HYDERABAD: Troubled Karvy Group borrowed as much as Rs 1,523 crore in the past few months, nearly doubling its consolidated debt to a staggering Rs 3,233 crore, according to company filings with the Registrar of Companies (RoC).
However, over the past few quarters, it repaid small amounts to private lenders Kotak Mahindra Bank and Karur Vysya Bank aggregating Rs 70 crore, taking the outstanding debt to Rs 3,133 crore, up from Rs 1,710 crore as on September 2018. When contacted, officials declined to comment on the consolidated debt level but reaffirmed that payments whenever due will be honoured.
ALSO READ| NIP Karvy-style cheating right in the bud
"We have never defaulted payments to our creditors. Lenders are cooperating with us and we are closely working with them," C Parthasarathy, chairman, Karvy Group told this publication. RoC filings of 39 Karvy Group entities also revealed that a handful of entities were steadily borrowing. For instance, holding entity Karvy Stock Broking raised as much as Rs 1,000 crore in the past few months, while Karvy Fintech, Karvy Data Management Services, and Karvy Realty accounted for the rest of the borrowings.
Industry sources hinted that the company's debt levels may further rise given the management's attempts to unpledge client shares to comply with the recent SEBI order. NSE sources confirmed to this publication that Karvy pledged client securities worth Rs 2,300 crore to raise Rs 600 crore. According to Karvy, the outstanding value of pledged shares was less than Rs 500 crore and that it will free up shares in the next few weeks.
Analysts of ratings firm Icra have been flagging Karvy's weak cash flows and increasing debt levels since the beginning of 2019. "Icra notes that cash inflows from Karvy Data Management Services Ltd (KDMSL) were critical for fulfilling KSBL's debt obligations in the short-term. KSBL's gearings are high on a standalone level and the frim is financing KDMSL, which has witnessed a deteriorating in its cash flows. KSBL's near-term debt repayment obligations are largely dependent on cash inflows from KDMSL," it noted in March.
On Wednesday, it downgraded the ratings citing adverse impact due to the Sebi order and also because of limited or no updated information from Karvy. As on September 2018, Karvy Stock Broking's net profit fell to Rs 7.56 crore from Rs 20,26 crore during March 2018 on account of high operating expenses and finance costs.