The Hindu Business Line : Wheels India: Invest in 3-year option

Wheels India: An investment may be considered in the three-year FD option of Wheels India. The rate of 7.5 per cent on offer is attractive. Choose the cumulative option, as it would offer a slightly higher yield of 7.7 per cent.

The rates on offer for the one-year and two-year options are 6 per cent and 6.5 per cent. There are other companies such as OCL that offer a higher rate for these tenors. Wheels India is a TVS group company that is engaged in the manufacture of wheel rims. It caters to the requirements of manufacturers of passenger cars, commercial vehicles, tractors and jeeps.

The company has a stranglehold in this market. Despite the growth numbers being lower than the past two years, they are on a high base, courtesy the robust increase during this period. Demand for the company's products are at healthy levels. The company has also expanded its exports; it also now manufactures air suspension systems for commercial vehicles and buses. This could provide a boost to revenues. The financials of Wheels India are in excellent shape and investors in the FD programme have no cause for worry.

So investors should use the window that is now open to invest in the three-year option. Do not let the minimum amount of Rs 21,000 deter an investment decision. For deposits from shareholders, Wheels India has still has leeway to accept deposits. Shareholders of the company should use the option to lock in a part of the funds that they have earmarked for investing in fixed-income investments.

Fenner: An investment may be considered in the one-year option of Fenner (India). The rates on offer for the two- and three-year options are not attractive; the rate for the latter does not offer any premium for longer maturity. The one-year option may be considered only to park funds that may otherwise idle in a savings bank account. The minimum investment amount is Rs 5,000. Interest is paid on a quarterly basis. Fenner is in the engineering business and makes a range of products that find application in several industries. The outlook for revenue growth appears bright given the buoyant activity in the engineering and construction sector. Though there was a dip in earnings in FY 05, it still remains at healthy levels that provide for a high degree of comfort for investors in the fixed-deposit programme. The company's fixed deposits account for only about 65 per cent of what it entitled to accept. So investors could exhaust superior options in the FD space before contemplating adding Fenner to their FD basket.

Srei Infrastructure Finance: Investments in the one-year fixed deposit programme of Srei can be considered. The company offers 7.25 per cent for a one-year cumulative term deposit. The interest rate is attractive considering housing finance companies and banks offer rates that are lower by more than one percentage point. In addition, from this financial year, interest from bank deposits and housing finance companies do not enjoy the protection under section 80-L.

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