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Sunday, Nov 03, 2002

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Ashok Leyland Finance: Creditable option

G. Madhan

THE fixed deposit programmes of Ashok Leyland Finance can be a good option for investors with a low-to-medium risk profile.

The interest rates offered by the company are quite attractive considering the RBI's current interest rate policy. The rates offered by few leading banks are cut by 25 to 50 basis points, following the change in the Credit Policy.

Ashok Leyland Finance has a good track record and its credit quality is also on the high side. It is among the better-managed non-banking finance companies (NBFCs) operating now.

The company's deposits are one of the safer fixed-income investment options available, as suggested by the FAA rating assigned by Crisil, indicating high safety, but factoring in the inherent risks involved in the company's areas of operation.

AL Finance provides financial assistance to retail and corporate customers.

Its portfolio in the retail segment includes financing of commercial vehicles, cars, multi-utility vehicles, two-wheelers and white goods.

For corporate customers, it provides short-term assistance through bill discounting and also lends for purchase of industrial or office equipment under hire-purchase or leasing schemes.

The company's fundamentals appear sound. For the quarter ending June 2002, the net profit rose 45.8 per cent to Rs 9.23 crore and the operating margin went up by 0.84 percentage points to 24.53 per cent over the corresponding previous quarter. The financial and operational risk profile is stable and the company is not likely to face any problems in servicing its fixed deposit base.

Schemes and features

The company offers various plans to suit depositors' needs. Under the fixed deposit programme, the depositor has a choice of cumulative and non-cumulative schemes.

Under the quarterly income plan, the depositor can choose between two tenors — 24 or 36 months — at 9.58 per cent and 10.08 per cent respectively. The minimum deposit amount under this option is Rs 10,000.

Under the monthly income scheme, only the 36-month scheme is available. Depositors are offered 10 per cent as interest rate for this tenor. The minimum deposit under this option is Rs 15,000.

Under the cumulative deposit scheme, there are three tenors — 12, 24 and 36 months at 9 per cent, 9.5 per cent and 10.5 per cent respectively.

Tax is not deducted at source on interest payments up to Rs 5,000 per annum. Depositors can also get loans against the deposits. For further details, depositors can contact the Chennai office at Sudarsan Building, 86, Chamiers Road, Chennai - 600 018.

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