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India Cements: An investment in the one- and two-year options may be considered. The rates are attractive compared to what is on offer from a host of other companies. The risks are, however, higher as the company is still in the nascent stages of a turnaround. The improvement in price levels in the southern market over the past six months is likely to be sustained and help consolidate the 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 and the three-year options can be avoided, as the incremental returns do not compensate for the higher risk element.

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.

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. In 2004-05, KSE reported a 14 per cent rise in sales to Rs 212.6 crore, and a 34 per cent increase in net profits to Rs 6.7 crore.

Apart from the capital expansion projects underway at its extraction and refining plants, the company has recently added to capacities by acquiring a90 tonne per day cattle-feed plant at Mysore.

A strike in the Irinjalakuda unit, which has been on since February 2005, was called off in May after the company entered into a wage settlement with workers. However, this did not materially affect the performance or operations for the March quarter. The company's financials are on sound footing and it has a comfortable interest cover.

India Glycols: An investment can be considered in the two-year fixed deposit of India Glycols. It also offers a three-year option, which can be avoided for now. Cumulative options are also available.

India Glycols reported a 38 per cent growth in earnings for FY-05 aided by higher volumes. Rising raw material costs have cut down its margins from 31 per cent in FY-04 to 27 per cent in FY-05. India Glycols is the only manufacturer of MEG using the molasses route other than the Reliance group; it also makes di-ethylene glycol and ethylene oxide derivatives.

Price volatility of its products acts as a dampener. Interest expenses are, however, sufficiently covered and the company would be able to meet their interest obligations for a two-year period.

First Leasing: Investments in the three-year fixed deposit of First Leasing can be considered. 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 them, 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.

BL Research Bureau

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