Magma Financial Structure

8/2/2019 Magma Financial Structure

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Profit & Loss - Magma Fincorp Ltd.

Mar'11 Mar'10 Mar'09 Mar'08 Mar'07

12 Months 12 Months 12 Months 12 Months 12 Months

INCOME:

Sales Turnover 800.32 648.79 579.30 443.01 265.31

Excise Duty 0.00 0.00 0.00 0.00 0.00

NET SALES 800.32 648.79 579.30 443.01 265.31

Other Income 0.00 0.00 0.00 0.00 0.00

TOTAL INCOME 847.53 702.98 625.63 471.77 278.38

EXPENDITURE:

Manufacturing Expenses 3.53 2.40 1.73 1.21 1.23

Material Consumed 0.00 0.00 0.00 0.00 0.00

Personal Expenses 136.11 104.84 99.36 63.65 40.14

Selling Expenses 71.75 50.74 47.17 2.23 20.69

Administrative Expenses 99.45 93.34 97.18 84.15 60.10

Expenses Capitalised 0.00 0.00 0.00 0.00 0.00

Provisions Made 0.00 0.00 0.00 0.00 0.00

TOTAL EXPENDITURE 310.84 251.32 245.45 151.24 122.17

Operating Profit 489.48 397.47 333.86 291.77 143.14

EBITDA 536.69 451.66 380.18 320.52 156.22

Depreciation 27.85 32.79 34.24 28.79 24.18

Other Write-offs 0.00 0.00 0.00 0.00 0.00

EBIT 508.84 418.87 345.94 291.73 132.03

Interest 338.13 316.25 285.36 214.81 82.01

EBT 170.71 102.62 60.58 76.93 50.02

Taxes 56.08 36.59 21.09 26.06 9.95


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Profit and Loss for the Year 114.63 66.03 39.48 50.87 40.07

Non Recurring Items -0.1 0.43 -0.4 -0.3 -8.67

Other Non Cash Adjustments 0.00 0.00 0.00 0.00 0.00

Other Adjustments 0.00 0.00 0.00 0.00 0.00

REPORTED PAT 114.43 66.46 39.04 50.54 31.40

KEY ITEMS

Preference Dividend 9.62 5.99 6.02 10.13 4.79

Equity Dividend 7.79 5.17 2.18 4.36 4.22

Equity Dividend (%) 29.99 23.75 9.99 19.99 24.92

Shares in Issue (Lakhs) 1,297.74 217.77 217.77 217.77 169.30

EPS - Annualised (Rs) 8.82 30.52 17.93 23.21 18.55

The P&L A/C page of Magma Fincorp Ltd. presents the key P&L A/c Ratios, its comparison

with the sector peers and 5 years of Profit & Loss Account Statement.

The Cash Flow Statement of Magma Fincorp Ltd.presents the key Cash Flow ratios, its

comparison with the sector peers and 5 years of Cash Flow Statement.

Cash FlowPrint

Particulars Mar'11 Mar'10 Mar'09 Mar'08 Mar'07

Profit Before Tax 170.50 103.04 60.13 76.59 49.96

Net Cash Flows from Operating

Activity-926.43 -1,096.00 -280.08 -766.66 -198.45

Net Cash Used in Investing Activity -6.89 60.42 32.87 -77.72 -35.81

Net Cash Used in Financing Activity 969.14 1,105.04 548.19 880.33 555.28

Net Inc/Dec in Cash and Cash

Equivalent35.82 69.46 300.98 35.95 321.02

Cash and Cash Equivalent - Beginningof the Year

968.46 899.00 598.01 562.06 241.04

Cash and Equivalent - End of the Year 1,004.28 968.46 899.00 598.01 562.06
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The Balance Sheet Page of Magma Fincorp Ltd.presents the key ratios, its comparison with the

sector peers and 5 years of Balance Sheet.

