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Sowmya Sundar

OPTIONS for fixed deposits have been dwindling over the past two years. There are few manufacturing companies that access the fixed deposit market now.

Those who accept do not offer superior rates on a risk-adjusted basis compared to other fixed rate instruments such as small-savings schemes, LIC's Bima Triple Cover and RBI Relief Bonds.

Hence, only investors who have exhausted the limits in these schemes need to look at fixed deposits as an investment alternative.

Among the fixed deposit options, Jubilant Organosys (formerly known as Vam Organic Chemicals) can be considered if one wants to park funds for a short term.

The interest rates are 7.5 per cent for one year, 7.75 per cent for two years and 8 per cent for three years.

The cumulative scheme is compounded at half-yearly rests and the annual yield is 7.64 per cent for one year, 8.21 per cent for two years and 8.84 per cent for three years.

The interest for the non-cumulative scheme is payable at half-yearly intervals. Further details can be obtained from 1-A, Sector 16-A, Institutional Area, Noida - 201301, UP.

Jubilant Organosys makes performance chemicals, organic intermediates, agri-products and adhesives for the industrial and household segment.

Over the past two years, it has also diversified into pharmaceutical ingredients and life-sciences. It derives 27 per cent of its turnover from exports. The organic intermediates segment contributes over 45 per cent and the pharma and life-sciences segment about 30 per cent of the revenues.

It is fundamentally on a strong ground and has grown steadily over the past three years.

Its presence in the high growth life-sciences segment and the thrust on exports would be its future growth drivers.

The high leverage is not a cause for concern as the funds borrowed are to be used for its growth plans.

These investments would start yielding returns in the medium-to-long term.

Despite the high leverage, the interest cover (operating profit/interest) at 3.8 times is comfortable.

Jubilant Organosys would be able to generate enough cash to service its deposits. Investors can consider a short-term deposit (one year) in the company. The long-term deposit can be avoided, given the low incremental interest for it.

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