15 December 2019

Interview-Sumit Mukherjee (Magma Fincorp)

Our strategy to tie-up with OEMs will be followed in bC India 2014

 

Established in 1989, the journey of Magma Fincorp has been momentous in the financing sector. The financier today is an active contributor to equipment financing, commercial vehicles, used vehicles, auto lease, SME, housing and insurance segments. SUMIT MUKHERJEE, HEAD PRODUCTS AND PROGRAMS, MAGMA FINCORP  offered his insights about the company’s growth strategies to CONSTRUCTION OPPORTUNITIES .

 

The construction equipment industry is expected to increasingly get busy, with the Indian government now aiming to fast track infrastructure projects. How is Magma Fincorp planning to explore these opportunities?

Magma Fincorp has equipment financing as its core business. The business of construction equipment financing as a whole was impacted due to the double digit de-growth in primary sales. The overall industry slowdown also had its impact on our business activities. However, Magma Fincorp is still positively forging ahead through its diversified portfolio of commercial vehicles, tractors, used equipments and housing segments.   Considering these evolving opportunities re-emerging through the infrastructure push, we, as a firm involved in equipment financing, are more than happy to participate in the next round of infrastructure growth, which the industry pundits are expecting. We are also working very closely with equipment manufactures in leveraging each other’s strengths to improve our business volumes.

 

Tell us about your current portfolio in relation to construction equipment financing along with details of the business model you follow? Could you name some of the equipment players you have supported? 

We have seen our delinquencies go up in the past 18 months; however the increase this time is a cause of concern.  Due to the prevalent conditions, customers are finding it very difficult to deploy their equipment. Magma Fincorp has positioned itself and outlined operational strategies as per the market dynamics. Today, Magma Fincorp is a leading NBFC involved in the equipment financing business. Apart from equipment financing we have also established our presence in the area of commercial vehicles, tractors, used equipment and housing segment. We have been closely associated with industry majors in the construction equipment business. To name a few - JCB, Komatsu, Telcon , Hyundai , Escorts etc. are some of the original equipment manufacturers (OEMs) with whom we have closely worked with.

 

Please brief us about your offerings to the industry under various schemes? What is the support offered by Magma Fincorp for purchase of rental equipments?

Our financing options are offered on standard terms to the customers, wherein the pay back tenures for customers range from 3-5 years. EMIs generally is started after 30 days, however in some cases (during monsoons) owing to the challenging operational conditions, we allow our customers to pay the first EMI after 60-90 days. If the customer chooses to adopt such pay back patterns, then he can opt for bundling insurance in the package. This ultimately enables in reducing the burden and the customer can manage insurance for the full tenure by paying a small amount every month. No interest is charged upon the customer for such bundling packages.  

A large part of the disbursement we do is focused towards the retail segment who do not have contracts and rent out their equipment on hourly basis. With the evolving opportunities, we see immense potential in these segments. Magma has been traditionally a strong player in the rental segment and will continue our focus to fund such customers. In addition, Magma also provides loans for the entire range of used commercial vehicles varying from small commercial vehicles to tractor trailers.

 

Give us a sense of the challenges faced by construction equipment finance providers and your strategies to raise Magma Fincorp’s business profile? 

Cost of credit, i.e. losses have been particularly severe this time, which is one amongst the key challenges faced by equipment financiers. Additionally, the market for used assets has also come down and has posted a decline of 10-20 per cent. Due to this situation, customers who are not able to deploy their assets are also not able to dispose their respective assets. The concern over higher interest rates, which was witnessed in the past few months, has already been offset with decrease in diesel prices. Currently, we have maintained a cautious approach in our lending strategy and are focusing on customers with proven track records and established ability to deploy their assets.

 

What are your plans and expectations from the bC India show 2014?

Owing to the prevalent economic and market uncertainties, we expect the response to be muted. Magma has focused its strategy on tie-ups with original equipment manufacturers (OEMs) in offering special schemes during major industry exhibitions. The same strategy will be followed in bC India 2014.




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