Magma Fincorp

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Magma Fincorp Limited
Public
Traded as BSE524000, NSEMAGMA
Industry Non-banking Financial Company
Founded 1988
Founder Sanjay Chamria
Headquarters Kolkata, Kolkata, India
Key people
Mayank Poddar, Chairman
Sanjay Chamria, Vice Chairman, CEO
Services Car Loans/Lease, Vehicle Loans, Construction Equipment Loans, Refinance, SME Loans, Tractor Loans, Housing Loans, Insurance
Owner KKR
IFC
Number of employees
7000 (2013)
Website magma.co.in

Magma Fincorp Limited (MFL) is a Kolkata based non-banking financial company registered with the Reserve Bank of India as an Asset Finance Company.[1] The company operates 275+ branches across 21 states and a union territory and has a strong presence in rural and semi-rural India.[2][3][4]

History[edit]

Magma Fincorp Limited (formally known as Magma Leasing Limited) was incorporated in 1988 and commenced operation in 1989. In 1992, the company merged with Arm Group Enterprises to strengthen its presence and later in 1996 entered retail financing business for vehicles and construction equipment.[5] In the year 2000, with the Acquisition of Consortium Finance Ltd, Magma expanded its network across Northern India. In 2007, Schrachi Infrastructure Finance merged with Magma increasing the company's footprint in southern and western India.[6] In the same year, the company formed a joint venture with International Tractors Limited (ITL) to enter tractor finance business.[7] In 2008, Magma re-branded and renamed itself as Magma Fincorp Limited.[8] In 2009, Magma inked a joint venture with German insurer HDI Gerling to enter general insurance business.[9] The company has received its R1 license in April 2011.[10] In the same year, Magma picked up 7% stake in the newly formed Experian Credit Information Company of India Pvt Ltd, the Indian arm of the global credit information services company. In 2011, Kohlberg Kravis Roberts – a large global PE firm and International Finance Corporation, an arm of the World Bank Group invested about $100 mn in Magma.[11]

Products/Services[edit]

Magma Fincorp Limited has a "diversified product portfolio" and has a strong presence in semi-urban and rural areas. Magma has a bunch of financial products including:[12]

  • Commercial Vehicles Finance
  • Cars & Utility Vehicles Finance
  • Construction & Strategic Construction Equipment Finance
  • Tractor Finance
  • SME Loans
  • Suvidha (Refinance)
  • Housing Loans
  • Insurance

Commercial Vehicle Finance[edit]

  • Finances new commercial vehicles.
  • Focuses on first-time buyers across semi – urban and rural areas.
  • Emerged as a preferred financing partner for vehicle manufacturers like Tata Motors, Mahindra & Mahindra, Ashok Leyland, Volvo and Eicher Motors among others.
  • Provides escorts services for old vehicles which are off the road for at least 3 years – might need to be shifted to used assets category
  • Plans to start diesel loans and tyre loans for old vehicles. – need to check

Cars & Utility Vehicles Finance[edit]

  • Provides loans to customers with or without proof of income, through its 'Income Proof' and 'Non-Income Proof' schemes, extending its service to a wide range of customers.[13]
  • Facilitates exchange schemes, where Magma buys old cars at attractive prices and finance new cars at customer-friendly terms.[14]
  • Vertical segregation of sales, credit and collection functions has helped Magma achieve a rapid turnaround time in customer service.[15]

Construction & Strategic Construction Equipment Finance[edit]

  • Finances construction equipment in the retail segment.
  • Has the shortest turnaround time in financing assets to customers.
  • Magma has entered into tie-ups with Telcon and JCB and works closely with L&T, Ace, Caterpillar, Volvo and others to attain market leadership.
  • Helps customers take up large projects in India and abroad because of the LC facilities for import and export of various kinds of equipment.

Tractor Finance[edit]

  • Focused on rural tractor financing.
  • Entered into a joint venture with agri-equipment manufacturer International Tractors Limited through Magma ITL Finance Limited.
  • Enjoys strategic alliances with Mahindra & Mahindra, TAFE, John Deere, New Holland and more.

