Magma Fincorp aims to grow loan disbursement by 50% in FY12

He also stated, "This year, we target to keep the net interest margins (NIMs) between 5-5.25%."

Below is the verbatim transcript of the interview. Also watch the accompanying video.

Q: There have been reports that you are targeting about 50% growth in loan volumes this year. Can you detail your expansion plans?

A: This is our guidance that we put out in the beginning of this financial year. This is the context in which we raised capital from KKR and IFC. Last year, we ended the year with disbursements of 5,415 and this year, we intend to grow that by 50%. Last year, we opened by about 20 branches. We are sitting on 172 locations this year and there is an expansion of 20 odd branches during this year to be completed before the second half. This gives us the confidence of growing disbursements by about 50% during this financial year.

Q: What about margins? Do you expect pressure? What are the kinds of NIMs are you looking at?

A: We are definitely seeing margin pressure coming in. Last year, we ended the year with 5% net interest margin. This year, we target to keep it between 5-5.25%. In the background, we have three high yield products which is the tractor, used commercial vehicles and SME. The contribution of this product was 19% last year and it is expected to grow to 25% during this year. This growth plus the fact of passing on the incremental costs to the customers should get us to the place of 5-5.25% NIM by the end of the year.

Q: Can you breakdown the credit growth? How is it looking in terms of individual sectors? For commercial vehicles, it has come down compared to last year.

A: As far as our disbursements are concerned, the tractor looks quite robust and it has grown quite well. The car segment, which is a personal use and multi-utility, has also grown quite well. Commercial vehicles are growing, but not the way that it was growing in the last year. As of now, our growth comes from tractor segment, car segment, multi-utility vehicle segment and used commercial vehicle segment.

Q: What do you think about capital raising? Are you done with capital raising? Do you meet your capital requirements? There was a QIP which you did. How is it looking now?

A: It was not a QIP. We did a private equity infusion about Rs 236 crore from KKR and Rs 202 crore from IFC Washington. They should see us through for close to about two years from now. We are not looking at any capital infusion in the near future.