Magma Fincorp Limited - ACE Analyser Meet/124000_20090630.pdf · 2 0 50 100 150 200 250 300 350 400...
Transcript of Magma Fincorp Limited - ACE Analyser Meet/124000_20090630.pdf · 2 0 50 100 150 200 250 300 350 400...
Magma Fincorp Limited
Reaching New Heights in Retail Finance
2
0
50
100
150
200
250
300
350
400
450
500
550
600
650
700
FY 1977
FY 1989
FY 1994
FY 1995
FY 1996
FY 1997
FY 1998
FY 1999
FY 2001
FY 2002
FY 2003
FY 2004
FY 2005
FY 2006
FY 2007
2008
2009
2010
INR in Cr
0
500
1000
1500
2000
2500
3000
3500
4000
INR in Cr
Income Annual Disbursement
Magma
incorporated
Commenced financing business operations
Started retail financing
Acquired Consortium Finance
Diversification into general insurance and personal loan
distribution
Merger with Shrachi
High Growth
Phase
JV with ITL for Tractor financing
SME Loans business
launched on own books
…Over 3 decades of rich history in Indian financial services industry…
JV with HDI Gerling for General Insurance business
3
Commercial Vehicle Finance
Car and Utility Vehicle Finance
Used Commercial Vehicle Finance, Tractors & SME
Loans
Construction Equipment Finance
Asset Size – Rs 586 Cr
… Strong Focus on Vehicle Financing Business
Asset Size – Rs 3084Cr
Asset Size – Rs 2062 Cr
Asset Size – Rs 2260
Total Assets ~ Rs 9171 Cr
Other Assets – Rs 1179 Cr
Insurance Agency Business
Premium Size – Rs 38 Cr
4
Vision
Strategy
“To become India’s largest retail financing company”
� Focus on un-penetrated and un-contested rural and semi urban areas
� Around 77 % of the branches are rural / semi urban
� Growth in high yield product segments such as used vehicle financing
� Effective use of cross sell opportunities to expand share of the wallet
� Diversification into offering SME loans and insurance products
� Target on small and first time buyers
� Growth through combination of organic and inorganic routes
… Clear Vision and Effective Strategy
5
Significant market position* in Asset Financing (Q1 FY 10)
Market Share in New CV financing Market Share in New Car/UV financing
Market Share in CE financing
Magma
3.0%
Others
97.0%
� Market share based on internal estimates, based on All India industry sales for Car and Commercial Vehicles for Q1 FY 10
� Market share for CE based on internal estimate of industry sale for Q1 FY 10
Magma
2.3%
Others
97.7%
Magma
8.6%
Others
91.5%
* Market share figures shown above are as per company estimates.
6
Involved Customer
Management Process
An efficient and involved customer management process
“Deepen and
diversify client
relationships”
“Know your
customer”
“Grow with the
customer”
“Enable healthy
client growth”
Proximity to customers
Hands on sales force with close understanding
of customers’ financial status and requirements
Customer Analysis
Analysis of various customers to identify
attractive segments to be focussed on Flexible products
Flexible repayment terms to absorb any short term
fluctuations of repayment ability. Due consideration is
also given to intentions
Efficient loan processing and back office
operations ensure a faster turn around time for
customers
Healthy customer financials
Better vehicle utilization improves
operational efficiency
Repeat business and
referrals by existing
customers
… Objective to enrich customer lifetime value and build profitable lifetime
relationships
7
Magma At a Glance
� A strong presence across rural and semi-urban India with 148
branches in 20 states and 1 union territory
� Expertise in financing first time buyers and small enterprises
� Bouquet of fund based and fee based products
� Product offerings covering Commercial Vehicle, Passenger Cars and Utility
Vehicles, Construction Equipment Loans, Tractor Finance, SME Loans and
General Insurance
� Magma team strength of 4130 employees, including field force of 3138 employees
� Total Asset Size ~ Rs 9171 Cr
� Loan Assets of ~ Rs 7992 Cr
� Disbursement: Rs 1229 Cr for Q1 FY10
� 5-Yr CAGR of 34% in disbursements, 50% in income
� Capital Adequacy at 17.3% (March 2009), above norm of 10%.
8
Strong Financial Performance
867
13711820
2544
3513
1229
3673
0
700
1400
2100
2800
3500
4200
FY20
04
FY20
05
FY20
06
FY20
07
FY20
08
FY20
09Q
1 FY
-10
Rs Cr
CAGR 34%
82 98152
278
471
625
142
0
100
200
300
400
500
600
700
FY20
04
FY20
05
FY20
06
FY20
07
FY20
08
FY20
09Q
1 FY
-10
Rs Cr
CAGR 50%
Annual Disbursement Income
Net Profit
CAGR 50%�Magma has posted disbursal of
Rs.1229 Cr in Q1 FY 10 almost same
as Q1 FY 09
�Income grew by 3% in Q1 FY10.
