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Magma Fincorp Limited Becoming the benchmark Magma Fincorp Limited | Annual Report, 2010-11
Magma Fincorp Limited Becoming the benchmark Magma Fincorp Limited | Annual Report, 2010-11

Magma Fincorp Limited

Becoming the

benchmark

Magma Fincorp Limited | Annual Report, 2010-11

Magma Fincorp Limited Becoming the benchmark Magma Fincorp Limited | Annual Report, 2010-11

Forward looking statement

In our report we have disclosed forward-looking information so that investors can comprehend the Company’s prospects and make informed investment decisions. This annual report and other written and oral statements that we make periodically contain such forward-looking statements that set out anticipated results based on the Management’s plans and assumptions. We have tried, wherever possible, to qualify such statements by using words such as ‘anticipates’, ‘estimates’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words and terms of similar substance in connection with any discussion of future operating or financial performance.

We do not guarantee that any forward-looking statement will be realised, although we believe we have been diligent and prudent in our plans and assumptions. The achievement of future results is subject to risks, uncertainties and validity of inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, our actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Contents

Contents

Magma - The corporate

03

Highlights 2010-11

15

Board of Directors

16

Executive management team

17

Vice Chairman’s review

18

Business segments

22

Business drivers

29

Directors’ report

36

Corporate governance

45

Management discussion and analysis

59

Financial section

67

Corporate Information

96

governance 45 Management discussion and analysis 59 Financial section 67 Corporate Information 96
Most toil to match benchmarks. A select few emerge as one. Magma Fincorp is one
Most toil to match
benchmarks.
A select few
emerge as one.
Magma Fincorp is
one of them.

Success in India’s financial services business has been measured across three parameters.

The industry dreamt of a 100 percent collection efficiency. Magma

exceeded

2
2

Annual Report 2010-11

it

The industry toiled to minimise a NIM fall. Magma

sustained

it

The industry reconciled to a few day inward cash float. Magma

shrunk it

Promoters’ holding

Promoters’ holding

Disbursements

Assets under management

41.6%

Rs. 5,262 crore

Rs. 10,691 crore

March 31, 2011

2010-11

March 31, 2011

Revenue

Profit after tax

Gross and net NPA

Rs. 847 crore

Rs. 114 crore

0

2010-11

2010-11

March 31, 2011

The corporate

The business

The products

One of India’s largest financial services companiesPan-India presence across 172 branches in 21 states and one Union Territory Commercial vehicles

Pan-India presence across 172 branches in 21 states and one Union TerritoryOne of India’s largest financial services companies Commercial vehicles

Commercial vehiclesIndia’s largest financial services companies Pan-India presence across 172 branches in 21 states and one Union

Passenger car and utility vehiclesin 21 states and one Union Territory Commercial vehicles Strong team of over 5,000 members Construction

Strong team of over 5,000 membersConstruction equipment

Construction equipmentStrong team of over 5,000 members

Headquartered in Kolkata (India)Over 54 percent of business generated from rural and semi-urban India Suvidha loans (refinance)

Over 54 percent of business generated from rural and semi-urban IndiaHeadquartered in Kolkata (India) Suvidha loans (refinance)

Suvidha loans (refinance)Headquartered in Kolkata (India) Over 54 percent of business generated from rural and semi-urban India

Equity shares listed on the Bombay Stock Exchange and the National Stock ExchangeTractors

TractorsEquity shares listed on the Bombay Stock Exchange and the National Stock Exchange

SME loansEquity shares listed on the Bombay Stock Exchange and the National Stock Exchange Tractors Magma Fincorp

Magma Fincorp Limited

Magma Fincorp Limited

3
3

2006-2010

Rolled out two new financing products (used vehicle finance and strategic construction equipment) in 20062006-2010 Entered into an alliance with Maruti Udyog in 2006 for financing the latter’s vehicles Shrachi

Entered into an alliance with Maruti Udyog in 2006 for financing the latter’s vehiclesfinance and strategic construction equipment) in 2006 Shrachi Infrastructure Finance merged with Magma to become

Shrachi Infrastructure Finance merged with Magma to become Magma Shrachi Finance Limited in 2007Maruti Udyog in 2006 for financing the latter’s vehicles Entered into a joint venture with International

Entered into a joint venture with International Tractors Limited (ITL) to form Magma ITL Finance Limitedwith Magma to become Magma Shrachi Finance Limited in 2007 Renamed Magma Fincorp Limited in 2008

Renamed Magma Fincorp Limited in 2008Tractors Limited (ITL) to form Magma ITL Finance Limited Entered into a tie-up with Ashok Leyland

Entered into a tie-up with Ashok Leyland for financing the latter’s commercial vehicles in 2009ITL Finance Limited Renamed Magma Fincorp Limited in 2008 Entered into a joint venture with German

Entered into a joint venture with German insurer HDI Gerling to enter into general insurance businessfor financing the latter’s commercial vehicles in 2009 Acquired a 7 percent stake in the newly

Acquired a 7 percent stake in the newly formed Experian Credit Information Company of India Pvt. Ltd, the Indian Credit Information Company (CIC) arm of Experian, the global information services company.insurer HDI Gerling to enter into general insurance business Entered into a tie-up with Caterpillar India

Entered into a tie-up with Caterpillar India to finance the latter’s range of construction and mining equipment in 2010arm of Experian, the global information services company. 1996-2000 Entered the retail financing of vehicles and

1996-2000

Entered the retail financing of vehicles andrange of construction and mining equipment in 2010 1996-2000 construction equipment in 1996; expanded this operation

construction equipment in 1996; expanded this

operation across eastern India in two years

Acquired Consortium Finance Limited; expandedexpanded this operation across eastern India in two years network across 40 branches in northern and

network across 40 branches in northern and eastern

India dealing mostly in commercial vehicles, cars and

construction equipment in 1999

2001-2005

Entered into a strategic joint financing agreementvehicles, cars and construction equipment in 1999 2001-2005 with Citicorp in 2001 Initiated strategic arrangement with

with Citicorp in 2001

Initiated strategic arrangement with ICICI Banka strategic joint financing agreement with Citicorp in 2001 in 2003 Launched fee-based business (personal loans)

in 2003

Launched fee-based business (personal loans)2001 Initiated strategic arrangement with ICICI Bank in 2003 in 2005 1988-1995 Incorporated as Magma Leasing

in 2005

1988-1995

Incorporated as Magma Leasing Limited in 1988fee-based business (personal loans) in 2005 1988-1995 Commenced financing business in 1989 Merged with Arm Group

Commenced financing business in 19892005 1988-1995 Incorporated as Magma Leasing Limited in 1988 Merged with Arm Group Enterprises in 1992

Merged with Arm Group Enterprises in 1992Leasing Limited in 1988 Commenced financing business in 1989 Magma. Milestones lead to benchmarks 4 Annual

Magma. Milestones lead to benchmarks

4
4

Annual Report 2010-11

Vision

To become India’s largest financing company

Mission

Continue service excellence in retail financing to bring prosperity and happiness to all

Magma’s core values

Openness and transparency: We will foster honesty and frankness in all our dealings and be transparent with everybody we deal with.

Integrity and credibility: We will act with the utmost intellectual and financial uprightness.

Fairness and impartiality: We will be just in our dealings with others and practice empathy.

Trust and respect for people: We will recognise and demonstrate through our actions, our inherent belief in the dignity that every human being is entitled to.

Demanding excellence: We will, in demanding excellence of ourselves and others, exceed all expectations and overcome perceived barriers.

Magma Fincorp Limited

5
5
Proactive GIVE MORE. RECOVER LESS. This is the challenging reality that most non-banking financial institutions
Proactive
GIVE MORE. RECOVER LESS.
This is the challenging reality
that most non-banking financial
institutions must live with.
6
Annual Report 2010-11

O N ONE HAND, NBFIs MUST PROVIDE GROWING

finance to consumer segments at the lower end of India’s social pyramid. On the other, they must run

the risk of large repayment delays.

Magma countered this prevailing reality.

The Company lent more and recovered faster through the following disciplines:

Altered collection mindsets from a collection of current month dues to a collection of the total amount outstandingmore and recovered faster through the following disciplines: Trained extensively, provided legal support and incentivised

Trained extensively, provided legal support and incentivised superior performancemonth dues to a collection of the total amount outstanding Sustained follow-up with customers leading to

Sustained follow-up with customers leading to a precise understanding of their capacity and willingness to payprovided legal support and incentivised superior performance Initiated activity-based daily monitoring to counter

Initiated activity-based daily monitoring to counter existing realities with solutionsunderstanding of their capacity and willingness to pay Addressed penal dues (current and old) with a

Addressed penal dues (current and old) with a focused tracking mechanism that helped collect Rs.70 crore in 2010-11, instilling financial discipline in the minds of our customersmonitoring to counter existing realities with solutions Created a focused policy - ‘no rollback, only

Created a focused policy - ‘no rollback, only resolution’ - to liquidate long-pending dues (180 day + bucket)financial discipline in the minds of our customers Following these initiatives, collection efficiency improved

Following these initiatives, collection efficiency improved from 99.8 percent in 2009-10 to 101.7 percent in 2010-11, peaking at 107.5 percent in March 2011, possibly the highest in the industry.

A NEW BENCHMARK.

Magma Fincorp Limited

7
7
Profit BORROW CHEAP. LEND PROFITABLE. This represents the business model of the non-banking financial services
Profit
BORROW CHEAP. LEND PROFITABLE.
This represents the business model
of the non-banking financial services
industry.
8
Annual Report 2010-11

M AGMA’S PROFITABILITY IS DERIVED FROM ITS

ability to source funds at the lowest cost and

disburse loans at optimum rates that the market

can comfortably bear. The difference between the two (after eliminating the payout to channels) is referred to as the net interest margin – the higher the better.

The ability to report a reasonable NIM was threatened in 2010-11 as interest rates hardened on seven occasions and old financiers re-emerged. Evidently, the net interest margin should have contracted. Interestingly, Magma’s net interest margin mirrored its 2009-10 benchmark.

This typically contrarian Magma response was the result of various initiatives:

The proportion of business from high-yielding products increased from 13 percent of overall disbursements in 2009-10 to 19 percent in 2010-11.Magma response was the result of various initiatives: The portfolio quality and priority sector lending status

The portfolio quality and priority sector lending status of the assets helped create a buffer so that when policy rates increased 175 bps across the economy, Magma’s funds cost declined by 46 bps.overall disbursements in 2009-10 to 19 percent in 2010-11. The collection efficiency strengthened, reducing Magma’s

The collection efficiency strengthened, reducing Magma’s dependence on external funds.across the economy, Magma’s funds cost declined by 46 bps. The call money market movements were

The call money market movements were prudently exploited, optimising interest outflow.reducing Magma’s dependence on external funds. This was the result: Even as industry NIM contracted,

This was the result: Even as industry NIM contracted, Magma’s NIM stood at a high 5 percent in 2010-11.

A NEW BENCHMARK.

Magma Fincorp Limited

9
9
Proclaim MONEY IN HAND. MONEY NOT USEABLE. In the competitive financial services business, collections in
Proclaim
MONEY IN HAND. MONEY NOT USEABLE.
In the competitive financial services business,
collections in hand can often be disbursed only
after a week, especially in non-city limits,
leading to an opportunity and profitability loss.
10
Annual Report 2010-11
  A T MAGMA, WE COUNTERED THIS IDLING THROUGH THE following initiatives: Arranged cash pick-up
 

A T MAGMA, WE COUNTERED THIS IDLING THROUGH THE following initiatives:

Arranged cash pick-up arrangements with bankers, which helped transfer cash immediately into a central poolWE COUNTERED THIS IDLING THROUGH THE following initiatives: Covered over 98 percent Magma branches with this

Covered over 98 percent Magma branches with this pick-up arrangement, collecting around Rs.10 crore a daywhich helped transfer cash immediately into a central pool Commenced CMS services for local cheque collections

Commenced CMS services for local cheque collections and PDC banking with six banks at the best rates in the industry, which made it possible for cheques/PDCs to be deposited in a CMS code and collections immediately transferred to a central pool; the facility covered more than 90 percent of Magma’s branchespick-up arrangement, collecting around Rs.10 crore a day This lateral approach strategy crunched the inward cash

This lateral approach strategy crunched the inward cash float from six days (2008-09) to just one day. Besides, this strategy eliminated the need to maintain over 200 current accounts.

A NEW BENCHMARK.

