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G. Madhan

THE fixed deposit programme of Cholamandalam Investment and Finance, a Murugappa group company, is open for investment. The interest rates are lower than that of Ashok Leyland Finance. However, considering Cholamandalam's strong fundamentals, an investment in all the three years can be considered. The three-year cumulative scheme is particularly attractive, as the annual yield is higher at 8.32 per cent

Schemes and features: Cholamandalam Finance offers non-cumulative and cumulative schemes. Under the former, interest is paid at monthly, quarterly and annual rests (see table). The interest rates for the cumulative deposit scheme is akin to that of the monthly non-cumulative option.

However, the annual yield for this scheme works out to 6.67 per cent, 7.44 per cent and 8.32 per cent respectively, as interest is compounded monthly. The minimum deposit for all the schemes is Rs 10,000. However, for the one- or two-year monthly payment options, it is Rs 25,000. For further details contact , TIAM House, 2nd floor, 72 Rajaji Salai, Chennai-01.

Business prospects: Cholamandalam is among the better-managed non-banking finance companies. It is into vehicle finance, capital market finance, mutual funds, securities broking, depository services, insurance, and distribution services. About 80 per cent of the company's assets are in vehicle finance, while 9 per cent of the asset portfolio is vested in the capital market. Hence, the company's fortunes, to a large extent, depend on the auto segment, which is cyclical in nature.

Given the gradual uptrend in the auto sector, coupled with the geographical expansion undertaken by the company, Cholamandalam Finance's prospects appear bright. However, these may not necessarily improve the company's bottomline, given the competition in the vehicle-financing segment.

Financials: For the quarter ended June 2003, the company's income from operation grew a modest 5 per cent to Rs 57.7 crore over the corresponding previous period.

The net profit was Rs 11.1 crore (Rs 6.03 crore). The net profit margin for the period was 19.2 per cent (10.9 per cent). For the year ended March 2003, the total disbursements went up 44.6 per cent to Rs 1,008 crore.

The capital adequacy ratio is 13.18 per cent, which is higher than the prescribed RBI norms. The reducing interest spread is also a cause for concern.

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