The sugar companies of the K K Birla group have launched fixed deposit schemes at a coupon rate of 9.5 per cent. The rate is 50 basis points (half-a-per cent) higher than Life Insurance Corporation run Varistha Bima Yojana, so long the most attractive assured return instrument, and much more above FD schemes being offered by the banks with the same maturity period.

For company shareholders and employees, an even sweeter deal has been lined up. The four Birla sugar firms -- New India, Gobind, Oudh and Upper Ganges -- have offered 10.5 per cent interest to the shareholders, employees and directors.

The schemes have two advantages over VBY: they have maturity of two years and any Indian citizen is eligible for them. VBY is meant for investors above 55 years and has a lock-in period of 15 years.

The FD offer has come as a pleasant surprise to conservative investors struggling to find out a safe and secured instrument in the falling interest regime. The Birla move of collecting funds at a rate as high as 10.5 per cent rate has also surprised corporate India which has been moving away from similar schemes.

For example, Tata Tea has recently wound up its FD schemes. A top official, who looks after the sugar business of the group, said the schemes were designed to "reward the shareholders and employees" for their association with the companies.

"In the process, the group would be delighted to serve common investors who intend to opt for the schemes," he added. Group sources said it was not difficult to service such high interest rates. Saroj K Poddar of the group said, " The sugar companies have been borrowing money at rates more than what is being offered. The firms want to retire the high cost borrowings by collecting funds through the proposed FDs."

According to conservative estimates, the FDs should mop up funds worth Rs 10-12 crore. However, market intermediaries expected the figure might surpass expectations.

A leading intermediary said Kolkata, the headquarters of some Birla companies, had traditionally been a "good market" for fixed income schemes, although a string of mishaps -- CRB, Prudential, Lloyds and Duncan Industries -- have dampened the spirit in recent years.