The Hindu Business Line : Attractive rates from Wheels India

Repco Bank: Investments in the fixed deposits of Repco Bank can be considered. The bank offers 6.75 per cent for 1-to 3-year deposits and 7.50 per cent for deposits for periods above 3 years. The higher rate compared to that offered by public sector banks is attractive considering the risk profile.

The Government of India holds a 47 per cent stake in the bank and the State Governments of Tamil Nadu, Andhra Pradesh, Kerala and Karnataka hold the rest. The bank is registered as a Co-operative Society and is governed by the Ministry of Home Affairs. The company's fundamentals and ownership structure are factors that provide comfort to investors in the FD programme.

Wheels India: An investment may be considered in the three-year FD option of Wheels India. The rate of 7.5 per cent on offer is attractive. Choose the cumulative option, as it would offer a slightly higher yield of 7.7 per cent. The rates on offer for the one-year and two-year options are 6 per cent and 6.5 per cent. There are other companies such as OCL that offer a higher rate for these tenors. Wheels India is a TVS group company that is engaged in the manufacture of wheel rims. It caters to the requirements of manufacturers of passenger cars, commercial vehicles, tractors and jeeps. The company has a stranglehold in this market. Despite the growth numbers being lower than the past two years, they are on a high base, courtesy the robust increase during this period. Demand for the company's products are at healthy levels. The company has also expanded its exports; it also now manufactures air suspension systems for commercial vehicles and buses. This could provide a boost to revenues. The financials of Wheels India are in excellent shape and investors in the FD programme have no cause for worry. For deposits from the public, the company has exhausted about 80 per cent of the available limit. So investors should use the window that is now open to invest in the three-year option. Do not let the minimum amount of Rs 21,000 deter an investment decision. For deposits from shareholders, Wheels India has exhausted about 50 per cent of the limit. Shareholders of the company should use the option to lock in a part of the funds that they have earmarked for investing in fixed-income investments.

Madras Cements: An investment may be contemplated in the fixed deposit programme of Madras Cements; the one-year and three-year options may be considered. It may begetter 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 your portfolio of fixed-income investments. Madras Cements offers an annual interest rate of 7 per cent. If you opt for the cumulative option, the yield is likely to be a tad higher. As interest rates appear to have bottomed out, you could consider investing between 25 and 40 per cent of your surplus now and park the rest in floating-rate funds. They could be invested in FDs over the next year so that you could 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 that are available to investors.

BL Research Bureau

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page