Magma Fincorp Limited

Besides, this strategy eliminated the need to maintain over 200 current accounts. A NEW BENCHMARK. Magma
11
11
Profound SERVICE CUSTOMERS. SERVE SELF. At first glance, approving loans with speed and recovering dues
Profound
SERVICE CUSTOMERS. SERVE SELF.
At first glance, approving loans with speed and
recovering dues on time appear to be serving
only the interest of the Company providing the
finance.
12
Annual Report 2010-11

A T MAGMA, WE STRENGTHENED OUR BUSINESS

businesses through the following initiatives:

efficiency and helped our dealers grow their respective

Evolved our turnaround time monitoring from a conventional understanding of the time between enquiry and loan approval to the tenure between enquiry and dealer payment with the objective to shrink the cycleefficiency and helped our dealers grow their respective Redesigned our credit screens in line with market

Redesigned our credit screens in line with market dynamics to accurately determine loan-to-value limits without compromising asset qualityand dealer payment with the objective to shrink the cycle Incentivised field investigators while maintaining quality,

Incentivised field investigators while maintaining quality, which reduced our turnaround time by 20 percentloan-to-value limits without compromising asset quality Improved processes and responsibilities across all team

Improved processes and responsibilities across all team levels, which ensured that the majority of the cases were screened comprehensively by the credit analyst and the credit headquality, which reduced our turnaround time by 20 percent Introduced an SMS facility providing daily updates

Introduced an SMS facility providing daily updates to field officers on the status of files, eliminating blockerscomprehensively by the credit analyst and the credit head This was the result: We retained our

This was the result: We retained our position as preferred financiers with OEMs in the automotive and construction equipment space through a reduction in our TAT (enquiry to dealer payment) from 17 days in 2009-10 to 12 days in 2010-11 and half this number (projected) in 2011-12.

A NEW BENCHMARK.

Magma Fincorp Limited

13
13

Magma. Reporting improved performance.

Magma. Reporting improved performance. Disbursements (Rs. crore) 2008-09 3,391 2009-10 3,989 2010-11 5,262 All

Disbursements

(Rs. crore)

2008-09 3,391 2009-10 3,989 2010-11 5,262
2008-09
3,391
2009-10
3,989
2010-11
5,262

All disbursement figures are without bought out portfolio (Including in product highlights segment)

Assets under

management

(Rs. crore)

2008-09 8,269 2009-10 9,377 2010-11 10,691
2008-09
8,269
2009-10
9,377
2010-11
10,691

Revenue

(Rs. crore)

2008-09 625 2009-10 703 2010-11 847
2008-09
625
2009-10
703
2010-11
847

Profit after tax

(Rs. crore)

2008-09 39 2009-10 66 2010-11 114
2008-09
39
2009-10
66
2010-11
114

Capital adequacy ratio

(%)

2008-09 17.3 2009-10 14.9 2010-11 18.2
2008-09
17.3
2009-10
14.9
2010-11
18.2
14
14

Annual Report 2010-11

Collection efficiency

(%)

2008-09 97.8 2009-10 99.8 2010-11 101.7
2008-09
97.8
2009-10
99.8
2010-11
101.7

Customers

(numbers)

2008-09 2,04,925 2009-10 2,24,475 2010-11 2,26,957
2008-09
2,04,925
2009-10
2,24,475
2010-11
2,26,957

Employees

(numbers)

2008-09 4,283 2009-10 4,602 2010-11 5,166
2008-09
4,283
2009-10
4,602
2010-11
5,166
Highlights, 2010-11

Highlights, 2010-11

 
   
Highlights, 2010-11             Disbursement increased 32 percent from Rs.3,989 crore in
Highlights, 2010-11             Disbursement increased 32 percent from Rs.3,989 crore in
Highlights, 2010-11             Disbursement increased 32 percent from Rs.3,989 crore in
 
   
 
 
  Disbursement increased 32 percent from Rs.3,989 crore in 2009-10 to Rs.5,262 crore  

Disbursement increased 32 percent from Rs.3,989 crore in 2009-10 to Rs.5,262 crore

 
Assets under management increased 14 percent from Rs.9,377 crore as on March 31, 2010 to

Assets under management increased 14 percent from Rs.9,377 crore as on March 31, 2010 to Rs.10,691 crore as on March 31, 2011

Net interest margin maintained at 5 percent despite an increase in Indian interest rates

Net interest margin maintained at 5 percent despite an increase in Indian interest rates

Collection efficiency improved 190 bps; write-off declined from 0.45 percent in 2009-10 to 0.26 percent

Collection efficiency improved 190 bps; write-off declined from 0.45 percent in 2009-10 to 0.26 percent

Opened 19 new branches and strengthened the branch network to 172 as on March 31,

Opened 19 new branches and strengthened the branch network to 172 as on March 31, 2011

Mobilised Rs.122 crore through qualified institutional placements, increasing the number of our marquee global

Mobilised Rs.122 crore through qualified institutional placements, increasing the number of our marquee global institutional shareholders

Capital adequacy ratio was 18.2 percent as on March 31, 2011 against 14.9 percent as
Capital adequacy ratio was 18.2 percent as on March 31, 2011 against 14.9 percent as

Capital adequacy ratio was 18.2 percent as on March 31, 2011 against 14.9 percent as on March 31, 2010

Magma Fincorp Limited

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15

Board of Directors

Board of Directors 01 02 03 04 05 06 07 08 09 01 Mayank Poddar ,
01 02 03 04 05 06 07 08 09
01
02
03
04
05
06
07
08
09

01 Mayank Poddar, 57

Chairman

A B.Com graduate, he contributes to

policy formulation, enabling corporate

objective achievement.

02 Sanjay Chamria, 46

Vice-Chairman & Managing Director

A fellow chartered accountant (FCA), he

anchors policy, strategy planning and

execution.

03 SK Todi, 67

Vice-Chairman

A Master of Commerce, he guides and

supports the Board in achieving corporate goals.

16
16

Annual Report 2010-11

04 Ravi Todi, 42

Joint Managing Director

A B.Com graduate, he heads business

operations and leads teams in the four

business zones.

05 Narayan Sheshadri, 54

Director

A chartered accountant, he serves the

Company as an Independent Director.

06 Neil Brown, 52

Director

A member of the ICAEW, he is currently

on the boards of over a dozen international organisations.

07 K.N.Bhandari, 69

Director

An LLB, he is currently on the boards of several leading companies, and is a World Bank consultant.

08 Nabankur Gupta, 62

Director

A management graduate, he is currently

on the boards of 11 companies as

independent director

09 Satya Brata Ganguly, 68

Director

A chemical engineer, he is currently

Chairman Emeritus of India's largest automotive battery manufacturer.

Executive management team

Executive management team 01 02 03 04 05 06 07 08 09 01 V. Lakshmi Narasimhan,
01 02 03 04 05 06 07 08 09
01
02
03
04
05
06
07
08
09

01 V. Lakshmi Narasimhan, 46

Chief Financial Officer

A Fellow Company Secretary (FCS), he

handles the Company’s treasury, MIS and secretarial functions.

02 Ashutosh Shukla, 48

Chief Operating Officer

A chartered accountant, he handles

sales, credit, operations and administration verticals.

03 G.P. Pattanaik, 51

Chief - Receivables Management An associate chartered accountant (ACA), his role is focused on collections for 0-180 buckets and Asset Reconstruction Division.

04 Brahmajyoti Mukherjee, 53

Chief People Officer An alumnus of IIT Kharagpur, he is responsible for organisation development, operations, recruitment and training.

05 Dinesh Chandna, 50

Chief Information Officer

A B.Tech graduate, he provides a state-

of-the-art IT platform to optimize productivity.

06 Swaraj Krishnan, 53

CEO - Designate, Magma HDI General Insurance Company Limited

A Master in business economics, he

oversees business operations, implementation and Company expansion.

07 Sumit Mukherjee, 41

National Sales Head (High-yield business)

A B.Com graduate, he heads sales for

high-yield businesses.

08 Mahender Bagrodia, 39

National Credit & Risk Head

A chartered accountant, he has been

associated with Magma for nearly a decade.

09 Raj Kumar Kapoor, 47

Chief Internal Auditor

A chartered accountant, he oversees on-

site and off-site inspection, compliance

and financial transactions.

Magma Fincorp Limited

17
17

“We will strengthen our standards and raise industry benchmarks further.”

our standards and raise industry benchmarks further.” SANJAY CHAMRIA, Vice Chairman and Managing Director, reviews
our standards and raise industry benchmarks further.” SANJAY CHAMRIA, Vice Chairman and Managing Director, reviews

SANJAY CHAMRIA, Vice Chairman and Managing Director, reviews the Company’s performance and prospects

18
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Annual Report 2010-11

 
 

Q Why was 2010-11

important in Magma’s history?

The last fiscal was a milestone in our history for an important reason: during a challenging 2008-09 and 2009-10, when the financial services sector suffered on account of the global financial crisis, we utilised the opportunity to look within and strengthen various aspects of our working. We reported an attractive improvement but most critics felt that this response was perhaps one-off and that maybe we had reached the end of efficiency improvement. So the big challenge was whether we would be able to sustain this into the following financial year.

In view of this, it gives me pleasure to state that we sustained the improvement and in doing so, did not merely report record parameters but also emerged as our industry’s benchmark. What pleased me was that this achievement was the result of the co-ordination of our entire team leading to sequential quarter-on-quarter improvements across all our operating parameters. The result was record earnings and a new industry respect.

Q How did Magma push the

envelope?

In our financial services industry, one year of bad asset origination can potentially stagger growth for years at best and wipe

a

company out at worst. This became

particularly relevant in our case as we were

not supported by any financial house that

would bail us out with a large cash infusion. Magma converted this reality into

strength; we derisked our business model in a specific way: instead of making

a

 
 
  everyone a multi-functional all-rounder, we focused on creating centres of functional excellence across our
 

everyone a multi-functional all-rounder, we focused on creating centres of functional excellence across our origination, underwriting, back-office, collections and ARD functions. Thereafter, each vertical concentrated on improving its key performance metrics: we set targets for each, we reported stretch performances and devised roadmaps to strengthen these further. When we put these competencies together, the result was a record benchmark-enhancing performance.

Q How did Magma inspire its people towards this end?

All the improvements that we make eventually come down to how our people are inspired to respond to the corporate challenge. The principal objective that we achieved in this respect was to create an enabling environment: of trust and transparency. This initiative commenced way before the financial slowdown; it commenced in 2003 when we introduced the Balanced Scorecard, a transparent performance measurement system that made it possible for each Magma employee to be aware of the basis of his/her remuneration and what improvements would be needed to graduate to the next tier. As this Balanced Scorecard was extended across the organisation, there was a credible and visible connection between input and output across our 5,000 employees. Concurrently, we reinforced our IT infrastructure and re-configured our salary structure to include a variable

employees. Concurrently, we reinforced our IT infrastructure and re-configured our salary structure to include a variable

component. This was the result: a change in the team mindset towards the proactive, and a graduation to a transparent process-led and technologically-supported work environment. So when the financial slowdown transpired, we were better equipped than most to respond with speed, leading to positive change.

Q How did Magma strengthen its business model?

Magma strengthened its business model through competent derisking in the following ways:

Geographic derisking: We widened our geographic presence, derisking us from an excessive dependence on any single location. The result is that no Indian state contributes more than 13 percent to our revenues. Besides, no zone contributes more than 29 percent to our topline and no region contributes less than 18 percent. This indicates that our revenue model is based on a broad nation-wide presence rather than the growth coming out of limited pockets, which could affect us in the event of any selective downturn.

Product derisking: Since we finance products that are cyclical, we expanded our portfolio to seven products, which is an effective cushion against deceleration in any single product vertical. Three of our products enjoy margins higher than the rest and we expect to grow their contribution in the revenue mix. We also expect to create new refinancing verticals in our existing products, opening a new opportunity.

in our existing products, opening a new opportunity. We expect to leverage our distribution spread, customer

We expect to leverage our distribution spread, customer network, management bandwidth, knowledge capital and technologically- strengthened processes to overcome our size handicap and widen the delta between our growth and our sectoral performance.

Q Where does Magma go from here?

We possess a stable senior management team with a rich experience of having managed our respective verticals in good times and bad. We have an organisational team that has completely bought into our operational culture, having been able to appreciate the difference between our growth and that of the broad sector. The time has come to take this performance further.

We expect to grow at a 50 percent CAGR over the next 2-3 years against a historic five-year 24 percent CAGR and an industry average growth of 20 percent. We expect to strengthen our returns on equity – the one number that indicates all our organisational efficiency - from 19.8 percent (2010-11) to about 22 percent, which means that not only will we report robust topline growth but also a higher overall efficiency (higher than the sub-20 percent ROE by competing players), which should enhance our organisational value.

