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First Leasing: Investments in the three-year fixed deposit of First Leasing can be considered. The company offers 8 per cent for a three-year tenure, one of the higher rates offered by established finance companies.

In terms of financial health, the company is in reasonably good shape. Its debt-equity ratio of less than five offers investors higher level of safety.

The profit growth record is also impressive with the company growing its profits in nine out of the past ten years. In each of the past ten years, the return on net worth has been above 15 per cent. The proportion of bad loans is also quite low at less than 1 per cent and its capital adequacy of about 24 per cent offers scope for business expansion.

OCL India: An investment may be considered in the one-year fixed deposit of OCL India. Investors can opt for the cumulative option, as it would push the yield to slightly higher levels compared to the interest rate of 7.50 per cent on offer. The two- and three-year options may be avoided; for the former, the rate is the same as a one-year deposit and there is no maturity premium to compensate for the longer tenure.

The incremental rise in the interest rate for the three-year deposit is just 25 basis points, which is inadequate for taking an exposure for an additional two years. OCL India is in the business cement and related products. The company's financials are in healthy shape.

With an improvement in cement prices, profitability and earnings levels are likely to comfortably cover the interest outgo, which is only about 10 per cent of operating profits. Investors in the FD programme have no cause for concern.

KSE: Investors can consider adding the one- or two-year fixed deposit programme from KSE Ltd to their portfolio, given the attractive interest rates and the modest risks associated it.

The company offers an interest rate of 8 per cent per annum on both options.

KSE Ltd is a large producer of cattle feed, coconut oil from oilcakes and also has a marginal presence in the dairy segment in milk and ice creams.

After facing pressure on profits due to rising input prices in 2002-03, KSE's financial performance recorded a sharp improvement since 2003-04.

Over the past 12 months, KSE reported a 17 per cent rise in sales to Rs 207 crore, and a 59 per cent increase in net profits to Rs 6.47 crore.

The company has an interest cover of over 12 times and a comfortable debt-equity ratio of 0.25:1.

Cholamandalam Investment: Investment in the one-year fixed deposit programme of Cholamandalam Investment and Finance Company can be considered.

The company offers 6 per cent with interest being paid either quarterly or annually. For monthly interest payments, the minimum period of investment is three years which, however, can be avoided.

Cholamandalam is one of the safer investment options in the NBFC arena. The rate of interest is also attractive compared to other investment options such as bank term deposit and is only 0.25 percentage points lower than that of Post Office Term Deposit.

Premature withdrawals before three months are not allowed. Withdrawals after three months also suffer penalty in the form of a reduction in the contracted interest.

For withdrawals between three and six months, no interest would be paid. For withdrawals after six months, interest paid will be only 4.5 per cent.

BL Research Bureau

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