Balancesheet - Magma Fincorp Ltd.Print

Particulars Mar'11 Mar'10 Mar'09 Mar'08 Mar'07

Liabilities12

Months

12

Months

12

Months

12

Months

12

Months

Share Capital 185.34 137.88 137.88 137.88 166.26

Reserves & Surplus 536.80 326.71 272.78 242.77 179.85

Net Worth 722.14 464.59 410.66 380.65 346.11

Secured Loans 3,387.47 2,863.99 1,956.19 1,422.21 899.65

Unsecured Loans 1,020.94 703.10 517.06 488.54 118.55

TOTAL LIABILITIES 5,130.56 4,031.68 2,883.91 2,291.39 1,364.31

Assets

Gross Block 388.23 382.07 379.97 333.05 289.34

(-) Acc. Depreciation 201.10 174.11 141.77 108.66 80.12

Net Block 187.13 207.96 238.20 224.40 209.22

Capital Work in Progress. 0.00 0.00 0.00 0.00 0.00

Investments. 29.88 30.22 42.14 77.60 15.79

Inventories 4,283.92 3,181.76 1,980.27 2,262.84 1,240.24

Sundry Debtors 6.06 7.45 6.55 8.21 5.67

Cash And Bank 1,004.28 968.46 899.00 598.01 562.06

Loans And Advances 169.52 163.44 138.34 113.52 82.22

Total Current Assets 5,463.78 4,321.10 3,024.16 2,982.58 1,890.18

Current Liabilities 453.61 475.63 396.68 954.33 740.56

Provisions 96.63 51.97 23.91 38.86 10.32

Total Current Liabilities 550.23 527.60 420.59 993.19 750.88

NET CURRENT ASSETS 4,913.55 3,793.50 2,603.57 1,989.39 1,139.30

Misc. Expenses 0.00 0.00 0.00 0.00 0.00
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TOTAL ASSETS

(A+B+C+D+E)5,130.56 4,031.68 2,883.91 2,291.39 1,364.31

The Quarterly Results page of Magma Fincorp Ltd.presents the key result items, its comparison

with the sector peers and its previous 5 Quarterly Results.

Quaterly - Magma Fincorp Ltd.Print

Dec'11 Sep'11 Jun'11 Mar'11 Dec'10

INCOME:

Net Sales Turnover 267.05 241.34 210.39 266.37 216.41

Other Income -0.0 0.08 1.08 0.40 0.43

Total Income 267.04 241.42 211.48 266.76 216.85

EXPENSES

Stock Adjustments 0.00 0.00 0.00 0.00 0.00

Raw Material Consumed 0.00 0.00 0.00 0.00 0.00

Power and Fuel 0.00 0.00 0.00 0.00 0.00

Employee Expenses 34.42 35.70 38.56 39.66 31.86

Administration and Selling

Expenses0.00 0.00 13.85 0.00 0.00

Research and Development

Expenses 0.00 0.00 0.00 0.00 0.00


Other Expenses 41.03 26.17 7.41 62.68 32.25

Provisions Made 0.00 9.24 9.14 3.48 6.84

TOTAL EXPENSES 75.45 71.11 68.96 105.82 70.95


EBITDA 191.59 170.31 142.52 160.94 145.90

Depreciation 6.33 6.22 6.49 6.62 7.17

EBIT 185.27 164.09 136.03 154.32 138.73

Interest 168.55 137.88 114.91 91.61 92.54

EBT 16.71 26.22 21.12 62.71 46.18
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Taxes 5.43 7.64 6.86 19.85 15.40


Extraordinary Items 0.00 0.00 0.00 0.00 0.00

Prior Year Adjustment 0.00 0.00 0.00 0.00 0.00


Reported PAT 11.29 18.58 14.25 42.85 30.78

KEY ITEMS

Reserves Written Back 0.00 0.00 0.00 0.00 0.00

Equity capital 37.95 35.93 35.93 25.96 25.95

Reserves and Surplus 0.00 0.00 0.00 0.00 0.00

Equity Dividend Rate 0.00 0.00 0.00 0.00 0.00

Agg. Non-Promoter Shares(lacks) 1,258.00 1,257.32 1,269.41 757.46 757.46

Agg. Non-Promoter Holding (%) 66.30 69.98 70.67 58.37 58.37

Government Share 0.00 0.00 0.00 0.00 0.00

Capital Adequacy Ratio 0.00 0.00 0.00 0.00 0.00

EPS (Rs.) 0.59 1.03 0.79 3.30 2.37

The Half Yearly Results page of Magma Fincorp Ltd. presents the key Half Yearly result items,

its comparison with the sector peers and its previous 5 Half Yearly Results.