Magma Fincorp Limited

19
19

Brand

Magma enjoys a strong recall of supporting rural

Indians-turned-successful-

entrepreneurs by investing in their smallest dreams.

Product diversity

Magma’s derisked business model covers seven products across diverse geographies, minimising selective downtrends.

Cost management

Magma invested in technology, systems and processes to rationalise costs.

Disbursement

24%

5-year CAGR

Pan-India presence

Magma enjoys a pan-India presence (172 branches across 21 States and one Union Territory) with over 78 branches in rural locations; about 46 percent of the network is located in villages.

Alliances

Magma emerged as the preferred financing partner for leading automotive OEMs like Eicher Motors, JCB, Volvo, TAFE, Maruti, John Deere, Caterpillar and Escorts, among others, helping create a quality asset portfolio.

Income mix

Magma increased the proportion of high-yield businesses from 13 percent of the total income in 2009- 10 to 16 percent in 2010-11.

Credit base

Magma’s 19-banker consortium, superior credit rating, asset quality and efficient collection helped mobilise adequate low-cost funds.

Management bandwidth

Magma possessed adequate management and infrastructure bandwidth to double its business at a negligible cost.

Transparent

Magma adopted the conservative practice of writing off entire loans due for more than 180 days, resulting in a credible and trustable balance sheet.

Intellectual capital

Magma possessed a dedicated team of 5166 members (as on March 31, 2011), nearly half comprising dedicated collection professionals - one of the industry’s highest.

collection professionals - one of the industry’s highest. NIM growth 113bps 5-year period Assets under management
collection professionals - one of the industry’s highest. NIM growth 113bps 5-year period Assets under management

NIM growth

113bps

5-year period

Assets under

management

27%

5-year CAGR

Revenue

41%

5-year CAGR

Profit after tax

42%

5-year CAGR

20
20

Annual Report 2010-11

Magma. Going deep. Spreading wide. Rising high.

Magma. Going deep. Spreading wide. Rising high. Area of Business Branches operation clusters covered New branches
Area of Business Branches operation clusters covered New branches 172 125km 2,000 19 March 31,
Area of
Business
Branches
operation
clusters covered
New branches
172 125km
2,000
19
March 31, 2011
2010-11
Semi-urban
Urban locations
locations
Rural locations
20%
34%
46%
March 31, 2011
March 31, 2011
March 31, 2011
HIMACHAL
PRADESH
Branches well entrenched
Ludhiana
PUNJAB
Karnal
UTTARANCHAL
HARYANA
DELHI
Delhi
UTTAR PRADESH
Jaipur
SIKKIM
Lucknow
RAJASTHAN
BIHAR
GUJARAT
MADHYA PRADESH
Ahmedabad
Jabalpur
Indore
JHARKHAND WEST BENGAL
Ranchi
Kolkata
Nagpur
Raipur
CHATTISGARH
MAHARASHTRA
ORISSA
Bhubaneshwar
Mumbai
North
South
Hyderabad
31%
23%
Vijayawada
KARNATAKA
March 31, 2011
March 31, 2011
ANDHRA
BANGALORE
LEGEND
Chennai
East
West
Head office
PONDICHERRY
TAMIL NADU
KERALA
24%
22%
Zonal office
Cochin
March 31, 2011
March 31, 2011
States/SBU

Branchoffice Cochin March 31, 2011 March 31, 2011 States/SBU Branches distributed geographically Magma Fincorp Limited 21

Branches distributed geographically

Magma Fincorp Limited

21
21

Product basket

Product basket Magma provides equipment and vehicle financing solutions to individuals and small businesses not

Magma provides equipment and vehicle financing solutions to individuals and small businesses not considered bankable, creating a niche market where others fear to tread.

The Company earned the preferred financing partner reputation with a number of OEMs in the

automotive, tractor and construction equipment space – providing them with a robust market, earlier

perceived to be non-existent. Added to its product basket are SME loans and used-vehicle refinancing.

Financing of commercial vehicles continues to be the Company’s flagship business segment.

Core products

84%

Commercial

vehicles

37%

Passenger cars and utility vehicles

25%

22
22

Annual Report 2010-11

Construction

equipment

22%

High-yield products

16%

Tractors

6%

SME loans

6%

Used CV

(Suvidha)

4%

CORE PRODUCT

01 Commercial vehicles

Industry overview

India is the fourth-largest commercial

vehicle manufacturer in the world.

In India, truck demand is a function of

incremental freight, which is dependent

on economic/industrial growth.

Domestic truck volumes grew at a CAGR

of over 30 percent during 2008-09 and

2010-11(E) in line with the country’s

robust economic growth and shift in

freight movement from rail to road.

Road freight increased an estimated 13

percent CAGR against 9 percent for

railways between 2008-09 and 2010-

11(E). While rail was preferred for the

transportation of bulk goods (coal, ores,

minerals, cement, iron, steel and

fertilisers), products belonging to the

capital, consumer and agricultural

segments (for short distances) used

road transport.

In 2010-11, commercial vehicle sales

grew 27 percent to 6.8 lac units.

Medium and heavy commercial vehicles

(M&HCVs) grew faster at 32 percent

while the light commercial vehicle

growth remained subdued at 23

percent, largely due to improving

highways making it cost-effective to use

heavier vehicles.

Business overview

Magma financed new commercial

vehicles (LCVs and M&HCVs) for the

benefit of first-time buyers and strategic

customers across 21 Indian states by

leveraging its pan-India reach (hub-and-

spoke through national, zonal, regional

and branch offices). First-time buyers

accounted for the major business share

of 22 percent. More than 85 percent of

the vehicles financed by the Company

were M&HCVs.

Magma’s strengths comprise a deep-

rooted understanding of buyers. This

led to customised loan tenures,

accelerated vehicle delivery and

customer satisfaction. Magma

encouraged employees to become

entrepreneurs, widening the market for

OEMs and dealers. The Company

participated in promotional activities

conducted by dealers and

manufacturers. It emerged as a

preferred financing partner for leading

automobile giants like Tata Motors,

Mahindra & Mahindra, Ashok Leyland,

Volvo and Eicher Motors, among

others.

Highlights, 2010-11

Magma outperformed its industry

growth in 2010-11. Its business grew

36 percent as against 27 percent for the

industry. The superior performance

reported by the Company was derived

Parameters

2009-10

2010-11

Total disbursement (Rs. crore)

3,989.07

5,261.51

CV business (Rs. crore)

1,434.63

1,945.09

Contribution to the total disbursement (%)

35.96

35.92

Y-o-y Magma growth (%)

35.88

35.58

Y-o-y industry growth (%)

38.30

27.29

from the following factors:

growth (%) 38.30 27.29 from the following factors: A meaningful presence in all key markets and

A meaningful presence in all key

markets and segments

A meaningful presence in all key markets and segments A focus on first-time buyers across semi-urban

A focus on first-time buyers across

semi-urban and rural areas

Close relationships with strategicfocus on first-time buyers across semi-urban and rural areas customers, strengthening service Magma’s commercial

customers, strengthening service

Magma’s commercial vehicle segment

contributed 36 percent of the total

disbursements in 2010-11.

Disbursements increased 36 percent

from Rs.1,434.63 crore in 2009-10 to

Rs.1,945.09 crore in 2010-11. Average

ticket size increased from Rs.13 lac to

Rs.16 lac with an average 44-month

tenure; collection efficiency

strengthened from 100.5 percent to

102.6 percent over the period. First-

time buyers and small transporters

accounted for 56 percent of

disbursements for commercial vehicles.

Net interest margin was maintained in

2010-11.

Optimism

With India’s industrial growth expected

to remain robust and the country’s

freight continuing to shift from rail to

road, the demand for new commercial

vehicles is expected to remain attractive.

List of corporate associates and product collaborators

List of corporate associates and product collaborators
List of corporate associates and product collaborators
List of corporate associates and product collaborators

Magma Fincorp Limited

23
23

CORE PRODUCT

02 Passenger cars and multi-utility vehicles

Industry overview

India is the 11th largest passenger car market globally. Car manufacturers in India dominate the passenger vehicle market by 79 percent, the rest being contributed by utility vehicles. The passenger vehicle segment grew at a 17 percent CAGR over the last five years up to 2010-11.

All major global players in the passenger vehicle segment have a presence in India through joint ventures or subsidiaries. This is driven by the huge Indian opportunity – a robust demand fuelled by increasing disposable income, growing urbanisation and people’s aspirations and easy finance availability. Besides, growing export volumes emerged as a strong indicator of India emerging as a manufacturing hub for global players.

In 2010-11, passenger vehicle sales grew

29 percent – from 19,49,776 units in

2009-10 to 25,20,421 units in 2010-11. Passenger car sales grew 30 percent and

utility and multi-purpose vehicles grew

27 percent over the same period.

Business overview

Passenger vehicle financing represents the Company’s second-largest business segment – disbursements grew at a 24 percent CAGR over the last five years leading to 2010-11.

Magma offers secured finance for new and used cars as well as multi-utility vehicles in rural, semi-urban and urban markets through a chain of regional, branch and pocket offices. Passenger

cars are basically used for self or family purposes whereas MUVs are largely used for corporate staff transportation and excursion. Loans are broadly categorised under ‘income proof’ or ‘non-income proof’ schemes, thereby extending the service to a wide array of customers.

The Company’s strategic alliances with Maruti Suzuki India Ltd, General Motors India Pvt. Ltd, International Cars and Motors Limited and Mahindra & Mahindra catalysed vehicle availability and business growth. Promotional activities among dealers and manufacturers as well as pre-funding provisions for dealers represented Magma’s strengths.

Magma’s exchange scheme facilitates the purchase of old cars at attractive prices and new cars to be financed at customer-friendly terms.

Highlights, 2010-11

The passenger vehicle financing business grew 44 percent against the industry growth of 29 percent. This growth was largely due to important initiatives taken by the team:

Focused on rural areas and onwas largely due to important initiatives taken by the team: financing B-segment cars (small cars) to

financing B-segment cars (small cars) to

customers in these locations; around 80

percent of the portfolio created in the

year comprised B-segment cars

Leveraged the distribution networkthe portfolio created in the year comprised B-segment cars better for a deeper penetration into the

better for a deeper penetration into the

rural areas for achieving a first-mover

advantage in new emerging opportunity

pockets; focused tracking of existing

branch performance, ensuring that every

unit contributed to business growth

ensuring that every unit contributed to business growth Provided lucrative incentives for generating quality

Provided lucrative incentives for

generating quality business;

verticalisation of business functions

facilitated a faster turnaround time;

person productivity improved from

financing approximately 130 cars in

2009-10 to approximately 160 cars in

2010-11

Disbursements increased 44 percent from Rs.916.39 crore in 2009-10 to Rs.1,316.35 crore. The average ticket size stood at Rs.3 lac with an average repayment tenure of 44 months. In addition to volumes, the business registered superior profitability – net interest margin was maintained at 4.3%.

Optimism

Growing incomes, changing lifestyles, rising aspirations and favourable schemes will drive the demand for passenger cars in India, which is expected to emerge as the world’s seventh largest passenger car market by 2016.

India's car and SUV sales are expected to double from 2.2 million units in 2009 to just over 5 million units in 2015 and around 10 million units by 2020 (Source:

ACMA). Some 30 models/variants will be launched in 2011.

While passenger cars will continue to be the key business growth driver, the team will focus on strengthening its presence in the MUVs segment, expected to improve business volumes and strengthen profitability. Magma is also looking to establish a presence in the high-yielding car refinance space.

Parameters

2009-10

2010-11

Total disbursement (Rs. crore)

3,989.07

5,261.51

PC and MUV business (Rs. crore)

916.39

1,316.35

Contribution to the total

disbursement (%)

22.97

25.02

Y-o-y Magma growth (%)

(3.17)

43.64

Y-o-y industry growth (%)

25.60

29.27

List of corporate associates and product collaborators

List of corporate associates and product collaborators International Cars and Motors Limited WORLD’S NO. 1

International Cars and Motors Limited

WORLD’S NO. 1

List of corporate associates and product collaborators International Cars and Motors Limited WORLD’S NO. 1
24
24

Annual Report 2010-11

CORE PRODUCT

03 Construction equipment

Industry overview

Rapid urbanisation and industrialisation paved the way for multi-billion dollar infrastructure construction projects, which propelled demand for construction equipment in India.

