Magma Fincorp elevates Adar Poonawalla as its new Chairman
Magma Fincorp Limited has appointed Adar Poonawalla as their chairmen as part of a management renovation following the Poonawala controlled Rising Sun Holdings acquiring a domineering stake.
Rising Sun invested 3,456 crores in the non-bank lender earlier this month. Magma will soon be rebranded as Poonawalla Group Company. The lender has also appointed Abhay Bhutada as its managing director and Vijay Deshwal as chief executive officer.
Deshwal is the business head at ICICI Bank, will assume charge at Magma from the first week of July. He will also be the Group CEO of Poonawalla Group’s financial services business.
Magma today reported widening of net losses to 626 crores in the March quarter compared with 35 crore loss in the year-ago period on account of aggressive provisioning to cover stressed assets. The company's revenue also shrunk to 446 crores from 524 crores over the same phase.
It cleared its balance sheet by writing off all default accounts beyond the 90 days past due in the SME lending business, beyond 180 days past dues in the vehicle finance business, and over 730 days past dues in the affordable housing finance business. It has also made 100 percent provisions against these accounts, leading to a rise in provision coverage ratio to 68.6 percent from 36.5 percent last year.
The Company, states, "The balance sheet has been strengthened significantly through the equity infusion, with the Tier1 capital adequacy ratio standing at 66.8 percent, and leverage at 1.3 times as on 15 May."
Based on a one-time incremental write-off impact of 274 crores, the company has created management overlay provisions of 621 crores, aggregating to a one-time profit and loss charge of 895 crores. The Company said it has created capital buffers and opted for aggressive write-off policies in line with a bank structure.