Financial Daily from THE HINDU group of publications
Sunday, Aug 10, 2003
Financial Daily from THE HINDU group of publications Sunday, Aug 10, 2003 |
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Investment World
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Fixed Deposits Corporate - Fixed Deposits Columns - FD Watch Axles India: Gear in for a year G. Madhan
An investment up to one year can be considered in FD programmes, given the attractive interest rates. However, considering the high initial deposit, the business risk involved due to cyclical nature of the auto industry, an investment beyond a year can be avoided. Schemes and features: Axles India offers cumulative and non-cumulative schemes (see table). The interest rate for both the schemes is the same at 8.5 per cent for 12 months, 9 per cent for 25 months and 10 per cent for 36 months. However, as the interest on the cumulative scheme is compounded at quarterly intervals, the annual yields are 8.8 per cent, 9.79 per cent and 11.50 per cent for respectively. Interest for the non cumulative scheme is payable at quarterly intervals. The minimum deposit for both the schemes is the same at Rs 21,000. Further details can be obtained from the company's registered office at 21, Patullos Road, Chennai - 600 002. Prospects and financials: Promoted by Sundaram Finance and Wheels India, Axles India makes axles and axle components and its principal products include rear axle housings and gear assemblies. The company's main customers are Tata Motors and Ashok Leyland. Axles India has started making profits on the back of improved business prospects, driven by the increased truck and bus offtake during 2002-03. The company`s fortunes depends, to a large extent, on the auto segment, which is cyclical in nature. Given the strong growth witnessed by the commercial vehicle segment (for the quarter ending June 2003, the domestic sales of commercial vehicle segment grew 20 per cent.) The company has good prospects for growth. For the year ending March 2003, the company registered a pre-tax profit of Rs 2.5 crore against a loss of Rs 0.9 crore in the corresponding previous period. The post-tax profit was Rs 1.5 crore (loss of Rs 0.6 crore). The debt-equity ratio, on the other hand, went up sharply to 5.1 in March 2003 from 4.2 in March 2002, indicating higher financial risk. A sharp 3.6-fold jump in the contingent liabilities is a cause for concern. Given the risk profile, an investment beyond one-year can be avoided.
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