TUTE GROUP I 42 ASSIGNMENT

CORPORATE ACCOUNTS
ASSIGNMENT - 2
ANALYSIS OF CASH FLOW STATEMENTS

Analysis of Cash Flow Statements of the years ending 31 March 2023 , 2022 and 2021
of Tata Motors , Bajaj Auto and Mahindra & Mahindra -

1. TATA MOTORS

1. Operating Activities: In 2023, Tata Motors generated cash from operating activities of INR
4,775.43 crores, indicating a decrease compared to INR 5,281.93 crores in 2022. This
suggests a decline in cash generation from core operations, despite a significant
improvement in profitability.

2. Profitability: Tata Motors achieved a profit of INR 2,728.13 crores in 2023, compared to a
loss of INR 1,739.23 crores in 2022. The increase in profitability can be attributed to factors
such as higher revenues, cost control measures, and improved operational efficiency.

3. Investing Activities: The company generated cash from investing activities amounting to
INR 922.67 crores in 2023, a positive sign compared to a significant cash outflow of INR
3,149.49 crores in 2022. This indicates that Tata Motors generated cash by disposing of
certain assets and investments.

4. Investments in Mutual Funds: Tata Motors made significant investments in mutual funds,
with a net purchase of INR 2,078.75 crores in 2023. This demonstrates the company's focus
on investment opportunities and potential growth areas.

5. Financing Activities: Tata Motors experienced a cash outflow of INR 7,021.32 crores from
financing activities in 2023. The repayment of long-term borrowings, amounting to INR
4,808.33 crores, drove this outflow. Significant repayments of short-term borrowings were
also made.

6. Overall Cash Flow: The net decrease in cash and cash equivalents for 2023 was INR
1,323.22 crores, indicating that Tata Motors utilized more cash than it generated during the
year. The closing balance of cash and cash equivalents at the end of 2023 was INR
1,121.43 crores.

7. Positive Cash Flow in 2022: In 2022, Tata Motors experienced a net increase in cash and
cash equivalents of INR 1,616.60 crores, with a closing balance of INR 2,450.23 crores.
However, a cash outflow of INR 1,200.00 crores as part of the slump sale of PV undertaking
impacted the overall cash flow.

8. Operating Cash Flow Improvement in 2021: Tata Motors generated cash from operating
activities amounting to INR 29,000.51 crores in 2021, an increase compared to INR
26,632.94 crores in 2020. This improvement was driven by a significant increase in
profitability.

9. Investing Cash Outflow Improvement in 2021: The net cash outflow from investing
activities decreased to INR 26,126.25 crores in 2021, compared to INR 34,170.22 crores in
2020. The company made significant payments for assets but also had proceeds from the
sale of certain assets and investments.

10. Financing Cash Inflow Increase in 2021: Tata Motors experienced a net cash inflow of
INR 9,904.20 crores from financing activities in 2021, a significant increase compared to INR
3,389.61 crores in 2020. The company raised funds through the issuance of shares,
borrowings, and made repayments of borrowings and lease liabilities.

Overall, Tata Motors demonstrated mixed cash flow performance in 2023. While profitability
improved significantly, the cash flow from operating activities decreased, and there was a
cash outflow from financing activities. Careful cash management and a focus on profitability
and operational efficiency will be essential for Tata Motors to maintain a healthier financial
position and sustainable growth. The positive cash flow in 2021 showcased improvements in
operating, investing, and financing activities, indicating positive momentum for the
company's financial performance.

2. MAHINDRA AND MAHINDRA

Analysis of Mahindra & Mahindra Ltd's Cash Flow Statement for the years ended 2023,
2022, and 2021:

2023:
1. Operating Activities: Mahindra & Mahindra generated a cash outflow from operating
activities amounting to INR 7,074.02 crores in 2023. This decrease in cash flow can be
attributed to changes in working capital, including trade and other receivables, financial
services receivables, and inventories.

2. Profitability: The company reported a profit before exceptional items, share of profit of
associates and joint ventures, and tax of INR 11,305.27 crores in 2023, indicating an
improvement compared to INR 7,091.81 crores in 2022. However, the cash flow from
operating activities was negatively affected by changes in working capital.

3. Investing Activities: Mahindra & Mahindra experienced a net cash outflow from investing
activities of INR 8,547.26 crores in 2023. This outflow was primarily driven by payments to
acquire property, plant & equipment, investments, and acquisitions of subsidiaries. The
company also received proceeds from the sale of property, plant & equipment and
investments.

4. Financing Activities: The financing activities section of the cash flow statement showed a
net cash inflow of INR 15,946.11 crores in 2023. The company raised funds through the
issuance of shares, borrowings, and Compulsorily Convertible Preference Shares. There
were repayments of borrowings and lease liabilities, as well as dividends paid.
2022:
1. Operating Activities: Mahindra & Mahindra generated a cash flow from operating activities
of INR 9,247.55 crores in 2022, which decreased compared to INR 17,908.83 crores in
2021. The decrease can be attributed to changes in working capital, including trade and
other receivables, financial services receivables, and inventories.

