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G. Madhan

THE fixed deposit programme of Sundaram Industries (SIL), a subsidiary of TVS and Sons, is open for renewal only. The interest rates are quite attractive. Given the company's fundamentals, the parentage and the strong growth witnessed by the auto sector, an investment in all the three years can be considered.

Schemes and features: SIL offers cumulative and non-cumulative deposit schemes. Under the latter, two options (bi-monthly and quarterly) are available (see table). Deposits under the former are compounded at monthly rests and, hence, the annual yields are 7.76 per cent for one year, 8.64 per cent for two years and 9.64 per cent for three years.

Business prospects: SIL derives its revenues from two main businesses — rubber automotive components and tyre retreading. The company's rubber division makes moulded components used in automotive and industrial segments. The company serves domestic players including Maruti Udyog, Toyota Kirloskar Motor, Tata Motors and TATA Cummins and exports to several countries including the US, UK, and Germany.

The company's tyre services division provides retreading services and processes all sizes of tyres ranging from scooters to earthmovers.

Given the robust growth witnessed by the auto sector, the company has good prospects for revenue growth.

Financials: SIL's post-tax profit was down 54 per cent to Rs 5.2 crorefor the year ending March 2003. The company has reduced its debt (both secured and unsecured loans) by 27 per cent. The company's debt-equity ratio as of March 2003 is at 1.3 as against 1.6 in March 2002.

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