Text: Bhargav TS
Kolkata-based Non-Banking Financial Company (NBFC) Magma Fincorp plans to focus on loans for SMEs (small and medium enterprises) and Suvidha (used vehicle loans) in the coming years. Magma provides a wide range of financial products including financing of utility vehicles and cars, commercial vehicles, construction equipment, tractors and SMEs. The company, which has a presence in semi-urban and rural Tamil Nadu, is now looking to grow its business in the region by 25% this fiscal over last year with a specific focus on loans for SMEs and used vehicles.
Magma Fincorp Vice-President, Dhrubashish Bhattacharya, said that over the past few months, the company had been able to build a strong team to deliver numbers in SME and Suvidha. “We expect to grow at 25% and 90% respectively in these two product categories. Auto loans and commercial vehicles too will contribute to push the overall volume to 25%. We will bank on SME loans and Suvidha to drive our numbers in Tamil Nadu other than auto loans which has been our mainstay in the state so far.” In the past 2 decades, Magma has granted over 1 million loans.
“Amongst NBFCs, we offer a wide variety of products and have a large customer base. Around 80% of our customers are from rural and semi-rural parts of the country. Needless to say, these rural regions continued to grow buoyantly and most manufacturers have realised the potential of these regions. Our growth has been consistent over the years and is led by our strong distribution network. We expect to witness high growth in future as well,” said Bhattacharya.
The company has been consciously growing the mortgage, tractor and SME businesses to improve yields while at the same time maintaining a robust product portfolio. The mortgage finance and general insurance business launched during the last 2 years has achieved scale and is contributing to overall group profitability. Its exposure to passenger car and utility vehicle business is 29%, commercial vehicles 10%, with Suvidha accounting for 12%. The company is optimistic to grow more than 17% in Suvidha this year and overall it is projected to grow at more than 30% year-on-year by the end of 2014.
Bhattacharya asserted, “The industry has degrown due to poor monsoon, but we have grown. Industry is slated to grow at single digit while we will grow at more than 30% at the end of the year. That is the projection. We will aggressively grow our market share in car finance, tractor finance, Suvidha and construction equipment financing. We already have a strong network and over a period of time will offer many products from all our branches and this will support our growth. We will also be opening more branches during this fiscal which will further strengthen our market share in various products. Our strategy will be to reduce the turnaround time (TAT), thereby giving us a competitive advantage.”
In the tractor segment Magma plans to grow by 19% from the existing 17% even as sales have remained sluggish due to a weak monsoon. “Though the tractor business was dull due to poor monsoon, tractors used in commercial activities was not impacted and in places like Bihar and Madhya Pradesh the commercial activities using tractors was high. The growth achieved on various fronts like disbursements, loan book and net interest margin coupled with the control of delinquencies in a dormant economic environment has been challenging. The investments made during the past two years have started yielding results. We hope to see more benefits flowing in during the ensuing quarters as we have registered a 46% growth during the first quarter of this financial year despite contraction in total industry,” added Bhattacharya.