2. Profitability: The company reported a profit before exceptional items, share of profit of
associates and joint ventures, and tax of INR 7,091.81 crores in 2022, indicating an
improvement compared to INR 3,039.80 crores in 2021. The increase in profitability
positively impacted the cash flow from operating activities.

3. Investing Activities: Mahindra & Mahindra experienced a net cash outflow from investing
activities of INR 3,225.82 crores in 2022. The outflow was primarily driven by payments to
acquire property, plant & equipment, and investments. The company also received proceeds
from the sale of property, plant & equipment and investments.

4. Financing Activities: The financing activities section showed a net cash inflow of INR
406.23 crores in 2022. The company raised funds through the issuance of shares to
employees and borrowings. There were repayments of borrowings and loans, as well as
transactions with non-controlling interests.

2021:
1. Operating Activities: Mahindra & Mahindra generated a cash flow from operating activities
of INR 17,908.83 crores in 2021, which decreased compared to INR 19,758.91 crores in
2020. The decrease can be attributed to changes in working capital, including trade and
other receivables, financial services receivables, and inventories.

2. Profitability: The company reported a profit before exceptional items, share of profit of
associates and joint ventures, and tax of INR 10,514.71 crores in 2021, indicating an
improvement compared to INR 7,587.72 crores in 2020. The increase in profitability
positively impacted the cash flow from operating activities.

3. Investing Activities: Mahindra & Mahindra experienced a net cash outflow from investing
activities of INR 18,446.76 crores in 2021. The outflow was primarily driven by payments to
acquire property, plant & equipment, investments, and acquisitions of subsidiaries. The
company also received proceeds from the sale of property, plant & equipment and
investments.

4. Financing Activities: The financing activities section showed a net cash outflow of INR
5,882.60 crores in 2021. The company made repayments of borrowings and lease liabilities,
as well as paid dividends. There were also transactions with non-controlling interests and
interest, commitment, and finance charges paid.

Overall, Mahindra & Mahindra's cash flow statement reflects varying cash flow performance
over the years. While profitability improved, the cash flow from operating activities decreased
in 2023 compared to 2022. The company made significant investments and acquisitions,
leading to cash outflows in the investing activities section. The financing activities showed
both inflows and outflows, primarily driven by borrowings and repayments. Careful
management of working capital and capital allocation will be crucial for the company's cash
flow management in the future.

3. BAJAJ AUTO

Analysis of the Consolidated Statement of Cash Flows for Bajaj Auto Limited:

Year Ended March 31, 2023:

1. Cash Flow from Operating Activities: The company generated net cash flow from
operating activities of INR 5,511.89 crores. This represents an increase compared to the
previous year's net cash flow of INR 4,207.57 crores. The increase can be attributed to
higher profit before tax and adjustments for depreciation, amortization, and provision for
doubtful debts. There was also a decrease in trade receivables and an increase in liabilities
and provisions.

2. Cash Flow from Investing Activities: Bajaj Auto had a net cash inflow from investing
activities of INR 1,333.81 crores. This indicates an improvement compared to the previous
year's net cash outflow of INR 95.95 crores. The cash inflow was primarily due to proceeds
from the sale of investments and interest income. There were also investments in subsidiary
companies and property, plant, and equipment.

3. Cash Flow from Financing Activities: The company had a net cash outflow from financing
activities of INR 1,733.40 crores. This represents a decrease compared to the previous
year's net cash outflow of INR 1,731.89 crores. The cash outflow was primarily driven by
dividend payments and interest expenses.

Year Ended March 31, 2022:

1. Cash Flow from Operating Activities: Bajaj Auto generated net cash flow from operating
activities of INR 4,207.57 crores. This represents an increase compared to the previous
year's net cash flow of INR 3,119.88 crores. The increase can be attributed to higher profit
before tax and adjustments for depreciation, amortization, and provision for doubtful debts.
There was also a decrease in trade receivables and an increase in liabilities and provisions.

2. Cash Flow from Investing Activities: The company had a net cash outflow from investing
activities of INR 95.95 crores. This indicates a decrease compared to the previous year's net
cash outflow of INR 2,868.36 crores. The cash outflow was primarily due to purchases of
investments and property, plant, and equipment.

3. Cash Flow from Financing Activities: Bajaj Auto had a net cash outflow from financing
activities of INR 1,731.89 crores. This represents a slight decrease compared to the previous
year's net cash outflow of INR 1,578.33 crores. The cash outflow was primarily driven by
dividend payments and interest expenses.

Year Ended March 31, 2021:

1. Cash Flow from Operating Activities: The company generated net cash flow from
operating activities of INR 4,197.21 crores. This represents an increase compared to the
previous year's net cash flow of INR 3,119.88 crores. The increase can be attributed to
higher profit before tax and adjustments for depreciation, amortization, and provision for
doubtful debts. There was also a decrease in trade receivables and an increase in liabilities
and provisions.

2. Cash Flow from Investing Activities: Bajaj Auto had a net cash outflow from investing
activities of INR 2,868.36 crores. This indicates a significant increase compared to the
previous year's net cash outflow of INR 500.64 crores. The cash outflow was primarily due to
purchases of investments and property, plant, and equipment.

