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G. Madhan

IN THE current low interest rate regime, safe fixed deposit options offer either low interest rates or require a longer lock-in period to get reasonably attractive returns. For investors with a penchant for risk, however, few companies offer deposit schemes that offer high returns.

Such schemes also carry a higher degree of risk. Investors, based on their risk appetite, can consider these options.

Bata India's two-year FD programme is one such option. The company has made net losses over the past two years. The trend has also continued in the last six months ending June 2004.

The rate on offer is, however, quite attractive. The company's net cash flows have become marginally positive during the year ending December 2003, after being in the negative in 2002 and 2001.

The company's declaration that it has not defaulted repayment of deposit or interest in respect of investments by small depositors is comforting.

Scheme and features: Bata India offers cumulative and non-cumulative schemes. The minimum deposit amount for both is Rs 15,000 and carry the same 8 per cent interest rate.

Since the cumulative option is compounded at quarterly intervals, the annual yield for the same is 8.58 per cent. Interest on the non-cumulative option is paid at quarterly rests.

Further details can be had from the company's registered office at 6A, S. N. Banerjee Road, Kolkata 700 013.

Business and financials: Bata India makes and sells all types of footwear, footwear components and leather, besides footwear accessories, garments and sports goods.

The company is now undergoing a restructuring exercise. It plans to redevelop the township of Batanagar; come out with a rights issue to fund its organisational and financial revamping; and turn profitable by 2005.

In the half-year ending June 2004, Bata' revenues grew 4.1 per cent to Rs 357.7 crore over the corresponding previous period. The net losses were Rs 16.4 crore (Rs 6 crore).

At the operating level, losses were at Rs 6.1 crore against a profit of Rs 5 crore in the corresponding previous period.

In the year ending December 2003, Bata India held fixed deposits of Rs 15.1 crore (Rs 21.9 crore). Its debt-equity ratio is 0.35.

Suitability: Bata's FD option is suitable only for investors with a penchant for risk. The returns are not substantially higher than that offered by the small-savings schemes such as post-office monthly income schemes.

Those who have exhausted those options can consider the FD programme; risk-averse investors can, however, stay away.

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