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City Union Bank: Senior citizens can consider investing in the short-term deposits of City Union Bank.

The bank offers 6 per cent for deposits maturing in six months, 7 per cent for one-year deposits and 7.50 per cent for two- and three-year deposits.

The rates offered are competitive and higher than that offered on post -ffice time deposits.

Deposit insurance for deposits of value less than Rs 1 lakh made in scheduled commercial banks make the scheme even more attractive.

Deposits for a term longer than three years, however, can be avoided. Small-savings schemes are more attractive for such deposits.

Chambal Fertilisers: Investors need not consider investing in the fixed deposit programme of Chambal Fertilisers, as the interest rates offered appear to be less attractive when compared to options available in the universe of manufacturing companies and banks. The company has a reasonable track record of revenue as well as profit growth.

With its debt:equity ratio at 1.4 :1 and a interest cover of about seven times, the company also appears well-placed to service its fixed deposit obligations.

However, given the seasonal nature of the business and the dependence on subsidies from the government, the fertiliser business is characterised by a degree of risk.

The interest rates offered appear to be unattractive in relation to those offered by some other finance companies and banks with a similar or superior risk profile.

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.

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 compared to 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.

BL Research Bureau

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