Note: This project is solely for the study purpose and understanding. Results may vary or not tally with the actual results.
Acknowledgment The project of operating cycle is done in the partial fulfillment of post graduate program in management. This project has been done under the guidance of Gautama adhikari professor of working capital management. I am great full to him for his guidance and providing me an opportunity to understand working capital management and operating cycle.
1) INTRODUCTION
Working capital typically means the firm’s holding of current or short-term assets such as cash, receivables, inventory and marketable securities. These items are also referred to as circulating capital. Corporate executives devote a considerable amount of attention to the management of working capital.
Working capital definition
Working Capital refers to that part of the firm’s capital, which is required for financing short-term or current assets such a cash marketable securities, securities, debtors and inventories. Funds thus, invested in current assets keep revolving fast and are constantly converted into cash and this cash flow out again in exchange for other current assets. Working Capital is also known as revolving or circulating capital or short-term capital.
2) Types of working capital
Concept of working capital •
There are two possible interpretations of working capital concept: 1. Balance sheet concept 2. Operating cycle concept
Balance sheet concept There are two interpretations of working capital under the balance sheet concept. a. Excess of current assets over current liabilities
b.Gross or total current assets. •
•
•
•
•
Excess of current assets over current liabilities are called the net working capital or net current assets. Working capital is really what a part of long term finance is locked in and used for supporting current activities. The balance sheet definition of working capital is meaningful only as an indication of the firm’s current solvency in repaying its creditors. When firms speak of shortage of working capital they in fact possibly imply scarcity of cash resources. In fund flow analysis an increase in working capital, as conventionally defined, represents employment or application of funds.
OPERATING CYCLE CONCEPT •
A company’s operating cycle typically consists of three primary activities: –
Purchasing resources,
–
Producing the product and
–
Distributing (selling) the product.
These activities create funds flows that are both unsynchronized and unsynchronized and uncertain. uncertain. Unsynchronized because cash disbursements (for example, payments for resource purchases) usually take place before cash receipts (for example collection of receivables). re ceivables). They are uncertain because future sales and costs, which generate the respective receipts and disbursements, cannot be forecasted with complete accuracy. •
•
•
•
The firm has to maintain cash balance to pay the bills as they come due. In addition, the company must invest in inventories to fill customer orders promptly. And finally, the company invests in accounts receivable to extend credit to customers. Operating cycle is equal to the length of inventory and receivable conversion periods.
VALUE ADDITION
ACCOUNT PAYABLE
OPERATING CYCLE
3) OBJECTIVE OF WORKING CAPITAL MANAGEMENT
1) Working capital objective is to keep adequate level of short term assets. 2) It converts an asset from non productive to productive one and vice-versa. 3) To establishes the relationship between current assets and current liabilities. Two MAIN MAIN objectives objectives of working capital management are Determining the size of the working capital Arranging the sources of working capital
4) Formula for calculation of NET OPERATING CYCLE
RMCP =
WPCP =
FGCP =
RCP =
DP =
OC =
Average Raw Material Stock -----------------------------------------------------------------------------------------------X ------------X 365 Total Raw Material Consumption Average Work in Progress ------------------------------------------------------------------------------------------------------ X 365 Total Cost of Production Average Finished Goods ------------------------------------------------------------------------------------------------------ X 365 Total Cost of Goods Sold Average Receivables ------------------------------------------------------------------------------------------------------ X 365 Total Credit Sales Average Creditors ------------------------------------------------------------------------------------------------------------------ X 365 Total Credit Purchase
