BBA133

MICROECONOMICS

CONTINUOUS INTERNAL ASSESSMENT ASSIGNMENT IIIA

On

Tata Motors and Mahindra & Mahindra

Submitted By- Abel Thomas 2123201, Gautam Rajesh 2123213,

Prabhat Tiwari 2123234, Swaroop Patra 2123249, K Jonita Sravani

2123261, Khyati 2123263

Class: 1 BBAH C
Index :

1. Cost and Revenue Structure

 Mahindra & Mahindra

 Tata Motors

2. Accounting and Economic Profit

3. Externalities caused due to the Profit Motive

4. References
Cost And Revenue Structures :

Accounting and Economic Profit :

Profit is the reward of investment and hard work done in running a successful

business. Profitability is the main motivation for all business ventures. Profit can be of two

types – Accounting Profit and Economic Profit.

Accounting profit is the Net income of the company which is derived after deducting

various expenses from the total income. It is basically, the Net profit which is calculated after

deducting all the direct and indirect expenses from the revenue from sales. Accounting Profit

serves the purpose of determining the financial performance of the firm.

The Accounting Profit for Mahindra & Mahindra for the year ended 31 st March 2021

is 268.88 crores and the profits for the previous year ended 31st March 2020 is 1330.55

crores. This shows that there has been a 79.79 % decrease in the profits this year when

compared to the previous years.

The Accounting loss for Tata Motors ltd for the year ended 31 st March 2021 is

2,395.44 crores and the loss for the previous year ended 31 st March 2020 is 7289.63 crores.

This shows that there has been 67.13% decrease in the profits this year when compared to the

previous year.
Economic Profit :

Economic profit is the revenue after subtracting the explicit and opportunity costs.

The explicit cost is the normal business transactions and the opportunity cost is the profits the

company misses out on while choosing between the alternatives. A company’s economic

profit is very subjective and can go either way.

Economic Profit of Mahindra and Mahindra :

Mahindra & Mahindra on the other hand has completely revamped their two already

very popular models. This brought about the XUV 700 and the new Thar. Both these vehicles

have been completely changed while still maintaining the essence that brought it to the

limelight in the first place. The company also heavily invested in safety, making it one of the

safest cars in that segment. Here the company could have easily followed Tata and have

invested in EV heavily or in a different model of vehicle. But they took that opportunity cost

and revamped two cars. This could have easily gone wrong but they played their cards right

and now That has a booking of 75000+ in a year and XUV 700 bagged a booking of 70000+

in just October. This pushed M&M’s economic profit as it led to two new highly demanded

vehicles.

Economic Profit of Tata Motors :

Tata motors have been doing poorly the last decade and recently have picked up

through their EV venture. Here their opportunity cost is an expansion in the field of the

conventional diesel and petrol vehicles which is known to them. They also could have

invested their resources in developing that field that had a pre-existing base. But they chose

to go into the field of Electric Vehicles which was not done by any of the competitors. This

decision helped them garner a whopping 75% of the market, mainly due to their Tata Nexon
EV. This is one of Tata’s greatest steps as the economic profit obtained here is substantial as

now they are the market leaders of the EV market in India.

Both the company’s deduct depreciation which is an implicit cost to them affects the

profit of the company, hence both of these companies earn an Economic profit.

Externalities caused due to the Profit Motive :

Externalities of Mahindra & Mahindra :

Mahindra & Mahindra maintained a proper balance between its positive and negative

externalities. It came up with all the possible ways for contributing positive externalities

towards the society meeting the Social Responsibility of the business ethics.

Positive externalities of Mahindra & Mahindra :

Mahindra & Mahindra launched, Cut the Crap campaign which particularly focuses

on inadequate waste management and the damage from single use plastic usage.

Mahindra & Mahindra basically has 3 missions, they are

1. To, “Adopt & enable benchmark sustainable practices to be a top 10 global

automotive brand”.

2. To, “Adopt & enable benchmark sustainable practices to deliver Farm Tech

Prosperity”.

3. To, “transform rural lives and drive positive change in the communities”.

It promotes and runs various campaigns to achieve these missions for the social wellbeing.
Negative Externalities of Mahindra & Mahindra:

Mahindra & Mahindra also being a part of the automobile industry take part in the air

pollution and the global oil dependency which recently has led us to the shortage of fuel

resulting on inflation of fuel prices. To launch new lines of vehicle they have

compromised on the aspect of changing towards EV like Tata has been doing in recent

years, this also has led to slight decrease in sales as people are starting to believe Electric

as the future and would be instantly convinced to buy from Tata ,as a lack of collection on

Electric cars. . Still, Mahindra manufactures more diesel vehicles, trucks, and tractors,

which makes the environment for the local people more polluted, and locals have to bear

the cost without paying for it.

