Kalika Micro Credit Development Bank Limited

Note: IPO applied for more than 20 units should be divisible by 10 and when applied for more than Rs 50,000 the payment should be made through account payee check.

Issue Manager: NMB Capital Limited

Introduction of Kalika Micro Development Bank Limited


Kalika Microcredit Development with the aim of helping the government in the national goal of poverty elevation was established in 2066 B.S.

The bank is 10 regional  ‘D’ category  financial institution licensed by Nepal Rastra Bank, which was incorporated under the Company Act. And licensed under the Bank and Financial Institutions Act (BAFIA) 2063.

The development  bank is based at Waling in Syangja. The company provides retail micro finance service to the economically and socially disadvantaged and deprived people. In collaboration with various sponsors KMDB also provides training programs and helps in market management.

Currently, it has twelve branches spread in the areas of Waling, Pokhara, Hatemalo Chowk, Panchnagar,  Rampur, Kusma, Chormara and Malunga where it has been providing its services to improve
 the life status of marginalized people through connecting them into groups, to follow the loan and to provide saving service.

The Bank has been registered with authorized capital of NPR 100 million and currently holds issued capital of NPR 50 million and paid up capital of NPR 20 million. The Bank is firmly motivated to support the national movement of poverty reduction through preparing the community which actively participates in national product.

The development bank registered office is situated at Waling Municipality-3, Syangja, Nepal, which is also the central office of the Bank.

Major shareholders in Kalika Micro Development Bank Limited as per the Prospectus.

Board of Directors of Kalika Micro Development Bank Limited

Mr.  Chandra Bahadur Basnet,  Chairman
Qualification: Bachelor of Arts (B.A.)
Work Experience: 27 years of work experience in Nepal Bank Limited and 6 years of experience as Management in various cooperatives. He has been chairman of this company from the day of establishment.

Mr. Krishna Kaji K.C.  Member
Qualification:  Bachelor of Science (B.Sc.)
Work Experience: 25 years of working experience in Education sector.

Mr. Laxman Prasad Regmi, Member
Qualification: Master of Arts (M.A.)
Work Experience: 10 years of work experience in education sector.

Mr. Krishna Bahadur Khand, Member
Qualification: Bachelor of Arts (B.A.)
Work Experience: 12 years work experience in the education sector.

Mr. Padampani Kafle, Member
Qualification: Master of Business Administration
Work Experience: 12 years work experience in the education sector.

Board of Directors (BOD) holding as per Prospectus.

Management Team of Kalika Micro Development Bank Limited

Mr. Tejendra Sharma Lamsal, Chief Executive Director
Qualification: Master of Arts (M.A.)

Mr. Kamal Bahadur Khatri, (Manager)
Qualification: BL

Capital Structure

FINANCIAL HIGHLIGHT OF THE COMPANY

                                                                                                                                                                  Figure in Rs “000”

The micro finance current paid up capital stands at 60% of its issued capital. From the date of establishment, this institution has kept on increasing its capital gradually. In the initial year, it's paid up stood at Rs 12 million but with the increase in its promoter shareholders now it’s paid up stands at Rs 30 million.

With the initial public offering (IPO), the company plans to par the capital structure with that of issuing capital. Further in the future, it has not projected any increase in its capital from Rs 50 million. Similarly, observing reserve and surplus of the company, it is in a growing phase than that of the past figures.

As the micro finance is newly established one, we can observe in the initial two years the company was in loss, however, coming to this FY 2069/70, the bank has come to maintain NPR 5,678 thousand in reserve. If we closely observe and compare the data of reserve and surplus, the micro finance has maintained steady improvement, indicating increasing progress in the income flow of the bank.

The company loan base is mainly focused on the retail lending retail micro finance service to the economically and socially disadvantaged and deprived people.

As the company’s history in the field of micro finance only goes back to 2067 B.S., its market reach is currently limited to the eight areas of the country i.e. Waling, Pokhara, Hatemalo Chowk, Panchnagar,  Rampur, Kusma, Chormara and Malunga.

Given the  financial situation of maximum people residing in above mentioned areas comes below the poverty line and low penetration of MFI (Micro finance Institutions)  in this area has provided immense opportunity for the bank  to grow, which can be observed through the  growth in the  company’s loan portfolio by 54.06% and  151.78% in the past two years respectively.

Since, it is a micro finance company; it doesn’t have the provision to accept saving like other financial institutions, however, the company can get approval from the NRB to accept micro deposits of allocated groups, which will be small in size. The main source of funding for the company’s lending purpose comes in the form of deprived sector loans from the commercial banks. Currently, the borrowing amount of the company stands at Rs78.28 million

Looking at the past three years report, the bank’s operating profit before provision is in the increasing phase. Because of the bank’s successive expansion of its loan portfolio, it’s growth in the interest income is in upside whereas its interest expenses obligation is moreover on a downward slide.

In the last fiscal year, the bank interest income growth stood at 103.99% to the prior growth of 85.46% whereas the interest expenses declined to 78.18% from 118.71%.
 
Looking at the net write back, the bank has made a negative write back in all the past three years respectively. Though the Net write back to loan is still below one percent, the increasing pattern of the provision seems to indicate a worrying sign for the bank.
 
Now, if we look at the net profit figure, we can find that it is also in increasing trend. Given the increasing interest income and decreasing interest expense along with the increasing income from the other operating activities, have helped the company maintain such figure.

However, if we compare the past two fiscal year net profits, the growing provision has limited the bank growth. As we can see the growth of net profit in the last fiscal year was lower than that of the previous year

If we look at the Net Worth of the company, it has grown to Rs 117.45 by the end of the last fiscal year.  Now, looking at the EPS, ROA and ROE, it has maintained a steady and remarkable growth. The last fiscal year figure of ROE indicates that the company return rate is higher than the market interest rate and even higher than half of the commercial banks. The company’s EPS has also improved from the state of minus figure to Rs 15.72, which again is higher than some of the well recognized commercial banks.

In conclusion, the bank is not well established micro finance institutions like Sana Kisan Bikash Bank or Rural Micro Development Center Ltd. But, looking into its performance, it is on constructive path and heading gradually in the right direction.

The potentiality for the growth of micro finance companies in Nepal is immense as most of the people are still deprived of micro finance institutions services in rural areas. Along with it, the government flexibility towards micro finance companies further creates a sublime opportunity for these sectors. However, to grab the opportunity, the company has to make a tremendous effort in order to expand its services as the competition is on raising side.

Apart from the company’s performance, considering the recent investors’ share of interest towards the micro finance companies, it can be expected that the IPO of this company will be well received in the market.

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