RMCP + WPCP +FGCP +RCP - DP
365 NOC= -----------------------------------OC
COST OF SALES WORKING CAPITAL= ----------------------------------------------------------------------------------NUMBER OF OPERATING CYCLE
Opening raw material + closing raw material Average raw material stock =-----------------=------------------------------------------------------------------- 2 Op stock of raw + purchase of raw material – closing stock Total raw material consumption = ------------------------------------------------------------------------------365 Opening wip + closing wip Average work in progress = ---------------------------------------------------------------- 2 opening wip + raw material consumption + manufacturing expenses-closing wip Total cost of production =---------------=----------------------------------------------------------------------------------------------365 opening finish goods + closing finish goods Average finish goods = ----------------------------------------------------------------------------------------------------- 2 op finish goods + selling, administrative & financing cost – cl finish goods Cost of sales= -----------------------------------------------------------------------------------------------------------------------------
365 opening + closing Average receivable = ----------------------------------------- 2 opening + closing Average payable = --------------------------------------------- 2 credit Credit sales = --------------365 purchase Credit purchase = --------------365 Efficiency ratio sales Working capital turnover ratio =----------------------Net working capital Gross sales Receivable turnover =------------------------- Average account receivable 365 Debtor turnover = -----------------------------------Receivable turnover
sales Current assets tturnover urnover =---------------=----------------------------Current assets Liquidity ratio Current assets Current ratio= -------------------------------------------Current liabilities Current assets - inventory Quick ratio = ----------------------------------------------------------------Current liabilities
5)
Mahindra and Mahindra
Kesub Mahindra : chairman
Head office: Gateway building Apollo bunder Mumbai 400001
Financial information for year 2009. Mahindra & mahindra Financial chart
Particulars
Opening
Closing
Raw material
351.95
391.01
Work in progress
335.42
498.36
Finish goods
579.43
471.81
Recieveable(debtors) 3767.88 Payable(creditors)
3407.79 2296.55
Raw material purchase
8756
Manufacturing expenses
5786
Selling and administrative charge
3214.33
Sales
12,649.06
3520.2
Inventory
1060.67
Current assets
5062.93
Current liabilities
3520.2
Gross sales
14268.41
Calculation
1) Average 1) Average raw material stock = Rs 371.48 cr 2) Daily consumption of raw material = Rs 23.882 cr 3) Average 3) Average holding of work in progress = Rs 416.89 cr 4) Daily cost of production = Rs 39.287 cr 5) Average 5) Average holding of finished goods = Rs 48.388 cr 6) Daily cost of sales = Rs 50.2449 cr 7) Average 7) Average receivable = Rs 3587.835 cr 8) Daily credit sales = Rs 34.654 cr 9) Average 9) Average payable =Rs 2908.375 cr 10)
Average daily credit purchase = Rs 23.989 cr
Calculation for operating cycle 11) Raw material conversion period (RMCP) = 15.554 days da ys 12) Work in progress conversion period (WIPCP) = 10.611 days
13) Finish good conversion period (FGCP) = 10.862 days 14) Debtors conversion period (DCP) =103.530 days 15) Creditors deferral period (CDP) =121.377 days
Main calculation for operating cycle
16) Operating cycle= RMCP+WIPCP+FGCP+DCP-CDP =20 DAYS 17) No of operating cycle = 365/57 =18.632 18) Working capital= Rs 947.9056 cr
6) TATA MOTORS INTRODUCTION OF COMPANY Rattan tata chairman Ravi kant vice chairman Registered office Bombay house 24,homi mody street Mumbai 400001 Tata motors is known as tata motors limited. Products of tata motors are Land rover, cars , commercial vechile, passenger vechile
Financial information for year 2009. Tata motors Financial chart
Particulars
Opening (Rs crore)
Closing (Rs crore)
Raw material
1122.65
1834.66
Work in progress
370.08
1094.02
Finish goods
1332.15
5444.34
Debtors(Receivable) 4409.52
4764.75
Creditors(Payable)
3859.14
3738.51
Raw material purchase
19386.03
Manufacturing expenses
12887.48
Selling and administrative charge
3886.35
Sales
26586.76
Inventory
2229.81
Current assets
9691.69
