The Hindu Business Line : Wheels India: Invest in cumulative option

Wheels India: An investment can be considered in the FD options across tenures of Wheels India. The rate of 7.5 per cent on offer is attractive for a three-year period.

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 6.5 per cent and 7 per cent and have been hiked by 0.50 percentage points. If you invest in the two-year option, opt for the cumulative option.

Wheels India is a TVS group company 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.

The demand for the company's products are at healthy levels. The company has expanded its exports; it now manufactures air suspension systems for commercial vehicles and buses. This could provide a boost to revenues.

The financials of Wheels India are in good shape and investors in the FD programme have no cause for worry. Do not let the minimum amount of Rs 21,000 deter an investment decision. Cholamandalam Investment: Investment in the one-year fixed deposit programme of Cholamandalam Investment and Finance Company can be considered. The company offers 6 per cent with interest being paid either quarterly or annually.

For monthly interest payments, the minimum period of investment is three years which, however, can be avoided. Cholamandalam is one of the safer investment options in the NBFC arena. The rate of interest is also attractive compared to other investment options such as bank term deposit and is only 0.25 percentage points lower than that of Post-Office Term Deposit. Premature withdrawals before three months are not allowed. Withdrawals after three months also suffer penalty in the form of a reduction in the contracted interest.

For withdrawals between three and six months, no interest would be paid. For withdrawals after six months, interest paid will be only 4.5 per cent.

OCL India: Investors can consider exposures in the fixed deposit options of OCL India. The one- and three-year options can be considered. As the two-year option does not offer any premium over the rate on the one-year option for the longer duration, it need not be considered. Investors can divide their exposures equally between the one- and three-year options to have flexibility, in case interest rates edge up. Though the premium for the three-year option is a modest 0.25 percentage points, the rate of 7.75 per cent appears attractive to lock into.

We had earlier recommended only the one-year option. But given the trend in interest rates, we take the view that the three-year could also be considered. OCL India is in the business cement and related products.

The company's financials are in healthy shape. With an improvement in cement prices, profitability and earnings levels are likely to comfortably cover the interest outgo.

City Union Bank: Senior citizens can consider investing in the short-term deposits of City Union Bank can be considered. 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 are higher than what is on offer 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.

BL Research Bureau

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