17.614.0
20.2
31.4
50.5
39.0
10.1
0
10
20
30
40
50
60
FY20
04
FY20
05
FY20
06
FY20
07
FY20
08
FY20
09Q
1 FY
-10
Rs Cr
CAGR 17%
9
Profile of Promoters
� Founded Shrachi Group – businesses in Financial Services, Realty, Agricultural Tools & Engineering
� Joined as co-promoters on merger of Shrachi Infrastructure Finance with Magma in FY07.
� The Todis have over 20 years of experience in financing business
Shravan Kumar Todi,Vice Chairman
Age 67 yrs, M.Com
Ravi Todi, Joint Managing Director
Age 40 Yrs, B.Com
� Promoted Magma Leasing along with Mayank Poddar
� Two decades of experience in retail finance business
� Looks after strategic policy formulation and execution, driving new business initiatives and guidance on day to day affairs of the company
Sanjay Chamria, Vice Chairman & Managing
Director Age 45 years, FCA
� 22 years experience in finance business
� Interests in realty sectors
� Role at Magma - Strategic & policy direction
Mayank Poddar, Chairman
Age 56 Years, B.Com
10
Equity Holding
Given its strong business and operating fundamentals, Magma has attracted significant interest from overseas investors
2004 Jun 2009
Promoters
49.2%
Others
23.0%Overseas
Investors
27.8%
Promoters
71.5%
Overseas
Investors
0.0%
Others
28.5%
11
Organisation Structure
Vice Chairman & Managing Director
Head-Insurance Business
Chief Financial Officer
Chief Information
Officer
Chief People Officer
Company Secretary
MIS & Control
Treasury
Audit Committee& sub-committees
Accounts & Taxation
National Sales Heads CE,
Suvidha and SME
National Business Vertical Heads
SBU HeadRecruitment
Head Admin & Corp Com.
Training
Performance & Compensation
Joint Managing Director (JMD)
SBU Product Heads
SBU Credit Head
SBU Recovery Head
Segregated teams - Sales, Credit & Collections
SBU Structure
Board of Directors
National Recovery Head (0-180)
National Credit & Ops Head
National ARD Head (180+)
IT Infrastructure
Project & Software
SBU OPS Head
12
Pan India Presence
148 Branches across 20 States & 1
Union Territory
� Pan India Presence
� Strong in East, North, South and Growing
Presence in West
� Focus on:
� Rural markets
� Semi-urban markets
South,
35East, 37
West, 31
North,
45
Markets Zones
Urban,
33
Rural, 62
Semi-
urban,
53
13
Disbursements Profile – By Geography/ Products
Passenger Cars and
Utility Vehicles 24%Strategic CE 4%
Const Equipment
26%
Used CV 3%Commercial
Vehicles 42%
Const
Equipment
24%
Strategic CE
7%
Commercial
Vehicles
30%
SME
6%
Used CV
3%
Tractors
4%
Passenger
Cars and
Utility
Vehicles
26%
Disbursements – Geographical MixDisbursements – Geographical Mix Disbursements – Product MixDisbursements – Product Mix
Apr- Jun 2009
�Well diversified portfolio – de-risked across geographical markets and products
ANDHRA PRADESH
14%WEST BENGAL
8%
CHHATTISGARH /
MP
14%
GUJARAT
4%
UP / UTTARANCHAL
7%
JHARKHAND /
BIHAR
8%
TAMIL NADU
1%
DELHI &
HARYANA
5%ORISSA
5% MAHARASHTRA
9%
KERALA
3%KARNATAKA
4%
DELHI & HARYANA
11%PUNJAB /
HP 12%
14
JCB INDIA
LTD
36%
CATERPIL
LER
6%
Others
18%
L&T-
KOMATSU
12%
TELCON
17%TATA
11%
TATA
81%
OTHERS
3%
M & M
1%
EICHER
7%
ASHOK
LEYLAND
8%
MARUTI
47%
OTHERS
17%
HYUNDAI
11%
TATA
10%
M & M
15%ITL
64%
TAFE
15%
EICHER
21%
CAR Tractor
CECV
Disbursements Profile – By Manufacturer
Apr- Jun 2009
15
Strong presence in its Niche Segments
Commercial Vehicle
•The First-Time Buyer & small customers owning 0-5 vehicles are prime customers; 90% of the portfolio is small road transport sector (SRTO), a priority segment as per RBI
Passenger Car & UV
•Semi Urban segment growth oriented; Rural segment – fast developing market.
