Kosamattam Finance NCD Oct 2015 Issue review

Published on Saturday, October 24, 2015 by Dilip Davda

Kosamattam Finance Ltd. (KFL) the gold loan sector company is a frequent visitor in debt market since April 2014 and is now coming out with its 5th NCD offer. The company is offering 1150000 Secured Redeemable Non-Convertible Debentures of Rs. 1000 each to mobilize Rs. 115 crore and has a permission to retain 100% oversubscription, raising the aggregate offer size to Rs. 230 crore. KIL also offers money transfer services, foreign currency exchange and air ticketing services.

This offer is opening for subscription on 26.10.15 and will close on or before 26.11.15. Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. Tenure for this offer is for 400 days, 18 months, 36 months, 45 months, 60 months and 75 months. It has cumulative and monthly interest payment options and the coupon rate is ranging from 10.50% to 11.50%. Allotment is available in demat as well as in physical mode, however, trading will take place only in demat mode. The funds mobilize from this issue will be used for repayment of existing loans as well as for further lending and meeting general corpus funding. Post issue its debt equity ratio will stand enhanced to 9.50 from current 8.27. On performance front, it has suffered a severe setback with a net profit of Rs. 5.28 crore on a total income of Rs. 255.36 crore for FY15 against net profit of 26.45 crore on a turnover of Rs. 260.39 crore.

This issue is graded as CARE BB+ by CARE that indicates that instruments with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations. Issue is solely managed by Vivro Financial Services Pvt Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue IL & FS Trust Co. Ltd is the debenture trustee. Post allotment NCDs will be listed on BSE.

Caution: Rising debt equity ratio and poor rating is the major concern. No harm in giving it a miss.

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.