The Hindu Business Line : Cholamandalam

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.

CEAT: Taking into account the attractive interest rate offered, investment in the fixed deposits with one-year tenure may be considered. The one-year deposit carries an interest rate 8.5 per cent which is attractive in comparison to the rates offered by banks and other companies. Though the interest rates on deposits beyond one-year maturity also appear attractive, it would be better to stick to the shorter tenure option as the tyre industry is still passing through a relatively depressed phase. The firm trend in input cost and intense competition in the industry along with the sizeable excess capacity would keep the financials under pressure.

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: Investors may consider exposures in the fixed deposit options of OCL India. The one-year as well as the three-year options may be considered. As the two-year option does not offer any premium over the rate on the one-year option for the longer duration, it need not be considered. Investors could divide their exposures equally between the one-year and three-year option to have flexibility in case interest rates edge up.

Though the premium for the three-year option is a modest 0.25 per cent, the rate of 7.75 per cent appears attractive to lock into. We had earlier recommended only the one-year option. But given the trend in interest rates, we now take the view that the three-year could be considered.

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.

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