Morgan's analysts believe that while Telco's new car, the Mint, will have advantages such as cost competitiveness and the management is investing in a high quality dealer network, it is unlikely to contribute to Telco's bottomline. It says that, given the tough nature of competition, and the poor perception of Telco's product quality, it is unlikely that the car project will cover its cost of capital in the next eight years. In the event, Morgan's analysts feel that the car will not addshareholder value.

The point, however, is that Morgan's analysts believe that the value of the commercial vehicles business should more than offset the structural erosion in value due to the car business.

Morgan issued this clarification in view of a story published in The Indian Express a few days ago which concentrated exclusively on Morgan's comments on Telco's small car venture.