Magma Fincorp rides high on tractor financing to fuel growth

In Q1, tractor and car finance witnessed growth of 113 per cent and 46 per cent, respectively

Kolkata-based Magma Fincorp is bullish on tractor finance segment to fuel its growth in Uttar Pradesh.

"The farm sector, including tractors and farm equipment, has returned good growth numbers in the first quarter at a time when the automobile and commercial vehicle segment has been sluggish," company's Vice President Sanjiv Jha said here.

He said good monsoon this year was bound to boost rural segment demand.

In the first quarter of the current financial year, the company had already clocked overall growth of 21 per cent, compared to the corresponding period in the last fiscal. Tractor and car finance witnessed a growth of 113 per cent and 46 per cent, respectively.

Almost 70-75 per cent of new tractors are sold on finance.

During 2012-13, the non-banking finance company had tractor finance portfolio of Rs 202 crore, which was a growth of 184 per cent over the previous year, compared to 69 per cent growth in car finance portfolio of Rs 222 crore.

The company had set a growth target of 15 per cent to top its loan disbursal of Rs 784 crore during 2012-13.

"Last year, we grew 59 per cent against the target of 40 per cent in Uttar Pradesh. However, given tough market conditions this year, we have set a rather conservative growth target of 15 per cent," Jha said.

Magma has 25 branches in UP, of which two fall under National Capital Region. The state accounts for nine per cent of the company's overall business, which was Rs 16,274 at the start of this financial year.

Pan-India, the company has a network of 279 branches. About 80 per cent of these branches are situated in rural areas and small cities.