Current liabilities
8958.25
Gross sales
28599.27
Calculation
1) Average raw material stock = Rs 1478.655 cr 2) Daily consumption of raw material =Rs 51.1617 51.161 7 cr 3) Average holding of work in progress = Rs 732.05 cr 4) Daily cost of production = Rs 84.4864 cr 5) Average holding of finished goods = Rs 3388.245 cr 6) Daily cost of sales = Rs 83.8677 cr 7) Average receivable = Rs 4587.135 cr 8) Daily credit sales = Rs 72.8404 cr 9) Average payable =Rs 4228.885 cr 10) Average daily credit purchase = Rs 53.112 cr
Calculation for operating cycle 11) Raw material conversion period (RMCP) = 28.906 days 12) Work in progress conversion period (WIPCP) = 8.664 days da ys 13) Finish good conversion period (FGCP) = 40.399 days 14) Debtors conversion period (DCP) =62.975 days 15) Creditors deferral period (CDP) =79.621 days
Main calculation for operating cycle
16) Operating cycle= RMCP+WIPCP+FGCP+DCP-CDP =61 DAYS 17) No of operating cycle = 365/57 =5.87 18) Working capital = Rs 5214.186 cr
7) Analysis Efficiency ratio Particulars
Mahindra &
Tata motors
Mahindra
Working capital
13.3442
5.0989
3.97688
6.2346
Debtor turnover ratio
91.78036
58.5436
Current assets turnover ratio
1.4382
2.7432
Turnover ratio Receivable turnover Ratio
Liquidity ratio Particulars
Mahindra &Mahindra
Tata motors
Current ratio
1.4382
1.0818
Quick ratio
1.1369
0.8329
Analysis 1) Mahindra & Mahindra has higher working w orking capital turnover indicates that it has achieved maximum sale with low investment. Mahindra & Mahindra has efficiently used its working capital. 2) Receivable turnover of Mahindra & Mahindra is lower than Tata motors, it means it provide higher credit period to its customer than Tata motors. 3) Current assets turnover of Tata motors is higher, implies that it uses efficiently its fund. 4) Both firms have nearly same current ratio, which shows that both have assets which can be turned into cash. 5) Quick ratio of Mahindra & Mahindra is higher than Tata motors; it means it has higher liquid funds to pay out the liabilities.
Bibliography 1) www.scribd.com 2) www.tatamotors.com 3) www.mahindra&mahindra.com 4) www.google.com 5 ) financial statement statement for both the companies companies
**Financial statement for MAHINDRA AND MAHINDRA**
Ballance Sheet
as at 31
st
March, 2009
Rupees crores Schedule 2009 2008 I. SOURCES OF FUNDS : SHAREHOLDERS’ FUNDS : Capital ............ ......................... ............................ ............................. ........................... ........................... .............. I 272.62 239.07 Employee Stock Options Outstanding ................................. 6.55 4.00 Reserves and Surplus .................................... .................................................... ....................... ....... II 4,982.91 4,107.00 5,262.08 4,350.07 LOAN FUNDS : (a) Secured Loans .................................. ................................................ ............................ .............. III A 981.00 617.26 (b) Unsecured Loans .......................................................... III B 3,071.76 1,969.80 4,052.76 2,587.06 DEFERRED TAX LIABILITY (Net) ...................................... ............................................ ...... — 56.72 Total .......... 9,314.84 6,993.85 II. APPLICATION OF FUNDS : FIXED ASSETS : Gross Block .............. ........................... ........................... ......................... ........................... ...................... ...... 4,893.89 3,656.13 Less : Depreciation .............................................................. 2,326.29 1,841.68 Net Block ............. .......................... ........................... ............................ ........................... ....................... .......... IV 2,567.60 1,814.45 CAPITAL WORK-IN-PROGRESS (INCLUDING CAPITAL ADVANCES) .............. .............................. .............................. .......................... .......................... ................. ... 646.73 546.45 3,214.33 2,360.90 INVESTMENTS .............. ............................ ............................ ............................ ............................ .............. V 5,786.41 4,215.06 DEFERRED TAX ASSET (Net) .............. ............................ ............................ .................... ...... 18.27 — FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT [NOTE 3(d)] ............ .......................... ........................ .......... 18.11 — CURRENT ASSETS, LOANS AND ADVANCES : (a) Inventories .................................................................... VI A 1,060.67 1,084.11 (b) Sundry Debtors ................................... ............................................... ......................... ............. VI B 1,043.65 1,004.88 (c) Cash and Bank Balances ............................................... VI C 1,574.43 861.23 (d) Other Current Assets ................................... ................................................. ................. ... VI D 1.56 2.27 (e) Loans and Advances ..................................................... VI E 1,382.62 691.88 5,062.93 3,644.37 CURRENT LIABILITIES AND PROVISIONS : (a) Current Liabilities ...................................... ...................................................... .................... .... VII V II A 3,520.20 2,296.55 (b) Provision Provisions s ............. ............................. .............................. .......................... .......................... .............. VII B 1,277.56 943.46 4,797.76 3,240.01 NET CURRENT ASSETS .............. ............................ ............................ ............................ ................ 265.17 404.36
MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN OFF OR ADJUSTED) ............ .......................... ............................ .................... ...... VIII 12.55 13.53 Total .......... 9,314.84 6,993.85
Profit and Loss Account
for the year ended 31
st
March, 2009
Rupees crores Schedule 2009 2008 SALES - Traded and Manufactured Goods [Note 11(a)] .......................................... 14,268.41 12,371.03 Less : Excise Duty on Sales (Net) ............................................................................. 1,619.35 1,566.39 Net Sales ................................................................................................................. 12,649.06 10,804.64 Income from Operations ......................................................................................... IX A 444.62 736.63 Other Income .......................................................................................................... IX B 270.34 130.37 Net Income .............................................................................................................. 13,364.02 11,671.64 EXPENDITURE : Raw Materials, Finished and Semi-finished Products ............................................... X 9,274.23 7,725.91 Excise Duty ............................................................................................................... (32.30) 18.18 Personnel ................................................................................................................. XI 1,024.61 868.14 Interest, Commitment and Finance Charges (Net) ................................................... XII 45.26 24.24 Depreciation/Amortisation [Note 5(c)(i) & (d)] ......................................................... 291.51 238.66 Other Expenses ........................................................................................................ XIII 1,777.34 1,608.96 12,380.65 10,484.09 Less : Cost of Manufactured Products Capitalised .................................................. 42.83 46.49 12,337.82 10,437.60 Profit before exceptional items and taxation ........................................................... 1,026.20 1,234.04 Add : Exceptional Items [Note 23] .......................................................................... 10.27 172.73 Profit before taxation .............................................................................................. 1,036.47 1,406.77 Less : Provision for Tax - Current Tax (including Fringe Benefit Tax) ....................... 58.51 278.75 - Deferred Tax (Net) [Note 24] .......................................... 141.18 24.65 Profit for the year .................................................................................................... 836.78 1,103.37 Add : Profit of Mahindra Holdings and Finance Limited for the period 1 st
February, 2008 to 31 st
