The Hindu Business Line : Advantage company deposits

Once the proposal takes effect, investment in small-saving schemes and bank deposits would no longer have a tax advantage over that of company deposits.

United Bank of India: Senior citizens can consider investing in the recently introduced long-term term deposit scheme of United Bank of India.

The bank has introduced a new-term deposit bucket of between 7 and 10 years. It offers 7 per cent for such deposits for younger investors with senior citizens being offered 8 per cent.

This rate of 8 per cent is comparable to the yield on some of the post-office schemes such as Post-Office Monthly Income Scheme and Kisan Vikas Patra.

The attractive yield is also applicable for a longer duration compared to such schemes.

Investors can thus consider investing a small proportion of their surplus for a 10-year period in this scheme.

JK Paper: An investment can be considered in the fixed-deposit programmes across tenures.

As the paper business is subject to a high degree of cyclically, the longer tenures are risky. But the rates on offer appear attractive.

The steady improvement in the company's financial profile also augurs well. The substantial reduction in interest outgo and replacement of high-cost debt with funds sourced at lower rates over the past quarter enhances the degree of comfort that is available to investors in the FD programme.

JK Paper is also set to commission a coated paper facility, which would also lead to a scaling up revenues over the next two years.

We had earlier recommended that the three-year option could be avoided. With further confirmation over the past quarter that the financials are in healthy shape, we believe that even this tenure can be considered as JK Paper is well-placed to ride out a weak phase in the business cycle. The minimum amount is Rs 10,000.

In the two- and three-year options, investors can opt for the cumulative option, while the non-cumulative option appears appropriate for the one-year tenure.

More information can be sourced from the company's Web site www.jkpaper.com.

Jindal Stainless: Investments in the fixed deposit scheme of Jindal Stainless can be considered with a one-year perspective.

Long-term tenures can, however, be avoided, as the incremental returns of 25-50 basis points are unattractive.

Jindal Stainless manufactures stainless steel and other special steel products such as steel ingots, strips and ferrochrome.

The demand for stainless steel from China is likely to remain strong over the next couple of years.

The company should be able to maintain its margins of more than 15 per cent and is well-placed to meet its current interest obligations.

BL Research Bureau

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