Magma Fincorp Ltd, now renamed Magma Fincorp Ltd, expects about 43 per cent rise in disbursement in the present fiscal, even though company expects a marginal slowdown in the commercial vehicle lending due to slow industrial growth in the beginning of the year.
Last fiscal, the company had disbursed Rs 3,512 crore, out of which the commercial vehicle loan was Rs 1,387 crore, accounting for 39.5 per cent of the total disbursement.
The disbursement quantum grew by 20.4 per cent in 2007-08 over the previous year.
In the first quarter of the present fiscal, commercial vehicle lending came down to 33 per cent of total disbursements.
“The incremental disbursement in the first four months of the year has been low compared to the last year. The company has spread its lending portfolio in other products too. The slowdown in the industrial production has also been a factor for lower disbursement,” said Sanjay Chamria, vice chairman and managing director, Magma Fincorp Ltd.
The company would continue to focus lending in the priority sector in the rural and semi urban locations, said Chamria. About 30 per cent of the company's network is in villages.
The company has also entered into a joint venture agreement with Sonalika tractors, for financing tractor purchases in the rural areas. The company's total disbursement in the segment in 2007-08 was Rs 14.53 crore, corresponding to 497 tractors. The company focused on small farmers and the average loan size of Rs 2.92 lakh.
Chamria said, the company was optimistic on tractor sales, which was expected to grow on account of strong governmental initiatives to improve agricultural productivity. Over the last year, rising interest rate and oil prices, along with plateauing freight rates have dented the demand for commercial vehicles, said the latest annual report of the company.
According to the report, while low cost commercial vehicles recorded a growth of 12.3 per cent in the last fiscal, the high cost and low cost vehicle segments registered a negative growth of 1.7 per cent. The overall commercial vehicle segment grew by just 4.1 per cent in 2007-08, against 33.28 per cent in the previous year.
The company has a market share of around 7 per cent in the commercial vehicle segment.
With tier II and III cities accounting for major customer base for Magma Fincorp, Bihar and Jharkhand accounting for 10.32 per cent client base in the commercial vehicle segment.
It may be mentioned, the index of industrial production (IIP) went up 5.2 per cent in the first quarter of the current fiscal, compared to 10.3 per cent in Q1 2007-08.
In the personal loan segment , the company would put on suitable filters for unsecured loans, and the major focus of the company would be lending to the small and medium enterprises, said Chamria.
However, the company is bullish on passenger cars and multi-utility vehicle. It increased its market share in the new car financing from 1.57 per cent in 2006-07 to 2.70 per cent in 2007-08. Last fiscal the total disbursement in the car business was Rs 893 crore, accounting for 25 per cent of the total disbursement.
