The Hindu Business Line : Fixed Deposit options

The bank has introduced a new term deposit bucket of between seven and 10 years. The bank offers 7 per cent for such deposits for younger investors with senior citizens being offered 8 per cent.

This rate of 8 per cent is comparable to the yield on some of the post office schemes such as Post Office Monthly Income Scheme and Kisan Vikas Patra.

The attractive yield is also applicable for a longer duration compared to such schemes.

Investors can, thus, consider investing a small proportion of their surplus for a 10-year period in this scheme.

JK Paper: An investment can be considered in the fixed deposit programmes across tenures. As the paper business is subject to a high degree of cyclicality, the longer tenures are risky. But the rates on offer appear attractive.

The steady improvement in the company's financial profile also augurs well.

The substantial reduction in interest outgo and replacement of high-cost debt with funds sourced at lower rates over the past quarter enhances the degree of comfort that is available to investors in the FD programme.

JK Paper is also set to commission a coated paper facility, which would also lead to a scaling up revenues over the next two years.

We had earlier recommended that the three-year option could be avoided.

With further confirmation over the past quarter that the financials are in healthy shape, we believe that even this tenure can be considered as JK Paper is well-placed to ride out a weak phase in the business cycle.

The minimum amount is Rs 10,000. In the two- and three-year options, investors can opt for the cumulative option while the non-cumulative option appears appropriate for the one-year tenure.

More information can be sourced from the company's Web site, www.jkpaper.com.

Escorts: An investment in the fixed deposit programme of Escorts can be considered for a one- or two-year lock-in period.

Depositors can avoid longer tenures due to the potential risks involved in dealing with a company that is just poised to turnaround and post a profit after recording a massive net loss during the previous year.

The company offers an attractive 8.5 per cent rate of interest for a one-year deposit. Escorts is primarily engaged in the business of manufacturing tractors and farm equipment.

The company, the fourth largest player, has been tracking the fortunes of the tractor industry.

So, while its performance plummeted in 2003-04 (July to June), when industry-wide sales of tractors crashed, it has been making a quite comeback this year.

Labour problems, which had also affected its performance in the previous year, have not been a point of contention this year.

BL Research Bureau

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