Revival of the Indian economy and improved liquidity in 2010-11 strengthened investments in infrastructure creation, accelerating the demand for construction equipment; the sector grew 20 percent from Rs.18,000 crore to Rs.21,500 crore.

This trend is expected to continue over the coming years through favourable regulatory policies and increasing infrastructure allocation. In the Union Budget 2011-12, the government allocated Rs.2,14,000 crore for infrastructure creation, an increase of 23.3 percent over 2010-11.

Besides, research revealed that the industry will sustain its growth momentum in coming years at a CAGR of 17.6 percent during FY 2011- FY 2014 (Source: Report on booming construction equipment market in India).

Business overview

Magma finances construction equipment (backhoe loaders, excavators, crane and dumpers, among others, and a fleet of machines for bigger projects) for its strategic and retail customer segments.

The strategic segment comprises customers with an annual billing

ranging of Rs.100-300 crore; they account for 19 percent of the construction equipment business; retail customers (purchasing equipment for onward renting or small contractors, mine operators, first-time buyers and mid-size customers) comprise the largest business chunk and profitability.

Magma has tie-ups with Telecon and JCB: the Company works closely with L&T, Ace, Caterpillar and Volvo, among others. It provides a fast turnaround time in financing as compared with competitors; it provides tailor-made and innovative schemes.

Highlights, 2010-11

Business disbursements registered a marginal de-growth of 5 percent from Rs.1,200 crore in 2009-10 to Rs.1,144 crore; significantly lower than estimates for the following reasons:

Planned infrastructure investmentslower than estimates for the following reasons: took significant time to move from the drawing board

took significant time to move from the

drawing board to the ground;

consequently, ground activity was

significantly lower than estimates.

Consider this: the plan of 20 kms of

road construction was reduced to 8 km

per day

Competition, which vacated theof 20 kms of road construction was reduced to 8 km per day market space owing

market space owing to the global

meltdown, resurfaced resulting in

market fragmentation

In 2010-11, Magma entered into a tie- up with Caterpillar India and its dealers Gmmco and TIPL to provide financial

solutions for a wider range of products and broaden the customer base across India.

In 2010-11, business from strategic customers declined 17 percent while that from the retail customers declined 1 percent; the average ticket size stood at Rs.23 lac and the average loan tenure was 37 months. The Company’s market share among NBFCs was 7.4 percent in 2010-11 against 9.4 percent in 2009-10.

Optimism

India’s infrastructure deficiency and rising infrastructure requirements portend rapid growth over the next decade for the Indian construction industry. While real estate development and industrial capex will be favourable construction-industry drivers, infrastructure growth will be key over the next decade.

The government’s indication of a US$ 1trillion Twelfth Plan (FY12-17) signifies a potential US$ 455million construction opportunity over FY12-17 (considering 65 percent construction intensity and 30 percent slippage).

Magma has charted a blueprint to aggressively increase business volumes and strengthen profitability. The Company will undertake focused marketing to maximise contribution from each product segment. To garner volumes, the Company will execute this business from an increased number of branches and strengthen its presence in the refinancing construction equipment.

Parameters

2009-10

2010-11

Total disbursement (Rs. crore)

3,989.07

5,261.51

Construction equipment and strategic

construction equipment business (Rs. crore)

1,199.69

1,143.85

Contribution to the total disbursement (%)

30.07

21.74

Y-o-y Magma growth (%)

4.21

(4.65)

Y-o-y industry growth (%)

9.40

21.10

List of corporate associates and product collaborators

List of corporate associates and product collaborators Voltas
List of corporate associates and product collaborators Voltas

VoltasList of corporate associates and product collaborators

Magma Fincorp Limited

25
25

HIGH-YIELD

PRODUCT

01 Tractors

Industry overview

The demand for tractors rides the growth of the agriculture sector, an increase in the diverse non-agricultural use of such vehicles as well as credit availability.

India is the largest manufacturer of tractors in the world, accounting for a third of the total global tractor production. The country registered a positive growth (CAGR) of 17 percent in three years attributed to the following reasons:

Doubling in rural labour wages in just two years following favourable government employment schemes like the NREGA (National Rural Employment Guarantee Act)percent in three years attributed to the following reasons: Rising farm prices supported by higher minimum

Rising farm prices supported by higher minimum support prices, which enhanced tractor affordabilitylike the NREGA (National Rural Employment Guarantee Act) Increasing use of tractors for transportation (water and

Increasing use of tractors for transportation (water and material) and construction

for transportation (water and material) and construction Cumulative tractor sales (domestic and exports) increased 21

Cumulative tractor sales (domestic and exports) increased 21 percent from 3,59,112 units in 2009-10 to 4,33,700 units in 2010-11 for April-February period.

Business overview

Magma entered the tractor financing business in 2007-08 for the benefit of

farmers owning less than six acres of agricultural land, an extension of its semi-urban and rural focus.

Tractors represent a profitable portfolio addition as they are used by owners across the year and pose a relatively low business risk. The net interest margin earned from this vertical was higher than what was earned from core products.

The Company entered into a joint venture with agri-equipment manufacturer International Tractors Limited (through Magma ITL Finance Limited). The Company also enjoyed strategic alliances with Mahindra & Mahindra, TAFE, John Deere, New Holland and ITL, among others.

Highlights, 2010-11

Magma grew its tractor financing business faster than sectoral growth; the financed volumes doubled to about 15,000 in 2010-11 for the following reasons:

Doubled the team for financing tractors to 205 helping widen sales pan- Indiato about 15,000 in 2010-11 for the following reasons: Incentivised business growth through lucrative customer

Incentivised business growth through lucrative customer schemesfor financing tractors to 205 helping widen sales pan- India Initiated tractor financing business in 19

Initiated tractor financing business in 19 branches in 2010-11; focused on rural tractor financingbusiness growth through lucrative customer schemes Collection efficiency improved from 94.2 percent in 2009-10

Collection efficiency improved from 94.2 percent in 2009-10 to 97.1 percent19 branches in 2010-11; focused on rural tractor financing Disbursements increased 157 percent from Rs.120 crore

Disbursements increased 157 percent from Rs.120 crore in 2009-10 to Rs.309 crore, accounting for 36 percent of high-yield product disbursements. Correspondingly, NIM was maintained at 10.9 percent. Average loan size stood at Rs.3 lac with an average maturity tenure of 45 months.

Optimism

India’s tractor offtake is expected to remain robust due to the agrarian nature of the country, increased rural income and a government agricultural focus through favourable policies and monetary allocation.

In Union Budget 2011-12, the government increased farm credit from Rs.3,75,000 crore in 2010-11 to Rs.4,75,000 crore. The Bharat Nirman Programme allocation increased by Rs.10,000 crore to Rs.58,000 crore; allocation under Rashtriya Krishi Vikas Yojana increased from Rs.6,755 crore to Rs.7,860 crore, which will prospectively increase tractor demand.

Magma is optimistic of more than doubling 2011-12 sales through a wider distribution network, more tractor- focused branches, stronger team and an entry into tractor re-financing.

Parameters

2009-10

2010-11

Total disbursement (Rs. crore)

3,989.07

5,261.51

Tractor business (Rs. crore)

120.06

308.65

Contribution to the total disbursement (%)

3.01

5.87

Y-o-y Magma growth (%)

6017.00

157.08

Y-o-y industry growth (%)

32.30

20.80

List of corporate associates and product collaborators

List of corporate associates and product collaborators International Tractors Limited

International

Tractors Limited

List of corporate associates and product collaborators International Tractors Limited
List of corporate associates and product collaborators International Tractors Limited
26
26

Annual Report 2010-11

HIGH-YIELD

PRODUCT

02 SME loans

Business overview

Magma entered the EMI-based, unsecured financing segment in 2007-08 to meet the growing needs (working capital requirement and project funding) of small and medium enterprise customers (up to requirements of Rs.35 lac). Progressively, Magma graduated to mid and large ones (ticket size ranging between Rs.1 lac and Rs.1 crore) following delinquency possibilities in small ticket sizes.

Magma analysed the financials of prospective customers on the basis of cash flows (achieved and prospective). A horizontal approach facilitated an analysis of customer behaviour, location,

industry and delinquencies. The Company also engaged in unsecured lending for mid and semi-large corporates following comprehensive balance sheet appraisal.

Magma is among the five leading Indian players providing SME loans.

Highlights, 2010-11

Restricted its financing to quality clients (as opposed to a volume-based approach by competitors), which ensured superior asset quality, collection and returnsIndian players providing SME loans. Highlights, 2010-11 Created a separate team for SME collections Trained channel

Created a separate team for SME collectionswhich ensured superior asset quality, collection and returns Trained channel partners in attracting the right customer

Trained channel partners in attracting the right customer profileand returns Created a separate team for SME collections Increased average transaction ticket size to Rs.24

Increased average transaction ticket size to Rs.24 lac covering higher net worth customers.channel partners in attracting the right customer profile Maintained NIM from this business in a hardening

Maintained NIM from this business in a hardening interest rate environmentsize to Rs.24 lac covering higher net worth customers. Disbursements increased 47 percent from Rs.206 crore

Disbursements increased 47 percent from Rs.206 crore to Rs.304 crore. Average loan size was Rs.24 lac across an average tenure of 33 months. The SME vertical accounted for 35 percent of the high-yield product business in

2010-11.

Optimism

Magma expects to grow this segment 50 percent in 2011-12 through strong channel relationships as well as cross- sale opportunities across the existing customer base.

Parameters

2009-10

2010-11

Total disbursement (Rs. crore)

3,989.07

5,261.51

SME loans (Rs. crore)

206.43

303.66

Contribution to the total disbursement (%)

5.17

5.77

Y-o-y Magma growth (%)