Half Yearly - Magma Fincorp Ltd.Print

Sep'11 Mar'11 Sep'10 Mar'10 Sep'09

INCOME:


Other Income 1.16 0.83 0.86 1.67 2.03

Total Income 452.90 483.61 363.72 387.78 315.23

EXPENSES


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Power and Fuel 0.00 0.00 0.00 0.00 0.00


Administration and SellingExpenses

13.85 0.00 0.00 32.51 22.85

Research and DevelopmentExpenses

0.00 0.00 0.00 0.00 0.00


Other Expenses 33.58 94.94 105.54 28.22 21.99

Provisions Made 18.38 10.32 4.58 24.14 15.88

TOTAL EXPENSES 140.07 176.77 141.36 137.86 113.08


EBITDA 312.83 306.84 222.36 249.93 202.15

Depreciation 12.71 13.79 6.78 15.92 16.87

EBIT 300.12 293.05 215.59 234.01 185.28

Interest 252.78 184.16 153.97 168.58 147.67

EBT 47.34 108.89 61.61 65.43 37.62

Taxes 14.50 35.26 20.81 23.70 12.88





Reported PAT 32.83 73.63 40.80 41.73 24.73

KEY ITEMS


Equity capital 35.93 25.95 25.87 21.78 21.78Reserves and Surplus 0.00 0.00 0.00 0.00 0.00


Agg. Non-Promoter Shares 1,257.32 757.46 753.21 109.61 109.91



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EPS (Rs.) 1.83 5.67 3.15 19.16 11.36

The Nine Month Results page of Magma Fincorp Ltd. presents the key result items, its

comparison with the sector peers and its previous 5 Nine Monthly Results.

NinemonthlyPrint

Dec'10 Dec'09 Dec'08 Dec'07 Dec'06

INCOME:


Other Income 1.30 2.90 1.37 26.32 5.26

Total Income 580.57 491.79 447.91 309.65 155.76

EXPENSES



Power and Fuel 0.00 0.00 0.00 0.00 0.00



Expenses0.00 0.00 40.55 78.68 43.00


Expenses0.00 0.00 0.00 0.00 0.00


Other Expenses 88.88 68.40 36.17 0.00 0.00

Provisions Made 21.15 26.46 22.35 0.00 0.00

TOTAL EXPENSES 205.02 174.01 169.86 124.99 66.94


EBITDA 375.54 317.78 278.05 184.66 88.82

Depreciation 21.23 25.01 24.36 21.05 17.05

EBIT 354.31 292.77 253.69 163.61 71.78
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Interest 246.52 230.21 204.75 112.05 42.26

EBT 107.80 62.56 48.94 51.56 29.51

Taxes 36.21 21.43 16.70 0.00 0.00





Reported PAT 71.58 41.13 32.24 51.56 29.51

KEY ITEMS


Equity capital 25.95 21.78 21.78 20.16 16.93



Agg. Non-Promoter Shares(lacks) 757.46 549.52 110.99 94.85 81.30




EPS (Rs.) 5.52 3.78 14.80 25.57 17.43

The Yearly Results page of Magma Fincorp Ltd. presents the key annual result items, its

comparison with the sector peers and its Annual Results for the last five years.

Yearly - Magma Fincorp Ltd.Print

Mar'11 Mar'10 Mar'09 Mar'08 Mar'07

INCOME:


Other Income 1.69 3.70 2.08 34.31 14.18

Total Income 847.33 703.01 625.48 471.43 278.33

EXPENSES
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Power and Fuel 0.00 0.00 0.00 0.00 0.00



Expenses0.00 55.36 0.00 0.00 0.00


Expenses0.00 0.00 0.00 0.00 0.00


Other Expenses 151.56 50.22 104.32 131.24 82.03

Provisions Made 24.63 40.02 41.51 0.00 0.00

TOTAL EXPENSES 310.85 250.93 245.76 195.28 122.18


EBITDA 536.48 452.08 379.73 276.15 156.16

Depreciation 27.85 32.79 34.24 28.79 24.18

EBIT 508.63 419.29 345.49 247.36 131.98

Interest 338.13 316.25 285.36 170.77 82.01

EBT 170.50 103.04 60.13 76.59 49.96

Taxes 56.07 36.58 21.08 10.94 9.94



Prior Year Adjustment 0.00 0.00 0.00 -15.11 0.00


Reported PAT 114.43 66.46 39.04 65.65 31.40

KEY ITEMSReserves Written Back 0.00 0.00 0.00 0.00 0.00

Equity capital 25.96 21.78 21.78 21.78 16.93




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Agg. Non-Promoter Shares(lacks) 757.46 109.61 110.99 110.99 79.67




EPS (Rs.) 8.82 30.52 17.93 30.15 18.55

The Capital Structure page of Magma Fincorp Ltd. presents the Authorized Capital, Issued

Capital, and Paid-Up Equity Capital of the company over the period.

