Financial Daily from THE HINDU group of publications
Sunday, Sep 15, 2002
Financial Daily from THE HINDU group of publications Sunday, Sep 15, 2002 |
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Investment World
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Fixed Deposits Money & Banking - NBFCs Balaji Auto Finance: Racing ahead Sowmya Krishnan
BAJAJ Auto Finance accepts fixed deposits under two schemes, cumulative and non-cumulative. It offers 8 per cent for a one-year deposit and 8.5 per cent for a three-year deposit. It does not accept deposits for a two-year tenure. The minimum deposit requirement differs with the interest payment option chosen. While the monthly payment schemes require a deposit as high as Rs 50,000, the quarterly payment option requires a minimum deposit of Rs 25,000. The effective yield for the cumulative scheme works out to 8.30 per cent and 9.64 per cent for one and three years, respectively. The minimum deposit is Rs 5,000. With another round of rate cut, many companies have pegged their one-year rate at 8 per cent. Therefore, one might go in for a one-year deposit. But the returns for the three-year deposit appear to be slightly lower. Many other companies that fall in the same risk category offer at least 50 basis points higher than that offered by Bajaj Auto Finance. One can choose other options for a three-year tenure. Moreover, the minimum deposit requirement is too high. For an investor with limited funds it might not be advisable to invest a huge sum in one company. The one-year cumulative scheme is the most suitable. Bajaj Auto Finance is an NBFC that provides retail finance. It offers hire purchase finance for two- and three-wheelers and consumer durables. Of late, it has started concentrating more on consumer durable loans, which is a growing business. As a result, the asset mix has tilted towards consumer durables.
Bajaj Auto Finance is one of the safer companies with sound fundamentals and good asset quality. With lot of finance companies entering the retail finance segment, tough times are ahead. Given the past track record and strong fundamentals characterised by steady growth in disbursements and income, high operating margins and good asset quality, one can safely invest in the company.
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