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G. Madhan

THE fixed deposit programme of Premier Instruments and Controls (Pricol), a Coimbatore-based engineering company, is open for renewal only. The company's fundamentals are strong and the interest rates offered are quite attractive compared to that of other manufacturing companies.

Given the sharp decline in the number of attractive fixed deposit options, investors can continue to park their funds in Pricol. However, considering the low incremental return offered for the three-year tenor, they would be better off considering the one- and two-year options.

Schemes and features: Pricol offers cumulative and non-cumulative fixed deposit schemes. Under the former, the interest rates on offer are 7.85 per cent, 8.35 per cent and 8.60 per cent for one, two and three years respectively. Since the rates are compounded at quarterly rests, the yields for the same are 8.08 per cent, 9.45 per cent and 9.69 per cent.

For the same tenors, the non-cumulative scheme offers 7.5 per cent, 8.25 per cent and 8.5 per cent respectively and the interest is payable at quarterly intervals.

The minimum deposit for both schemes is Rs 25,000. Further details can be obtained from 1087A, Avinashi road, Coimbatore - 641 037.

Business prospects: Pricol's earnings, to a large extent, depend on the fortunes of the auto industry. The company makes auto ancillary components such as automotive dashboard instruments and accessories, speedometers, electrical pressure gauges and battery condition indicators for two- and four-wheelers, earthmoving equipment and industrial applications. Its customers include industry majors such as Hero Honda Motors, Ashok Leyland, Bajaj Auto, and Tata Motors. Given the strong showing of the automobile industry, the company's prospects appear bright.

Financials: The company's financial performance is encouraging. For the nine months ending December 2003, the net sales grew 23 per cent to Rs 271.6 crore over the corresponding previous period.

The post-tax profit was up 86 per cent to Rs 23.6 crore during the period. The operating profit margin was up 20.7 per cent (as against 19.4 per cent earlier). The net profit margin was at 8.7 per cent (5.7 per cent).

The company's ability to meet interest expenses appears good as the interest coverage ratio was up to 14.4 (3.6). The debt-equity ratio was at 1.19 (as on March 2003).

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