Magma Fincorp, one of India's leading non-banking financial companies (NBFCs), has seen some fund action as two Mauritius-based funds -- Laurus Mauritius sold 3.33 percent stake and Indium V (Mauritius) sold 2.03 cr shares.
Speaking to CNBC-TV18, Kailash Behati, CFO of Magma Fincorp said that there was a significant drop in collections post demonetisation, in the months of November and December. However, January onwards it has been improving.
"Demonetisation problem is over and the company has returned to near normal," he said.
Since the rural economy was impacted a bit more due to demonetisation, there were delays in payments in the tractor segment, he said. Tractor segment forms 20 percent of the company's overall portfolio.
On the loan growth, he said "Loan book for the current quarter will remain flat but we expect the loan book to grow between 7 and 10 percent for the next quarter", he further added.
The company has taken approval for selling part of its assets that have been non-performing (NPA) for two years.
Below is the transcript of Kailash Behati's interview with CNBC-TV18.
Latha: Primarily are the demonetisation blues over, can you broadly describe how Q4 turned out vis-à-vis Q3?
A: Whether the demonetisation problem is over, yes, it is over. We have returned to near normal. We had seen a significant drop in the months of demonetisation that is November and December and January onwards it has been improving month-on-month. So January was probably one of the best months in the year, February was even better and March -- up till now three weeks the provisional trends are significantly better. So collections are on track.
As far as disbursement is concerned, Magma specific, we have been having the issue of somewhat high NPAs mainly because 20 percent of our portfolio is tractor portfolio. The equated monthly instalments (EMIs) for tractor loan are restructured, which means that the EMIs are linked to the harvest, rabi and kharif. Rabi harvest in the months of May and June and kharif in the months of November and December. Unfortunately, November and December happened to be demonetisation months and therefore there were significant issues with the tractor loans in the months of November and December.
Fortunately, the kharif crop was very good and the money for kharif crop has reached the farmers and we see significant recovery in the months of January, February and even in March.
Sonia: Can you give us some numbers? In the quarter gone by, your disbursements were around Rs 1,700 crore or so, slightly lower than the quarter before, going ahead because things have improved what kind of disbursement growth are you looking at?
A: In the months of January and February, we had lower disbursements. The overall disbursements would be in the range of about Rs 1,000 crore and in March we see that we are returning to near normal. So probably the quarter as a whole, this quarter will be similar to what we have achieved in the months of October, November, December.
Anuj: You are also intending to sell down some of your bad loans, how is the NPA picture going to look like from hereon?
A: We have taken approval for selling off a part of our NPA portfolio. We are primarily looking at selling the portfolio with more than 730 bucket which means that it has been NPA and it is more than two years since we have recovered from them. Therefore these are pretty hard buckets which we intend to sell-off within this quarter. The discussions, negotiations are on at this point in time. Post this sell, our GNPA which was at 9.9 percent as on December 31, we expect it to fall to below 7 percent. There will be about 30 percent reduction in GNPAs.
Sonia: You did not give us a number on loan growth. Your loan book stands at around somewhere about Rs 17,000 crore or so. It has been tepid for a very long time. What kind of loan growth would you be looking at?
A: In the current quarter, our loan book will almost remain flat. There would not be any growth in this quarter but in the next year we expect that the loan book should grow between 7 percent and 10 percent.
Latha: You had used the RBI dispensation to not classify loans, which were not repaid within 90 days.
A: Yes.
Latha: How much did you have to use the dispensation and do you see that loans, have they come back in the current month?
A: We had used the RBI dispensation only for tractor loans. The reason was that tractor had November and December as bullet EMI months. Therefore it is quite sizeable instalment and the farmers were not able to pay. The total dispensation if I take absolute number was about Rs 103 crore and we have recovered in the months of January and February about 40 percent of this amount and March is going far stronger than even February. So we hope to recover almost 70-80 percent of the amount for which we have taken dispensation. The balance would be Rs 20-30 crore so that impact will not be very significant.
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