Adar Poonawalla on Monday (May 31, 2021) took over as chairman of Magma Fincorp, a Mumbai-based non-banking financial company. The appointment follows the acquisition of controlling stakes in Magma through an equity fusion of Rs 3,456 crores in May 2021 by Rising Sun Holdings.
Poonawalla is also the CEO of Pune- based Serum Institute of India, the world’s largest vaccine manufacturer.
With 60% shares owned by Rising Sun Holdings, Magma Fincorp is now a part of the Poonawala Group. The rebranding of the company as a Poonawalla Group Firm is underway.
The company has also appointed Abhay Bhutada as the Managing Director and Vijay Deshwal as the CEO of Magma Fincorp from July 2021. Deshwal, a professional banker with a two-decade track record will also be the group CEO of Poonawalla Group’s financial service businesses.
“We are confident that Vijay Deshwal, with his extensive experience and knowledge across various facets of banking and financial services, will drive the transformation and charter a new phase of growth for the amalgamated entity under the brand of Poonwalla,” Abhay Bhutada, Managing Director, Magma Fincorp, said in a statement.
“Having handled pan-Indian financial institutions including NBFCs for over 6 years, Mr. Deshwal has a wide understanding of various asset classes and the cyclicity of these businesses. He had previously headed debt syndication business for ICICI Bank for over five years”, the company release added.
Magma Fincorp is a financial conglomerate offering a variety of financial products such as commercial finance, Agri finance, SME finance, mortgage finance, and general insurance. The company is focused on the rural and semi-urban sectors with widespread coverage and presence across 21 states and 298 branches. Magma’s customer base has crossed 5 Billion and manages a loan book of over Rs.15,000 crore.
Covid has impacted the company and their loss before tax for the financial year of 2021 stood at Rs.749 crore. The company expects some recoveries from written-off contracts through legal actions taken against defaulting customers which would flow into their income in subsequent quarters. The management is confident that with provisions buffers and stringent write-off policies, it is adequately prepared to deal with the potential impact of the ongoing second wave of Covid in the financial year 2022.
In an investor presentation, the company stated that the equity fusion has significantly strengthened their balance sheet with the capital adequacy ratio increasing to 66.8% and with leverage standing at 1.3 times as of May 15, 2021. The changes will reflect the company’s transition into the next phase of growth and the ongoing commitment to achieve the highest standard of corporate governance.
As the second wave of Covid seems to be subsiding, the new management is expected to drive business acceleration “We have outlined core strategic pillars of Magma 2.0, laying out a clear and focused direction for the company. Magma 2.0 would be a professionally run organization under a new leadership team fully supported by the existing leadership, capitalize benefits from a large capital base, and stronger parentage. There would be early recognition and tackling of asset quality challenges with accelerated write-offs and buffer provisioning, robust ALM profile, risk management technology, and data analytics”, Abhay Bhutada said.
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