Magma Fincorp

Magma Fincorp Limited

Type	Public
Traded as	BSE: 524000, NSE: MAGMA
Industry	Non-banking Financial Company
Headquarters	Kolkata, India
Key people	Mayank Poddar, Chairman Sanjay Chamria, Vice Chairman, CEO
Employees	5166 (2011)
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 172 branches across 20 states and a union territory and has a strong presence in rural and semi-rural India.^[2][3][4]

History

Magma Fincorp Limited (formally know 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] Same year, the company formed a joint venture with International Tractors Limited (ITL) to enter tractor finance business.^[7] In 2008, Magma completed a major re-branding exercise 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

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

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

Commercial Vehicle Finance

• Magma finances new commercial vehicles for the benefit of the first time buyers and strategic customers leveraging its pan India reach.
• Magma focuses on first time buyers across semi – urban and rural areas.
• Magma emerged as a preferred financing partner for leading automobile giants like Tata Motors, Mahindra & Mahindra, Ashok Leyland, Volvo and Eicher Motors among others.

Cars & Utility Vehicles Finance

• 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

• Magma finances construction equipment in the retail segment.^[16]
• Has the shortest turnaround time in financing assets to customers.^[17]
• 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 in the areas where present.^[18]
• LC facilities for import and export of various kinds of equipment help customers take up large projects in India and abroad.^[19]

Tractor Finance

• Magma finances farmers owning less than six acres of land.^[20]
• Magma is focused on rural tractor financing.
• Magma has the shortest turnaround time in financing assets to customers.
• Magma has entered into a joint venture with agri-equipment manufacturer International Tractors Limited through Magma ITL Finance Limited and also enjoys strategic alliance with Mahindra & Mahindra, TAFE, John Deere, New Holland, etc.^[21]

SME Loans

• Magma restricted its financing to quality clients which ensured superior asset quality, collection & returns.
• Magma has trained channel partners in attracting the right customer profile.
• Magma has engaged in unsecured lending for mid and semi large corporates following comprehensive balance sheet appraisal.
• Magma is among five leading players providing SME loans.

Suvidha (Refinance)

• 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

Magma’s assets under management as on 31st March 2011 were valued at Rs 10,907 crore.^[22] The company disbursed Rs 5,415 crore in FY 11 – 33% higher than Rs 4,065 crore in FY 10.^[23] Total revenues grew by 21% to Rs 874 crore and PAT grew 71% to Rs 122 crore. EPS grew 45% to 8.38.^[24]

Magma has a strong collection mechanism in place and has set a new benchmark with 101.7% collection efficiency.^[25] Despite the raising interest rate, Magma maintained a NIM of 5% in FY11.^[26]

Magma by numbers in 2010-11:

• 65% growth in net income^[27]
• 70% growth in PAT^[28]
• Disbursement increased by 33% to Rs 5415 crore^[29]
• AUM - Rs 10,907 crore^[30]
• Capital Adequacy Ratio - 18.2%^[31]