•Over 25% portfolio is eligible under SRTO
Construction Equipment
The First-Time Buyer & Small Customers owning 0-1 equipments are target customers; Over 80% of portfolio under SME/SSE lendings
Retail Focus
16
Overview of Insurance Business
Distribution of Insurance Products
� Insurance business launched in FY 05
� Alliances with National Insurance, Royal
Sundaram, Bajaj Allianz, Oriental Insurance,
Reliance General Insurance & Kotak Life for
various products
� Key features:
� About 76% captive business & 24% of non-
captive business
� High proportion of renewal business, where
premium is collected through EMI
� Developed expertise in claims settlement and
back office operations
17
44
87
128
160
38
0
20
40
60
80
100
120
140
160
180
FY 05 FY 06 FY 07 FY 08 FY 09 Q1 FY-
10
Rs Cr
CAGR 75%
General Insurance venture by Magma
� Foray into General Insurance through Joint Venture HDI-
Gerling in Jul 09
� HDI-Gerling is part of Talanx Group, which is the 13th largest player in Europe & 3rd largest Insurance group in Germany with a track record of over 100 years
� The new entity will be the first private sector general insurance
company headquartered in East Zone
17
Reinforcement of Collection Management
� In view of declining collection performance of industry peers and own portfolio growth, Magma proactively reinforced its collection management system in FY09
� By creating a separate Collection Function Vertical upto National Level
� Reinforcement of leadership at National/Zonal/SBU levels
• Two senior most Magma leaders appointed as National Collection Heads
• Collection team increased and leadership inducted from industry leaders
� A centralised direction and control of collection performance
� Through constant and rigorous portfolio monitoring and collection strategy
• With ground level staff at branches / different buckets
• Integration of normal collection, repo/sale and legal processes
� Suitably incentivising the FOS through innovative/special schemes
� During FY09, Magma created a separate asset reconstruction division for driving rapid recovery out of non performing loans
97
99
88.0
90.0
92.0
94.0
96.0
98.0
100.0
Q1 FY-09 Q1 FY-10
Collection Efficiency %
� Collection efficiency in Q1 FY10 has increased to 98.6% from 96.8% last year on the back of portfolio increase of almost 15%
18
Strong Financial Performance…Reaffirmed
� Bank Facilities
� With 19 consortium banks & institutions; includes all major banks operating in India
� Working Capital Facility and Term Loans/ Debentures of approx. Rs 3030 Cr
� Credit Rating
� Has consistently maintained high credit rating
� Rating under Basel II : PR1+ for short term and AA for Long & medium term by CARE.
� Securitisation Pool Rating : AAA (so) by CRISIL
� Secured Bonds : AA by CARE
� Commercial Paper / Short Term Debt : PR1+ by CARE
� Unsecured Long Term Debt : AA by CARE
� Unsecured Tier II Bonds/debentures : AA- by CARE
� Perpetual Debt : A+ by CARE
� Financing Arrangements
� Bilateral Securitisation with ICICI Bank, Punjab National Bank, IDBI Bank, UBI, State Bank of Patiala, UCO Bank, Dena Bank, SIDBI, IDFC, Kotak, SBICI & Axis Bank
� Securitisation through PTC route in market
• Major Investors: Mutual Funds such as , Deutsche Mutual, Morgan Stanley, PNB Principal MF, SBI MF, Reliance MF, Canbank, HDFC MF etc.
19
Alliance with Maruti Suzuki
� In FY 2007, Maruti Suzuki got into an Alliance with Magma
� Maruti is the largest Car manufacturer in India with over
50% share in the passenger car market
� Key Benefits
� Alliance gave Magma the status of Preferred Financier for
Maruti Suzuki
� It allowed Magma access to Maruti’s extensive dealer
network across India
� Access to large customer base to drive disbursement growth
� Facilitated Semi-urban & Rural Maruti customers access to
finance from Magma
� Monthly volume of maruti cars financed saw manifold
increase subsequent to tie up.