Capital Structure - Magma Fincorp Ltd.

Period Instrument

Authorized

Capital

Issued

Capital - P A I D U P -

From To (Rs. cr) (Rs. cr)Shares

(nos)

Face

Value

Capital

(Rs.

Cr)

2010 2011Equity

Share35.0 26.0 129773550 2.0 26.0

2009 2010Equity

Share35.0 21.8 21777140 10.0 21.8

2008 2009Equity

Share35.0 21.8 21777140 10.0 21.8

2007 2008Equity

Share 35.0 21.8 21777140 10.0 21.8

2006 2007Equity

Share25.0 16.9 16929764 10.0 16.9

2005 2006Equity

Share25.0 14.4 14391992 10.0 14.4

2004 2005EquityShare

15.0 11.4 1000000 100.0 10.0

2004 2005Equity

Share15.0 11.4 600000 100.0 6.0

2004 2005Equity

Share

15.0 11.4 11374992 10.0 11.4

2003 2004EquityShare

15.0 11.4 11374992 10.0 11.4

2002 2003Equity

Share15.0 11.4 11374992 10.0 11.4

2001 2002Equity

Share15.0 11.4 11374992 10.0 11.4


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- The Company has been carrying on various business activities in manufacturing, trading and

financial services and has laid the foundation for emerging as a multi-divisional enterprise

specialising in diverse lines of business such as Financial Services covering leasing, hire-

purchase and bill discounting through a separate division as well as through an exclusive

Financial Services Company called Magma Leasing Limited (erstwhile) which was separately

incorporated for the purpose.

- The name of the Company was also changed from ARM Group Enterprises Ltd. to Magma

Leasing Limited, (August 24, 1993). The activity of manufacture and selling of Industrial Gases

has been subsequently discontinued by the Company.

- Another Company, Calcutta Credit Corporation Limited, was earlier merged with ARMGroup

Enterprises Ltd. in 1987. Calcutta Credit Corporation Ltd. was one of the earliest hire-purchase

companies in Eastern India having been incorporated in 1937.

2000 - The Company has signed an agreement with CDSL & NSDL for dematerialisation.

2003 -Members approved delisting of its equity shares from Kolkata Stock Exchange.

2004

-Magma has entered into a tie-up with the National Insurance Company Ltd (NIC) for extending

insurance cover to its customers

-MLL launches 'Magma Carisma' car loan scheme

2005

-Magma ties up with National Insurance to unveil co-branded product

2006 -Magma Leasing Ltd has appointed Mr Narayan Seshadri as an Additional Director of the

Company to hold office till the next Annual General Meeting of the Company.

2007

- Magma Shrachi Finance Ltd has informed that at the meeting of the Board of Directors of the

Company held on October 29, 2007, Mr. Ashish Moti Chugani has been appointed as the

Alternate Director to Mr. Neil Graeme Brown, Director of the Company w.e.f. October 29, 2007.

-Company name has been changed from Magma Leasing Ltd. to Magma Shrachi Finance Ltd.


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2008 - Once again company name changed from Magma Shrachi Finance Ltd. to Magma

Fincorp Ltd.

2010

- Magma Fincorp Ltd has informed that Mr. V. Lakshmi Narasimhan has been appointed as

Chief Financial Officer (CFO) of the organization with effect from April 01, 2010.

Management

Name Designation

Ashutosh Shukla Chief Operating Officer

Brahmajyoti Mukherjee Chief People Officer

Dinesh Chandna Chief Information Officer

G P Pattanaik Chief - Receivables Management

Girish Bhatia Company Secretary & Compliance Officer

Girish Bhatia Secretary

Kailash Nath Bhandari Director

Mahender Bagrodia National Credit & Risk Head

Mayank Poddar Chairman / Chair Person

Nabankur Gupta DirectorNarayan K Seshadri Director

Neil Graeme Brown Director

Sanjay Chamria CEO

Sanjay Chamria Vice Chairman & Mng.Director

Sanjay Nayar Non Exe.Non Ind.Director

Satya Brata Ganguly Director

Sumit Mukherjee National Sales Head (High-yield business)

Swaraj Krishnan Chief Executive Officer

V Lakshmi Narasimhan Chief Financial Officer


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Director ReportPrintMar2010 Mar 2011