References

1. ^ Fincorp Ltd, Magma. "About Us". http://magma.co.in/aboutus_profile.htm. 
2. ^ "Magma Fincorp: Buy for a target of Rs94". http://www.valuenotes.com/article.php?articlecode=159720&ref_id=14560019.00&type=C. 
3. ^ "Magma Fincorp Ltd Q3fy11 Result Update". http://www.articlesnatch.com/Article/Magma-Fincorp-Ltd-Q3fy11-Result-Update/1999900. 
4. ^ "Magma Fincorp Disbursals up 36%, Registers 23% growth in Revenue". http://www.citiesbazar.com/india/chhattisgarh/49-magma_raipur-14711.php. 
5. ^ "Magma Fincorp - A stock for rural growth !". http://www.multibaggerpennystocks.com/2011/04/magma-fincorp-perfect-stock-for-rural.html. 
6. ^ "Information : Magma Fincorp Ltd". http://www.edelweiss.in/market/Information.aspx?co_code=5023&tb=CH. 
7. ^ "Magma ties up with International Tractors". The Hindu (Chennai, India). 11 August 2007. http://www.hindu.com/2007/08/11/stories/2007081157482000.htm. 
8. ^ "Magma renames itself, sees 43 percent loan disbursal growth this fiscal". http://www.thaindian.com/newsportal/business/magma-renames-itself-sees-43-percent-loan-disbursal-growth-this-fiscal_10083597.html. 
9. ^ "Magma inks JV with German Insurer HDI Gerling, to enter General Insurance Business". http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=267148. 
10. ^ "MAGMA HDI GENERAL INSURANCE RECEIVES R1 LICENCE FROM IRDA". http://www.bimabazaar.com/index.php?option=com_content&view=article&id=285:magma-hdi-gen-ins-receives-r1-licence-from-irda&catid=94:irda&Itemid=78. 
11. ^ "Magma Fincorp Raises $100M From KKR, IFC". http://www.vccircle.com/500/news/magma-fincorp-raises-100m-from-kkr-ifc. 
12. ^ "Magma Fincorp Ltd". http://www.corporateinformation.com/Company-Snapshot.aspx?cusip=C356FLD00. 
13. ^ "Magma Fincorp Ltd: Company Snaphot". http://www.corporateinformation.com/Company-Snapshot.aspx?cusip=C356FLD00. 
14. ^ "Indiamart- Magma Fincorp Ltd: Services". http://www.indiamart.com/magma-fincorp-ltd/services.html. 
15. ^ "Indiamart- Magma Fincorp Ltd: Services". http://www.indiamart.com/magma-fincorp-ltd/services.html. 
16. ^ "Total Construction Solutions/About Magma Fincorp Ltd". http://www.totalconstructionsolution.com/index1.php?view=magma. 
17. ^ "Indiamart/Magma Fincorp Ltd Services". http://www.indiamart.com/magma-fincorp/services.html. 
18. ^ "Equipment-Planet/ About Magma Fincorp Ltd". http://www.equipment-planet.com/describe_finance.php?id=40. 
19. ^ "Equipment-Planet/ About Magma Fincorp Ltd". http://www.equipment-planet.com/describe_finance.php?id=40. 
20. ^ "Magma within Construction Equipment and Machinery Industry in India". http://www.reportlinker.com/ci02287/Construction-Equipment-and-Machinery.html/coverage/Asia:India/keywords/magma. 
21. ^ "Magma Fincorp Ltd". http://www.totalconstructionsolution.com/index1.php?view=magma. 
22. ^ "KKR, IFC pick up 27.75% in Magma Fincorp for Rs. 440 cr". http://www.livemint.com/2011/05/23171110/KKR-IFC-pick-up-2775-in-Mag.html. 
23. ^ "Magma Fincorp PAT up 70% Registers 41% growth in Disbursement". http://citiesbazar.com/india/maharashtra/44-magmafincorp_results_mumbai-20411.php. 
24. ^ "Magma Fincorp: Annual PAT up 71% to Rs. 122.1 crore". http://www.adgully.com/marketing/magma-fincorp-annual-pat-up-71-to-rs-122-1-crore.html. 
25. ^ "Magma Fincorp Q4 net up 70% posts 41% growth in disbursals". http://www.business-standard.com/india/news/magma-fincorp-q4-net70-posts-41-growth-in-disbursals-/432760/. 
26. ^ "Magma CFO on CNBC-TV18". http://www.youtube.com/watch?v=hdt7wiXtmCk. 
27. ^ "Centrum Broking Pvt. Ltd. report on Magma Fincorp". http://www.business-standard.com/content/research_pdf/magma_270410_01.pdf. 
28. ^ "Q4, FY11 - Magma Fincorp PAT up 70% Registers 41% growth in Disbursement". http://www.indiaprwire.com/pressrelease/financial-services/2011041984063.htm. 
29. ^ "Magma Fincorp Q4 net up 70% posts 41% growth in disbursals". http://www.business-standard.com/india/news/magma-fincorp-q4-net70-posts-41-growth-in-disbursals-/432760/. 
30. ^ "Magma Fincorp to raise Rs 440 cr through private equity funding". http://www.thehindubusinessline.com/markets/stock-markets/article2042618.ece. 
31. ^ "Q4, FY11 - Magma Fincorp PAT up 70% Registers 41% growth in Disbursement". http://www.indiaprwire.com/pressrelease/financial-services/2011041984063.htm. 

External links

• Official Website