Kosamattam Finance Ltd (KFL) is a frequent visitor to debt market since 2014-15. KFL is primarily engaged in gold loan finance business and also offers fee based ancillary services which include money transfer services, foreign currency exchange and air ticketing services.
To meet its onward lending and repayment of interest and principal of existing loans along with general corpus funds requirement, the company is offering Secured, Redeemable Non-Convertible Debentures of face value of Rs. 1000 each to mobilize Rs. 100 crore. It has permission to retain 100% oversubscription and thus aggregate size of the offer is Rs. 200 crore. Offer opens for subscription on 18.01.16 and will close on or before 18.02.16. Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. Post allotment, NCDs will be listed on BSE. Issue is lead managed by Vivro Financial Services Pvt Ltd. Karvy Computershare Pvt Ltd is the registrar and IL & FS Trust Company Ltd is the debenture trustee. NCDs are available in demat as well as physical mode, however, trading will take place only in demat mode. Post this issue, its current debt equity ratio will rise from 8.96% to 10.03%. CARE has given rating of 'CARE BB+' indicating moderate risk of default regarding timely servicing of financial obligations. This is sixth debt offer from this company since FY 15.
These NCDs have tenure of 370 days, 25 months, 36 months, 48 months and 76 months and coupon rates ranging from 9.75% to 11.50% depending upon the choice of investors. Interest payment options are monthly and cumulative.
On performance front, the company that kept posting higher net profits from FY 2010 to 2013 is now having declining trends for past three fiscals. Its net profit of Rs. 392.81 crore for FY 2013 declined to Rs. 264.46 crore for FY 2014 and further to Rs. 52.81 crore for FY 2015 indicating tough time for goal loan sector. For first half of the current fiscal, it has shown some improvement in top and bottom lines, but its equity too has gone up.
Considering poor rating, declining trends of net profits for past three fiscals and rising debt-equity ratio, there is no harm in giving this offer a miss.
Review By Dilip Davda on December 13, 2019
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.
