Does it mean that short-term assets are being encashed to finance long-term assets?
Actually there has been a net increase in working capital – there has been no use of short-term funds for long-term investment. If you notice there has been a decrease in bank deposits and intercorporate deposits – as these were used for the expansion into Automotive Batteries. We have actually financed the expansion through internal accruals. Basically, the company has been generating cash in the past years, and we also had a rights issue in the previous year. These are the resources which have gone into financing the fixed assets. It is not actually through liquidation of current assets. Your company’s shareholders’ fund works out to Rs 158.75 crore as against a debt of Rs 13.36 crore. Don’t you think that servicing equity is costlier than servicing debt? It is the basic philosophy of the company not to rely too much on debt. I agree with you that equity is costlier than debt. But we would also need to weigh the cost options with the investment options available for cash surpluses. A
