The Silicon Review
“Our vision is to become India’s largest retail asset finance company”
At Magma, they offer a bouquet of financial products to customers through their 290 branches speared across 22 states. Their energetic team of 8800 Magmaites is always looking to support client as a friendly financier and guide. Since inception in 1988, they have been driven by a single, purposeful goal- of "investing in the smallest dream". During the past 28 years, they have serviced over one million customers and helped them evolve. At Magma, they believe they can play a part in fuelling India’s growth, by investing in the dreams of its people. Through their egalitarian processes they aim to reach out to all sections of society and lend a helping hand in their progress.
What they do
Magma possesses a diversified product portfolio: loans for cars and utility vehicles, commercial vehicles, construction equipment, tractors, used vehicles, SME businesses, mortgage finance as well as Housing Finance and General Insurance. In 2012-13 year, Magma launched loans for Mortgaged Finance following the acquisition of the mortgage business of GE India. Magma entered in to General Insurance business through Magma HDI General Insurance Company, a joint venture with HDI Gerling. The HDI-Gerling brand, is a part of Hannover based Talanx group, the third-largest German insurance Group operating in around 150 counties of the world.
Why they do
The company believes that no dream should go unfulfilled because of the lack of funds. The dream of a first time car buyer, who wants to take his family on their first long drive, the dream of a fleet operator, whose business has grown from a single commercial vehicle to a fleet of 25. After fulfilling many such dreams, our customers’ trust has fuelled our own dream- to become the largest retail-finance company in the country. Being one of the fastest growing economies, India is high on aspirations but low on funding, that’s where we step in.
Diversified Product Portfolio- Magma has a portfolio of nine products across asset finance, business finance and mortgage finance. The maximum exposure in a single product is capped at 30% thus ensuring that product specific risks are minimized. This diversified mix also allows Magma to calibrate its growth strategy with market realities and switch focus across products whenever required.
Underbanked Customer Base-Magma has espoused the policy of financial inclusion by focusing on customers who are left out of the banking network. Magma prefers to finance customers who do not have adequate documentation, credit history and hence are perceived as a high-risk category by the banking channels. Magma believes that credit worthiness can be evaluated by employing innovative methods that take into account the subjective knowledge gleaned from customer visits and background checks. This provides an opportunity to the customer to start building a credit history and move towards financial inclusion. The low delinquency levels in the loan book demonstrate the success of the methods that Magma employs for credit appraisal.
Geographical Diversification- Magma has a pan India presence spread across 22 states and union territories, which account for more than 90% of India’s population. Magma has ensured that the loan book exposure in a single state is limited to around 10% thus reducing the impact of local and regional risks eg. drought, floods, political instability. An evenly balanced exposure across the four regions is a culmination of the risk mitigation principles that Magma has followed.
Conservative Accounting Policies- Magma follows some of the most conservative accounting policies in the NBFC industry. Magma is one of the select few NBFCs to follow a 120 dpd+ NPA recognition policy against the RBI requirement of 180 dpd+. Besides this, the company has opted for higher than mandated provisioning norms on its NPA and provided 30 bps standard assets provisioning. These steps have resulted in Magma creating a pool of significantly higher provisions than is required.
Efficient Liability Management- Magma is one of the few NBFCs which has a truly diversified liability profile encompassing bank lines, capital markets and securitization transactions. Magma has been able to make a successful transition from a profile with a high share of securitization to a profile evenly spread across all three funding channels. This allows Magma the flexibility to balance the channel wide exposure to optimize the benefits of liquidity, cost of funds and maturity
Meet the Leader
Sanjay Chamria, Vice Chairman & Managing Director-Chamria founded Magma in 1988, along with Poddar. As the Vice Chairman and Managing Director of Magma, he anchors policy formation, strategy planning and execution. He was born and educated in Kolkata, and graduated as one of the country’s youngest chartered accountants in 1985 with national ranking. For the past 25 years, he has steered the organization from a three-employee, one-office set up to a company with 280+ branch offices and more than 9000 employees.
Chamria uses his position as one of the foremost leaders in India’s asset financing industry to articulate his views on critical issues facing the industry and its future. He has represented the BFSI and NBFC industry at various forums, including RBI, and before the finance ministry and other government bodies. He has also chaired committees at the FICCI, the Hire Purchase & Lease Association of India, the CII, the Finance Industry Development Council (FIDC) and the Indian Merchants Chamber in Mumbai.
Chamria is a voracious reader and a music lover. He also runs marathons, and plays tennis regularly.