THIRUVANANTHAPURAM: What if Kerala State Industrial Development Corporation (KSIDC) never existed? Would Kerala’s industrial ecosystem suffer – or simply be better served by banks and other agencies?
With assets under management (AUM) or loan book of just Rs1,882 crore – compared with the Kerala-based banks, South Indian Bank’s Rs17,639 crore in corporate loans or Federal Bank’s corporate loan book of Rs73,596 crore – KSIDC’s lending scale is negligible.
Even more worrying: high non-performing assets (GNPA at 14.61 per cent) and Rs115 crore in idle fixed deposits suggest KSIDC remains as a capital-rich but impact-poor institution.
Kerala seems to support more industrial development bodies than the state really requires and much more than almost any other state in the country, including:
- Kerala Financial Corporation (KFC)
- Kerala Industrial Infrastructure Development Corporation (KINFRA)
- Kerala Small Industries Development Corporation (SIDCO)
- Kerala State Information Technology Infrastructure Ltd (KSITIL)
- Kerala Startup Mission (KSUM)
- Centre for Development of Imaging Technology (C-DIT)
- ICT Academy of Kerala
- Kerala Bureau of Industrial Promotion (KBIP)
- KELTRON (electronics arm)
- Kerala Land Development Corporation (KLDC), to name a few.
According to sources, many of thesse agencies are burdened with overlapping mandates.
In comparison, KSIDC’s Rs1,882 crore AUM is minuscule. In FY25, KSIDC’s profit dropped from Rs71.8 crore to Rs58.3 crore, its income fell from Rs111.9 crore to Rs95.8 crore, and RoA declined from 4.18 per cent to 2.94 per cent. Meanwhile, high NPAs have eroded asset quality.
Why is KSIDC unable to tilt even its modest loan book towards healthy assets?
Contrast this with its peers: KFC maintains Rs8,012 crore in lending, keeps NPAs under 3 per cent, and reports a net profit near Rs98 crore . KINFRA remains active in infrastructure delivery across 140 industrial parks.
Business model
KSIDC’s business model – borrowing from financial institutions to re-lend at a markup – offers little unique value. And this model suggests that only those couldn’t borrow from other institutions or those who enjoy political clout would naturally be KSIDC’s target customers for funding needs, according to sources close to the government.
When even that limited lending results in elevated NPAs, it begs the question: why does the corporation continue to exist?
Despite sitting on a massive net worth of over Rs1,348 crore and boasting an unusually large capital adequacy ratio (CAR) above 60 per cent, many experts seriously believe KSIDC is an under-utilised institution, unable or unwilling to deploy capital at scale.
“KSIDC appears to be faltering where it matters most – delivering impact,” said an insider.
Serious questions
With gross non-performing assets (GNPAs) rising to an alarming levels, and a sharp drop in income and profitability, serious questions are being raised about whether the state’s premier industrial financier is still fulfilling its purpose.
For an institution meant to catalyse industrial growth and investment in Kerala, KSIDC’s numbers paint a contradictory picture.
Its asset base (loan book) has grown only marginally – from Rs1,667 crore to Rs1,882 crore – and even that is overshadowed by the fact that a significant portion of its lending has turned sour.
With loan disbursements lagging and high NPAs eating into asset quality, critics are beginning to ask: is KSIDC losing its relevance, or worse – simply not needed anymore in its current form?