3. Cash Flow from Financing Activities: The company had a net cash outflow from financing
activities of INR 1,578.33 crores. This represents a slight decrease compared to the previous
year's net cash outflow of INR 1,496.90 crores. The cash outflow was primarily driven by
dividend payments and interest expenses.

Overall, Bajaj Auto has shown consistent positive cash flows from operating activities in all
three years, indicating a strong financial performance. The company has also made
significant investments in subsidiary companies, investments, and property, plant, and
equipment. However, there have been cash outflows from financing activities due to dividend
payments and interest expenses.

Differences in Cash Flow Patterns:

1. Operating Activities:
- Tata Motors: In 2023, Tata Motors experienced a decrease in cash flow from operating
activities compared to 2022, indicating a decline in cash generation from core operations.
- Bajaj Auto: Bajaj Auto demonstrated consistent positive cash flows from operating activities
in all three years, indicating strong financial performance.
- Mahindra & Mahindra: Mahindra & Mahindra reported varying cash flow performances over
the years, with a decrease in cash flow from operating activities in 2023 compared to 2022,
despite an improvement in profitability.

2. Investing Activities:
- Tata Motors: Tata Motors had a net cash inflow from investing activities in 2023, indicating
cash generation through the sale of assets and investments. However, it experienced a
significant cash outflow in 2022 due to payments for assets.
- Bajaj Auto: Bajaj Auto showed improvement in investing activities, with a net cash inflow in
2023 and a decreased net cash outflow in 2022.
- Mahindra & Mahindra: Mahindra & Mahindra experienced a net cash outflow from investing
activities in all three years, primarily due to payments for property, plant, and equipment,
investments, and acquisitions.

3. Financing Activities:
- Tata Motors: Tata Motors had a net cash outflow from financing activities in all three years.
In 2023, the outflow was driven by repayments of long-term borrowings.
- Bajaj Auto: Bajaj Auto had a net cash outflow from financing activities, mainly due to
dividend payments and interest expenses, with a slight decrease in 2023 compared to the
previous years.
- Mahindra & Mahindra: Mahindra & Mahindra showed varying cash flows from financing
activities, including both inflows and outflows, reflecting borrowings, repayments, dividends,
and transactions with non-controlling interests.

Financial Position Based on Cash Flow Statements:

2.1 Tata Motors:

- Despite a decrease in cash flow from operating activities, Tata Motors improved profitability
in 2023, resulting in a positive net cash flow.
- The net decrease in cash and cash equivalents indicates a utilization of cash during the
year, which may affect liquidity and financial flexibility.
- The company's investments in mutual funds demonstrate its strategic approach to capital
allocation and potential growth opportunities.

2.2 Bajaj Auto:

- Bajaj Auto consistently generated positive cash flows from operating activities, indicating a
strong financial position and effective management of core operations.
- The net cash inflow from investing activities and manageable cash outflow from financing
activities contribute to a stable financial position.
- The company's investments in property, plant, and equipment reflect its focus on enhancing
manufacturing capabilities and future growth.

2.3 Mahindra & Mahindra:

- Mahindra & Mahindra's cash flow statement shows varying cash flow performance over the
years, influenced by changes in working capital and investments.
- Despite a decrease in cash flow from operating activities in 2023, the company reported
improved profitability, indicating potential for future cash generation.
- The net cash outflow from investing activities highlights the company's investments and
acquisitions, which may contribute to long-term growth.

Comparison of the Three Activities based on Cash Flows:

3.1 Operating Activities:

- Bajaj Auto consistently demonstrated positive cash flows from operating activities,
indicating efficient management of core operations and a strong financial position.
- Tata Motors and Mahindra & Mahindra experienced fluctuations in cash flow from operating
activities, influenced by changes in working capital and profitability.

3.2 Investing Activities:

- Tata Motors and Mahindra & Mahindra incurred cash outflows from investing activities due
to payments for assets and acquisitions.
- Bajaj Auto showed improvement in investing activities, with a net cash inflow in 2023 and
decreased net cash outflow in 2022.

3.3 Financing Activities:

- All three companies had cash outflows from financing activities, primarily driven by dividend
payments and interest expenses.
- Tata Motors experienced significant repayments of long-term borrowings, contributing to
the overall cash outflow.

Conclusion:
The comparative analysis of the cash flow statements of Tata Motors, Bajaj Auto, and
Mahindra & Mahindra reveals differences in cash flow patterns and financial positions. Bajaj
Auto demonstrated consistent positive cash flows from operating activities, indicating strong
financial performance and effective management of core operations. Tata Motors and
Mahindra & Mahindra experienced fluctuations in cash flow from operating activities,
influenced by changes in working capital and profitability. While Bajaj Auto improved its
investing activities, Tata Motors and Mahindra & Mahindra made significant investments and
acquisitions, leading to cash outflows. All three companies had cash outflows from financing
activities, primarily driven by dividend payments and interest expenses.