Magma Leasing
Limited
Maruti Suzuki
Acquiring
Consortium Finance
Alliance with
Maruti Suzuki
Merger with
Shrachi
Infrastructure
Finance
JV with HDI-
Gerling
JV with
International
Tractor Limited
20
JV with International Tractors Limited
� In FY 2008, Magma formed a Joint Venture with International Tractors Limited (ITL)
� ITL is amongst the top four manufacturers in India
� ITL sold approx. 30,000 in FY2009 , of which 95% were financed
� Magma holds 74% in the new company and ITL the balance 26%
� Key Benefits
� The JV has access to 500+ dealer outlets of ITL across the country mostly in rural areas
� The JV company is entitled to participate in all dealer promotional schemes
� The JV company is assured of a min 40% of business of ITL
� Opportunity for JV to look at other financing opportunities in the agri-sector
� Tractor Business Q1 FY 10: _______(Rs. _____).
Magma Fincorp
Limited
International
Tractor Limited
Magma ITL
Finance Limited
74% 26%
10SOUTH
23NORTH
40WEST
27EAST
Disbursement %ZONES
Disbursements – Geographical MixDisbursements – Geographical Mix
Acquiring
Consortium Finance
JV with International Tractor Limited
Merger with
Shrachi
Infrastructure
Finance
JV with HDI-
Gerling
Alliance with
Maruti Suzuki
21
JV with HDI Gerling AG, Germany
Acquiring
Consortium Finance
JV with International Tractor Limited
Merger with
Shrachi
Infrastructure
Finance
JV with HDI-
Gerling
Alliance with
Maruti Suzuki
Magma &
Associates
HDI-Gerling
International
Holding AG
Magma HDI General
Insurance Company
74% 26%
� Magma has signed a JV agreement with HDI-Gerling to enter into general insurance sector in India
� HDI-Gerling is part of Talanx Group, 3rd largest Insurance group in Germany
� Magma / Associates will hold 74% and HDI, balance 26%
� The JV will underwrite insurance business related to Motor, Fire, Engineering, healthcare and other general insurance products
� Expected commencement of business : FY11
� Key Benefits
� The JV will get a headstart in terms of Magma’s strong captive customer base and large distribution and servicing network
� Magma will become a corporate agent and earn commission income on the business that it will generate for the JV.
� The JV will enable cost efficiency for Magma by way of better utilisation of mannower and infrastructure resources
� JV will get the benefit of HDI’s unique product design, cost efficient operational management skills and excellent reinsurance platformwhich will help it to manage insurance risks better
22
Ongoing Alliances* – ability to work successfully with partners
Manufacturers
Banks
Insurance
Companies
National Insurance Company
Oriental Insurance Company
* Representative Listing of Labels
23
Oracle 10gApplication
Server
Oracle 10gApplication
Server
Oracle 10gDatabase Server
Web databaseContent
Client Data
Web
Server
Report
Writer
HO - KOLKATA Other Locations
Reportingdatabase
IT Platform – Overview of Architecture and Network
Service Provider
VPN CLOUD
Internet
Strong IT platform and branch network connectivity enables real-time processing &
information access
24
Magma – In Brief
Strong retail network across rural and semi urban IndiaStrong retail network across rural and semi urban India
Finances first time buyers and small enterprisesFinances first time buyers and small enterprises
Well-diversified product portfolio – adding new productsWell-diversified product portfolio – adding new products
Pan India presence and leveraging its wide networkPan India presence and leveraging its wide network
Strong financials and funding track recordStrong financials and funding track record
Fee based revenue stream – Asset Insurance and Credit CoversFee based revenue stream – Asset Insurance and Credit Covers
25
Looking Ahead…
Utilise infrastructure and resources for sustained business growthUtilise infrastructure and resources for sustained business growth
Emerge as a formidable retail finance player with strong brand
recall
Emerge as a formidable retail finance player with strong brand
recall
Expand product offerings & leverage distribution networkExpand product offerings & leverage distribution network
Leverage and increase field presence & brand equity in semi
urban and rural markets
Leverage and increase field presence & brand equity in semi
urban and rural markets
Strive for high-level IT enablement, operational efficiency and
sustainable margin on each product line
Strive for high-level IT enablement, operational efficiency and
sustainable margin on each product line
26
Disclaimer
Certain of the statements and figures included in this presentation may be forward looking statements
and/or based management’s current expectations and beliefs concerning future developments and their
potential effects upon Magma and its subsidiaries/ associates. There can be no assurance that future
developments affecting Magma and its subsidiaries/ associates will be those anticipated by management.
These forward-looking statements are not a guarantee of future performance and involve risks and
uncertainties and there are important factors that could cause actual results to differ, possibly materially,
from expectations reflected in such forward-looking statements. Magma does not intend, and is under no
obligation, to update any particular forward-looking statement included in this presentation.