March, 2008 [Note 25(a)] .............................................. 30.73 — Balance of Profit for the year .................................................................................. 867.51 1,103.37 Balance of Profit for earlier years ............................................................................ 2,775.48 2,125.08 Amount Transferred on Amalgamation of Mahindra Holdings and Finance Limited [Note 25(a)] ................................................................................................ 159.94 — Less : Transfer to Debenture Redemption Reserve (Net) .......................................... (29.62) (16.88) 2,905.80 2,108.20 Total of Profit and Loss Account balances shown above ........................................ 3,773.31 3,211.57 Less : General Reserve ....................................................................................................... 100.00 115.00 Credit of Income-Tax on Proposed Dividend of Previous Year ................................. (4.07) — Proposed Dividend ................................................................................................... 278.83 282.61
Income-Tax on Proposed Dividend ........................................................................... 33.23 38.48 Balance for 2008-2009 and earlier years carried to Balance Sheet ......................... 3,365.32 2,775.48 EARNINGS PER SHARE [Note 26] : (Face value Rs.10/- per share) (Rupees) Basic ........................................................................................................................ 31.83 46.24 Diluted ..................................................................................................................... 30.02 41.52
Cash Flow Statement
for the year ended 31
st
March, 2009
Rupees crores 2009 2008 A. CASH FLOW FROM OPERATING ACTIVITIES : Net Profit before exceptional items and taxation ................................... 1,026.20 1,234.04 Adjustments for : Net Profit earned by Mahindra Holdings and Finance Limited from 1 st
February, 2008 to 31 st
March, 2008 ....... 30.73 — Taxes and other adjustments on above ........................................... 11.01 — 41.74 — Adjustments for : Depreciation/Amortisation ............................................................... 291.52 238.66 (Profit)/Loss on Exchange (Net) ....................................................... 6.30 (39.90) Investment and Interest Income ...................................................... (266.90) (143.60) Interest, Commitment and Finance charges .................................... 134.12 87.59 Amortisation of Expenses ................................................................ 11.32 10.28 (Profit)/Loss on sale of investments (Net) ........................................ (92.36) (28.94) (Profit)/Loss on fixed assets sold/scrapped/written off (Net) ............ 1.19 2.82 Excess of cost over fair value of current investments (Net) ............. (1.57) (1.74) Provision for diminution in the value of long term investments ..... — (5.40) 83.62 119.77 Operating Profit before Working Capital changes.................................. 1,151.56 1,353.81 Changes in : Trade and other receivables ............................................................. (99.37) (450.40) Inventories ....................................................................................... 176.01 (205.63) Trade and other payables ................................................................ 515.13 408.87 591.77 (247.16) Miscellaneous Expenditure (to the extent not written off or adjusted) incurred during the year ........................................................................ (11.73) (3.12) Cash generated from operations ............................................................ 1,731.60 1,103.53 Income Taxes paid (Net of refunds) ........................................................ (100.30) (277.70) NET CASH FROM OPERATING ACTIVITIES ............................................... 1,631.30 825.83
Cash Flow Statement
(Contd.)
Rupees crores 2009 2008 B. CASH FLOW FROM INVESTING ACTIVITIES : Purchase of fixed assets ......................................................................... (929.74) (729.09) Sale of fixed assets ................................................................................. 14.58 12.00 Purchase of investments ......................................................................... (17,118.59) (16,091.67) Sale of investments ................................................................................ 16,195.73 14,487.81 Interest received ..................................................................................... 79.87 68.95 Dividends received .................................................................................. 