Kerala Financial Corporation to tap 200 crore through bond issue

KOCHI: State-owned Kerala Financial Corporation (KFC), which is aiming to raise its portfolio size to Rs 1,500 crore by the end of fiscal 2012, is planning to raise a further Rs 200 crore through the issue of non-SLR bonds by the beginning of May this year. The second non-SLR bond issue is likely to raise Rs 100 crore with a greenshoe option of the same amount.
"Our first bond issue in November last year was an unqualified success and we expect to do equally well in the upcoming issue. We are entering a new stage of growth in fiscal 2013, and will diversify into sectors like manufacturing, hospitality and entertainment in a bid to increase portfolio size as well as spread risk across different asset classes," said Yogesh Gupta, chairman and MD, KFC.
KFC plans to diversify in 2012-13 by investing about Rs 500 crore in manufacturing, hospitality, entertainment, films and tele-serials, housing, and real estate projects. The corporation will also formulate new schemes for financial assistance for producing feature films and TV serials as well as schemes for modernizing existing cinema theatres and establishing new multiplexes.
The corporation has been professionalizing its management in the past few months and putting in place stronger monitoring mechanisms, one-time settlement offers for old pending cases, objective appraisal and sanction of loans.
This, coupled with greater efficiency in recoveries and collections has helped improve quality of advances routed to key sectors.
Term loans to MSMEs and emerging entrepreneurs are being offered currently at interest rates of 13.5%, as against 16%-17% charged by banks, and with increased flow of funds, KFC intends to increase its portfolio size in new investment activities, Gupta said.
For fiscal 2012, profit after tax is expected to be Rs 40 crore, up from Rs 36 crore last year. "WThe portfolio size has to be measured based on the quality of advances rather than its size.
There has been a substantial improvement in the quality of assets and "We are able to reduce our net NPAs to below 2%," Gupta said.
KFC's current advances are Rs 1,200 crore which the company will scale up to over Rs 1,500 crore in fiscal 2012. The revenue target for fiscal 2013 has been in the range of Rs 1,700-1,800 crore.