Financial Daily from THE HINDU group of publications
Sunday, Mar 27, 2005
Financial Daily from THE HINDU group of publications Sunday, Mar 27, 2005 |
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Investment World
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Fixed Deposits Corporate - Fixed Deposits FD options
Once the proposal takes effect, investment in small-saving schemes and bank deposits would no longer have a tax advantage over that of company deposits.
As the paper business is subject to a high degree of cyclically, 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, 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. KSE: Investors can consider adding the one- or two-year fixed deposit programme from KSE Ltd to their portfolio, given the attractive interest rates and the modest risks associated it. The company offers an interest rate of 8 per cent per annum on both options. KSE is a large producer of cattle feed, coconut oil from oilcakes and also has a marginal presence in the dairy segment in milk and ice creams. After facing pressure on profits due to rising input prices in 2002-03, KSE's financial performance recorded a sharp improvement since 2003-04. 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-office 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. United Bank of India: Senior citizens can consider investing in the recently introduced long-term term deposit scheme of United Bank of India. The bank has introduced a new-term deposit bucket of between 7 and 10 years. It 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.
BL Research Bureau
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