137.13 65.61 Inter corporate deposits (Net) ................................................................ (319.98) 111.31 NET CASH USED IN INVESTING ACTIVITIES ............................................ (1,941.00) (2,075.08) C. CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from borrowings ..................................................................... 2,117.39 2,303.55 Repayments of borrowings (including premium on prepayments) ......... (1,005.05) (1,294.08) Dividend paid [including income tax on dividend Rs. 38.48 crores (2008 : Rs. 16.69 crores)] ...................................................................... (320.26) (118.01) Interest, Commitment and Finance charges paid ................................... (95.17) (80.12) NET CASH FROM FINANCING ACTIVITIES ............................................... 696.91 811.34 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS ............ 387.21 (437.91) CASH AND CASH EQUIVALENTS [Note 1] : Opening Balance .................................................................................... 923.88 1,361.79 Cash and Bank Balance acquired pursuant to the Schemes of Amalgamation ........................................................................................ 253.76 — Cash and Bank Balance transferred on transfer of Division ................... (3.02) — Closing Balance ...................................................................................... 1,561.83 923.88
SCHEDULE VI Rupees crores 2009 2008 Current Assets, Loans and Advances : (A) Inventories (at cost or net realisable value whichever is lower) : (i) Finished Products produced and purchased for sale ...................... 471.81 579.43 (ii) Contracts and Work-in-Progress ...................................................... 89.09 53.10 (iii) Manufactured Components ............................................................ 55.71 48.15 (iv) Raw Materials and Bought-out Components .................................. 391.01 351.95 (v) Property Development Activity - Work-in-Progress [including completed flats and premises Rs. 6.32 crores (2008 : Rs. 6.32 crores)] [Note 11(b)] ............................................. 6.32 6.32 (vi) Stores and Spares ............................................................................ 23.56 24.76 (vii) Tools ................................................................................................ 23.17 20.40 1,060.67 1,084.11 (B) Sundry Debtors (Unsecured) [Note 6] : Outstanding over six months : Considered good ................................... 125.74 111.29 : Considered doubtful ............................. 72.12 31.61 197.86 142.90 Other Debts : Considered good ................................... 917.91 893.59 : Considered doubtful ............................. — 1.20 917.91 894.79 1,115.77 1,037.69 Less : Provision for Doubtful Debts ........................................................ 72.12 32.81 1,043.65 1,004.88 (C) Cash and Bank Balances : Cash, cheques and stamps on hand ...................................................... 354.39 194.27 Balances with Scheduled Banks : (i) On Current Account ........................................................................ 275.65 109.72 (ii) On Fixed Deposit Account* ............................................................. 938.73 550.59 (iii) On Margin Account ........................................................................ 0.09 0.06 1,214.47 660.37 *[includes balance of unutilised monies raised by issue : Rs. 53.95 cores (2008 : Rs. 274.03 Crores)] Balances with Non-Scheduled Banks [Note 7] : On Current Account ............................................................................... 5.57 6.59 1,574.43 861.23 (D) Other Current Assets : Interest accrued on Investments ............................................................. 1.42 2.13 Others ..................................................................................................... 0.14 0.14 1.56 2.27 (E) Loans and Advances [Note 8] : (Unsecured, considered good unless otherwise stated) : Advances and Loans to subsidiaries :Considered good .................................................................................... 402.93 100.73 Considered doubtful ............................................................................... 24.99 5.99 427.92 106.72 Less : Provision for Doubtful Advances and Loans ................................. 24.99 5.99 402.93 100.73 Bills of exchange, considered doubtful .................................................. 1.02 1.02 Less : Provision for Doubtful bills ........................................................... 1.02 1.02