81.00

47.10

Magma Fincorp Limited

27
27
HIGH-YIELD PRODUCT 03 Suvidha (Refinance) Business overview relationships, advising on the prudent choice of
HIGH-YIELD
PRODUCT
03 Suvidha (Refinance)
Business overview
relationships, advising on the prudent
choice of appropriate vehicles.
As a logical extension of Magma’s
commercial vehicle financing business,
the Company initiated the financing of
used commercial vehicles (Suvidha
programme). The Company largely
financed first-time buyers and
commercial vehicles 2-15 years old
through schemes addressing the lower-
end of the customer segment.
Installed a credit programme that
ensured the customer’s compliance with
existing practices
Highlights, 2010-11
This business vertical grew more than
100 percent in 2010-11 with
disbursements touching Rs.244 crore
(Rs.112 crore in 2009-10). The business
achieved momentum for the following
reasons:
Strengthened process to reduce
turnaround time coupled with stringent
asset and collections monitoring
The customer selection process was no
different from new vehicle financing,
covering a need to ensure vehicle
usefulness and profitability leading to
timely debt repayment.
Enhanced operations from 50
branches to 100, more than doubling
the operations team
Magma refinanced the popular Tata
Motors and Ashok Leyland models. The
Company focused on enduring customer
Established equipment valuation
norms, which were checked by
independent valuers and resident
equipment managers prior to
disbursement
The team reported a collection efficiency
in excess of 100 percent for the third
successive year (including previous
overdues). The average loan size
increased from Rs.4 lac to Rs.5 lac in
2010-11; the average loan tenure was
32 months; net interest margin
maintained at 7.6 percent.
Optimism
The experienced team expects to grow
its business manifold from its 170
branches in the foreseeable future.
Parameters
2009-10
2010-11
Total disbursement (Rs. crore)
3,989.07
5,261.51
Refinancing business (Rs. crore)
111.88
243.91
Contribution to the total disbursement (%)
2.80
4.64
Y-o-y Magma growth (%)
(8.06)
118.01
28 Annual Report 2010-11
BUSINESS DRIVER 01 Credit management Applications per Rural/Semi-Urban Early delinquency Infant delinquency Team
BUSINESS DRIVER
01 Credit management
Applications per
Rural/Semi-Urban
Early delinquency
Infant delinquency
Team size
day (average)
customer base
541
0.6%
1.7%
500
64%
March 31, 2011
March 31, 2011
March 31, 2011
2010-11
March 31, 2011
Relevance
The credit management efficiency is of
critical importance for the following
reasons:
area, facilitating accurate customer
appraisal, which is presented
independently to the credit team.
This filter provides a reasonable
assurance of asset quality and business
profitability.
A majority of the lending is to the
The field investigation assists the credit
team in prudently streamlining credit
filters with three layers – understanding
the customer’s relevant experience,
estimating income patterns and
gauging stability in that geography.
Added credit filters for determining
loan-to-value (LTV) limits for various
proposals; redesigned filter screens in
keeping with dynamic market realities
(increased competition for instance);
redesigned filters to alter LTV limits in
line with the client’s Free Finance Ratio
non-bankable section of the Indian
population.
Altered processes, which optimised
paper work and simplified work
processes
Highlights, 2010-11
A large segment of the applicants
comprise first-time-buyers.
Addressed over 79,450 proposals
against 59,550 in 2009-10
The assets backing the loans are
completely mobile comprising four-
wheelers, commercial vehicles, tractors,
construction equipment and the
entrepreneur (for SME loans).
Reduced the credit team’s process-
wise turnaround time
Reduced infant delinquency from 2.5
percent in 2009-10 to 1.7 percent
Introduced an SMS service that
dispatched daily updates to all field
officers, facilitating a regular follow-up
externally (for pending documents with
the customer if any) and internally (for
speeding up the approval process)
Road ahead
Overview
Reduced early delinquency from 1.0
percent in 2009-10 to 0.6 percent
Reduce TAT by about 50 percent
The credit team of 541 members covers
the zonal, state and field levels. Magma
has strengthened its credit
management through prudent
recruitment; its field investigators are
handpicked from within the command
Key initiatives, 2010-11
Institutionalised the audit of field
inspection reports based on sample
testing, with heavy penalties for
inaccurate reporting
Increase LTV in line with market
offerings owing to increased
competition and customer demand
while protecting portfolio quality and
maintaining process accuracy
Magma Fincorp Limited
29
BUSINESS DRIVER 02 Treasury management Team size Daily Daily funds inflow (average) Average cost Capital
BUSINESS DRIVER
02 Treasury management
Team size
Daily
Daily funds inflow
(average)
Average cost
Capital adequacy
40 disbursements
of funds
(average)
18.2%
March 31, 2011
Rs.15 crore
8.21%
Rs.15 crore
March 31, 2011
2010-11
2010-11
2010-11
Magma’s treasury function is its life-
line, influencing growth and
profitability:
Overview
Magma’s core business is borrowing
and lending, the inadequate availability
of funds could impede the
organisation’s responsiveness to
opportunities
Magma’s treasury management
comprises three teams: core treasury,
securitisation/assignment and banking
operations.
regulatory and banking compliances,
prepares analytical reports/MIS, initiates
fresh ratings and renews the ratings of
debt instruments. Magma’s funds
comprise of cash credit limits from
consortium banks, term loans, short and
long-term debentures, subordinated
debt, Preference Shares and perpetual
debt.
High-cost funds could affect the
Company’s ability to provide
competitive rates to its customers
Core treasury: This team focuses on the
procurement of funds at best rates
available in the market through short-
term and long-term financial
instruments. The team also handles
Funding pattern as on March 31, 2011
Superior rating
( Rs. crore)
Working capital facilities
Basel II ratings PR1+ for short term
and AA for long term facilities by CARE
Cash credit
2,422.48
NCDs/Bonds
Preference shares/ sub
debt/ perpetual debt
556.08
PR1+ for short term and AA for long
term NCDs by CARE
Securitisation of receivables
AAA (so) by CRISIL and CARE
NCDs
411.65
Tier 2 instrument
Term loan
1,165
AA- rated by CARE, subscribed to by
banks and mutual funds
Tier 1 perpetual debt
AA- rated by Brickwork Ratings and A+
rated by CARE, subscribed by banks
Tier 2 Preference Shares
AA- rated by CARE
Securitisation/assignment: Magma
sells its portfolio of loan assets through
the bilateral assignment route to banks
and financial institutions. The role of
the securitisation/assignment team is to
negotiate the best deals. The Company
monetises assets capitalising on
opportunities; banks and institutions
acquire a relatively risk-free portfolio,
fulfiling its priority sector lending
compliance as more than 70 percent of
the assets created by Magma qualify as
priority sector lending assets.
Banking operations: This function
manages physical and electronic flow of
funds (from 172 locations to the head
office and vice versa) amounting to
nearly Rs.30 crore a day. The team
manages disbursements of 6200 new
cases generated every month through
172 branches.
was restricted to only 75 bps against an
industry-wide increase in the regulatory
rates by about 175 bps, which
maintained NIM at around 5 percent as
in 2009-10.
Highlights, 2010-11
NIM at 5.0%
Through better treasury management,
increase in cost of funds for the year
Funding
Working capital limits (fund and non
fund) were enhanced from Rs.2,750
crore in 2009-10 to Rs.4,300 crore. The
term loan and debenture loan portfolios
were enhanced from Rs.1,776.29 crore
in 2009-10 to Rs.1,985.85 crore
30 Annual Report 2010-11

Capital raising and capital adequacy ratio Equity capital of Rs 122 crore was raised via the qualified institutional placement route in May 2010. The issue was subscribed by 12 international and Indian institutional investors. The capital raising and further inflow of Tier I and Tier II capital in the form of PDI and subordinated debt ensured a comfortable capital adequacy ratio of 18.2 percent, against 14.9 percent in March 2010.

Managed inward cash float of one day and reduced payment turnaround time (TAT) by two days

The Banking Operations team, continuing on the initiative of 2009-10 for enabling CMS for cash pickup and cheque deposit in all the locations, managed to reduce the TAT for inward fund movement to around one day.

The team, by setting up remote cheque process and payment through RTGS/NEFT, was able to
The team, by setting up remote cheque
process and payment through
RTGS/NEFT, was able to reduce the
payment TAT by almost two days.
Key initiatives, 2010-11
Negotiated with bankers and fund
providers for better coupon rates,
leveraging asset quality and priority
sector lending status of the assets
created
Optimised securitisation/assignment to
reduce funds cost
Broadened the securitisation/
assignment base from four to eight
buyers, strengthening bargaining power
Reduced the first loss component of
the credit enhancement, replaced the
second loss component of the credit
enhancement fixed deposits with bank
guarantees, releasing precious funds for
business furtherance
Inefficient collection can lead to an
asset-liability mismatch, lower
profitability and a probable debt-trap
Cash management - around 75
percent of the collections are in cash -
makes collections vulnerable

Established the remote cheque and bulk RTGS/NEFT processes, which enabled the reduction in payment of TAT; reduced RTGS and NEFT costs by more than 60 percent through superior negotiations with bankersthe collections are in cash - makes collections vulnerable Road ahead Maintain overall funds cost in

Road ahead

Maintain overall funds cost in an inflationary environmentthrough superior negotiations with bankers Road ahead Use securitisation/assignment selectively for funding the

Use securitisation/assignment selectively for funding the businessMaintain overall funds cost in an inflationary environment Maintain a 60:40 ratio between Tier I and

Maintain a 60:40 ratio between Tier I and Tier II capital leading to desired capital adequacyselectively for funding the business Leverage benefits of the newly- initiated funds collection

Leverage benefits of the newly- initiated funds collection mechanismI and Tier II capital leading to desired capital adequacy Undertake initiatives to improve TAT for

Undertake initiatives to improve TAT for disbursements to customersbenefits of the newly- initiated funds collection mechanism BUSINESS DRIVER 03 Collections management Collection every

initiatives to improve TAT for disbursements to customers BUSINESS DRIVER 03 Collections management Collection every
initiatives to improve TAT for disbursements to customers BUSINESS DRIVER 03 Collections management Collection every

BUSINESS DRIVER

03 Collections management

to customers BUSINESS DRIVER 03 Collections management Collection every Collection Team size month (average)
Collection every Collection Team size month (average) efficiency 2,403 Write-off (as proportion of assets under
Collection every
Collection
Team size
month (average)
efficiency
2,403
Write-off (as
proportion of assets
under management)
Rs.395 crore
101.7%
March 31, 2011
0.26%
2010-11
2010-11
2010-11

Relevance

Collections efficiency is critical for the

following reasons:

A financially indisciplined customerefficiency is critical for the following reasons: can transform sound lending into a delinquent one Lack

can transform sound lending into a

delinquent one

Lack of security in rural and semi-customer can transform sound lending into a delinquent one urban areas makes loan recovery daunting; a

urban areas makes loan recovery

daunting; a significantly large

proportion of the Company’s collections

are outside city limits

Magma Fincorp Limited

31
31

Overview

Magma progressively developed a credible collection and recovery team (2,403 members) supported by state-of- the-art information technology and superior processes. The result is that the Company’s collection and delinquency management is one of the best among India’s NBFCs.

Magma’s collection team is structured regionally (national, zonal, state and field) with a product-agnostic approach (SMEs have a separate collection team). The collection team is supported by an efficient legal team, strengthening collections with legal support.

The team engages with customers across the loan tenure through multiple channels – direct visits and tele-calling. Assets are regularly tracked - to establish their engagement for profitable use. The Company contacts every customer well before the installment due date as a reminder of the impending liability. Defaulting customers are followed up through site visits, tele-calling and legal reminders. In cases of prolonged default, assets are repossessed with corresponding legal support.

At Magma, field investigation officers are responsible for collections, in case of default during the initial loan tenure. A large part of the officers’ emoluments are variable in nature, serving as an incentive for competent loan disbursal and collections.

Recently, the collection approach evolved from making customer calls for the recovery of partial dues to covering the entire dues (including delayed

32
32

Annual Report 2010-11

payment surcharge), which strengthened collection efficiency.

SME collection management

Magma created a special team for timely SME loan collection as these assets represent disbursements not backed by any repossessable asset. Field members are trained in gathering customer information from diverse sources, interacting with customers and using legal recourse judiciously (case to case) to eliminate delinquencies. The movement from lower bucket (EMI outstanding days) to higher bucket is addressed through appropriate legal action.

Asset Reconstruction Division (ARD)

In 2010-11, the Company merged the Asset Reconstruction Division (180+ days bucket) with the collections vertical (0-180 days bucket) headed by the Chief Receivables Management. The team maintained three verticals (based on buckets) and focused on squeezing the 180-day+ bucket. The team’s new policy – ‘no rollback, only resolution’ facilitated a complete resolution of 51 percent cases (of the total pending as on April 1, 2010) in the 180-day-plus bucket. During 2010-11, no fresh portfolios were purchased; the existing portfolio was reduced to Rs.338 crore.

Highlights, 2010-11

Collection efficiency improved to 101.7 percent in 2010-11 against 99.8 percent in 2009-10; collection efficiency was at an all-time high of 107.5 percent in March 2011

was at an all-time high of 107.5 percent in March 2011 Collected overdue interest amounting to

Collected overdue interest amounting to Rs.70 crore in 2010-11 against Rs.76 crore in 2009-10was at an all-time high of 107.5 percent in March 2011 Write-offs as a proportion to

Write-offs as a proportion to the average assets under management declined from 0.45 percent in 2009-10 to 0.26 percent in 2010-11to Rs.70 crore in 2010-11 against Rs.76 crore in 2009-10 Key initiatives, 2010-11 Conducted quarterly meetings

Key initiatives, 2010-11

Conducted quarterly meetings to strengthen collection processes

Organised training, use of legal tools, DPC tracking and collection; incentivised superior collection through attractive schemesquarterly meetings to strengthen collection processes Initiated activity-based daily monitoring, which reduced

Initiated activity-based daily monitoring, which reduced inventory in higher buckets (60-day +), liberating time for teams to engage in managing difficult delinquenciesincentivised superior collection through attractive schemes Allocated sticky delinquency cases to those bucket

Allocated sticky delinquency cases to those bucket management teams where inventory was squeezed, for the efficient utilisation of intellectual capital and superior collectionstime for teams to engage in managing difficult delinquencies Developed IT solutions (DPC expired contract tracker

Developed IT solutions (DPC expired contract tracker and DPC live contract tracker) which generated reports that populated the lists of all customers with DPC dues; allocated DPC cases to high- bucket collection managers (where inventory was squeezed) for focused recoveryutilisation of intellectual capital and superior collections Conducted regular joint meetings between the legal and

Conducted regular joint meetings between the legal and recovery teams for co-ordinated recovery and asset repossession; initiated a tracking system between the head office and regional offices to eliminate time delay at both ends; accelerated the utilisation of appropriate legal tools for which thewith DPC dues; allocated DPC cases to high- bucket collection managers (where inventory was squeezed) for

offices to eliminate time delay at both ends; accelerated the utilisation of appropriate legal tools for
Company had incurred sizeable expenses Provided training to field officers on asset insurance (claim settlement),

Company had incurred sizeable

expenses

Provided training to field officers onCompany had incurred sizeable expenses asset insurance (claim settlement), which facilitated in putting assets faster on

asset insurance (claim settlement),

which facilitated in putting assets faster

on the road, generated revenue and facilitated EMI repayment Outlook Magma aims to introduce Human
on the road, generated revenue and
facilitated EMI repayment
Outlook
Magma aims to introduce Human
Sigma to maximise employee efficiency
report was generally compiled within 45
days from the date of audit. In addition
to SBU audits, IAD also carried out
audits of various other
departments/functions which were
centralised (these are called off-site
audits).
Key initiatives, 2010-11
Conducted internal audits in 15 of the
19 SBUs and verification audits for the
rest. Successfully completed nine off-site
audits during the year.
Introduced a pre-review committee of
the ACB where the audit reports and
their compliances were reviewed by
members of PRC comprising the

by minimising productivity variation. The

team is also working to outline and

implement steps for lean thinking to

eliminate process wastage.

