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City Union Bank: Senior citizens can consider investing in the deposits with tenors of between six months and three years offered by City Union Bank. The bank offers 6 per cent for deposits maturing in six months, 7 per cent for one-year deposits and 7.50 per cent for two and three-year deposits.

The rates offered are competitive and are higher than what post-office time deposits is on offer on post-office time deposits. Deposit insurance for deposits of value less than Rs 1 lakh made in scheduled commercial banks make the schemes even more attractive. Deposits for a term longer than three years, however, can be avoided. Small-savings schemes are more attractive for such deposits.

India Cements: An investment in the one- and two-year options can be considered. The rates of 8 per cent and 8.5 per cent are attractive when compared to what is offered by a host of other companies. The risks are, however, higher, as the company is still in the process of cutting its losses. The improvement in price levels in the southern market over the past few months is likely to lead to a turnaround.

Unless this is accompanied by a healthy growth in volumes, any turnaround may be short lived. If the company manages to raise equity in line with its plans, it would enhance the comfort level for investors in its fixed-deposit programme. The cumulative option and the three- year option can be avoided, as the incremental returns do not compensate for the higher risk element.

Srei Infrastructure Finance: Investments in the one-year fixed deposit programme of Srei can be considered. The company offers 7.25 per cent for a one-year cumulative term deposit. The interest rate is attractive considering housing finance companies and banks offer rates that are lower by more than one percentage point.

In addition, from this financial year, interest from bank deposits and housing finance companies do not enjoy the protection under Section 80-L. Srei is a fast growing non-banking finance company specialising in infrastructure project financing which has attracted equity investments from international institutions such as IFC of Washington and FMO of Netherlands. The company boasts of strong capital adequacy and has also low incidence of bad loans. The fixed deposit programme is ideal for investors with a one-year investment horizon.

India Glycols: An investment can be considered in the two-year fixed deposit of India Glycols. It also offers a three-year lock-in option, which can be avoided for now. The company offers an interest of 8 and 8.5 per cent on its deposits for two and three years respectively. Cumulative options are also available.

India Glycols, backed by sharp rise in prices of mono-ethylene glycol (MEG), has reported a sharp rise in profits for the three quarters in the fiscal 2005. Prices of molasses have been rising at a slower pace contributing to higher margins.

India Glycols is the only manufacturer of MEG using the molasses route; it also makes di-ethylene glycol and ethylene oxide derivatives. The prices of molasses are expected to rise even further, while global MEG prices are expected to decline cutting into the margins of India Glycols. Interest expenses are, however, sufficiently covered and the company would be able to meet their interest obligations for a two-year period.

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