Gitanjali Gems Fixed Deposit Scheme-Yield of 14.89%-Should you invest?

Gitanjali Gems Fixed deposit scheme-Yield of 14.89percent-Should you investGitanjali Gems Fixed Deposit Scheme-Yield of 14.89%-Should you invest?

Yesterday (3-Jul-13), Gitanjali Gems have launched fixed deposit scheme. The annualized yield is 14.89% for a 3 year fixed deposit scheme. While there is only one negative point, there are several positive factors which can be considered for investing in Gitanjali FD Scheme. Should you invest in Gitanjali FD Scheme?

About Gitanjali Gems Ltd

Gitanjali Gems is one of the largest integrated diamond and jewels manufacturers and retailers in India. It owns and distributes eight out of top ten jewellery brands in India which includes Gilli, Nakshatra, Asmi, D’Damas, Sangina and Diya. This company is listed in NSE and BSE and has a good track record of paying dividend for the last 8 years.

Also read: Sumeet Industries Fixed deposits scheme-Yield of 15.07%-Should you invest?

Features of Gitanjali Gems Fixed Deposit Scheme

FD scheme is available in cumulative and non-cumulative schemes.

a) Features of cumulative FD scheme

  • Your interest would be compounded quarterly and would be paid at maturity.
  • Minimum investment is Rs 25,000. You can invest additional amounts in multiples of Rs 1,000.
  • Interest rates would be as per below table.

Gitanjali Gems Fixed deposit scheme-Cumulative-Interest-Rates

b) Features of Non-Cumulative FD scheme

  • Your interest would be compounded quarterly and would be paid at the end of the quarter.
  • Minimum investment is Rs 25,000. You can invest additional amounts in multiples of Rs 1,000.
  • Interest rates would be as per below table.

Gitanjali Gems Fixed deposit scheme-Non-Cumulative-Interest-Rates

c) Common features for both cumulative and non-cumulative deposits

  • Interest and repayment would be done through ECS of the bank account specified in application form. Alternatively company can issue interest warrants and principal repayment cheques in absence of ECS facility for a particular bank or city.
  • TDS would be deducted as per applicable rates.
  • Nomination facility is available.
  • Pre-mature withdrawal is available after 6 months subject to certain conditions.

How to apply for this FD scheme?

  • Download the application form at this URL: (The application form is yet to be uploaded by them as of today)
  • Fill and sign the application form
  • Application form + cheque/draft in favoring “Gitanjali Gems Ltd – Fixed Deposit Account” should be sent to collection centers. Collection centers are listed in the application PD document. In case where collection centers are not available at their area, one can send duly filled application form + demand draft for the deposit amount to Registered office of the company at Mumbai.

Why should you invest

  1. High interest rates of 12.5% per annum for 3 years. Due to quarterly compounding, annualized yield would work out to be 14.89%. Banks are offering FD rates of 9%. Considering this, it would be a good option to invest in such FD schemes. Early this week, Sumeet Industries has offered similar 12.5% per annum FD’s where annualized yield is at 15.07% due to monthly compounding. Whereas Gitanjali FD scheme interest is compounded every quarter, hence there is slight difference in the yield.
  2. Gitanjali has a track record of paying dividend for the last 8 years. It has paid 30% dividend in the last 3 years.

Also read: Complete Guide on New Pension Scheme (NPS)

Why not to invest

  1. Company FD schemes are always unsecured and high risk.
  2. You may be delayed for interest payment and principal repayment.
  3. These are illiquid. Gitanjali Gems FD scheme has put a condition that investor can apply for pre-mature withdrawal after 6 months of starting a FD scheme, however at the company sole discretion, it MAY accept such application. Means there is no guarantee that company would accept your pre-mature withdrawal application.
  4. Updated on 5-Jul-13: Gitanjali stock price is hammered upto 50%+ in the last 30 days due to FII's pulling away the money from large cap and mid-cap stocks. This is little alarming

Conclusion: Gitanjali Gems Fixed deposit scheme interest rates are attractive. It has good track record of profits and it pays dividend for the last 8 years and paid 30% dividend in the last 3 years. However, due to conditions put in by company, one may or may NOT have pre-mature withdrawal. Considering this, an investor who is willing to take risk and do not require investment up to 3 years, can do moderate investment in such fixed deposit schemes. Also investor need to keep in mind about stock price getting hammered. We are not sure whether this could be temporary or it would have any future impact. Like I keep saying several times, invest part of your portfolio in such fixed deposits to diversify your risk.

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Gitanjali Gems Fixed deposit scheme-Yield of 14.89%

Suresh KP


    1. Agreed Raj, I have commented very next day in red font that share price has fallen drastically over the few weeks. However I am wondering what would have happened if one has invested just 1 month back. Looking at fundamentals, revenue growth, profits, company brand, one would have invested with all such good things. That is the reason i kee saying as first point in my analysis that investments in company fixed deposits are always risky.

  1. Thanks Suresh


    Looking to invest around 10 Lakhs in an Medium /High Risk asset class with a holding period of 3-5 years.


    What do you recommend (  Hybrid, Debt, Equity) 


    I have NRE  acct in ICICI, they are offering 9% for NRE FDs, tax free or should I wait till RBI announces steps on how to curb rupee( raise int rates or issue bonds)


    Planning to make this decision before July 15th as FD rates seems to head lower in coming weeks




    1. Raj, If you are looking for medium to high risk, invest in hybrid schemes. You can invest in largecap, diversified, sector based (small portion), mid-cap funds. What happens if RBI take steps to curb rupee. Your dollars value in rupees would get reduced. You can go ahead and invest partial amount now and in case of further rupee-dollar increase, you can still encash remaining amount into rupees. NRE FD’s are good as they are tax free.

    1. Raj, Even I have observed that. The main reason is FII’s selling in the last 1 month. Looks I need to update my view based the recent changes. Tks for sharing.

  2. Hi,

    I have an NRE acct and was thinking between NRE FD or this ?

    Is the interest from this investment taxable? 

    Would you recommend any other company investments for NRE FDs


    1. Raj, If you open FD thru NRE account, the interest is not taxable. NRI’s cannot invest in company FD’s unless you are investing thru your parents or spouse residing here in India

  3. Hi Suresh,

    I have written to you earlier requesting your valuable thoughts on Muthoot Debenture Secured Option paying monthly interest at 11.5% per annum.  Please let us all know, cause we have invested with Gold dropping so is our confidence in the investment made.

    1. Angeli, I responded to your 4 comments earlier on same question. This is the 5th time I am replying. There are no muthoot debentures being issued now. Please let me know where you heard so that I can analyse.

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