SME Loans[edit]

  • Engaged in unsecured lending for mid and semi large corporates following comprehensive balance sheet appraisal.

Used Assets Finance[edit]

  • Initiated the financing of used commercial vehicles and financed first time buyers and 2–15 years' old commercial vehicles through schemes addressing the needs of the lower-end customer segment.
  • Established equipment valuation norms, which were checked by independent valuation experts and resident equipment managers prior to disbursement.
  • Installed a credit programme that ensured customers’ compliance with existing practices.
  • Strengthened process to reduce turnaround time coupled with stringent mentoring of asset and collections.

Magma Mortgage[edit]

In Feb 2013, the company acquired 100% equity share capital of GE Money Housing Finance (an affiliate of GE Capital India) engaged in Housing Finance in India and the home equity loan portfolio of GE Money in two separate transactions. Following the acquisitions, GE Money Housing Finance (GEMHF) has been renamed as Magma Housing Finance Company. This acquisition marked the entry of Magma into the mortgage finance business. Magma Housing Finance Co commenced fresh disbursement in May 2013 and started offering financing products under 3 broad product lines viz. Home Loans, Home Equity (Loan against Property) & Construction Finance. The company intends to increase its disbursements, by adding new customers and leveraging the existing channels for other businesses. The target customer segment is self employed, located in rural and semi rural locations and lacks banking history and adequate documentation. This customer segment is also the target segment for other Magma products in the asset finance business. Magma plans to provide this product across the existing branch network and has already launched this product in 170 out of the 235 branches.

Magma HDI General Insurance Co Ltd[edit]

Magma HDI General Insurance Co Ltd. is a Joint Venture between Magma Fincorp Limited and HDI-Gerling Industrie Versicherung AG. HDI Gerling is part of Talanx Group, the third largest insurance group in Germany. The entity leverages on the complementary strengths of the two companies, HDI Gerling’s product knowledge and Magma’s pan India distribution and service network with deep penetration in rural India.

KEY MILESTONES

  • Joint Venture agreement signed and company registered in September 2009
  • Licence for carrying out General Insurance business issued by IRDA in May 2012
  • Business operations commenced in October 2012
  • Gross Written Premiums (GWP) of Rs 96 crore collected in H2 FY13
  • GWP of Rs 430 crore collected in FY14. This was the highest by any general insurance company in its first full year of operations
  • Reported profits in Q1 FY15, the seventh quarter of operations
  • Business operating out of 73 Branches & 5 Zonal offices as on 31 May, 2014

Suvidha (Refinance)[edit]

  • Company initiated the financing of used commercial vehicles and financed first time buyers and commercial vehicles 2 – 15 years old through schemes addressing the needs of the lower-end of the customer segment.
  • Magma established equipment valuation norms, which were checked by independent valuers and resident equipment managers prior to disbursement.
  • Installed a credit programme that ensured the customers’ compliance with existing practices.
  • Magma strengthened process to reduce turnaround time coupled with stringent asset and collections mentoring.

Financial Results[edit]

Magma’s loan assets under management as on 31 March 2014 were valued at INR 17,877 Crore. The company disbursed INR 9,081 Crore in FY 2014. Total revenues for FY13-14 grew by 24% year over year to INR 2,117 Crore and PAT grew by 10% year over year to INR 160 Crore.

Magma by numbers in 2010-11[edit]

Corporate Social Responsibility[edit]

A 24 member team from Magma Fincorp participated in the Mumbai Marathon 2012 sponsored by the Standard Chartered Bank. The team headed by Mr. Sanjay Chamria, Vice Chairman & Managing Director, covered the 21 km, half – marathon stretch. Magma team which was running for a cause to raise funds for charity through the Marathon, donated an amount of Rs. 10 lacs to an orphanage run by The Philanthropic Society of the Orthodox Church, Kolkata.[21]

References[edit]

External links[edit]