— — Advances recoverable in cash or in kind or for value to be received : Considered good .................................................................................... 757.11 470.53 Considered doubtful ............................................................................... 48.64 47.80 805.75 518.33 Less : Provision for Doubtful Advances .................................................. 48.64 47.80 757.11 470.53 Payments towards Income-Tax and Surtax [Note 20(d)] ......................... 221.67 119.92 Balances - Customs, Port Trust, Excise, etc. ............................................ 0.91 0.70 1,382.62 691.88 Total..... 5,062.93 3,644.37
SCHEDULE VII Rupees crores 2009 2008 Current Liabilities and Provisions : (A) Current Liabilities* : Acceptances ............................................................................................ 106.26 125.79 Sundry Creditors : (i) Total outstanding dues of micro and small enterprises [Note 9] .... 5.99 4.16 (ii) Total outstanding dues of creditors other than micro and small enterprises [including Rs. 162.51 crores (2008 : Rs. 112.05 crores) being advance payments for which value has still to be given] ..... 3,206.19 2,075.43 (iii) Dues to Subsidiaries ........................................................................ 124.62 70.70 3,336.80 2,150.29 Dividend payable .................................................................................... 6.19 4.21 Balances on Directors’ Current Accounts ............................................... 2.21 2.46 Interest accrued but not due on loans ................................................... 68.74 13.80 3,520.20 2,296.55 * There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund. (B) Provisions : Proposed Dividend.................................................................................. 278.83 282.61 Provision for Tax on Proposed Dividend ................................................. 33.23 38.48 Provision for diminution in value of long term investments .................. 201.02 25.17 Provision for premium payable on redemption of convertible bonds .... 269.51 224.97 Provision for compensated absences ...................................................... 245.76 200.76 Provision for taxation ............................................................................. 81.76 37.09 Provision Others [Note 10] ..................................................................... 167.45 134.38 1,277.56 943.46 Total........ 4,797.76 3,240.01
**Financial statement for TATA MOTORS**
DIRECTORS' REPORT TO THE MEMBERS OF TATA MOTORS LIMITED The Directors present their Sixty-Fourth Annual Report and the Audited Statement of Accounts for the year ended March 31, 2009. 1. FINANCIAL RESULTS Financial Year (Rs. in Crores) 2008-09 2007-08 (i) Gross Revenue 28599.27 33093.93 (ii) Net Revenue (excluding excise duty) 25660.79 28739.41 (iii) Total Expenditure 23908.35 25807.82 (iv) Operating Profit 1752.44 2931.59 (v) Other Income 925.97 483.18 (vi) Profit before Interest, Depreciation, Exceptional items & Tax 2678.41 3414.77 (vii) Interest and Discounting Charges (a) Gross Interest and Discounting Charges 1073.10 541.56 (b) Adjustment/Transfer to Capital Account (399.42) (259.19) (c) Net Interest and Discounting Charges 673.68 282.37 (viii) Product Development Expenses 51.17 64.35 (ix) Depreciation 874.54 652.31 (x) Exceptional item - Notional Exchange (loss) / gain (net) on Revaluation of Foreign Currency Borrowings, Deposits and Loan Given (65.26) 160.73 (xi) Profit Before Tax 1013.76 2576.47 (xii) Tax Expenses 12.50 547.55 (xiii) Profit After Tax 1001.26 2028.92 (xiv) Balance Brought Forward from Previous Year 1383.07 1013.83 (xv) Credit taken for Dividend Distribution Tax for previous year 15.29 (xvi) Amount Available for Appropriations 2399.62 3042.75 APPROPRIATIONS (a) Debenture Redemption Reserve 267.80 (b) General Reserve 100.13 1000.00 (c) Dividend (including tax) 345.70 659.68 (d) Balance carried to Balance Sheet 1685.99 1383.07
Sixty-fourth annual report 2008-09 Tata Motors Limited
56
