TATA Motors: CSR, Sustainability, and Financial Performance Analysis

This report critically evaluates TATA Motors' corporate social responsibility (CSR) initiatives and their contribution to organizational sustainability. The report begins with an introduction to CSR and its role in achieving market sustainability, followed by an overview of TATA Motors, an Indian multinational automotive organization. The main body delves into TATA Motors' various CSR programs, including Arogya, Vidyadhanam, Kaushlaya, Vasundhara, Amrutdhara, Aadhaar, and Seva, highlighting their positive impact on society and the environment. The report analyzes the company's CSR performance from 2014 to 2018, demonstrating an increasing trend in CSR activities and their positive impact on the number of lives touched by the programs. Furthermore, it discusses the application of the Triple Bottom Line approach, which focuses on social, environmental, and financial aspects. The report also includes a financial performance analysis using ratio analysis, assessing profitability, liquidity, and efficiency ratios to gauge the company's financial health. The report concludes by summarizing the findings and emphasizing the significance of CSR in achieving sustainability and contributing to the overall development of the nation.

Critical Evaluation of the
Organisation Sustainability
and CSR

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7
.........................................................................................................................................................7

INTRODUCTION
Corporate social responsibility is considered as self regulating business model that main aim to
drive the organisational operations toward fulfilment of societal goals. This not only includes the
activities beneficial for society but major concern is provided over environmental welfare too. Fulfilment
of both integrated concepts simultaneously provides an opportunity to attain sustainability in market. The
organisation considered in this report is TATA Motors. It is an Indian organisation and having its
operations in Auto-mobile sector. This organisation has operations at world wide level and provide
different nature of products to satisfy the requirement of various consumer segments. The main aim of
this report is to ascertain the contribution of CSR in sustainability within the organisational operations
(Habbash, 2016).
This report covered determination of CSR policies and functions of an organisation to ascertain
the contribution towards sustainability and analysis of the financial performance of an organisation
through use of ratio analysis technique.
MAIN BODY
TATA Motors is an Indian Multinational automotive organisation that has operations regarding
the manufacturing of Auto-mobiles to fulfil the demand of various consumer segments. The headquarter
of this organisation is situated over Mumbai, India. It is a part of TATA Group which is an Indian
Conglomerate. The different number of products in which this organisation deals or manufactures
includes trucks, vans, buses, sports cars, construction equipments, passenger cars, commercial vehicles
and military trucks. In all over the world this organisation delivers their products and services. These are
related to automotive designing, engineering and outsourcing, vehicle leasing and vehicle service. The
revenue earned by this organisation from their operations was around US$43Billion in 2019 (TATA
Motors Information. 2019). This has clear visibility towards the success of this organisation at
marketplace. The reason for success is not only the diversified products and services, image of an
organisation market was played the major role. This organisation has good image and brand name in all
over the world Automotive sector due to the acceptance and adherence of differentiated CSR policies.
They operate the business with the motive of overall societal development along with environmental
welfare (Hong and Minor, 2016). The different programmes which are initiated under the name of CSR
includes Arogya health i.e. free health check-up services are provided to all the people of society with the
motive of providing good health that enables to achieve life goals, Vidyadhanam i.e. providence of
education facilities for the development of individuals cognitive, psychological and intellectual capacities,
Kaushlaya in the area of employability or skilling that facilitates in the development of skills among the
individuals for their better and secured future along with reduction of unemployment, Vasundhara to
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bring improvements in environment through providence of concentrated efforts towards the increment of
green cover through plantation along with enhancing environmental awareness, Amrutdhara to promote
efforts towards the providence of clean and safe drinking water in the habitats of India that lack in
availability of the safe drinking water, Aadhaar as affirmative action towards the providence of equal
opportunity regarding creation of the situations that facilitates inclusive, equitable and holistic
development of the society along with all individuals for the purpose of building nation, Seva as the
volunteering operations for the purpose to provide support through their leadership against the needy
people through creation of different volunteering policies (CSR Programmes. 2019).
All these are different programmes which are initiated by the TATA motors for the development
of society along with environmental has huge contribution towards the development of overall nation
along with the brand name of an organisation. These contributes behind the attainment of sustainability in
the operations of an organisation through attainment of the full support from the side of society and
government (Javaid Lone, Ali and Khan, 2016). This is so because large number of programmes helped at
very large extent in development of living standard of individuals along with reduction in situation of
unemployment from nation. The figures that depicts the success and contribution of different programmes
of TATA Motors under CSR are presented below:
It is interpreted from the above graph that CSR performance of TATA Motors was in increasing
trend from the year 2014. Large number of individuals of society got the benefit in the different years
from the diversified CSR programmes of the organisation. It is depicted from the above graph that effort
of an organisation towards CSR was optimum in nature because from 2014 to 2018 they are able to got
the higher results against to the planned one's. The major growth was ascertained in year 2018 where
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Illustration 1: CSR Since 2014, 2018

