 Good day fellow investors. I recently made a video on Tata and there were two excellent comments where there is so much to learn and discuss about value. How we define, how we quantify and what actually at the end value investing is and what is the equalizer that can help us all see whether something is 100% value or it is not really 100% value that cannot lose its value. Let me start with the comments. Our wine doctor didn't understand why the rising property plant and equipment numbers pretend that the business is weak, as I said. In his opinion it only tells you that the company is spending money for future growth as they are investing in new plants. In this case with Tata they are investing in a new plant in Slovakia, manufacturing equipment etc. Could I please explain this again? And then the second question is from Amir Re. How much do you value their brand? That's an important part of the valuation. So how to value a brand and how to value property, plant and equipment? So the company was Tata that we discussed in the other video. So let's go to check Tata again to see what's the value there, how can we discuss that and then at the end with investing it will be up to you to see what is the number that you attach to property plant and equipment or brand value. Let's start with property plant and equipment. The first thing is if you look at row number 3 net property plant and equipment you see that they already spent the money over the last years as gross property plant and equipment went from 753 billion rupees doesn't matter the currency isn't important here to 1.4 billion so it almost doubled also net property plant and equipment is significantly up. So they have been investing in property plant and equipment but that didn't reflect itself into revenue as revenues were 2.6 billion trillion rupees and now they are 2.9 trillion rupees. So the actual expected future growth that should keep that value of property plant and equipment didn't come. As property plant and equipment is just an accounting measure you don't impair this as long as it depreciates you simply use the straight line or whatever they use. So yes the property plant and equipment if we look at row 3 has gone up but revenue didn't go up proportionally. So if you look at from a business perspective they are investing a lot but there are no returns from their investment. So the property plant and equipment yes has a cost so that is the cost that you see on the balance sheet and that cost what they spent for that has increased. However it didn't return value to shareholders as revenues didn't increase proportionally to the investment in the property plant and equipment which means that their business is actually becoming more and more capital intensive and less profitable for shareholders and that's also another reason why the stock price is down. So it's very important to see okay what is the result of investing in property plant and equipment and it always boils down to one equalizer and that is cash. If you invest in property plant and equipment and those factories print out cash to shareholders then the value of the property plant and equipment is great. If not then that is something to really question when you look at such companies that have huge capital requirements and very very competitive markets and products. Also just a quick look here total current assets are going up which means that they are using more and more working capital to do what they do. So more capital more capital which usually leads leads to lower returns on capital which is not a good thing for shareholders as you as a shareholder are the owner of the capital used. And also something very important row four intangible assets. The intangible assets they invest like say in the sketches in how much they invest into building a new project a new car or something are almost as big as net property plant and equipment. So that's another thing to keep in mind when investing and analyzing such companies. Now let's go to the second question. How much do you value their brand and that is an important part of the valuation here. Okay the brand Apple has a strong brand why because they can charge you a phone this case the one that I'm using to film this video they can charge me this I don't know what it costs thousand bucks so they have the power and people will pay a thousand bucks will overpay perhaps some other cheaper phones have same characteristics and cost much much less but people are willing to pay more for this phone because it's an apple it's connected to all other devices it's the ecosystem blah blah blah and then it's the brand just that bitten apple is worth something and people are willing to pay more are people willing to pay more for a Jaguar Range Rover. Actually if you look at the brands the people when you talk to people that they own something they usually say they will never own a Jaguar anymore. So the brand isn't that strong and then where do we see whether the brand is strong. We compare prices we look at revenues and we look at what comes out from those revenues are those cash flows. Let's see Tata's revenues those are not really increasing as if as the Indian rupee has decreased in value so Tata's revenues are stagnant let's say over the last five years. If we look at total operating expenses those are increasing much much faster than revenues which means that their brand is not sufficiently strong to charge their customers and at the end it all boils down to cash flows. If we look at the cash flows the operating cash flows are yes positive even if declining but the capital investments are huge and will probably continue to be huge because Jaguar Tata Motors they don't really have pricing power so in this case I wouldn't go around saying okay the valued Jaguar brand is extremely valuable and should be put into this combination. At the end it all boils down to cash flow free cash flow for shareholders which has been extremely negative in the last 12 months but it was positive in the previous nine years and then again negative in 2009 with a recession. As a car company Jaguar doesn't have the pricing power to conclude here at the end it's you have to go and see what are the real numbers on the balance sheet what is the real benefit of the strong brand and whether there is a strong benefit and usually strong brand leads to high margins high margins leads to high cash flows and then I would say okay that's a strong brand. However Jaguar cannot put a car out there and price it 20 000 above the competition no it has to be probably even below the competition because the competition has stronger brands just before because Sting made a video or a song 10 15 years ago in a Jag doesn't mean that is a strong brand. So that's something very interesting to discuss and it also shows how okay we all have the same numbers we have the same numbers about brand recognition we have the same numbers about property plant and equipment but that is actually what matters when it comes to investing you have to analyze those numbers and then see okay this is the number that the balance sheet gives me but what is my actual value what is the value that I would give or that for example someone buying the company would give to what is there on the books or to what is there from questionnaires or market researchers that the brand value or something like that what is the real value and then you put it in a model if you like the company and then you see whether the company is overvalued undervalued then comes your return on investment and when you do all that and when you do all that on many many companies then you will easily determine okay this is overvalued this is undervalued or this fits my investing criteria and then things become easier and easier so the equalizer that makes things much easier is always cash and always look these numbers the property plant and equipment equipment etc does it lead to cash or earnings depending on the company if not then things become more and more complicated which means more and more risky like it is the case with Tata Motors I have no idea where Tata will go nobody knows which makes it actual risk reward and that's why you see the stock price going down because the risk is there but there is also a reward as the stock price is severely depressed thank you for watching hope I have clarified this a little bit that investing actually isn't exact looking forward to your comments and I'll see you in the next video