NEW DELHI: Gold jeweller P.N. Gadgil and Sons has announced the launch of its unsecured company fixed deposit (FD) scheme offering an interest of 7% on a minimum deposit of ₹1 lakh for a lock-in period of 36 months.

The Pune-headquartered company is a jewellery retailer, with operations primarily in Maharashtra.

The FD scheme, which will be open for subscription from 13-30 October has been rated A+ by Care Ltd with a stable outlook.

The company had offered interest rates of 8% in 2019. This dropped to 7% in 2020, mirroring the decline of interest rates in India. However, the current rate offered is at a substantial premium to bank interest rates of 4-6.5%.

In comparison, AAA-rated HDFC company FD scheme offers 6.45% interest for tenures of 33-99 months. While AA-rated FD scheme by Shriram City Union Finance offers 7.48% interest rate for tenures of 12-60 months.

The minimum lock-in period in the scheme by P.N. Gadgil and Sons is 180 days and on any pre-maturity on or after complementation of 180 days, interest rate will be 1% less than the offer rate of 7%.

The company, meanwhile, is offering a special rate of 7.50% per annum on single deposit of ₹50 lakh and above.

The company is raising funds for medium-term finance, the long-term working capital requirements and for the general corporate purposes.

Listing risk factors for the FD scheme, the company that increase in gold price is always a cause for concern for the jewellery sector. This year, the covid-19 pandemic is an additional risk.

As per regulations, the company can raise up to ₹91.76 crore from public and up to ₹36.70 crore from shareholders by way of deposits. P.N. Gadgil and Sons had ₹14.84 crore in deposits as of 3 September.

The company runs 29 stores across Maharashtra, Gujarat, and Karnataka.

It had reported a net profit of ₹135.69 crore for financial year 2021 and ₹64.42 crore for FY20.