Investor Presentaiton
16
WHY SWAP OPTION IS PREFERRED-IMPORTANCE OF CASH
■ The Company now plans to grow to 4 million units with no debt and a very small paid-up capital of Rs.150 crores that
would increase marginally after the share swap. The high valuation of MSIL equity, with a P/E ratio far higher than of all
large global manufacturers of cars other than an electric car manufacturer, shows that the market appreciates our
management policies including attitude towards cash reserves.
■ Cash has enabled MSIL to make all required capital expenditures whenever required. It has enabled the Company to
deal with unexpected crisis situations. Cash has not been accumulated by avoiding investments that would benefit the
Company. It is hard to see why earning interest is not favoured in such circumstances, since it gives the Company
greater resilience and sustainability. It enables future opportunities to be seized easily.
■ The period from 2014 till now shows that MSIL not spending cash on the Gujarat plant enabled the Company to become
much stronger and its P/E ratio increased from 21* to 33#. Having cash reserves, and maximizing profits, has benefitted
everyone, including shareholders. There is no evidence to show that reducing cash would be of greater benefit to the
Company or shareholders, when a better option is available, which is proven by the projections of EPS and dividends.
*P/E ratio as of 31st March'2014 (based on EPS of FY13-14
# P/E ratio as of 29th September'23 (based on EPS of last 12 months from July'22 to June'23)View entire presentation