Unique collection system

Magma drew a strategic blueprint for a unique collection system for Rs.5 crore in 2010-11. Each field officer will be provided with a GPRS-enabled mobile device with an attached printing device connected to the main server.

The collections logged into the hand-held device will be immediately updated on the Company’s server, for which earlier, there was a lag of three days. This will facilitate better MIS and superior funds management. The IT team created a separate server to receive the data from hand-held devices, converting it to the format required by the main server and updated it in real-time.

required by the main server and updated it in real-time. BUSINESS DRIVER 04 Internal audit A
required by the main server and updated it in real-time. BUSINESS DRIVER 04 Internal audit A

BUSINESS DRIVER

04 Internal audit

A CULTURE OF ONGOING AUDIT

PROTECTS

Magma’s internal audit (IAD) function ensured adherence to standards processes and streamlining. The audit team of 13 members comprise qualified professionals and trainees. The head of IAD reported directly to the Board.

There were 19 SBUs, each audited annually. The audit finding was presented to the National/Zonal heads after the findings had been discussed thoroughly.

heads after the findings had been discussed thoroughly. Chairman, Joint Managing Director and Head of Internal

Chairman, Joint Managing Director and Head of Internal Audit. Only those reports were placed before ACB where compliance was 100 percent and had been cleared by PRC.

Suggested measures to strengthen the recovery process through a modification of existing process and the introduction of a rigorous control mechanismcompliance was 100 percent and had been cleared by PRC. Implemented the concept of a risk-

Implemented the concept of a risk- based auditprocess and the introduction of a rigorous control mechanism Outlook Rating each SBU based on their

Outlook

Rating each SBU based on their performanceImplemented the concept of a risk- based audit Outlook Reinforcement of self-audit at the SBU level

Reinforcement of self-audit at the SBU levelaudit Outlook Rating each SBU based on their performance There was a strict time discipline within

There was a strict time discipline within which National/Zonal heads were required to submit compliance. An audit

A FINANCIAL SERVICES COMPANY THRIVES ON ITS PEOPLE.

In face-to-face business, the person on the field is the CompanyA FINANCIAL SERVICES COMPANY THRIVES ON ITS PEOPLE. Intellectual capital facilitates in converting opportunity to reality

Intellectual capital facilitates in converting opportunity to realitybusiness, the person on the field is the Company People attrition results in knowledge- capital drain,

People attrition results in knowledge- capital drain, impeding growthcapital facilitates in converting opportunity to reality Magma fostered a knowledge-focused, flexible and satisfying

Magma fostered a knowledge-focused, flexible and satisfying work culture leading to superior results. The senior management team possessed more than a decade’s experience in managing various functions.

Magma provided professionals with exciting career options. The Company enhanced a sense of team spirit, provided performance-based incentives and groomed leaders through on-the- job exposure, training and cross- functional movements.

Initiatives, 2010-11

Organisation structure

Created the Chief Operating Officer’s position to ensure seamless operations and communication between sales and credit verticalmovements. Initiatives, 2010-11 Organisation structure Consolidated the Asset Reconstruction Division together with

Consolidated the Asset Reconstruction Division together with the collection vertical for focused fund recovery operationsand communication between sales and credit vertical Created product-wise teams under the sales vertical 34

Created product-wise teams under the sales verticalthe collection vertical for focused fund recovery operations 34 Annual Report 2010-11 Recruitment Recruited 1,500

34
34

Annual Report 2010-11

Recruitment

Recruited 1,500 individuals to manage the growing business; increased the team size for high-yielding product verticalsthe sales vertical 34 Annual Report 2010-11 Recruitment Training Implemented the e-learning concept, developed and

Training

Implemented the e-learning concept, developed and uploaded training modules with tests at the end of the module. Successful candidates were felicitated. In 2010-11, over 500 employees participated in the e-learning initiativethe team size for high-yielding product verticals Training Implemented a unique Reward and Recognition program wherein

Implemented a unique Reward and Recognition program wherein the employees were recognised and rewarded for their performance on the same day across all SBUs.over 500 employees participated in the e-learning initiative Strong focus on functional training by organising

Strong focus on functional training by organising simultaneous training in different products in different locationsfor their performance on the same day across all SBUs. Initiated the training model for the

Initiated the training model for the ‘fleet-on-street’ team for the passenger vehicle business vertical; engaged consultants to develop training modules; conducted training sessions across 20 locations for improving product knowledge, technical and behavioural skillstraining in different products in different locations Conducted leadership training for the senior management in

Conducted leadership training for the senior management in team management and inter-personal skills across 15 locationsproduct knowledge, technical and behavioural skills Provided training to the first line management team on

Provided training to the first line management team on ‘The 7 habits of leadership’ at 15 locationsmanagement and inter-personal skills across 15 locations Performance management Revisited the variable pay structure

Performance management

Revisited the variable pay structure linked to performance; transparently streamlined performance analytics for every vertical, which enabled members to ascertain reasons for their increased/decreased variable payof leadership’ at 15 locations Performance management Organised employee engagement programs viz. picnics,

Organised employee engagement programs viz. picnics, competitions, inter-zone events to enhance team bondingascertain reasons for their increased/decreased variable pay Way ahead Strengthen the team’s learning curve through

Way ahead

Strengthen the team’s learning curve through traininginter-zone events to enhance team bonding Way ahead Encourage employees to participate in the e-learning

Encourage employees to participate in the e-learning initiativeStrengthen the team’s learning curve through training Continue functional training to the ‘fleet-on-street’

Continue functional training to the ‘fleet-on-street’ teams for all product verticalsemployees to participate in the e-learning initiative Focus on systematic succession planning for all senior and

Focus on systematic succession planning for all senior and strategic positionsto the ‘fleet-on-street’ teams for all product verticals Employees as on March 31, 2011 20% 6%

Employees as on March 31, 2011

20% 6% 62% 7% 5%
20%
6%
62%
7%
5%

First line leaderspositions Employees as on March 31, 2011 20% 6% 62% 7% 5% Branch back office Fleet

Branch back officepositions Employees as on March 31, 2011 20% 6% 62% 7% 5% First line leaders Fleet

Fleet on streetpositions Employees as on March 31, 2011 20% 6% 62% 7% 5% First line leaders Branch

Second line leaderspositions Employees as on March 31, 2011 20% 6% 62% 7% 5% First line leaders Branch

HOas on March 31, 2011 20% 6% 62% 7% 5% First line leaders Branch back office

  TODAY’S BUSINESS ENVIRONMENT IS ONE …where time is money …where Pan-India operational data forms
 

TODAY’S BUSINESS ENVIRONMENT IS ONE

…where time is money

…where Pan-India operational data forms the foundation of organisational strategies

…where speed is the critical ingredient for success

In such operating complexities, Information Technology is the key enabler which facilitates growth accurately and seamlessly.

Magma’s business runs on an Oracle- based centralised database and application system (three-tier architecture), extensive VPN connectivity across key branches and CITRIX solution, along with NetScaler, making it possible for remote branches to access real-time information.

Initiatives, 2010-11

Application Implemented Oracle-based software, which replicated the data from the main server to the DR server in real time so

Implemented Oracle-based software, which replicated the data from the main server to the DR server in
Implemented Oracle-based software, which replicated the data from the main server to the DR server in

that all reports are generated from the disaster recovery server, ensuring smooth and seamless operations 24x7 and distributed user load.

Developed the ‘Captive Suvidha’ module to support the new business initiative, which provided a cross-selling opportunity.and seamless operations 24x7 and distributed user load. Introduced a new SMS facility for the sales

Introduced a new SMS facility for the sales force, which updates them on the status of the leads generated daily; this facility improved the turnaround time.initiative, which provided a cross-selling opportunity. Extended the IT network for facilitating credit and

Extended the IT network for facilitating credit and operations to 18 new branches, improving the turnaround time for processing leads.generated daily; this facility improved the turnaround time. Enhanced efficiency of the existing insurance distribution

Enhanced efficiency of the existing insurance distribution business by implementing various related modules leading to real-time monitoring of the business at various stages.improving the turnaround time for processing leads. Infrastructure Extended the IT infrastructure to 19 new

Infrastructure

Extended the IT infrastructure to 19 new branchesmonitoring of the business at various stages. Infrastructure Increased server capacity for managing increased business

Increased server capacity for managing increased business volumesExtended the IT infrastructure to 19 new branches Benchmarked the existing IT infrastructure, security

Benchmarked the existing IT infrastructure, security framework and processes with the best in the world. The project will include a gap analysis and provide relevant solutionsserver capacity for managing increased business volumes Way ahead Revamp the website for better navigation and

Way ahead

Revamp the website for better navigation and connect it with intranet so that employees can log in from the website itselfa gap analysis and provide relevant solutions Way ahead Enhance the Company’s image and branding. Use

Enhance the Company’s image and branding. Use social media tools like Facebook and Twitter to interact with young car buyers, analysts and employee groupsso that employees can log in from the website itself Create an IT backbone for Magma

Create an IT backbone for Magma HDI General Insurance businessinteract with young car buyers, analysts and employee groups Bring new technology/application to automate various

Bring new technology/application to automate various processes of the sales organisationan IT backbone for Magma HDI General Insurance business Initiate a lead generation system for sales

Initiate a lead generation system for sales and field investigation teamsto automate various processes of the sales organisation Upgrade the existing ERP Application System Magma Fincorp

Upgrade the existing ERP Application Systemthe sales organisation Initiate a lead generation system for sales and field investigation teams Magma Fincorp

Magma Fincorp Limited

35
35
36
36
Directors’ Report

Directors’

Report

Dear Shareholders,

Financial results

Total income

Profit before interest and depreciation

Less: Interest and finance charges

Less: Depreciation

Profit before tax

Tax Expense

Profit after tax

Add: Surplus brought forward

Balance available for appropriation

- Statutory reserves

- General reserve

Provision for dividend

- On Preference Shares

- On Equity Shares

- Dividend tax

Balance carried forward to the next year

Net worth

Earning per equity share (Rs.)

- Basic

- Diluted

Book value per equity share (Rs.)

Annual Report 2010-11

Book value per equity share (Rs.) Annual Report 2010-11 MAYANK PODDAR Chairman Year ended 31 March
Book value per equity share (Rs.) Annual Report 2010-11 MAYANK PODDAR Chairman Year ended 31 March
Book value per equity share (Rs.) Annual Report 2010-11 MAYANK PODDAR Chairman Year ended 31 March

MAYANK PODDAR

Chairman

Year ended 31 March 2011

(Rs. in lac)

Year ended 31 March 2010

84,732.98

70,300.89

53,648.17

45,207.66

33,813.00

31,624.96

2,785.07

3,278.58

17,050.10

10,304.12

5,606.78

3,658.09

11,443.32

6,646.03

10,191.97

6,677.91

21,635.29

13,323.94

2,290.00

1,330.00

1,150.00

500.00

961.53

599.28

778.64

517.39

282.42

185.30

16,172.70

10,191.97

72,214.16

46,458.69

8.12

5.46

7.94

5.45

43.36

32.00

185.30 16,172.70 10,191.97 72,214.16 46,458.69 8.12 5.46 7.94 5.45 43.36 32.00

Your directors have pleasure in presenting the 31st annual report on the audited accounts of the Company for the year ended 31st March, 2011. The summarised financial results are given below:

2011. The summarised financial results are given below: Note: EPS and Book Value are shown after

Note: EPS and Book Value are shown after adjusting for split of share in ratio of 1 share of Rs.10/- into 5 shares of Rs.2/-

  Business The Indian economy achieved good growth in the year and is estimated to
 

Business

The Indian economy achieved good growth in the year and is estimated to have grown at 8.6 percent during FY 2010-11, as compared to 7.4 percent during FY 2009-10. WPI based inflation remained high in major part of the year and was at 8.9 percent at March end. High food inflation, which was 9.2 percent for the week ended 26 March 2011, has been one of the major contributors to overall high inflation in the economy. Responding to this, RBI has been following policies of monetary tightening for the entire year, which has pushed up the interest rates in the economy. Despite this, retail assets demand continues to be strong.

