Date:16/04/2006 URL: http://www.thehindubusinessline.com/bline/iw/2006/04/16/stories/2006041600401300.htm

Back FD Options

OCL India: Investors may consider exposure in the fixed deposit options of OCL India. The one- and 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 can be considered. OCL India is in the business of cement and refractories; it has a small presence in a couple of other areas as well. The company's financials are healthy. With an improvement in cement prices, profitability and earnings levels are likely to comfortably cover the interest outgo.

Sundaram Finance: Investors looking at a building a portfolio of fixed investments should consider exposures in the deposits of Sundaram Finance. The rates appear reasonably attractive, especially on a risk-adjusted basis, as in terms of credit quality, Sundaram Finance is in the top bracket. The company has a portfolio of business in several areas of financial services. Its financials are in fine shape and investors need have no concern on any score. If you have funds that are likely to be needed over a twelve-month period, opt for the one-year deposit. Else, choose the three-year deposit and opt for the cumulative option.

Shriram Investments: Investments can be considered in the high-yielding fixed deposit and debentures schemes of Shriram Investments. The company offers 7.75 per cent for a three-year cumulative fixed deposit and 8.40 per cent for a three-year cumulative debenture. They also offer 7.50 per cent for a three-year non-cumulative fixed deposit and 8.0 per cent for a three-year non-cumulative debenture. The offer is attractive and the risks are now lower considering the business growth and the capital infusion made in recent years.

BL RESEARCH BUREAU