Magma Fincorp

Magma Fincorp ltd

Type	Public
Traded as	BSE:  524000, NSE:  MAGMA
Industry	Non-banking Financial Company
Founded	1988
Founder	Mr. Mayank Poddar and Mr. Sanjay Chamria
Headquarters	Mumbai, India
Key people	Adar Poonawalla, Chairman, [1] Abhay Bhutada, Managing Director [2]
Services	Car loans/lease, vehicle loans, construction equipment loans, refinance, SME loans, tractor loans, housing loans, insurance
Revenue	US$ 303 Million (₹ 2219 crores) (2020)
Operating income	US$ 135.2 Million (₹ 989.24 crores) (2020)
Net income	US$ 168.01 Million (₹ 1229.8 crores) (2020)
Number of employees	9500 (2020)
Website	magma.co.in

Magma Fincorp Limited (MFL) is a Mumbai based non-banking financial company registered with the Reserve Bank of India as an Asset Finance Company with registered office in Kolkata. ^[3] The company operates more than 295 ^[4] branches in 22 states and a union territory and has a strong presence in rural and semi-rural India. ^{[5] [6] [7]}

History

Magma Fincorp Limited (formally known as Magma Leasing Limited) was incorporated in 1988 by Mr. Mayank Poddar and Mr. Sanjay Chamria. Magma commenced operation in 1989. In 1996, Magma entered retail financing business for vehicles and construction equipment. ^[8] In the year 2000, with the Acquisition of Consortium Finance Ltd, Magma expanded its network across Northern India. In 2007, Shrachi Infrastructure Finance merged with Magma increasing the company's footprint in southern and western India. ^[9] In the same year, the company formed a joint venture with International Tractors Limited (ITL) to enter tractor financing business. ^[10] In 2008, Magma re-branded and renamed itself as Magma Fincorp Limited. ^[11] In 2009, Magma inked a joint venture with German insurer HDI Global to enter general insurance business. ^[12] The company commenced operations in 2012. 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. ^[13] In 2012, Magma acquired GE Money Housing Finance and GE Money Financial Services. In 2016 Mr. Mayank Poddar stepped down as the chairman. The Company announced a major financial investment by RIsing Sun Holdings, a Adar Poonawalla controlled company in February 2021. Magma HDI announced capital infusion in March 2021 by ICICI Ventures, Cyza Chem and Morgan Stanley.

Products/services

Magma Fincorp Limited has a "diversified product portfolio" and has a strong presence in semi-urban and rural areas. Magma's financial products include: ^[14]

• Commercial vehicles finance
• Cars & utility vehicles finance
• Construction & strategic construction equipment finance
• Tractor finance
• SME loans
• Used assets finance
• Housing loans
• Auto lease
• Insurance

Commercial vehicle finance

• 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.

Cars and 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. ^[15]
• Facilitates exchange schemes, where Magma buys old cars at attractive prices and finance new cars at customer-friendly terms.
• Vertical segregation of sales, credit and collection functions has helped Magma achieve a rapid turnaround time in customer service.

Construction and strategic construction equipment finance

• Finances construction equipment in the retail segment.
• 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 to help

Tractor finance

• Focused on rural tractor financing. ^[16]
• Entered into a joint venture with agri-equipment manufacturer International Tractors Limited through Magma ITL Finance Limited. ^[17]
• Has strategic alliances including Mahindra & Mahindra, TAFE, John Deere and New Holland.

SME loans

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

Used assets finance

• Magma Fincorp initiated the financing of used 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 Housing Finance

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. ^{[18] [19]} 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.

Magma Fincorp Auto Lease

Provides financing facility to small, medium and large businesses in need of fleet of cars Serves over 140 large & medium company's fleets across 14 states in India.

Magma HDI General Insurance Co Ltd

Magma HDI General Insurance Co Ltd. is a joint venture between Magma Fincorp Limited and HDI-Gerling Industrie Versicherung AG. ^[20] HDI Gerling is part of Talanx Group, the third largest insurance group in Germany.