Balance Sheet as at March 31, 2009 (Rs. in crores) As at Schedule Page March 31, SOURCES OF FUNDS 2008 1. SHAREHOLDERS’ FUNDS (a) Share Capital 1 63 514.05 385.54 (b) Reserves and Surplus 2 63 11716.10 7453.96 12230.15 7839.50 2. LOAN FUNDS (a) Secured 3 64 5251.65 2461.99 (b) Unsecured 4 64 7913.91 3818.53 13165.56 6280.52 3. FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT (NET) 164.12 [Note A(9), page 82 and Note P(i), Page 75] 4. DEFERRED TAX LIABILITY (NET) 865.81 975.72 [Note A(3)(a), page 77] 5. TOTAL FUNDS EMPLOYED 26425.64 15095.74 APPLICATION OF FUNDS 6. FIXED ASSETS 5 65 (a) Gross Block 13905.17 10830.83 (b) Less - Depreciation Depreciation 6259.90 5443.52 (c) Net Block 7645.27 5387.31 (d) Capital Work-in-Progress Work-in-Progress 6954.04 5064.96 14599.31 10452.27 7. INVESTMENTS 6 66 12968.13 4910.27 8. CURRENT ASSETS, LOANS AND ADVANCES (a) Interest accrued on investments 0.11 0.86 (b) Inventories 7 70 2229.81 2421.83 (c) Sundry Debtors 8 70 1555.20 1130.73 (d) Cash and Bank Balances 9 70 1141.82 2397.31 (e) Loans and Advances 10 71 4764.75 4409.52 9691.69 10360.25 9. CURRENT LIABILITIES AND PROVISIONS (a) Current Liabilities 11 72 8958.25 8643.67 (b) Provisions 12 72 1877.26 1989.43 10835.51 10633.10 10. NET CURRENT ASSETS [(8) - (9)] (1143.82) (272.85) 11. MISCELLANEOUS EXPENDITURE 13 72 2.02 6.05 (to the extent not written off or adjusted)
12. TOTAL ASSETS (NET) 26425.64 15095.74 13. SIGNIFICANT ACCOUNTING POLICIES
Profit and Loss Account for the year ended March 31, 2009 (Rs. in crores) Schedule Page 2007-2008 INCOME 1. SALE OF PRODUCTS AND OTHER INCOME FROM OPERATIONS A (1) 59 28599.27 33093.93 LESS : EXCISE DUTY 2938.48 4354.52 25660.79 28739.41 2. DIVIDEND AND OTHER INCOME A (2) 59 925.97 483.18 26586.76 29222.59 EXPENDITURE 3. MANUFACTURING AND OTHER EXPENSES B 60 24824.37 26552.05 4. EXPENDITURE TRANSFERRED TO CAPITAL AND OTHER ACCOUNTS (916.02) (744.23) 23908.35 25807.82 PROFIT BEFORE DEPRECIATION, INTEREST, EXCEPTIONAL ITEMS AND TAX 2678.41 3414.77 5. PRODUCT DEVELOPMENT EXPENDITURE 51.17 64.35 6. DEPRECIATION 5 65 874.54 652.31 7. INTEREST AND DISCOUNTING CHARGES 673.68 282.37 [Note B(4), page 83] PROFIT BEFORE EXCEPTIONAL ITEMS AND TAX 1079.02 2415.74 8. NOTIONAL EXCHANGE (LOSS) / GAIN (NET) ON REVALUATION OF FOREIGN CURRENCY BORROWINGS, DEPOSITS AND LOANS GIVEN (65.26) 160.73 PROFIT BEFORE TAX 1013.76 2576.47 9. TAX EXPENSE [Note A(3)(c), page 77] (12.50) (547.55) PROFIT AFTER TAX 1001.26 2028.92 10. BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR 1383.07 1013.83 Add : Credit taken for Dividend Distribution Tax for previous year 15.29 AMOUNT AVAILABLE FOR APPROPRIATION 2399.62 3042.75 11. APPROPRIATIONS (a) Proposed Dividend 311.61 578.43 (b) Tax on Proposed Dividend 34.09 81.25 (c) Debenture Redemption Reserve 267.80 (d) General Reserve 100.13 1000.00 (e) Balance carried to Balance Sheet 1685.99 1383.07 2399.62 3042.75 12. EARNINGS PER SHARE [Note B (7), page 85] I. Ordinary Shares a) Basic Rupees 22.70 52.64 b) Diluted Rupees 20.83 48.04 II. ‘A’ Ordinary Shares a) Basic Rupees 23.20 b) Diluted Rupees 21.33
Sixty-fourth annual report 2008-09 Tata Motors Limited
60
Schedules forming part of the Profit and Loss Account (Rs. in crores) “B” [Item no. 3] 2008-2009 2007-2008 MANUFACTURING AND OTHER EXPENSES 1. Purchase of products for sale etc. [Note B(1), page 83] 2180.32 1598.11 2. Consumption of raw materials and components (Schedule 18, page 91) 16218.62 18592.08 3. Processing charges 810.60 851.43 4. Payments to and provisions for employees : (Refer Note B(5), page 84) (a) Salaries, wages and bonus 1227.77 1208.22 (b) Contribution to provident and other funds 131.80 171.20 (c) Workmen and staff welfare expenses [Note B(i), page 61] 191.82 165.15 1551.39 1544.57 5. Expenses for manufacture, administration and selling : (a) Stores, spare parts and tools consumed 402.43 465.40 (b) Freight, transportation, port charges, etc. 479.71 537.52 (c) Repairs to buildings [Note B(ii), page 61] 31.15 25.87 (d) Repairs to plant, machinery, etc. [Note B(iii), page 61] 56.06 53.52 (e) Power and fuel 304.94 325.19 (f) Rent 46.55 41.87 (g) Rates and taxes 16.22 16.64 (h) Insurance 44.14 46.48 (j) Publicity 321.29 286.77 (k) Incentive / Commission to dealers 419.76 347.11 (l) Works operation and other expenses [Note B(iv), page 61] 1764.10 1786.49 3886.35 3932.86 6. Excise Duty on change in Stock-in-trade (60.95) (7.48) 7. Changes in Stock-in-trade and Work-in-progress : A Opening Stock (i) Work-in-pro W ork-in-progress gress 296.00 301.32 (ii) Stock-in-trade Stock-in-trade 1067.86 1103.02 1363.86 1404.34 B Closing Stock (i) Work-in-pro W ork-in-progress gress 245.95 296.00 (ii) Stock-in-trade Stock-in-trade 879.87 1067.86 1125.82 1363.86 238.04 40.48 24824.37 26552.0