Externalities of Tata Motors :

Tata motors being one of the largest producers of automobile industry, has certain

positive and negative externalities. As every coin has two sides, Tata motors too withholds

and contributes towards the society.

Positive externalities of Tata Motors :

Tata motors have recently launched a Mega Safety Campaign. It is a nation-wide free

safety check-up for its customers, nation-wide across 650 plus stores. This campaign was run

in order to ensure safety of the consumer during the ride and prevention of road accidents.

This campaign was launched on the occasion of National Safety Month for the welfare of the

consumers and the society.

Tata Motors launched Electric Future of India to promote a proud moment for the

Indians and encouraging the consumers to reduce the use of crude products and opt pollution
free electric rides. This campaign was run to encourage people to go for more electric car

which doesn’t pollute the atmosphere.

Tata Motors not only launched these two campaigns for the public welfare but it also

contributes towards spreading awareness about the importance of education in rural areas in

the name of Tata motors Connecting Aspirations.

Negative externalities of Tata Motors :

Tata motors being a part of automobile industries contributes enough towards the

Global Air pollution and Oil dependency, US oil imports increased from 27% of domestic

consumption in 1985 to 56% in 2003, and are projected to grow to 68% by 2025, Gasoline

will be the single most important source of oil dependency, accounting for 44% of total

petroleum products, Growing dependence on foreign suppliers can be a big problem for the

country’s economic wealth.

References :

Annual Reports, Financial Statements, Balance Sheet of Tata Motors. (2021, May 18). Tata

Motors Limited | Largest Indian Automobile Manufacturer. Retrieved November 19,

2021, from https://www.tatamotors.com/investors/annual-reports/?

annual_report_search=annual_report_search&areport_year=2021

Balachandran, M. (2021, November 16). How Tata Motors is making giant leaps in India's

electric vehicle journey. Forbes India. Retrieved November 19, 2021, from

https://www.forbesindia.com/article/ev-special-2021/how-tata-motors-is-making-

giant-leaps-in-indias-electric-vehicle-journey/71557/1

BrandEquity, E. T. (2019, September 23). Mahindra launches #CutTheCrap environment

campaign. ETBrandEquity.Com. Retrieved November 19, 2021, from

https://brandequity.economictimes.indiatimes.com/news/marketing/mahindra-

launches-cutthecrap-environment-campaign/71261894

BrandEquity, E. T. (2020, September 10). Tata Motors’ campaign highlights the “electric”

future of India. ETBrandEquity.Com. Retrieved November 19, 2021, from

https://brandequity.economictimes.indiatimes.com/news/marketing/tata-motors-

campaign-highlights-the-electric-future-of-india/78034530

Economic Profit (or Loss) Definition. (2020, October 2). Investopedia. Retrieved November

19, 2021, from https://www.investopedia.com/terms/e/economicprofit.asp

Gandhi, S. (n.d.). Mahindra Thar clocks 75,000 bookings in a year. Autocar India. Retrieved

November 19, 2021, from https://www.autocarindia.com/car-news/mahindra-thar-

clocks-75000-bookings-in-a-year-422253

India.com News Desk. (2021, November 5). Mahindra XUV700 Bags 70,000+ Bookings In

October, 700 Units Delivered Before Diwali. India News, Breaking News |

India.Com. Retrieved November 19, 2021, from https://www.india.com/car-and-

bike/mahindra-xuv700-bags-70000-bookings-in-october-700-units-delivered-before-

diwali-5084676/

Mahindra and Mahindra. (2014). Mahindra Sustainability Report. Mahindra.

https://files.techmahindra.com/static/img/pdf/Mahindra-Sustainability-Report-2014-

15.pdf

Mahindra and Mahindra. (2020). Investors Report. Mahindra.

https://www.mahindra.com/resources/investor-reports/FY21/Annual-Reports/

Mahindra-Annual-Report-FY-2021.pdf

Mahindra and Mahindra Profit & Loss account, Mahindra and Mahindra Financial

Statement & Accounts. (n.d.). Moneycontrol. Retrieved November 19, 2021, from

https://www.moneycontrol.com/financials/mahindramahindra/profit-lossVI/MM

Tata Motors announces the launch of ‘Mega Safety Campaign.’ (2020, March 13). Tata

Motors Limited. Retrieved November 19, 2021, from

 https://www.tatamotors.com/press/tata-motors-announces-the-launch-of-mega-safety-

campaign/

Tata Motors Profit & Loss account, Tata Motors Financial Statement & Accounts. (n.d.).

MoneyControl. Retrieved November 19, 2021, from

https://www.moneycontrol.com/financials/tatamotors/profit-lossVI/TM03