Kolkata-based Magma Fincorp Ltd plans to set up a 100 per cent subsidiary for housing finance. The company will soon apply for a licence to the National Housing Bank, according to Mr Sanjay Chamria, Vice-Chairman and Managing Director, Magma.

“We plan to venture into the housing finance segment. Our primary focus will be on affordable housing. We will soon apply to NHB for a licence,” Mr Chamria said at a press meet to announce the company's annual performance here on Friday.

This apart, Magma also plans to enter into the loan against gold business shortly. When asked about fund infusion required for supporting its new business segments, Mr Chamria said: “We have a sizeable balance-sheet to take care of our foray into these new business segments.”

The company currently provides finance for cars, commercial vehicles, construction equipment, used commercial vehicles, tractors and small and medium enterprises.

Results

Magma posted a 44 per cent drop in net profit to Rs 25 crore for the quarter ended March 31, 2012, as compared with Rs 45 crore during same period last year. Disbursements during the quarter, however, grew by 28 per cent to Rs 2,509 crore.

According to Mr V. Lakshmi Narasimhan, Chief Financial Officer, Magma, the drop in profits is mainly on account of a shift in the company's business strategy.

“From the beginning of fiscal 2011-12, we have altered our accounting policy pertaining to recognition of gain on securitisation. We now accrue the income and expenses over the tenure of the loan contracts, as opposed to the upfront recognition of income,” he said.

The profits for the year ended March 31, 2012, dropped by 36 per cent to Rs 78 crore.

Net interest margins shrunk to 4.33 per cent (4.97 per cent) during the period under review. “Margins contracted due to increase in our cost of funds and our inability to pass it on to customers. We hope to improve our margins to 4.5 per cent this fiscal,” Mr Chamria said.

>shobha@thehindu.co.in

Related Topics