There was robust growth in sales of new vehicles during fiscal 2010-11. Domestic sales of new commercial vehicles registered a healthy growth of 27.3 percent during 2010-11 as compared to 2009-10, while sales of new cars and UVs registered a growth of 29.3 percent during the financial year. Tractors sales also grew about 21 percent during the year under review.

As supported by strong growth in primary sales, Magma Fincorp Limited recorded total funding of Rs.5,262 crore (on a standalone basis) during FY 2010-11, resulting in 31.9 percent growth over Rs.3,989 crore recorded during FY 2009-10. Aided by growth in business, build up of on-book assets and increasing share from high yield products such as Suvidha (Used CV), Tractors and SME Loans, total income enhanced to Rs 847.33 crore, representing a 20.53 percent growth over Rs.703.00 crore achieved in last year.

Higher business volumes have been accompanied by better asset quality, superior collection performance, dramatically lower write-offs and higher cost efficiency. Accordingly, profit before tax increased to Rs.170.50 crore during 2010-11, compared to Rs.103.04 crore for 2009-10, a growth of 65.5 percent. Profit after tax recorded remarkable 72.2 percent growth, from Rs.66.46 crore in last year to Rs.114.43 crore in 2010-11.

Profitability parameters of the Company have shown significant improvement during the year. RoA (return on average assets) has improved from 1.7 percent in 2009-10 to 2.2 percent in 2010-11, while RoE (Return on Average Equity) has enhanced from 18.5 percent in 2009-10 to 22.7 percent in 2010-11.

in 2010-11, while RoE (Return on Average Equity) has enhanced from 18.5 percent in 2009-10 to
from 18.5 percent in 2009-10 to 22.7 percent in 2010-11. Insurance Joint Venture : The Company

Insurance Joint Venture :

The Company is in Joint Venture Agreement with HDI Gerling International Holding AG for the purpose of entering into General Insurance Business in India through the existing Company, Magma HDI General Insurance Company Ltd. (the "JV Company"). The JV Company has since received the R1 approval and is in the process of filing the R2 application with IRDA.

Dividend

Your Directors recommend a tax-free dividend of 30 percent, i.e. Rs.0.6 per Equity Share on 12,97,73,550 Equity Shares of Rs.2 each; a 9.7 percent dividend on 21,09,199 Cumulative Non-Convertible Redeemable Preference Shares of Rs.100 each for the period from 1.4.2010 to 17.2.2011 and 9.7 percent on 21,09,199 Cumulative Non-Convertible Redeemable Preference Shares of Rs.80/- each (reduced to Rs.80/- upon redemption of 1st installment of Rs.20/- each per share on 17th Feb,2011) for the period from 18.2.2011 to 31.3.2011; a 5 percent dividend on 30,00,000 Cumulative Non-convertible Redeemable Preference Shares of Rs.100 each; a 3.7 percent dividend on 65,00,999 Cumulative Non-Convertible Redeemable Preference Shares of Rs.100 each; a 12 percent dividend on 25,00,000 Cumulative Non-Convertible Redeemable Preference Shares of Rs.100 each for the period from 30.6.2010 to 31.3.2011; a 9.6 percent dividend on 10,00,000 Cumulative Non-Convertible Redeemable Preference Shares of Rs.100 each for the period from 19th June, 2010 to 31st March,2011; a 1 percent dividend on 21,09,199 Cumulative Non Convertible Redeemable Preference Shares of Rs.100 each for the previous year ended 31 March 2010, subject to your approval at the ensuing Annual General Meeting .

Employee Stock Option Scheme

Your Company formulated and implemented an ESOP scheme (‘Magma Employees Stock Option Plan 2007’) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.The details of options granted and outstanding as on 31 March 2011 along with other particulars as required by Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Auditor’s Certificate required to be

Magma Fincorp Limited

37
37

Directors’ Report

placed at the forthcoming Annual General Meeting pursuant to Clause 14 of the said guidelines are set out in the Annexure to the Report.

Pursuant to Subdivision of Equity Share of the face value of Rs.10/- each into 5 Equity Shares of the face value of Rs.2/- each, the existing 7,41,900 Options of Rs.10/- each available for grant out of the 10,00,000 Options under the Plan stands converted into and increased to 37,09,500 Options of Rs.2/- each and existing 2,58,100 live options of Rs.10/- each stands converted into 12,90,500 options of Rs.2/- each. The exercise price is also revised from Rs.180/- per option to Rs.36/- per option.

Pursuant to the Plan, 17,54,000 stock options of Rs.2/- each (increased from 3,50,800 stock options of Rs.10/- each to 17,54,000 stock options of Rs.2/- each following subdivision of 1 equity share of the nominal value of Rs.10/- each into 5 Equity Shares of the nominal value of Rs.2/- each ) were granted to the eligible employees in October 2007 out of which 4,63,500 stock options of the nominal value of Rs.2/- each have lapsed and 7,74,300 stock options of the nominal value of Rs.2/- each were vested till 31st March,2011. During the year 5,51,750 stock options of the nominal value of Rs.2/- each were exercised by the eligible employees and equivalent number of Equity Shares of the nominal value of Rs.2/- each were issued and allotted under the scheme ranking pari passu with the existing Equity Shares of your company.

Capital – issuances and redemptions

Changes in Share Capital

Equity Shares

During the year,the following changes were effected in the share capital of the Company :

i) Issue of Warrants:

During the year, 20,00,000 warrants (increased to 1,00,00,000 warrants following subdivision of 1 equity share of the nominal value of Rs.10/- each into 5 Equity Shares of the nominal value of Rs.2/- each ) were allotted to one of the Promoter entities, carrying an option / entitlement to subscribe to equivalent number of Equity Shares at a price of Rs.250/- per Equity Share (revised to Rs.50/- per Equity share following Sub division ), on a future date not exceeding 18 months from the date of issue of such warrants in terms of provisions of SEBI Guidelines for

38
38

Annual Report 2010-11

 
 

Preferential Issue (Chapter VII of the SEBI (Issue and Disclosure Requirements) Regulations, 2009).

ii)

Issue of Equity Shares through the Qualified Institutional

Placement ( QIP ) route The Company has raised a sum of Rs.122.42 crore through the Qualified Institutional Placement ( QIP ) route by way of issue of 40,67,220 Equity Shares of Rs.10/- each for cash at a price of Rs.301/- per equity share (including premium of Rs.291/- per

 

equity share) to a host of Institutional Investors who are Qualified Institutional Buyers.

iii)

Sub-division of Equity Shares

Each Equity share of the face value of Rs.10/- of the Company was sub-divided into 5 Equity Shares of the face value of Rs.2/- each with effect from 16th August,2010.

 

iv)

Change in Authorised Equity Share Capital :

The Authorised Equity Share Capital of the Company comprising of 3.5 crore Equity Shares of Rs.10/- each stand revised to 17.5 crore Equity Shares of Rs.2/- each .

 

v)

Issue of Equity Shares under the Magma Employees Stock

Option Plan 2007:

 

During the year, 5,51,750 Equity Shares of the face value of Rs.2/- each at a price of Rs.36/- per share ( including a premium of Rs.34/- per share ) were allotted to the eligible employees under the Scheme against the exercise of stock options by them.

Consequently, the issued, subscribed and paid up equity share capital of your company stands increased to Rs.25.95 crore divided into 12,97,73,550 Equity Shares of Rs.2/- each.

The new Equity Shares issued during the year rank pari passu with the existing Equity Shares .

Preference Shares

(i) Issue of Preference Shares During the year 10,00,000, 9.6% Cumulative Non - Convertible Redeemable Preference Shares of the face value of Rs.100/- each aggregating to Rs.10 crore were issued and allotted on preferential allotment basis, at par redeemable at the end of 5 years at a premium of 25 percent of the face value.

The Company also issued 25,00,000, 12%, Cumulative Non Convertible Redeemable Preference Shares of the face value Rs.100/- each aggregating to Rs.25 crore at par on preferential allotment basis which are redeemable at par at the end of

Rs.100/- each aggregating to Rs.25 crore at par on preferential allotment basis which are redeemable at
  5 years. (ii) Redemption of Preference Shares As per the terms of issue of
 

5 years.

(ii) Redemption of Preference Shares As per the terms of issue of 9.7% Cumulative Non-Convertible Redeemable Preference Shares of Rs.100/- each, the first installment of 20 percent ( Rs.20/- each) on 21,09,199 Preference Shares aggregating to Rs.4.22 crore was redeemed on 17th Feb, 2011 out of the profits of the Company and an equivalent sum has been transferred to the Capital Redemption Reserve.

Consequently, the issued ,subscribed and paid up Preference share capital of your Company stands revised to Rs.146.88 crore.

Debt

Subordinated Debt

During the year, the Company issued 1,36,200 Unsecured Redeemable Non-Convertible Subordinated Debt in the nature of Debentures of Rs.10,00,000 each, aggregating Rs.136.20 crore.

Perpetual Debt

During the year, the Company issued 250 Unsecured Subordinated Perpetual Bonds in the nature of Debentures of Rs.10,00,000 each, aggregating Rs.25 crore.

Consolidated financial statements

In accordance with the requirements under Clause 32 of the Stock Exchange Listing Agreement, your Company prepared consolidated financial statements in accordance with Accounting Standard-21 issued by The Institute of Chartered Accountants of India. The consolidated financial statements form a part of the Annual Report.

Corporate Governance

Your Company has consistently been complying with the Corporate Governance Code prescribed by SEBI and a detailed report on Corporate Governance together with a certificate of compliance from the statutory auditors, as required by Clause 49 of the Stock Exchange Listing Agreement, forms a part of this Annual Report.

Directors' responsibility statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, your Directors confirm

statement In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, your Directors
217(2AA) of the Companies Act, 1956, your Directors confirm That in the preparation of the annual

That in the preparation of the annual accounts, the applicable accounting standards have been followed by your Company along with proper explanation relating to material departures, if any;217(2AA) of the Companies Act, 1956, your Directors confirm Having selected such accounting policies and applied

Having selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31 March 2011 and of the profit of the Company for the period under review;proper explanation relating to material departures, if any; That proper and sufficient care for the maintenance

That proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, if any, have been taken;

That the annual accounts have been prepared on a going concern basis.fraud and other irregularities, if any, have been taken; RBI regulations – compliance Your Company continues

RBI regulations – compliance

Your Company continues to carry on its business of Non-Banking Finance Company as a Non-Deposit Taking Company and follows prudent financial management norms as applicable and continues to progressively follow the internationally accepted accounting principles on revenue recognition, provisioning and

asset classification which are more stringent than the guidelines prescribed by the RBI. A detailed note is appended in Schedule

16 Notes on Accounts. The gross and net NPA’s stood at Nil and

Nil respectively. Your Company appended a statement containing particulars as required in terms of paragraph 13 of

Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 in Note 2 (xxvi), Schedule 16 Notes on Accounts and additional

disclosures required for NBFCs-ND-SI in terms of notification dated 1 August 2008 issued by the RBI in Note 2 (xxv) Schedule

16 Notes on Accounts.

Subsidiary

Magma ITL Finance Limited, a subsidiary of the Company and the Company’s joint venture with International Tractors Limited, manufacturers of Sonalika Brand of Tractors is registered with the RBI as a non-deposit taking NBFC.The Company has earned a PBT of Rs.11.71 crore for the year ended 31st March, 2011.

Magma Fincorp Limited

39
39

Directors’ Report

Information regarding the subsidiary, in accordance with the provisions of Section 212 of the Companies Act, 1956 is enclosed as an Annexure to this Report.

Directors

During the year, Mr. Satya Brata Ganguly was appointed as Additional Director by the Board of Directors at their meeting held on 1st July, 2011 w.e.f 1st april, 2011 as Non Executive Independent Director to hold office till the date of the Annual General Meeting .The Company has received a notice under Section 257 of the Companies Act, 1956 from the member of the Company proposing to appoint Mr. Satya Brata Ganguly as Director at the ensuing Annual General Meeting.

During the year, Mr. Ved Prakash Taneja, an Independent, Non– Executive Director, ceased to be the Director of the Company w.e.f 12 October, 2010. Mr. Taneja was also a member of the Audit Committee, Nomination and Remuneration Committee, Management Committee, Shareholders/Investors Grievance Committee and Fair Practice Committee of the Board. The Board places on record its sincerest appreciation for the invaluable guidance provided by him to the growth of the Company during his tenure as the Director of the Company.

