Financial Daily from THE HINDU group of publications
Sunday, Aug 25, 2002
Financial Daily from THE HINDU group of publications Sunday, Aug 25, 2002 |
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Investment World
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Fixed Deposits Columns - FD Watch Wheels India: For the short run Sowmya Krishnan
WHEELS India accepts deposits from the public under two schemes — fixed and cumulative. The fixed scheme offers 8.50 per cent for one year, 9 per cent for two years and 9.50 for three years. Interest will be paid at quarterly intervals. The minimum deposit requirement is Rs 21,000. Further details can be obtained from the company's registered office at 21, Patullous Road, Chennai 600 002, or its deposit section at Padi, Chennai 600 050. The interest rates offered by Wheels India are in line with those offered by other companies in the similar risk class. One can go in for the one- and two-year deposits. The three-year tenure can be avoided as the minimum deposit requirement on the high side. A three-year lock-in does not allow the flexibility of revising the investment decision, if better opportunities come up. As the interest rates offered are not attractive enough to lock in such a quantum in one company, it may be avoided. A TVS group company, Wheels India, is a leading manufacturer of automobile steel wheels with two-third of the domestic market share. It also has a presence in the overseas market. The company's fortunes depend entirely on the automobile industry, which is cyclical in nature. Since the industry appears to be on an upward swing, Wheels India may benefit in the near-to-medium term. The company might be able to generate steady cash flows in the medium term. The company's financials show the improving business conditions. Sales and operating profits rose 20 per cent and 10 per cent respectively compared to the corresponding previous period. What is more important is the noticeable improvement in the profit margin after interest but before depreciation and taxes, which improved to 7.18 per cent in 2002 from 4.96 per cent the year before. This indicates that interest costs have come down. Considering the improving business conditions, moderate leverage, modest returns and high minimum deposit, one might opt for the shorter tenors on offer.
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