The Hindu Business Line : FD Options

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 the 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 quarterly. 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 buoyancy in the engineering and construction sectors. Though there was a dip in the FY-05 earnings, they still remain at healthy levels providing 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 can exhaust superior options in the FD space before contemplating adding Fenner to their FD basket.

India Cements: An investment in the one- and two-year options may be considered. The rates of 8 per cent and 8.5 per cent are attractive compared to what is on offer from a host of other companies. The improvement in cement price levels in the southern market over the past couple of months is likely to lead to a turnaround. Yet, 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 and the three-year options can be avoided, as the incremental returns do not compensate for the higher risk element.

Shriram Investments: Investments can be considered in the high-yielding fixed deposit and debenture 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. It also offers 7.50 per cent for a three-year non-cumulative fixed deposit and 8 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.

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 1-year deposits and 7.5 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. Deposits for a term longer than 3 years however can be avoided. Small savings schemes are more attractive for such deposits

BL RESEARCH BUREAU

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