Financial Daily from THE HINDU group of publications
Sunday, Jul 20, 2003
Financial Daily from THE HINDU group of publications Sunday, Jul 20, 2003 |
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Investment World
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Fixed Deposits Corporate - Fixed Deposits Columns - FD Watch Wheels India — Well-aligned Sowmya Sundar
At 8 per cent the rate is 50 basis points higher than that offered by other companies in the similar risk class. The yield for a three-year deposit at 8.24 per cent appears quite attractive. One- and two-year interest rates are aligned to the market rate at 6.50 per cent and 7 per cent respectively. Investors looking for short-term investment have other options too in the market at similar rates. Hence, one can look at Wheels India's one-year option for diversifying the fixed income portfolio. The two-year option can be avoided as one can get a much higher yield if one locks in for three years instead of two. The yield on a two-year investment works out to 7.2 per cent against 8.3 per cent for three years. Additional information about the company can be got at 21, Patullos Road, Chennai - 600 002. Wheels India is a Chennai-based TVS group company that makes steel wheels for passenger cars, utility vehicles, trucks, buses, tractors, and construction equipment. It caters to two-thirds of the domestic market and also has a presence in the international market. The automobile industry has shown strong signs of revival over the last year. The latest automobile sales numbers too have been encouraging. Wheels India maintained its cash flow even during the lean periods of 2001-02. It has also constantly reduced debt and, therefore, interest costs. With business prospects improving, cash flow should not be a problem. A strong improvement in the interest cover (profit before interest/ interest) to 4.3 times in 2002-03 against 2.5 times in 2001-02 suggests that Wheels India makes enough profits to cover interest expenses. Investors can lock-in funds for three years. The only hitch is the high minimum investment limit at Rs 21,000. This rules out small investors looking at diversified fund allocations. Small investors may be better off investing in small-savings schemes that offer similar rates.
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