Kosamattam Finance Ltd. (KFL) is a systemically important non-deposit taking NBFC primarily engaged in the Gold Loan business, lending money against the pledge of household jewellery ('Gold Loans') in the state of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi, Maharashtra, Gujarat and Telangana along with the Union Territory of Puducherry. This is the 21st Debt offer from the company since April 2014. It is IRDA registered composite corporate insurance agent. Kosamattam also holds SEBI registration as depository participant and FFMC to act as money changer. KFL is also an AMFI registered mutual fund advisor and also holds registration from LEIL.
In addition to the core business of Gold Loan, KFL also offer fee based ancillary services which includes
Microfinance, money transfer services, foreign currency exchange, power generation, agriculture and air
ticketing services. Thus it has diverse business activities now.
As on October 31, 2020 it had 946 branches in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Delhi, Gujarat and Maharashtra along with the union territory of Puducherry.
For the purpose of onward lending (40%) and repayment of interest and principal of existing loans (35%) as well as general corpus fund need (25%), KFL is coming out with debt offer of Secured and Unsecured Redeemable Non-Convertible Debentures of Rs. 1000 each for Rs. 175 crore with a green shoe option to retain oversubscription to the tune of Rs. 175 crore making the total issue size of Rs. 350. Issue opens for subscription on December 23, 2020 and will close on or before January 19, 2021. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. It will spend Rs. 1.60 cr. for this entire issue proceeds.
This issue is rated as BWR BBB+ Outlook 'Stable', by Brickwork Ratings India Pvt. Ld. this rating indicates that instruments with such ratings are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk. Since last four issues KFL is having mandate with Karvy Investor Services Ltd. and SMC Capitals Ltd. for the issue process. KFin Technologies Pvt. Ltd. is the registrar to the issue. Vistra ITCL (India) Ltd. is the debenture trustee.
These NCDs have tenures of 400 days, 30 months, 39 months, 48 months, 66 months and 84 months. It offers coupon rates of 9.25% to 10.25% based on selection of investors. Frequency of interest payments will be Monthly or cumulative as per the choice of investors. Allotment of these NCDs will be in dematerialized mode only. Application is to be made through ASBA mode only.
| Series 1 | Series 2 | Series 3 | Series 4 | Series 5 | Series 6 | Series 7 | Series 8 | |
|---|---|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Cumulative | Monthly | Cumulative | Monthly | Cumulative | Cumulative | Monthly | Cumulative |
| Tenor | 400 Days | 30 Months | 30 Months | 39 Months | 48 Months | 66 Months | 84 Months | 84 Months |
| Coupon Rate (Retail) | NA | 9.25% | NA | 10% | NA | NA | 10.25% | NA |
| Effective Yield (Per year) | 8.50% | 9.65% | 9.34% | 10.47% | 10.67% | 10.71% | 10.75% | 10.41% |
| Amount on Maturity | Rs 1,093.50 | Rs 1,000 | Rs 1,250 | Rs 1,000 | Rs 1,500 | Rs 1,750 | Rs 1,000 | Rs 2,000 |
For the fiscal year ended on March 31, 2020, KFL has posted total income/net profits of Rs. 498.49 cr. / Rs. 47.63 cr. (FY20). For first six months ended on September 30, 2020, it has reported net profit of Rs. 30.36 cr. on total income of Rs. 244.99 cr. Its current debt equity ratio of 6.10 will enhance to 6.78 post this issue.
KFL's AUM has consistently grown in the last 5 years from Rs 1,708 Crs in FY16 to Rs 2,973 Crs in FY20 at CAGR of 11.72%. As on 30 September 2020, the company's AUM stood at Rs. 2,978 crores
As on September 30, 2020, its gold loan customers were 598999, net NPAs stood at 0.97% and it's paid up capital of Rs. 198.01 cr. is supported by free reserves of Rs. 273.23 cr. Company's gold loan yield is expressing declining trend.
Review By Dilip Davda on December 21, 2020
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
