Magma Shrachi heads for cities

Magma Shrachi Finance, a lender with a presence largely in rural and semi-urban areas, has targeted a 60-65 per cent increase in its lending portfolio in 2007-08 as it expands to cities.

Magma would make a beginning in cities by selling car loans. In the first quarter (Q1) of 2007-08, Magma Shrachi disbursed Rs 730 crore, a growth of over 67 per cent compared with Q1 of 2006-07.

"Since 15 per cent gross disbursements come on an average from Q1, we expect to achieve this target," said Kaushik Sinha, general manager.

The company has launched two initiatives the first quarter of this year, 'Suvidha', a remodelled version of the earlier used commercial vehicle loans. Magma has also started financing purchase of old construction equipment.

"There is a big market and we would try to aggressively grow here. We are also in the process of increasing our presence in the city markets through our car loans business.

"Car in City" is being launched as a special initiative in 14 cities including all metros and A cities by September. We have already launched this in Kolkata, Delhi, and a couple of markets and the growth is satisfactory," said Sinha.

He added that the company would further try to intensify its presence and would like to open more number of branches in the western parts of the country so that the growth objectives could be ensured. The company is specifically looking at entering Goa.

For the year ended 31st March 2007, Magma Shrachi Finance completed the integration process and formalities that completed the merger between Magma and Shrachi.

The combined entity is one of the largest non-banking financing companies in India with assets of Rs 57 billion (as on 31st March 2007), which represents a growth of 72 per cent. Of this, 37 per cent or Rs 21 billion are on book assets compared with Rs 10 million as on 31st March 2006.

The merger has provided Magma exceptional access to the southern region adding to Magma's reach in east, north, and central India.

The company has widespread presence in India through 154 branches and 2,532 employees, with particularly deep penetration in the rural and semi-urban regions with a customer base of over 150,000.

Its product portfolio comprises commercial vehicle finance, utility vehicle finance, construction equipment finance, used commercial vehicle finance, strategic construction equipment finance, and fee-based businesses.

Prior to the merger, Shrachi was more of a single product company with widespread reach. Magma has introduced multiple products across Shrachi's branch network.

In FY07, disbursements grew by 40 per cent to Rs. 25,441 million compared with Rs. 18,197 million in the corresponding previous year.

The commercial vehicle segment delivered 43 per cent growth during the year to Rs. 11,527 million from Rs 8,070 million in the FY2006, making it the primary growth driver. In used commercial vehicles, Magma Shrachi did business worth Rs 1,932 million during the year.