The 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:

Financial results (Rs. in lac)

Year ended 31 March 2011 Year ended 31March 2010

Total income 84,732.98 70,300.89

Profit before interest and

depreciation 53,648.17 45,207.66

Less: Interest and finance

charges 33,813.00 31,624.96

Less: Depreciation 2,785.07 3,278.58

Profit before tax 17,050.10 10,304.12

Tax Expense 5,606.78 3,658.09

Profit after tax 11,443.32 6,646.03

Add: Surplus brought forward 10,191.97 6,677.91

Balance available forappropriation 21,635.29 13,323.94

- Statutory reserves 2,290.00 1,330.00

- General reserve 1,150.00 500.00

Provision for dividend

- On Preference Shares 961.53 599.28

- On Equity Shares 778.64 517.39

- Dividend tax 282.42 185.30

Balance carried forward to the

next year 16,172.70 10,191.97
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Net worth 72,214.16 46,458.69

Earning per equityshare (Rs.)

- Basic 8.12 5.46

- Diluted 7.94 5.45

Book value per equity share (Rs.) 43.36 32.00

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

have grown at 8.6 percent during FY 2010-11, as compared to 7.4 percentduring 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 monetarytightening 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 thefinancial 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 crorerecorded 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 croreachieved 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


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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.114.43crore in 2010-11.

Profitability parameters of the Company have shown significant

improvement during the year. RoA (return on average assets) hasimproved 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.

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 R2application with IRDA.

Dividend

Your Directors recommend a tax-free dividend of 30 percent, i.e. Rs.0.6per 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-ConvertibleRedeemable 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 PreferenceShares 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 RedeemablePreference 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 theperiod 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)


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Guidelines, 1999.The details of options granted and outstanding as on

31 March 2011 along with other particulars as required by Clause 12 ofthe SEBI (Employee Stock Option Scheme and Employee Stock Purchase

Scheme) Guidelines, 1999 and the Auditors Certificate required to be

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, theexisting 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 2,58,100live 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 (increasedfrom 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 nominalvalue 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/- eachhave 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 thenominal value of Rs.2/- each were issued and allotted under the scheme

ranking pari passu with the existing Equity Shares of your company.

Capitalissuances and redemptions

Changes in Share Capital

Equity Shares

During the year,the following changes were effected in the sharecapital 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 ) wereallotted 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


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following Sub division ), on a future date not exceeding 18 months from

the date of issue of such warrants in terms of provisions of SEBIGuidelines for

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 40,67,220Equity 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 wassub-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 into12,97,73,550 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


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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 ConvertibleRedeemable 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 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 RedemptionReserve.

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 SubordinatedPerpetual 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 consolidatedfinancial 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


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Your Company has consistently been complying with the Corporate

Governance Code prescribed by SEBI and a detailed report on CorporateGovernance 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 CompaniesAct, 1956, your Directors confirm

- That in the preparation of the annual accounts, the applicableaccounting standards have been followed by your Company along with

proper explanation relating to materia departures, if any;

- Having selected such accounting policies and applied them

consistently and made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of

the Company at the end of the financia year 31 March 2011 and of theprofit of the Company for the period under review;

- That proper and sufficient care for the maintenance of adequateaccounting records in accordance with the 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.

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 followthe 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 isappended in Schedule 16 Notes on Accounts. The gross and net NPAs

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) CompaniesPrudential Norms (Reserve Bank) Directions, 2007 in Note 2 (xxvi),

Schedule 16 Notes on Accounts and additiona disclosures required for

NBFCs-ND-SI in terms of notification dated 1 August 2008 issued by theRBI in Note 2 (xxv) Schedule 16 Notes on Accounts.

Subsidiary


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Magma ITL Finance Limited, a subsidiary of the Company and theCompanys 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.

For and on behalf of the Board

Kolkata Mayank Poddar

18th April, 2011 Chairman

Magma Fincorp Limited is one of the fastest growing retail asset finance company in India.It has a well-diversified product portfolio comprising Commercial Vehicle Finance, Car &

Utility Vehicle Finance, ConstructionEquipment Finance, Used Vehicle Finance

(Suvidha), Strategic Construction EquipmentFinance, Tractor Finance, SME Finance andInsurance (through third party arrangement).The Company follows an excellent credit

appraisal policy through well-laid processes,which helps to build up a quality asset base

over the years.

