CSL Finance Ltd.
CMP -89 ,
MKT Cap – Around 42 crores
Transition towards NBFC with cautious lending to have zero default book
The company strongly values the relationships with its clients, building on transparency
and trust with them. It looks after their best interests to allowing them the
flexibility to prepay and ensures quick turnaround time for loan processing and
approval. Over time the company has become the Lender of choice for small &
mid-sized companies in the Delhi NCR region looking for short term loans.
The due diligence process followed by the company is constantly improved to adapt to newer
challenges in the operating environment.
Amongst other aspects, the company continues to lay emphasis on borrower's cash flows,
borrower's equity in the project during the due diligence process.
During the year under review, the company has added new clients to ensure rotation of its loan
book, so as to mitigate any exposure risks. With the slowness in the overall
economic environment, especially the real-estate sector, the company would be
following a more cautious approach to lending.
The focus will be to ensure the quality of its loan book by lending to high quality borrowers.
Aim to lend the borrowers with strong balance sheets, even if it comes at a decline in our yields.
Post-disbursal of the loan, the company regularly conducts site visits, takes regular sales and
cash flow updates, to identify any stress as early as possible, which enable it
take corrective action at the earliest.
The systems and procedures of the entire lending model have evolved over the years on account
of continuous refinement.
Proprietary Investments, wherein the company trades in arbitrage opportunities arising in the
stock market like Open Offers, Demergers, Delistings etc; has done reasonably well during the year under review, despite the extreme uncertainty prevailing in the stock market on account of micro & macro-economic factors. It is also investing in derivatives and bonds .
They will gradually scale down the deployment of funds in this segment as our loan book
grows in the coming years.
Going forward, the company's intends to focus on its Secured Lending business and further expand its loan book as it sees ample opportunities in the lending space, for those NBFCs which have the right set of people, knowledge, internal systems & network in place.
Income from operations has decreased to half but profits increased by 50% due to sharp reduction in purchase of inventory. Employee has been further increased from 1.25 crores to 1.32 crores
Promoter holding (CSL Holding Ltd. ) 75% of shares which is a good sign .
Equity shares - 46 lakh shares of 10 Rs each .
Company has cash balance of 11 crores ,short term loans and advances of 106 crores out of total assets of 110 crores
From balance sheet perspective short term borrowings increased more than 4 times whereas Non current investments and current investments got almost nil giving an indication of transition of
majority towards NBFC function
If salary is to be kept aside which is
not so easy , then company can have good growth in loan book through its credit
quality management and also having high tailwinds to the sector of NBFC .Also there is a probability of re- rating as currently very low valued scrip. Also current results are in favour of company and can grow further with diversifying loan book and getting more professionalised .
Total salary is 1.25 Crores out of which 90 lakhs is paid to MD and rest 35 lakhs to all employees in FY 2015. As on 31 March 2015, the company has 11 people on its payroll.
Out of 8 crores profits , 12-13 % of it is paid as salary to Chairman Rohit Gupta which is a negative sign for considering the integrity of management . Also there is a 3 times increase in salary of MD whereas profits increased by 10%.
Annual report of 2016 and June results will give more clarity of their loan book growth
Disclosure – Not invested .First time initiating a thread so let me know if done anything wrong.
It would be good if senior VP members could give more insights about company technically and fundamentally and especially Management Integrity.