• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

G. Madhan

THE fixed deposit programme of Cholamandalam Investment and Finance (CIFL) is open for investment. The interest rates are on a par with that offered by such auto finance companies as Lakshmi General Finance, but lower than that of Mahindra and Mahindra Financial Services.

Investors can park their funds in the CIFL scheme, given the company's strong fundamentals and the revival in the auto segment.

Schemes and features: A non-banking finance company, CIFL offers non-cumulative and cumulative schemes. Under the former, the interest (see table) is paid at monthly, quarterly and annual rests.

The interest rates for the latter are similar to that of the monthly non-cumulative option. However, the annual yields for this scheme works out to 6.14 per cent, 6.89 per cent and 7.72 per cent respectively, as interest is compounded at monthly rests.

The minimum deposit for all the schemes is Rs 10,000. However, for the one- and two-year monthly payment options, it is Rs 25,000. Further details can be got from the registered office at TIAM House, 2nd floor, 72, Rajaji Salai, Chennai-01.

Business prospects: A Murugappa group company, CIFL has presence in various segments, including vehicle and capital market finance, securities broking, mutual funds, insurance and distribution services.

A sizeable portion of the company's assets is vested in vehicle finance. Hence, its earnings, to a large extent, depend on the fortunes of the auto segment. For instance, in the year-ended March 2003, CIFL's total disbursements in vehicle finance business rose 44.6 per cent to Rs 1,008 crore.

Given the uptrend in the auto sector, CIFL has good growth prospects as far as disbursements go. However, this may not necessarily improve the company's profitability, given the fierce competition in the vehicle-financing segment.

Financials: For the nine months ending December 2003, CIFL's net sales grew a modest 1.7 per cent to Rs 170.2 crore.

The net profit, however, grew 40 per cent to Rs 27.7 crore during the period. The operating profit margin was at 69 per cent (80.7 per cent). The net profit margin, however, rose to 16.3 per cent (11.8 per cent) on the back of sharp drop in the interest expenses.

The net non-performing assets, as of March 2003, were one per cent of the total risk weighted assets. The capital adequacy ratio at 13.18 per cent is higher than the RBI norms prescribed.

Suitability: Among the options, the three-year cumulative scheme is particularly attractive, as the annual yield is higher at 7.72 per cent.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Quiz

Copyright © 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line