With a vision to become India.s Largest RetailFinancing Company, Magma continues itscustomised services, striving towards excellence in retail financing, garnering prosperity and

happiness to all.

Magma has implemented several initiatives directed towards building a strong financialinstitution with innovative processes and support structures in mission critical functions

like people, technology, customer relationships, branding and internal control.

.MILESTONE

1989: Magma Leasing Limited commenced operations1992: Merged with Arm Group Enterprises to strengthen its business

1996: Entered retail financing business for vehicles and

construction equipment

1998: Expansion of retail financing operations in Orissa and Chhattisgarh,thus expansion of network in East India

1999: Acquisition of Consortium Finance Ltd (CFL); expansion of networkacross 40 branches in North and East India2001: Strategic joint financing agreement with Citicorp

2003: Strategic arrangement with ICICI Bank

2005: Launched fee-based business - Insurance and Personal loan

2006: Rolled out two new products - Used Vehicle Finance (Suvidha) &Strategic Construction Equipment

25 August 2006: Magma Leasing and Shrachi Infrastructure merger


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announced; Magma also entered into a tie-up with Maruti Udyog

Limited, the country's largest carmaker, to finance Maruti cars2007: Merger and integration of Magma Leasing and Shrachi Finance

completed - pan-India footprint with 160 offices in 20 states and

asset base of over Rs 6,400 crore

August 2007: Magma and International Tractors Limited (ITL) entered intoa joint venture to form Magma ITL Finance Limited

August 2008: Underwent a major branding exercise, subsequent to which

the company was renamed Magma Fincorp Limited2009 : Entered into a tie-up with Ashok Leyland for financing of

commercial vehicles.

2009 : Magma inks JV with German insurer HDI Gerling to enter generalinsurance business.

2009 : Magma owns 7% stake in the newly formed Experian Credit

Information Company of India Pvt Ltd, the Indian Credit Information

Company (CIC) arm of the global information services company,

Experian.2010 : Entered into a tie-up with Caterpillar India to finance the latter's

entire range of construction and mining machines.

V I S I O N

To become Indias largest retail financing CompanyM I S S I O N

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

OUR CORE VALUESOpenness and transparency: We will foster honesty and frankness in all our dealings and

be clearly discernible to everybody we deal with.Integrity and credibility: We will act with the utmost intellectual and financial uprightness

and will be seen acting as such.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 CORPORATE PROFILE

Intellectual CapitalHuman resource is the key to the success of any financial services company. Being a

performance-driven, work-oriented organization, Magma has an eye for the best minds

in the industry and has created a pool of employees from diverse backgrounds,


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with various skill sets and experiences. The Company has developed a robust

performance measurement & evaluation system. Magma continuously undertakesnoteworthy measures to chart a tangible career growth of its team members.

The Company has been promoting people from within to take up the leadership

positions to chart a long term career for the performers.

Expeditious Technology InfrastructureSuccessful information management provides a critical competitive edge in the retail

financing business: be it cross sell, customer sourcing, credit assessment, portfolio analysis,

collection monitoring, or formulation of corporate strategy. Retail financing is also a processdriven activity, which requires its various units to comply with pre-defined processes. Sound

deployment of technology and its alignment with business strategy is an area where Magma

constantly seeks to keep ahead of the competition.Non-Performing Assets

Several initiatives are in place to improve portfolio quality and contain delinquency within

manageable limits: physical verification by dedicated Field Investigation officers at the

customer's place, strict compliance with credit processes, discipline in credit documentation

for all contracts, verification of customers business and financial track record etc. are alldirected at minimizing potential credit losses at the point of origination. Subsequently,

during the collection process, the Company engages an experienced field force for bucketwise monitoring of collections and any chronic defaults are further dealt through appropriate

legal actions.

Loyal CustomersMagma believes in sustainable partnerships and has always given priority to its customers.

interest. Its financing solutions are tailor-made to the customer.s business

and his capacity to pay. Well defined retail consumer target audience has

resulted in clear customer focus; transparent and standardised documentationhas shrunk turnaround time; the large network of offices ensures prompt and

efficient customer service; while continuous customer interaction and improved

quality of customer service results in repeat transactions with customers.

