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SAW Pipes: An investment in the fixed deposit programme of SAW Pipes can be considered.

However, depositors can choose the one-year lock-in option and avoid longer tenures due to the inherent risks involved in dealing with a company that is engaged in the cyclical commodities business.

The company offers a 7 per cent rate of interest for a one-year deposit.

Though this is lower than the rates offered by some of the other companies, the risk involved is also lower.

SAW Pipes is now riding on the benefits accruing from the rising prices of steel and steel products.

The company is also likely to benefit from the increased demand for submerged arc-welded pipes that are used in the transportation of water, oil and gas.

Ceat: Taking into account the attractive interest rate offered, investment in the fixed deposits with one-year tenure may be considered.

The one-year deposit carries an interest rate 8.5 per cent, which is attractive in comparison to the rates offered by banks and other companies.

Though the interest rates on deposits beyond one-year maturity also appear attractive, it would be better to stick to the shorter tenure option as the tyre industry is still passing through a relatively depressed phase.

The firm trend in input cost and intense competition in the industry along with the sizeable excess capacity would keep the financials under pressure.

India Cements: An investment in the one-year and two-year options may be considered.

The rates of 8 per cent and 8.5 per cent are attractive when compared to what is on offer from a host of other companies.

The risks are, however, higher as the company is still in the process of cutting its losses.

The improvement in price levels in the southern market over the past couple of months is likely to lead to a turnaround.

Unless this is accompanied by a healthy growth in volumes, any turnaround may be short-lived.

If the company manages to raise equity in line with its plans, it would enhance the comfort level for investors in its fixed-deposit programme.

The cumulative option and the three-year option can be avoided, as the incremental returns do not compensate for the higher risk element.

Bata India: Investors with a risk appetite can consider the fixed deposit programme of Bata India.

The one-year interest rate of 9.5 per cent is attractive compared to that of other manufacturing companies.

The rate compensates well the risk assumed in investing in the company, which has been making losses in recent years.

Bata is now in a restructuring mode. It has reduced staff, rationalised retail outlets and is developing surplus land.

Its foray into real-estate development should help it generate additional revenues. It is, therefore, better placed to meet its interest obligations.

BL Research Bureau

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