planned to reach towards the individuals from their different programmes around 756240. In the end of
the year figure attained was quite high from the planned one and individuals that are benefited from the
CSR programmes of TATA Motors are around 1746784. The continuous positive growth towards CSR is
the reason behind the success of an organisation at world wide level along with increment in the number
or CSR activities (CSR Report. 2018).
The expected growth was ascertained by an organisation in year 2018. In the initial year the rate
of success was not high due to adherence of less capacitate policies. The reason behind the attainment of
the significant growth in year 2018 in CSR along with profits was application of Triple Bottom Line
approach. This approach has major focus over the social and environmental concerns along with the
aspect of increment in profits (Kabir and Thai, 2017). This would be the reason behind the presence of 8
different major CSR programmes in the different filed for the overall development of society and
environment along with bring improvement in the living conditions of a nation. The other major benefit
that can be ascertained through acceptance of this approach is about reduction in spendings along with
spreading the reach towards the number of lives. This aid in use of amount towards the satisfaction of the
shareholders demand through providence of high amount of returns and dividends (Withisuphakorn and
Jiraporn, 2016). The same is ascertained from the information or graph presented below:
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It is interpreted from the above graph that spending in CSR was decreased in year 2018 as
compared to 2017 but able to cover larger number of lives. In year 2017, spendings was Rupees 25.94
Crores and the number of lives to which they able to reach was 580000. Whereas, in year 2018, spendings
was just Rupees 21.43 Crores but the number of lives they reached was 644000. This was the clear
indication behind the use and success of Triple Bottom Line approach where same focus is provided over
societal and environmental development along with business organisation (CSR Report. 2018).
The sustainability of this organisation in market was proved from the fact that in year total equity
of an organisation in year 2019 was US$8.5 Billion i.e. increasing trend as compared to other years. Also,
the revenue of this organisation in year 2019 depicted positive trend of growth where reached to the mark
of US$4.2 Billion. This was high as compared to other previous years (Lau, Lu and Liang, 2016).
Corporate governance was another important determinant for this organisation that aid in
attainment of continuous growth in market along with sustainability. This is known as the combination of
rules, processes and laws which are followed by an organisation simultaneously for carrying on their
business activities. It was determined from the corporate governance of TATA Motors that their standards
are uphold in class that contributes in strengthening the stakeholders trust over the organisation (Pintea,
2015). The basic reason behind the adherence of such standards from the side of an this organisation was
involvement of top officials in value creation processes. This includes direct supervision and control over
the performance of company, direct leadership and guidance to company management, regular review
over company's strategies and business plan and establishment of the framework for the risks (Corporate
Governance of TATA Motors. 2019).
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Illustration 2: CSR Spendings, 2018

The financial performance of an organisation was significant nature. Positive trend was visible in
their revenue in year 2019 as compared to other years. The comparative analysis of financial statements
of an organisation help to determine the the actual growth (Schäfer, 2016). The method used or best in
nature to analyse the difference was ratio analysis that provides an opportunity to get actual and reliable
results. Comparative analysis will be going to conduct among the financial statements of TATA Motors
of 2018 and 2019, presented below:
It is interpreted from the above key ratios that ability of an organisation to earn revenue was
grown but with average rate. The ratio that depicts the rate to which revenue increased was 3.53 (Key
ratios of TATA Motors. 2019).
Financial ratio- It is classified as a sort of methodology that is useful for the good financial assessment of
a corporation. Herein, below in the aspect of TATA motors some key ratios are calculated such as:
Profitability ratio:
 Gross profit ratio = Gross profit/ net sales*100
Year 2017 2018 2019
Gross profit 985600 1013268 1014807
Sales 2656495 2882951 2993662
Gross profit ratio 37.1% 35.1% 33.9%
Analysis- On the basis of above calculated gross profit ratio of this company, it can be find out
that company’s performance is decreasing in a significant manner. Such as in year 2017, it was
of 37.1 % which reduced in further years and became of 33.9% in year 2018.
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Illustration 3: Key ratios, 2019