Strategic Partnerships

Magma protects the interest of its customers by financing products of only those manufacturerswhose brands are synonymous with quality, longevity, service and value for money. Magma.s

entrenched rural presence and semi-urban penetration . 20% of its network is present in

villages . make it a preferred partner for companies seeking a presence in these markets.The Company enjoys partnerships with various manufacturers across all three product

segments:

v For passenger cars and utility vehicles, it has forged alliances with Maruti, Hyundai,

Mahindra & Mahindra and General Motors;

v For commercial vehicles, it has partnered with almost all leading manufacturerslike Tata Motors, Ashok Leyland, Eicher, Bajaj and Volvo India;

v In the construction equipment sector, Magma works closely with JCB and Telcon,

which together have a dominant market share in the CE sectorCorporate Image Building

As Magma grows in size and scale, dissemination of knowledge about the Company and

its activities is of benefit to all its stakeholders and the larger community it operates in.Corporate branding helps in identifying and aligning the Company.s image with its vision


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and objectives. It also acts as a platform for the corporate to participate in and discharge

its wider social responsibilities.In this context, several initiatives are undertaken on a

sustained basis like Customer outreach programs,

Corporate advertising in business and trade publications,

Corporate image building by maintaining personal relationswith the media, Participation and sponsorship of corporate

events, Corporate social responsibility activities across

the country like health camp and eye check-up campfor truck drivers & helpers under the programme .Better

Health with Magma., Maintaining strong Investor Relations,

Media campaign to highlight Magma.s strength and

brand equity and other activities.

There are 3numbers bywhich we wouldlike our 2009-10performance tobe remembered.Net interest margin. Collection efficiency. Cost-to-income ratio.

Net interest margin

IN THE COMPETITIVE BUSINESS OF ASSETFINANCING, THE COMPANY PROFITABLE ACROSSALL BUSINESS CYCLES IS THE ONE WITH THEWIDEST NET INTEREST MARGIN.Net interest margin is the difference between theaverage cost that one pays for borrowed capitaland the average realisation that one derives from it.In a challenging 2009-10, Magma did not justprotect its NIM, but widened it. Magma chose themost challenging year in its existence to report itshighest NIM. What was a prevailing range of 3.5percent to 3.8 percent touched 5 percent for thefirst time in the Companys history.This improvement was a result of an increase in thecontribution of higher yield products, a larger

access to low cost funds based on superior assetquality and a more efficient treasury operation.

Magma Fincorp Limited 5

Net interest margin (%)06-07 3.7%07-08 3.8%08-09 3.6%09-10 5.1%


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How a higher NIMwas achieved

Increased the

proportion of high-yieldproducts_Reduced the averagecost of debt from banks_Borrowed low costand short-term fromthe mutual fundsmarket_Strengthenedcollection efficiency_Recovered 180-dayplusbucket debts(erstwhile NPAs)

COLLECTION EFFICIENCY

IN A BUSINESS WHERE WE UNDERWRITE RISK ANDNEED TO UNDERTAKE THIS CONSISTENTLY, SUCCESSIS DERIVED FROM AN ABILITY TO COLLECT OURDUES AT THE RIGHT TIME.Collection efficiency is a term that describes just howwell we do this.In a buoyant 2007-08, our collection efficiency was97.0 per cent. In a challenging 2008-09, ourcollection efficiency improved to 97.8 per cent. In avolatile 2009-10, we surprised industry observers bystrengthening our collection efficiency even furtherto 99.8 percent. This was probably the highestcollection efficiency achieved by any Company inour sector in the country.This performance was creditable when onerecognises that this improved collectionefficiency was achieved on volumes inexcess of Rs. 4,000 crore. Besides, thecollection efficiency was reported on acombination of existing and acquiredportfolios, the latter being particularlychallenging.

Collection efficiency (%)06-07 96.807-08 97.008-09 97.809-10 99.8

COST TO INCOME RATIO

IN A BUSINESS THAT APPEARED TO BE IN DANGEROF SHRINKING FOR A PART OF 2008-09 AND2009-10, IT BECAME IMPERATIVE TO RIGHT-SIZEONES COST STRUCTURE WITH THE OBJECTIVE TOSTAY PROFITABLE ACROSS ALL BUSINESS CYCLESAND INSPIRE THE CONVICTION THAT EVERY RUPEE


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SAVED IS TWO EARNED.This is precisely what Magma did when theslowdown started.The Company enhanced awareness among itsmembers regarding the need to stay lean, enrolledthem actively in the exercise of cost reduction andenabled them to scrutinise every cost element to

reduce expenses.Magmas operating costs declined from 32.7percent of revenues in 2008-09 to 30 percent in2009-10

Magma Financial Structure

Documents