13.43% Kosamattam Finance Secured NCD-Apr/May-2014

Kosamattam Finance Secured NCD-April-May-2014Kosamattam Finance Secured NCD-April / May-2014

Probably you would not have heard Kosamattam Finance company earlier or if you even heard, you would have heard very little. Kosamattam Finance is offering Secured NCD’s now, which offers interest rates up to 13.43% for general investors and 13.50% for Sr. Citizens. This Non Banking Finance Company is operating from Kerala and has a presence in South India. Can we trust in Kosamattam Finance and invest in Secured NCD? What are the positives and risks involved in Kosamattam Finance Secured NCD?

About Kosamattam Finance Limited

Kosamattam is a one of the gold loan company registered in Kerala. The company is a non deposit taking NBFC primarily engaged in the gold loan business, lending money against the pledge of household Jewellery in the state of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi and in the Union Territory of Puducherry.

Also Read: Best Rated company fixed deposits schemes to invest

Features of Kosamattam Finance Secured NCD-April / May-2014

  • Start date: 23-April-2014
  • End date: 22-May-2014
  • NCD’s are available for 390 days, 18 months, 36 months and 66 month period.
  • It offers Non cumulative scheme and cumulative interest option
  • Bond face value is Rs 1,000.
  • Minimum investment is for 10 bonds means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.
  • These NCD bonds would be listed on BSE. Hence, these are liquid investments.
  • NCD’s can be invested through Demat account or Physical form.
  • Non-Resident Indians (NRI’s) cannot invest in these NCD’s.
  • The issue size is Rs 75 Crores with an option to retain another 25 Crores aggregating to Rs 100 Crores.

Below is the Interest rate chart of Kosamattam Finance Secured NCD

Kosamattam Finance Secured NCD-Interest chart

How the company is doing in terms of Financials?

Below are the details profit after tax

  • Year ended Mar-2010 – Rs 240 Lakhs
  • Year ended Mar-2011 – Rs 2006 Lakhs
  • Year ended Mar-2012 – Rs 3861 Lakhs
  • Year ended Mar-2013 – Rs 3928 Lakhs
  • 9 months ending Dec-2013 – Rs 2030 Lakhs

Non Performing Assets (NPA) of the company is 0.31% (FY2012-13) Vs 0.17% as on Dec-2013.

Why to invest

  • Company is earning good profits in the last 5 years, hence less risk for payment of interest on these NCD’s.
  • These NCD’s are secured by movable assets, including book debts, receivables, etc. Means in case of any unforeseen thing happening to companies, investors of NCD would still get the principal. Hence it is safe to invest in such secured NCD’s up to this limit.
  • Attractive interest rates of 13.00%. You can double your money in 66 months. Senior Citizens would get additional 0.5% more However, they need complete KYC norms to get additional interest.
  • CARE rated these NCD’s as “CARE-BB+”

Also Read: Post office schemes offer attractive interest rates from 1st April, 2014

Why not to invest?

  • It has received RBI circular in Feb-2014 for alleged non compliances which indicated in 2008 circular too. Any negative decision from RBI could impact the performance of the company.
  • Two of the promoter directors are subject to legal proceedings and any negative things could impact company performance.
  • One of the group company is in similar business and they may have a conflict of interest.
  • Company is not able to trace certain records which include equity shares allotted prior to Aug-2004.
  • Companies in finance business are little risky. Means the profits indicated now can reduce in future due to increase in interest rate payments. Due to competition, in future, it may need to reduce interest rates charged to customers and this can lower the margins.
  • In case of bad performance of the company, there could be a delay in interest payment and repayment of principal invested.

You can download the prospectus Kosamattam Finance NCD here

How to invest?

You can login to your demat account and apply. In case you want to apply in physical form, the process is indicated in the prospectus.

Conclusion: This company was not accepting deposits earlier and hence we would not have heard it. Kosammatam Finance offers good interest rates on these NCD's. Since it offers good interest rates and the NCD's are secured, considering the risks indicated above, one can invest in such NCD’s.

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Kosamattam Finance Secured NCD-April / May-2014


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