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Shanthi Venkataraman

THE fixed deposit programme of KCP can be considered by investors willing to take risk. The interest rate on offer is higher compared to other FD options available. Most manufacturing companies now offer rates between seven and eight per cent. Investors can, however, stick to the one-year option and renew their deposits once the company's fundamentals improve.

Scheme details: The company offers non-cumulative fixed deposits across a one-, two-, and three-year period. The interest rate offered is nine per cent and is payable on a quarterly basis.

The company also offers a cumulative deposit option at 9 per cent. The lock-in would, however, be for three years. The cumulative option may be avoided for now.

The minimum deposit is Rs 21,000. Further details can be obtained from the Corporate Office, Ramakrishna Buildings, No 2, Dr P.V. Cherian Crescent, Chennai 600 008.

Business prospects: KCP makes cement and heavy engineering equipment. It also has a hydel power unit, which it uses partly for captive consumption. Cement now accounts for close to 60 per cent of its sales.

Operating profits suffered a setback in FY-03 and the company made a loss during that year. In FY-04, its operating profits recovered, but are not as high as previous levels. Although interest costs have declined, there is still less of a cushion to absorb it. Investing in the fixed deposit of the company, thus, attracts a higher degree of risk.

KCP with its capacity of 500,000 tonnes per annum is among the smaller players in the cement business. Its main market is Andhra Pradesh. The oversupply in the South has affected volume growth.

Demand is, however, expected to improve as infrastructure development picks up in Andhra Pradesh and Karnataka. This should improve the price realisations for the company as well. KCP is increasing its production of blended cement, which should improve its margins and profitability.

The performance engineering division picked up in 2003-04. Exports grew five-fold to about Rs 20 crore in FY-04. The pick up in manufacturing sector in India augurs well for the division's growth prospects. Revenue and earnings growth would also be aided by its subsidiaries — KCP Biotech and KCP Vietnam — which enjoy bright prospects.

KCP Biotech has commenced production of natural colourants, which find application in various industries such as food, cosmetics and pharmaceuticals. KCP Vietnam, engaged in sugar production, should benefit from the firming up in sugar prices.

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