CRISIL

Arka Fincap Limited, a NBFC and subsidiary of Kirloskar Oil Engines Limited (KOEL), has been granted a Certificate of Registration to act as a Corporate Agent (composite) by Insurance Regulatory and Development Authority of India (IRDAI). This registration enables Arka to venture into insurance distribution, adding to its existing financial solutions portfolio to cater to the varied requirements of customers. With this announcement, Arka Fincap would broaden their product portfolio enabling diversification into a new category and capitalise on emerging opportunities. With one of their key values being ‘Customer centric, every time’, this will help the company to empower its customers to achieve business goals while protecting them from uncertainties.

Arka Fincap Ventures into Insurance Market

Arka Fincap Limited, a subsidiary of Kirloskar Oil Engines Limited (KOEL), has introduced a new product called ‘Uday’, offering Small Ticket Loans Against Property (STLAP). Targeted at micro, small, and medium enterprise (MSME) owners, these loans will range from ₹10 lakh to ₹30 lakh. The company aims to address the growing credit demands of small businesses in Tier II, III, and IV cities, providing crucial financial backing for their growth and expansion.  By offering loans against property, we can provide them with lower interest rates and longer tenures, which help with more sustainable growth. Our goal is to offer a diverse range of products that cater to the varying needs of different MSMEs across the country. Uday would be rolled out, initially, in five key locations in Tamil Nadu viz. Salem, Vellore, Tirupur, Porur, and Coimbatore, this launch marks the beginning of a broader, pan-India expansion deeper into Bharat. Arka Fincap Limited has plans to extend the product’s reach to MSMEs across the country, ensuring that small business owners in various regions can benefit from this accessible and flexible credit solution.

Arka Fincap launches loan service ‘Uday’ to serve MSMEs in smaller cities

Net profit of Arka Fincap declined 77.10% to Rs 6.69 crore in the quarter ended March 2025 as against Rs 29.22 crore during the previous quarter ended March 2024. Sales rose 26.62% to Rs 202.17 crore in the quarter ended March 2025 as against Rs 159.67 crore during the previous quarter ended March 2024. For the full year, net profit rose 16.08% to Rs 80.36 crore in the year ended March 2025 as against Rs 69.23 crore during the previous year ended March 2024. Sales rose 37.39% to Rs 774.42 crore in the year ended March 2025 as against Rs 563.66 crore during the previous year ended March 2024.

Arka Fincap standalone net profit declines 77.10% in the March 2025 quarter

AFL’s 1HFY26 PAT of INR 0.36 billion (1.03% ROA) reflects pressure from retail expansion and write-offs in discontinued books. While GNPAs reached 0.98% as the SME segment matured, coverage remained healthy at 67%. Future profitability depends on improving operating leverage and managing credit costs as the portfolio seasons.


The issuer has made timely interest payments

Anand Bang, Chief Executive Officer

AFL is a strategically vital subsidiary of KOEL, representing its largest investment at one-third of KOEL’s net worth. KOEL has fully infused INR 10 billion and maintains strict oversight through shared board members and committee representation. KOEL remains committed to majority ownership while actively directing AFL's growth and risk strategies.


AFL’s INR 52.7 billion debt is diversified across 33 lenders, primarily through bank loans (68%) and NCDs (24%). The company aims to lower costs by increasing NCD/CP issuance and leveraging its floating-rate debt following expected repo rate cuts in 2HFY26. Growth is further supported by expanding co-lending partnerships.



AFL maintains a strong 22.31% CAR and 4.0x leverage (INR 13.2B net worth) as of 1HFY26. While currently stable, a FY27 capital raise is planned to keep leverage under 5.0x during its retail-focused expansion. Ind-Ra expects ongoing parent support to fuel growth and provide a buffer against asset quality risks.




AFL’s AUM reached INR 75.58 billion in 1HFY26 as retail lending grew to 67% of the portfolio (target: 75% by FYE26). The company has pivoted to secured products (LAP, vehicle finance) and exited unsecured loans to manage risk. While GNPA is low at 0.98%, Ind-Ra is monitoring asset quality and portfolio seasoning as the retail book scales.


Security Name: 9.30% Arka Fincap Limited 27 Dec 2026

ISIN: INE03W107231

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