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G. Madhan

THE fixed deposit programme of Fenner India, an associate company of J. K. Organisation, is open to investment. The company's fundamentals are encouraging. The one-year interest rate is quite attractive compared to other manufacturing companies.

As the auto sector still has some steam left in it, an investment up to one year can be considered. Longer tenures, however, can be avoided, considering the cyclical nature of the user industry it serves. Besides, incremental returns in the two- and three-year options are not enough to warrant a long exposure.

Scheme and features: Fenner India offers the non-cumulative scheme only. The interest is paid at quarterly intervals. The interest rates are 7.50 per cent for one year, 7.75 per cent for two years and 8 per cent for three years.

The minimum deposit for the scheme is Rs 5,000 and, thereafter, in multiples of Rs 1,000. Further details can be got from the registered office at 3, Madurai-Melakkal Road, Madurai, Tamil Nadu — 625016.

Business Prospects: Fenner India has a strong presence in the auto- component product market. It also has business interests in engineering and textile industries.

The company makes industrial V-belts, auto belts, oil seals, power transmission products and conveyor belts and caters to several original equipment manufacturers. Its customers include automobile manufacturers such as TVS Motor, Hindustan Motors, Tata Motors, Hero Honda, TAFE and Ashok Leyland.

Financials: The performance of the user industries has a strong bearing on the company's fortunes.

Fenner India saw a steady decline in both its revenue and profits from 1998-99 to 2001-02. However, the financial performance in 2002-03 recovered on the back of improved performance of its user industries.

Fenner's sales in 2002-03 moved up by a moderate 4.5 per cent to Rs 178.3 crore over the corresponding previous year.

Earnings growth was higher at 29.4 per cent to Rs 7.2 crore. Profits at the operating level, however, fell 11.2 per cent to Rs 26.6 crore. The rise in profits at the net level was because of the sharp decline in the interest costs.

The company's gearing levels are stable and the interest coverage ratio is at 2.3, as against 2 the previous year. In this backdrop, the company is not likely to face problems servicing its fixed deposit base.

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