the demand of customers on continuous basis and
sudden demand of some customers. Businessmen today try to keep minimum possible
stock as it leads to blockage of capital. Goods are sold on credit for competitive reasons.
Thus, an adequate amount of funds has to be invested in current assets for a smooth and
uninterrupted production and sales process. Because of the circulating nature of current
assets it is sometimes called circulating capital.

FACTORS INFLUENCING THE WORKING CAPITAL REQUIREMENT

All firms do not have the same WC needs .The following are the factors that affect the
WC needs:
1. Nature and size of business: The WC requirement of a firm is closely related
to the nature of the business. We can say that trading and financial firms have
very less investment in fixed assets but require a large sum of money to be
invested in WC. On the other hand Retail stores, for example, have to carry
large stock of variety of goods little investment in the fixed assets.

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2. Manufacturing cycle: It starts with the purchase and use of raw materials and
completes with the production of finished goods. Longer the manufacturing
cycle larger will be the WC requirement; this is seen mostly in the industrial
products.
3. Business fluctuation: When there is an upward swing in the economy, sales
will increase also the firm’s investment in inventories and book debts will also
increase, thus it will increase the WC requirement of the firm and vice-versa.
4. Production policy: To maintain an efficient level of production the firm’s
may resort to normal production even during the slack season. This will lead
to excess production and hence the funds will be blocked in form of
inventories for a long time, hence provisions should be made accordingly.
Since the cost and risk of maintaining a constant production is high during the
slack season some firm’s may resort to producing various products to solve
their capital problems. If they do not, then they require high WC.
5. Firm’s Credit Policy: If the firm has a liberal credit policy its funds will
remain blocked for a long time in form of debtors and vice-versa. Normally
industrial goods manufacturing will have a liberal credit policy, whereas
dealers of consumer goods will a tight credit policy.
6. Availability of Credit: If the firm gets credit on liberal terms it will require
less WC since it can always pay its creditors later and vice-versa.
7. Growth and Expansion Activities: It is difficult precisely to determine the
relationship between volume of sales and need for WC. The need for WC
does not follow the growth but precedes it. Hence, if the firm is planning to
increase its business activities, it needs to plan its WC requirements during the
growth period.
8. Conditions of Supply of Raw Material: If the supply of RM is scarce the
firm may need to stock it in advance and hence need more WC and vice-versa.
9. Profit Margin and Profit Appropriation: A high net profit margin
contributes towards the WC pool. Also, tax liability is unavoidable and hence
provision for its payment must be made in the WC plan, otherwise it may
impose a strain on the WC.

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 Also if the firm’s policy is to retain the profits it will increase their WC, and if
they decide to pay their dividends it will weaken their WC position, as the cash will flow
out. However this can be avoided by declaring bonus shares out of past profits. This will
help the firm to maintain a good image and also not part with the money immediately,
thus not affecting the WC position.
Depreciation policy of the firm, through its effect on tax liability and retained
earning, has an influence on the WC. The firm may charge a high rate of depreciation,
which will reduce the tax payable and also retain more cash, as the cash does not flow
out. If the dividend policy is linked with net profits, the firm can pay fewer dividends by
providing more depreciation. Thus depreciation is an indirect way of retaining profits and
preserving the firms WC position.

CASH REQUIRED FOR WORKING CAPITAL

For estimating the actual cash requirement you may follow the following two-step
procedure:
1. Estimate the cash cost of various current assets requirement: The cash cost of
a current asset is:
Value of current asset
(-) Profit element, if any, included in the value.
(-) Non-cash charges like depreciation, if any, included in the
value.
2. Deduct the spontaneous current liabilities from the cash cost of current
assets: A portion of the cash cost of current assets is supported by trade credit and
accruals of wages on expense, which may be referred to as spontaneous current
liabilities. The balance left after such deduction has to be arranged from other
sources
In 1997, the RBI permitted banks to evolve their own norms for assessment of the
Working Capital requirements of their clients.

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CASH FLOW BASED COMPUTATION OF WORKING CAPITAL
 Drawing up cash flow statements (monthly or quarterly) for the past few years
clearly indicate the seasonal and secular trend in utilization of working capital.
 The projections drawn up by the entrepreneur may then be jointly discussed
with the banker as modified in light of the past performance and the banker’s opinions.
 The peak cash deficit is ascertained from the cash budgets.
 The promoter’s share for such requirement maybe mutually arrived at by the
banker and the borrower with the balance requirement forming the Bank financed part
of Working Capital.

