Kosamattam Finance NCD Issue
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 October 26 and will close on or before November 26. 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. Rural Electrification Corp Tax Free Bonds Rural Electrification Corporation Ltd (REC) is coming out with its tax free secured redeemable non convertible bonds of face value of Rs. 1000 each in the nature of debentures having tax benefits for Rs. 300 crore and having a permission to retain oversubscription of Rs. 400 crore making aggregate size of the issue for Rs. 700 crore. The funds raised will only be utilised towards general lending operations.
Allotment is available in demat as well as physical mode, however, trading will take place only in demat mode.
The issue opens for subscription on 27.10.15 and will close on or before 04.11.15. Allotment will be on “first come-first serve basis”. Minimum application is to be made for 5 TFBs and in multiple of 1 TFB thereon, thereafter.
These bonds have tenure of 10 yrs, 15 yrs and 20 yrs and coupon rate of 6.89%, 7.09% and 7.18% for the said tenures for other then retail investors. For retail investors, coupon rates are 7.14%, 7.34% and 7.43% for the said tenures. These bonds are grades as CRISIL AAA/Stable by CRISIL, CARE AAA by CARE, IND AAA/Stable by India Rating and ICRA AAA by ICRA, indicating the highest degree of safety.
Issue is jointly lead managed by A K Capital Services Ltd, Edelweiss Financial Services Ltd and RR Investors Capital Services Pvt Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. SBICAP Trustee Co. Ltd is the Trustee for the bond holders. Post allotment, TFBs will be listed on BSE.
Conclusion: In line with eased interest rates, this offer is having lower coupon rates than the recent two offers of NTPC and PFC, but considering its rating and tax free status, it is worth considering for long term safe tax free returns.
DISCLAIMER: 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.
