Financial Daily from THE HINDU group of publications
Sunday, Nov 21, 2004
Financial Daily from THE HINDU group of publications Sunday, Nov 21, 2004 |
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Investment World
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Fixed Deposits Corporate - Fixed Deposits Columns - FD Watch EL Forge: Forge short links Sowmya Sundar
If one is looking for longer tenures, other manufacturing options with higher returns can be considered. Scheme features: EL Forge accepts fixed deposits for one, two and three years. The interest rate is flat 8 per cent for all tenures. The minimum deposit is Rs 10,000. The effective rate on the cumulative scheme would be 8.32 per cent for two years and 8.65 per cent for three years. Further information can be got from the company's registered office at No. 84, Thiruneermalai Road, Chrompet, Chennai - 600044. Business: EL Forge makes rough steel forgings, including fuel injection forgings, steering rods, tie rods, engine and gear boxes and starter items for the automobile industry. The company exports to the US, Germany, Sri Lanka and Malaysia. Ashok Leyland and MICO are the major clients of EL Forge, account for close to 40 per cent of the company's total turnover. Other customers include Hindustan Motors, Lucas TVS, Rane, Sundaram Clayton, VST Tillers, and Sahney Paris.The auto component industry has been on an uptrend for the past couple of years, driven by export prospects and a buoyant domestic automobile sector. The rising steel price is, however, a cause for concern. Most auto component companies have begun to feel the pressure of higher input costs. EL Forge's revenue and profitability growth has been robust over the past couple of years. Given the strong pick-up in demand, the working capital requirement too has gone up, increasing financing costs. The interest cover (profits available before interest payment) has improved on robust revenue growth. The profit before interest is twice the interest liability for the half-year ended September 2004. This cushion is comfortable from a one-year perspective to meet interest liability. Higher input costs may compress the profitability cushion, despite revenue growth in the longer term. Therefore, one can ignore the longer tenures.
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