 Net profit ratio= Net profit/ net sales*100
Year 2017 2018 2019
Net profit 61211 66661 -293143
Sales 2656495 2882951 2993662
Net profit ratio 36.43% 35.99% -
Analysis- As per the calculated net profit margin of this company, it can be find out that their
performance is becoming poor year by year. Such as in year 2017, it was of 36.43% which
reduced in next year. As well as in year 2019, their ratio was presenting negative result.
Liquidity ratio-
 Current ratio:
Year 2017 2018 2019
Current assets 1163336 1362648 1228275
Current liabilities 1152886 1427783 1447751
Current ratio 1.01 0.95 0.85
Analysis- As per the above-mentioned measured current ratio of this corporation; this can be
found that its liquidity condition is not as great as it's unable to achieve the optimal current ratio
of 2:1. Such as in year 2017, it was of 1.01 times while in year 2019 it was of 0.85 times. This
indicates that performance is decreasing in a significant manner.
Quick ratio= Quick assets/ current liabilities
Year 2017 2018 2019
Quick assets 788127 896096 795245
Current liabilities 1152886 1427783 1447751
Quick ratio 0.68 times 0.63 times 0.54 times
Analysis- As per the above measured ratio of this corporation; it can be found that its volatility
situation is not as great as it's unable to meet the desirable quick ratio of 1.5:1. Such as in year
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2017, it was of 0.68 times while in year 2019 it was of 0.54 times. This indicates that
performance is decreasing in a significant manner.
Efficiency ratio:
 Assets turnover ratio:
Year 2017 2018 2019
Assets turnover ratio 1.00 0.98 0.96
Analysis- Higher assets turnover ratio shows that company is able to manage their assets effectively.
Though, their performance is decreasing year by year. Such as in year 2017, it was of 1.00 times which
decreased next years.
 Fixed assets turnover ratio:
Year 2017 2018 2019
Fixed assets
turnover ratio
4.02 3.84 3.71
Analysis- Higher fixed assets turnover ratio shows that company is able to manage their fixed assets
effectively. Though, their performance is decreasing year by year. Such as in year 2017, it was of 4.02
times which decreased in next year like in year 2018, this was of 3.84 times.
Inventory turnover ratio:
Year 2017 2018 2019
Stock turnover ratio 4.92 4.81 4.86
Analysis- This ratio shows that company’s performance to manage stock is fluctuating year by
year. Such as in year 2017, it was of 4.92 times that decreased in next year. While in next year
2019, it again increased till 4.86 times.
Overall analysis- As per the above mentioned financial analysis, this can be find out that TATA
motors’ performance is not so good. This is so because all the ratios are presenting negative
results.
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CONCLUSION
It has been concluded from the above report that CSR has hug contribution behind the growth of
an organisation. TATA Motors has large number of CSR programmes that allows providing support large
number of individuals of society. Corporate governance of TATA Motors was Uphold class due to the
involvement of top officials within organisational internal decision making. Financial performance
depicts that organisation revenue earning capacity was increasing but with average rate.
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REFERENCES
Books and Journals
Habbash, M., 2016. Corporate governance and corporate social responsibility disclosure: evidence from
Saudi Arabia. Social Responsibility Journal. 12(4). pp.740-754.
Hong, B., Li, Z. and Minor, D., 2016. Corporate governance and executive compensation for corporate
social responsibility. Journal of Business Ethics. 136(1). pp.199-213.
Javaid Lone, E., Ali, A. and Khan, I., 2016. Corporate governance and corporate social responsibility
disclosure: Evidence from Pakistan. Corporate Governance: The international journal of
business in society. 16(5). pp.785-797.
Kabir, R. and Thai, H.M., 2017. Does corporate governance shape the relationship between corporate
social responsibility and financial performance?. Pacific Accounting Review. 29(2). pp.227-258.
Lau, C., Lu, Y. and Liang, Q., 2016. Corporate social responsibility in China: A corporate governance
approach. Journal of Business Ethics. 136(1). pp.73-87.
Pintea, M.O., 2015. The relationship between corporate governance and corporate social
responsibility. Review of Economic Studies and Research Virgil Madgearu. 8(1). pp.91-108.
Schäfer, H., 2016. 26 Corporate Social Responsibility Rating. A Handbook of Corporate Governance and
Social Responsibility, p.449.
Withisuphakorn, P. and Jiraporn, P., 2016. The effect of firm maturity on corporate social responsibility
(CSR): do older firms invest more in CSR?. Applied Economics Letters. 23(4). pp.298-301.
Online:
CSR Programmes. 2019 [Online]. Available Through: <https://www.tatamotors.com/corporate-social-
responsibility/>
CSR Report. 2018 [Online]. Available Through:
<https://www.tatamotors.com/wp-content/uploads/2018/07/06111347/annual-csr-report-2017-
18.pdf>
Key ratios of TATA Motors. 2019 [Online]. Available Through:
<https://www.morningstar.com/stocks/xnse/tatamotors/quote>
Corporate Governance of TATA Motors. 2019 [Online]. Available Through:
<https://investors.tatamotors.com/financials/74-ar-html/board-of-directors.html>
TATA Motors Information. 2019 [Online]. Available Through: <https://www.tatamotors.com/>
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