Cash flow based computation of working capital requirement has been recommended by
the RBI for assessment of working capital requirement permitting the banks to evolve
their own norms for such assessment
However the reluctance to provide the cash budgets thereby revealing additional
information to the banks, has led to even larger companies shying away from Cash
Budget method of assessing Working Capital. Consequently Cash Budget method is
currently prevalent mainly in case of seasonal industries, construction sector as well as
other entities whose operations are linked to projects.

WHY DOES A FIRM NEED CASH?

i. Transaction motive: firm needs cash for transaction purpose.
ii. Precautionary motive: The magnitude and time of cash inflows and outflows is
always uncertain and hence the firms need to have some cash balances as a buffer.
iii. Speculative motive: All firms want to make profits from fluctuations in
commodity prices, security prices, interest rates and foreign exchange rates .A
cash rich firm is in a better position to exploit such bargains. Hence, the firm with
such speculative leanings may carry additional liquidity.
The firm must decide the quantum of transactions and precautionary balances to
be held, which depends upon the following factors:
 The expected cash inflows and outflows based on the cash budget and
forecasts, encompassing long/short range cash needs of the firm.

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  The degree of deviation between the expected and actual net cash flow.
 The maturity structure of the firm’s liabilities.
 The firm’s ability to borrow at a short notice, in case of emergency.
 The philosophy of management regarding liquidity and risk of
insolvency
 The efficient planning and control of cash.

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 OPTIMAL CASH BALANCE

Cash balance is maintained for transaction purposes and an additional amount may be
maintained as a buffer or safety stock. It involves a trade off between the costs and the
risk.

If a firm maintains a small cash balance, it has to sell its marketable securities and
probably buy them later more often, than if it holds a large cash balance. More the
number of transactions more will be the trading cost and vice-versa; also, lesser the cash
balance, less will be the number of transaction and vice-versa. However the opportunity
cost of maintaining the cash rises, as the cash balance increases.

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 KEY OF WORKING CAPITAL

Working capital may be classified in two ways:

(a) On the basis of Concept
(b) On the basis of time
This classification from the point of view of financial manager. On the basis of time,
working capital may be classified as:

KINDS OF WORKING CAPITAL

On the basis of Concept On the basis of time

Gross WC Net WC Permanent WC Temporary WC

Regular WC Reserve WC Seasonal WC Special WC

(A) On the basis of Concept

There are two concept of working capital
(i) Balance sheet Concept
(ii) Operating Cycle
(i) Balance Concept
There are two interpretation of working capital under the balance sheet concept
(a) Gross Working Capital
(b) Net Working Capital
(a) Gross Working Capital : The gross working capital is the capital invested in
total current assets of the enterprises

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 (b) Net Working Capital : The term working capital to the next working capital.
Net working the excess of current assets over current liabilities.
Net working capital = current assets – current liabilities

(ii) Operating cycle Concept

The gross operating cycle of a firm is equal to the length of the inventories
and receivables conversion period.

(c) Gross Operating Cycle: = RMCP + WIPCP+ FGCP+ RCP

Where RMCP = Raw material conversion period
WIPC = work –in -progress conversion period
FGCP = Finished Goods conversion period
RCP = Receivables conversion period
RMCP = Avg. stock of RM / RM Consumption per day
WIPC = Avg. Stock of WIP / Total cost of production per day
FGCP = Avg. Stock of finished Goods / total cost of sales per day
RCP = Avg. Account Receivables / Net Credit sales per day

(d) Net Operating Cycle : Gross operating Cycle Period – Payables Deferral
period
Payable Deferral Period =Avg. payables / Net credit purchases per day

Cash Raw material Work in progress

Debtors Sales Finished Goods

Working capital cycle

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Calculation of working capital Company Vs Tata Motors’ Group

46
 REFERENCE

1. www.thehindubusinessline.com
2. www.wikipedia.org
3. www. icmrIndia.org
4. www.findarticles.com
5. www.the hindu.com
6. www.financialexpress.com
7. www.ibef.org
8. www.ecch.com
9. www.tatamotors.com
10. www.money.rediff.com
11. www.finance.yahoo.com
12. www.tata.com
13. www.mouthshut.com
14. www.auto.indiamart.com
15. www.Carskerala.com
16. www..surfindia.com
17. www.clickindia.com
18. www.indiacar.net
19. www.economictimes.com
20. www.blog.carhzoo.com

BOOKS

1) CASE FOLIO: ICFAI JOURNALS AND MAGAZINES

2) MARKETING MANAGEMENT; KOTLER

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