Kosamattam Finance Ltd is a Kerala Based non-deposit taking NBFC engaged in the gold loan finance business. It is a part of Kosamattam Group. The company provides its services in Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi, Maharashtra, Gujarat and Telangana along with the Union Territory of Puducherry. In addition to Gold Loans, it also offers fee-based ancillary services like microfinance, money transfer services, foreign currency exchange, power generation, agriculture and air ticketing services. Kosamattam Finance is headquartered in Kerala and has a vast network of 928 branches and employs 3251 persons in its business operations. The Gold Loan portfolio of the company for upto FY20, FY19, FY18, FY17, and FY16 comprised of Rs.2,71,872.00 Rs. 2,21,230.86 lakhs, Rs. 2,05,050.99 lakhs, Rs. 1,73,040.27 lakhs and Rs. 1,31,224.42 lakhs, respectively. The company is offering Secured redeemable non-convertible debentures of Rs. 1000 each. It opens for subscription on 30.03.20 and will close on or before 23.04.21. Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. The offer has the tenure of 400 days, 24 months, 36 months, 48 months, 60 months and 84 months and interest payment modes cumulative or monthly as per the choice of investors. Coupon rates vary from 9.75% to 10.25%. Coupon rates are lucrative, but rating is not good. Funds mobilised through this issue will be used for onward lending as well repayment of existing loans with interest thereon. On the performance front, for the fiscal years ended March 31, 2020, March 31, 2019 March 31, 2018, March 31, 2017 and March 31, 2016, KFL's total income was Rs. 498.49 cr., Rs. 475.54 cr., Rs. 430.60 cr. Rs. 352.25 cr. and Rs. 345.69 cr. respectively. Its profit after tax the for these FYs was Rs. 47.66 cr., Rs. 43.36 cr., Rs. 30.81 cr., Rs. 15.68 cr. and Rs. 11.22 cr. respectively. It suffered a severe setback in FY15 and thereafter, it has posted gradual growth in its business. It had gross/net NPAs of 1.59/1.07 (FY20), 2.08%/1.28% (FY19), 0.98%/0.59% (FY18), 0.57%/0.27% (FY17) and 0.45%/0.20% (FY16). The issue is rated 'BWR BBB+/Stable by Brickworks India Limited & Research Pvt Ltd. This rating indicates that instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk. So we give NEUTRAL rating to this NCD offer.
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