The Hindu Business Line : Madras Cements offers 6 pc for 1-yr deposits

Madras Cements: An investment in the one-year option of the fixed deposit programme can be considered, but only to park a part of the funds that one may otherwise leave in a bank deposit for a similar period or less, and not out of funds set apart for building a long-term fixed income portfolio.

The company offers 6 per cent for its one-year fixed deposit and this comes with a high degree of safety.

The two-year and three-year options may be avoided as the interest rates on offer, even after taking into the effect of quarterly compounding, do not offer appropriate premium for longer maturity periods and are unattractive.

With interest rates having bottomed out, it may not be appropriate to lock in into an option that pays 7 per cent for a three-year period; this would be the case even for risk-averse investors.

Given its sound financials and demonstrated ability to bankroll its growth plans effectively through debt, Madras Cements is well-placed to service its fixed deposit programme. Opt for the one-year cumulative option now.

Tamil Nadu Newsprint: An investment may be considered in the one- and three-year options of the fixed deposit programme of Tamil Nadu Newsprint Ltd (TNPL). The two-year option can be avoided, as the premium for the longer maturity appears unattractive.

The company is one of major players in the paper industry with a fairly impressive track record in a cyclical business.

It has consistently pursued growth opportunities through loans and internal accruals and managed its debt in a deft manner.

With paper prices on firm terrain, TNPL should report healthy profitability.

The risks are higher for a three-year investment due to the cyclicality of the paper industry.

But TNPL is well-placed to meet its interest obligations and no problem for investors who choose this option is anticipated.

Shriram Investments: Investments can be considered in the high-yielding fixed deposit and debentures schemes of Shriram Investments.

The company offers 7.75 per cent for a three-year cumulative fixed deposit and 8.40 per cent for a three-year cumulative debenture.

They also offer 7.50 per cent for a three-year non-cumulative fixed deposit and 8.0 per cent for a three-year non-cumulative debenture.

The offer is attractive and the risks are now lower, considering the business growth and the capital infusion made in recent years.

Investors can contact Shriram Investments at 044-24990960, III Floor, Mookambika Complex, 4, Lady Desika Road, Mylapore, Chennai — 600004.

BL Research Bureau

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Madras Cements offers 6 pc for 1-yr deposits