• 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
• Business operating out of 86 Branches & 5 Zonal offices as on 31 May 2017
• Magma HDI offers Motor Insurance, Health Insurance, Liability Insurance, Fire Insurance, Engineering Insurance, Marine Insurance and Burglary & Risk Insurance.

Financial results

Mumbai-based asset finance company, Magma Fincorp Limited announced results for Q2FY21. The company’s profit after tax (PAT) rose 29% yoy to Rs38cr as against Rs30cr in the same quarter last year. Profits were driven by a reduction in the cost of funds and tight control in operating expenses. The Company has made an additional provision of Rs90cr in Q2 FY21 for COVID related stress on the portfolio. The total additional provision now stands at Rs 238cr being 1.5% of overall Assets Under Management (AUM). The AUM was flat at Rs15,571cr, on the back of the pandemic induced lockdown. The company has seen improvement in collections after the end of the moratorium in August, and recorded collection efficiency of 85% in September and 90% in October 2020. The Company expects 70 bps reduction in its operating expenses during the year, of which 40 bps is sustainable due to structural changes undertaken, whereas 30 bps may come back with a return in normalcy, which is expected by Q4FY21. ^{[21] [22]}

New investments

• In March 2015, Magma Fincorp received Rs.500 Cr investment from KKR, Indium V and LeapFrog Investments ^[23]

• In April 2018, Magma Fincorp raised Rs.500 Cr investment through QIP ^[24]

References

1. https://www.livemint.com/companies/news/adar-poonawalla-appointed-as-chairman-of-magma-fincorp-11622467050826.html
2. https://www.timesnownews.com/business-economy/companies/article/magma-fincorp-appoints-adar-poonawalla-as-chairman-announces-leadership-rejig/764204
3. Fincorp Ltd, Magma. "About Us".
4. Magma HR team
5. Mehta, Asit C. (31 March 2011). "Magma Fincorp: Buy for a target of Rs94". IndiaNotes. Retrieved 16 February 2016.
6. "Magma Fincorp Ltd Q3fy11 Result Update".
7. "Magma Fincorp Disbursals up 36%, Registers 23% growth in Revenue".
8. "Magma Fincorp - A stock for rural growth !".
9. "Information : Magma Fincorp Ltd".
10. "Magma ties up with International Tractors". The Hindu . Chennai, India. 11 August 2007. Archived from the original on 24 January 2009.
11. "Magma renames itself, sees 43 percent loan disbursal growth this fiscal".
12. "Magma inks JV with German Insurer HDI Gerling, to enter General Insurance Business".
13. "Magma Fincorp Raises $100M From KKR, IFC".
14. "Magma Fincorp Ltd".
15. "Magma Fincorp Ltd: Snaphot".
16. Chaudhari, Yuga (15 May 2014). "Non-banking Finance Companies (NBFCs) focus on tractor finance as auto sales slump". DNA India. Retrieved 16 February 2016.
17. "Magma ITL to finance Sonalika tractor". The Economic Times. 11 August 2007. Retrieved 16 February 2016.
18. Iyer, Satyanarayan (8 November 2012). "Magma Fincorp to buy GE Capital's housing finance biz for Rs. 1,600 cr". The Hindu Business Line. Retrieved 16 February 2016.
19. Leena, S. Bridget (8 November 2012). "Magma Fincorp buys GE Capital India's home loan businesses". Live Mint. Retrieved 16 February 2016.
20. "Magma HDI General Insurance kick-starts operation". SME Times News Bureau. 12 October 2012. Retrieved 16 February 2016.
21. "Magma Fincorp Q2FY21 PAT up 29% yoy at Rs38cr".
22. "Magma Fincorp Profit and Loss Reports". The Economic Times. Retrieved 6 June 2021.
23. "KKR, Indium, LeapFrog to invest Rs 500 cr in Magma Fincorp".
24. "Magma Fincorp raises Rs500 crore through QIP".