During the year, Mr. Mayank Poddar and Mr. Sanjay Chamria were reappointed as Chairman and Vice Chairman & Managing Director w.e.f 1/7/2011 and 1/4/2011 respectively by the Board of Directors at their meeting held on 14th January, 2011 subject to the approval of the Shareholders.

Mr. Nabankur Gupta retires at the ensuing Annual General Meeting and being eligible offers himself for reappointment. Mr. Ravi Todi retires at the ensuing Annual General Meeting but has not offered himself for reappointment. Disclosures in respect of these Directors as stipulated under Clause 49 of the Listing Agreement are provided in the Report on Corporate Governance forming a part of the Annual Report.

Auditors

M/s. S. S. Kothari & Co., Chartered Accountants, Kolkata, bearing Registration No. 302034E retire at the conclusion of the forthcoming Annual General Meeting and have expressed their

40
40

Annual Report 2010-11

 
 

willingness to be reappointed. They confirmed that their reappointment, if made, would be covered within the ceiling specified under Section 224(1B) of the Companies Act, 1956.

Investor Education and Protection Fund

During the year under review, your Company transferred a sum of Rs.81,502/- to the Investor Education and Protection Fund (IEPF), the amount which was due and payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205A(5) of the Companies Act,1956.

Auditors’ Observations

Observations of the Auditors when read together with the relevant notes to the accounts and accounting policies are self- explanatory.

Statutory information

1)

Your Company does not have any activity relating to conservation of energy or technology absorption.

2)

The Company does not have any foreign exchange earnings. The foreign exchange outgo of the Company is furnished in Note No. 2 (xix), Schedule 16, Notes on Accounts.

3) Information in respect of employees of the Company who are in receipt of remuneration in excess of limits prescribed under Section 217(2A) of the Companies Act, 1956 is given in Annexure attached to the Report.

 

4)

The comments in the Auditors' Report read with Notes on Accounts (Schedule 16) are self-explanatory.

Appreciation

 

Your Directors would like to record their appreciation of the hard work and commitment of the Company’s employees, which resulted in the strong performance recorded for the year and warmly acknowledge the unstinting support extended by its bankers, alliance partners, and other stakeholders in contributing to the results.

 

For and on behalf of the Board

Kolkata

Mayank Poddar

Chairman

 

18th April, 2011

to the results.   For and on behalf of the Board Kolkata Mayank Poddar Chairman  

Annexure to

Directors’ Report

Annexure to Directors’ Report As amended and forming part of the Directors’ Report for the year

As amended and forming part of the Directors’ Report for the year ended 31 March 2011

Particulars of Employees under Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Amendment Rules, 1975 as amended vide notification no. G.S.R 289(E) dated 31st March, 2011.

1. Employed throughout the year and in receipt of remuneration aggregating Rs.60,00,000 or more per annum.

Name

Age

Qualification

Designation

Date of

Experience

Remuneration

Particulars of last employment, last post, employer

(in

and nature

commencement

(years)

(in Rs.)

years)

of duties

of employment

Ashutosh Shukla

48

FCA

Sr. VP & Chief Operations Officer

01-Oct-92

29

10,776,124

Consortium Finance Limited (erstwhile) - General Manager

Brahmajyoti Mukherjee

53

B-Tech from

Sr. VP & Chief People Officer

16-Aug-06

31

9,414,705

Hindalco Industries Limited - Vice President

IIT, PGDIE

Guru Prasad Pattanaik

51

ACA

Sr. VP & Chief Receivables Management

17-Apr-00

30

10,403,399

Nicco Uco Financial Services Ltd - Vice President

V Lakshmi Narasimhan

46

FCS, LLB,

Sr. VP & Chief Financial Officer

01-Nov-90

26

8,030,673

Consortium Finance Ltd (erstwhile) - General Manager and Company Secretary

PGDBM

2.

Employed for a part of the year and in receipt of remuneration aggregating Rs.5,00,000 or more per month.

 

Name

Age

Qualification

Designation and nature of duties

Date of

Experience

Remuneration

Particulars of last

commencement

(years)

(in Rs.) employment, last post, employer

 

of employment

Not Applicable

Notes:

1.Gross remuneration comprises salary, medical reimbursement, leave travel concession, housing, Company’s contribution to provident fund, pension and gratuity fund, monetary value of other perquisites computed on the basis of the Income Tax Act and Rules, leave encashment and performance bonus.

2. All appointments were made in accordance with the terms

and conditions as per Company Rules.

3. None of the above employee is a relative of any Director of the Company.

For and on behalf of the Board

Kolkata

Mayank Poddar

18th April, 2011

Chairman

Magma Fincorp Limited

41
41

Annexure to Directors’ Report

Statement as at 31 March 2011, pursuant to Clause 12 (Disclosure in the Directors’ Report) of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999

Employee Stock Option Scheme

The details of options as required by the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out herein below.

The Company instituted “Magma Employees Stock Option Scheme 2007” for the employees of the Company. The vesting options are 30 percent, 30 percent, 20 percent and 20 percent of the total options granted after 24, 36, 48 and 60 months, respectively, from the date of grant.

 

Serial

Description

Details

number

1

Number of options granted

17,54,000

 

Each option is equivalent to one equity share of face value of Rs.2 each of the Company

 

2

Pricing formula

Closing market price of the day immediately prior to the date of grant of option

3

Options vested

7,74,300

4

Options exercised as at the year end

5,51,750

5

Total number of Equity Shares of Rs.2 each arising as a result of exercise of options

5,51,750

6

Options lapsed as at the year end

4,63,500

7

Variation in terms of options

Nil

8

Money realised by exercise of options

Rs.1,98,63,000/-

9

Total number of options in force as at the year end

7,38,750

10

Employee-wise details of options granted to

 

(i)

Senior managerial personnel

Details in appendix

(ii)

Any other employee who received a grant in any one year of option amounting to 5 percent or more of the options granted during that year

Nil

(iii)

Identified employees who were granted options during any one year, equal to or exceeding 1 percent of the issued capital of the Company at the time of grant

Nil

11

Diluted earnings per share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS 20) 'Earnings per Share'

Rs.7.94

12

Method of calculation of employee compensation cost

The Company calculated the employee compensation cost using the intrinsic value method of accounting to account for Options granted.

13

Difference between the employee compensation cost so computed in 12 above and the employee compensation cost that shall have been recognised if it had used the fair value of the options

The employee compensation cost that shall have been recognised if the Company had used fair value of options is Rs.50.95 lac

14

Exercise price of the options

Rs.36/-

42
42

Annual Report 2010-11

 
  Serial Description Details   number 15 The impact of this difference on profits and
  Serial Description Details   number 15 The impact of this difference on profits and
  Serial Description Details   number 15 The impact of this difference on profits and
 

Serial

Description

Details

 

number

15

The impact of this difference on profits and on the EPS

 

Basic

Diluted

 

of the Company

Net income (Rs. in lac)

10,325.68

10,325.68

Add: Employee cost intrinsic value (Rs. in lac)

24.08

24.08

Less: Employee cost fair value (Rs. in lac)

50.95

50.95

Adjusted net income (Rs. in lac)

10,298.81

10,298.81

Earning per share

 

As reported (Rs.)

8.12

7.94

As adjusted (Rs.)

8.10

7.92

 

16

Fair value of each options based on black scholes

 

Rs.30.32

 

methodology

 

Assumptions

Risk free rate

7.67

percent

Expected life of options

4.80

years

Expected volatility

73.94 percent

 

Expected dividend

3.03

percent

 

APPENDIX

 

List of senior management employees to whom stock options were granted on 12 October 2007

 

Name of the employee

Designations

 

Stock options granted

 

Mr. Ashutosh Shukla

Senior Vice President

 

1,70,000

Mr. Brahmajyoti Mukherjee

Senior Vice President

 

1,70,000

Mr. V. Lakshmi Narasimhan

Senior Vice President

 

1,70,000

Mr. Guru Prasad Pattanaik

Senior Vice President

 

1,25,000

 

For and on behalf of the Board

 
 

Mayank Poddar

   

Chairman

Kolkata 18th April, 2011   Magma Fincorp Limited 43

Kolkata 18th April, 2011

 

Magma Fincorp Limited

43
43
 

Annexure to Directors’ Report

 
  Annexure to Directors’ Report  

Auditor’s Certificate as required under Clause 14 of the SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999

We have examined the books of account and other relevant records of Magma Fincorp Limited having its Registered Office at “Magma House”, 24 Park Street, Kolkata – 700 016 and based on the information and explanations given to us, we certify that in our opinion, the Company has implemented the Employee Stock Option Scheme in accordance with SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 and in accordance with the special resolution passed by the Company in the Extra-Ordinary General Meeting held on 5th June, 2007.

India Steamship House 21, Old Court House Street, Kolkata – 700 001 18th April, 2011

 

For S. S. Kothari & Co. ICAI Firm Registration No. 302034E Chartered Accountants (R. N. Bardhan) Partner Membership No. 17270

Statement of interest in Subsidiary Company

 

Pursuant to Section 212(1)(e) of the Companies Act, 1956

 

(in Rs.)

 

Name of the Subsidiary Company

 

Magma ITL Finance Limited

 

Financial year to which the accounts relate

 

31 March 2011

Holding company's interest –

   

– Number of shares held – Equity ( Rs.10 each)

 

1,84,99,400

– Extent of holding

 

74 percent

The net aggregate amount of subsidiary’s profit/(loss) so far as it concerns the holding company.

   

(a)

Dealt with in the accounts of the Company for the subsidiary’s financial year ended 31 March 2011

Nil

(b)

i) Not dealt with in the accounts of the Company for the subsidiary’s financial year ended 31 March 2011

 

5,70,72,727

 

ii) For previous financial years since it became a subsidiary

 

3,78,17,067

 

For and on behalf of the Board

 

Mayank Poddar

 

Kolkata, 18th April, 2011

 

Chairman

44
44

Annual Report 2010-11

 
44 Annual Report 2010-11  
Report of the Directors on Corporate Governance 1. Company’s philosophy on the Code of Governance
Report of the Directors on Corporate Governance 1. Company’s philosophy on the Code of Governance

Report of the Directors on

Corporate Governance

1. Company’s philosophy on the Code of

Governance

Magma pursues its long-term corporate goals on the bedrock of financial discipline, high ethical standards, transparency and trust. Enhancing shareholder value and protecting the interests of all stakeholders is a tradition at Magma. Every effort is made to follow best practices in all the functional areas and in discharging the Company’s responsibilities towards all stakeholders and the community at large.

2. Board of Directors

2.1 Composition and size

The Company has a judicious mix of Executive and Non-Executive Directors on its Board. At present, there are nine directors on the Board, with 3 (three) Executive Directors. The Chairman is an Executive Director and more than half of the Board (55.56%)

Name of Director

Category

Materially

Number

 

significant,

of shares

pecuniary or

held

business

in the

relationship with

Company

the Company

 

Board

Meeting

Attended

/held

Mr. Mayank Poddar

Promoter,

Executive

Nil

4/4

Executive

Chairman

Mr. Sanjay Chamria

Promoter,

Vice Chairman and

Nil

4/4

Executive

Managing Director

Mr. Shrawan

Promoter,

Vice Chairman

2,75,980

3/4

Kumar Todi

Non-executive

Mr. Ravi Todi

Promoter,

Joint Managing

2,10,060

2/4

Executive

Director

Mr. Neil Graeme

Independent,

Nil

4/4

Brown

Non-executive

Mr. Narayan

Independent,

Nil

4/4

K Seshadri

Non-executive

Mr. Nabankur

Independent,

Nil

4/4

Gupta

Non-executive

Mr. Kailash Nath

Independent,

Nil

4/4

Bhandari

Non-executive

Mr. Satya Brata

Independent,

Nil

2/2

Ganguly***

Non-executive

Mr. Ved Prakash

Independent,

Nil

2/2

Taneja****

Non-executive

– Nil 2/2 Taneja**** Non-executive   Whether No. of No. of Committee Sitting
– Nil 2/2 Taneja**** Non-executive   Whether No. of No. of Committee Sitting
 

Whether

No. of

No. of Committee

Sitting

Directorships

(other than Magma

Fees

in other

Fincorp Limited)

paid

Companies

in which Chairman

 

incorporated

/Member (**)

in India(*)

Director

Chairman