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City Union Bank: Senior citizens can consider investing in the short-term deposits of 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 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 scheme even more attractive.

Deposits for a term longer than three years, however, can be avoided. Small-savings schemes are more attractive for such deposits.

Television Eighteen: An investment can be considered in the fixed deposit programme of Television Eighteen. The company offers an FD for a one-year period. The interest rate of 9 per cent on offer appears attractive, as does the 9.5 per cent on offer for senior citizens.

This rate is one of the higher rates on offer and appears to compensate for the higher risks involved with the company's operations. But investors should park only a part of the funds set apart for investment in fixed-income options, perhaps not more than 20 per cent.

The revenue and earnings profile of the company has improved steadily over the past year; earnings are now at healthy levels that provide for a high degree of comfort in paying interest obligations. The company operates two channels in the business news space — CNBC TV 18 in English and the recently launched Awaaz in Hindi.

It now faces intense competition from New Delhi Television. But over a one-year period, we do not perceive any significant risk to profitability and its ability to pay interest on its fixed deposits. Buy into this attractively priced FD option.

Madras Cements: An investment can be contemplated in the fixed deposit programme of Madras Cements; the one-year and three-year options may be considered. It may be better to opt for the three-year option than the two-year fixed deposit, as incremental returns are attractive.

We had earlier this year recommended only the one-year option. As the changes in tax laws have reduced the attractiveness of deposits in banks, the fixed deposit options of high-quality companies that have offered low rates have become more attractive.

The one-year option could be used to park funds that might be idle in a bank account. The three-year option can be considered as a core part of one's portfolio of fixed-income investments.

Madras Cements offers an annual interest rate of 7 per cent. If one opts for the cumulative option, the yield is likely to be a tad higher.

As interest rates appear to have bottomed out, one could consider investing between 25 per cent and 40 per cent of the surplus now and park the rest in floating-rate funds. They could be invested in FDs over the next year so that one can benefit from the modest hike in interest rates that appears likely.

Madras Cements rests on fundamentals that should ensure a high degree of safety for interest and principal payments. On a risk-adjusted basis, the fixed deposit programme of Madras Cements is one of the superior options available to investors.

BL Research Bureau

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