Serum Institute's Adar Poonawalla appointed chairman of Magma Fincorp

Vijay Deshwal, currently with ICICI Bank as its business head, will take charge as CEO of Magma Fincorp in July

As a part of the management overhaul, Adar Poonawalla, who acquired a controlling stake in Magma Fincorp for Rs 3,456 crore through Rising Sun Holding, has been appointed chairman of the company by the board of directors.
 
Poonawalla is also the chief executive officer of Serum Institute of India.
 
Vijay Deshwal, currently working at private sector lender ICICI Bank, as its business head, will take charge as the chief executive officer (CEO) of Magma Fincorp in July. He will also be the group CEO of Poonawalla Group’s financial services business. The company has also appointed Abhay Bhatuda as managing director (MD).
 
Magma has reported a loss of Rs 625.9 crore at the end of March compared to loss of Rs 35 crore a year ago. The company has reported total income of Rs 587.14 crores during the period ended March 31, 2021 as compared to Rs 617.62 crores during the period ended March 31, 2020.
 
The company has reported loss before tax to the tune of Rs 749 crore in FY21, due to aggressive provisioning for stressed assets. It has provided in full and wrote off all accounts in the 90-plus days past due (DPD) bucket in the SME lending business, 180+ DPD bucket in the vehicle finance business, and 730-plus DPD in the affordable housing business.
 
“Apart from one-time incremental write-off impact of Rs 274 crore, the company has created management overlay provisions of Rs 621 crore, aggregating to a one-time profit and loss charge of Rs 895 crore”, the company said.
 
Accordingly, the gross stage 3 assets and net stage 3 assets have declined to 3.7 per cent and 1.2 per cent the end of March quarter. And, the provision coverage ratio of the lender has gone up to 68.6 per cent from 36.5 per cent last year.
 
The management is of the opinion that with such aggressive provisioning the company is well prepared to deal with the impact of the second wave of the pandemic.
 
"As the second wave of Covid-19 is subsiding, the new management is expected to drive business acceleration. The rebranding of the company as a Poonawalla Group firm is underway. The company’s cost of funds is expected to fall in line with the industry best, along with resultant improvement in credit rating and progress towards resilience under the Poonawalla brand", the company said.