KFC raising Rs250 cr through pvt placement of NCDs

FY19 net profit grows 113 pc to Rs17.70 cr; Govt to get Rs1.3 cr as dividend

THIRUVANANTHAPURAM:  The Kerala Financial Corporation (KFC), which staged a sterling performance by more than doubling its net profit from Rs8.3 crore to Rs17.70 crore for 2018-19 despite large write-offs, is raising Rs250 crore non-SLR debt through private placement of NCDs.

After a gap of four years, KFC declared a dividend of Rs1.13 crore to the government, the largest shareholder with about 97 percent holding in the company. This works out a meagre dividend of only 0.5 per cent on the paid up capital.

While the size of the NCD issue has been announced as Rs100 crore, a green shoe option worth Rs150 crore takes the total possible size of the issue that is ready for launch this week to Rs250 crore.

KFC, which is considered to be one of the best performing state financial corporations, has been able to prune its NPA substantially over the years with the gross NPA as for FY19 standing at 5.77 per cent and the net NPA having fallen to a multiple-year low of 1.82 per cent – far less than most banks in the state.

On the fund resources, KFC currently sits very comfortable with the  aggregate value of bonds outstanding as on March 31, 2019 at Rs850 crore with no redemptions on this front coming up until June 2023.

Moreover, KFC has availed Rs609 crore as term loan/working capital demand loan from various commercial banks/financial institutions at their MCLR-linked rates during the 2018-19.

“The aggregate outstanding line of credit (LOC) from banks and other financial institutions at the year-end was Rs1413.99 crore at a weighted average cost of 8.68 per cent,” the KFC document reveals.

The large NPA has historically been the Achilles heel of KFC that has always gnawed at the bottom line and stopped the corporation from reporting a decent profit. This has been the case with FY19 too with the large bad loan write-offs to the tune of about Rs167 crore shrinking the net profit to Rs17.7 crore compared with  an operating profit as large as close to Rs200 crore.

The FY18 also witnessed the same trend with the write-offs amounting close to Rs125 crore pruning the net profit to just Rs8.3 crore, falling from an operating profit as large as Rs145 crore.

KFC has stated that during the financial year under review, the Corporation has adopted a three-pronged strategy to drive its strategic transformation through focused interventions , viz. (1) Strengthening Credit Mechanism (2) Reducing Cost of Funds and (3) Cleaning up of balance sheet to recover maximum bad loans.










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