Magma's insurance arm to commence ops in current fiscal

Kolkata-based non-banking financial company, Magma Fincorp, today said its insurance arm Magma HDI General Insurance will commence operations in current fiscal.

"We have received the R1 license from the insurance regulator Irda. After other formalities including R2 and R3 licences, we hope to start operations by end-this fiscal," Magma Fincorp's Vice Chairman and Managing Director, Sanjay Chamria told PTI on the sidelines of a press meet here.

Magma has signed a joint venture with HDI Gerling, part of Talanx Group, Germany's third largest insurance group to start a general insurance company in India, which since has received R1 license from the insurance regulator.

Magma will hold 74% while HDI Gerling will hold 26% in Magma HDI General Insurance Company, Chamria said.

Meanwhile, Magma Fincorp reported a significant increase in disbursements, revenue, PAT and in assets under management (AUM) in Q4 FY 11 over the corresponding quarter last year. The disbursements increased at a steady 41% to Rs 1,955 crore while revenue increased 24 per cent to Rs 269.8 crore.

The company recorded profit before tax (PBT) of Rs 66.4 crore and profit after tax (PAT) of Rs 44.9 crore, an increase of 57% and 70%, respectively in Q4 FY 11 over the corresponding period last year.

The AUM as on March 31, 2011 was Rs 10,907 crore.

Magma registered annual disbursals of Rs 5,415 crore, up 33% over the FY 10, resulting in improvement in its market share in the car, tractor and commercial vehicle segments. Annual revenues grew by 21% to record Rs 874 crore and PAT registered in FY 11 was the highest ever for the company at Rs 122.1 crore, up 71%.

Commenting on the company's performance, Chamria said, "Magma has responded well to the market opportunities in all the product segments, be it commercial vehicles, car or the high yield products such as tractors, Suvidha (refinance) or SME loans. Aligned with the rapid growth in primary sales, Magma too has been able to grow its disbursals in Q4 by 41%.

"We successfully increased the share of our high yield products to 19% from 13% which along with superior treasury management and efficiency in handling cost of funds ensured we achieved NIM of 5.0% for the year. On account of stringent write off policies and exemplary collections focus, Magma continues to have zero gross and net NPAs," Chamria said.

"With the expansion of its network in the Western and Southern markets, Magma is now at the cusp of an explosive growth and is looking to grow its topline by 50% during FY 12 with specific focus on the high yield segments of tractors, used CVs and SME segment. The high yield segment is targeted to contribute 25% of the disbursals for the year which will take our NIM up to 5.25% from the 5% for FY11," Chamria said.