Bajaj Tempo -- Revving up returns

Anup Menon

GIVEN the interest rates on offer, Bajaj Tempo's fixed deposit programme may be a good vehicle for investors with a moderate- to high-risk profile.

Bajaj Tempo's performance in 1999-2000 was in line with the trends of the automobile sector; the company is still in the red.

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The gearing levels are quite comfortable. The ability to cover interest payments, which deteriorated in the past, have improved. In this backdrop, the company is not likely to have problems servicing its fixed deposit base. However, given the interest rates on offer, those with a penchant for risk can consider investing in the fixed deposit programme.

The fixed deposit programme, offers fixed and cumulative schemes. The tenure for both is three years. The former offers an interest rate of around 14.5 per cent, payable half-yearly in March and September. The latter offers an effective interest rate of around 15 per cent. The minimum deposit under both schemes is Rs 10,000, and further investments in multiples of Rs 1,000. Deposits are accepted at the company's registered office on Bombay-Pune Road, Akurdi, Pune -- 411 035.

Bajaj Tempo has a dominant presence in the automobile industry, a wide range of products including light commercial vehicles, tractors and diesel engines. The company's performance was affected by the slowdown in the automobile industry; it has however improved in 1999-2000.

The indications in the first half of 2000-01 are that the growth rates may continue into the future. To widen its customer base, the company entered into an agreement with Robert Bosch GmbH of Germany for manufacturing tractors. It also entered the multi-utility segment with a six-seater autorickshaw. However, its contribution to the bottomline will take some time.

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The company's earnings performance for the year ended March 2000 was good. Sales revenues rose 24 per cent to Rs 567.99 crore compared to the corresponding previous period. Operating margins rose marginally to 6.80 per cent from 5.53 per cent. The company was able to stem its losses by around 50 per cent to Rs 14.94 crore.