Digital loan platform with Cars24; To expand the used car loan book: Poonawalla Fincorp


Cars24, India’s leading e-commerce platform for used vehicles and Poonawalla Fincorp Ltd (formerly Magma Fincorp Limited), a systemically important non-bank finance company (ND-SI-NBFC), announced their partnership strategy for fast and transparent consumer financing on vehicles purchased from Cars24.

In this partnership, Poonawalla Fincorp Ltd will honor consumer loans from Cars24. In addition, both parties will participate in the risks and rewards.

In an interview with CNBC-TV18, Vijay Deshwal, CEO of the Poonawalla Fincorp group, shed light on this partnership and the prospects.

He said: “We see this as a strategic partnership. If we look at the overall used car finance landscape, there are around 70 lakh of used cars, which are sold every year. Of this total, only 17 percent go through the organized channel. Thus, this partnership, which is based on technology, product innovation and financing capabilities, aims to create a digital consumer lending platform, which will help car buyers and sellers access a platform. -unique form and have end-to-end digital data. journey. “

“For us, in terms of numbers, we have a pan-Indian used car finance franchise through which we distribute around 100 crore per month. We plan to add 15% of volumes through this strategic partnership, ”he said.

Regarding operating performance, Deshwal said: “We made a strategic acquisition of the former Magma Fincorp, where we inherited a large branch distribution network and a large collection network, which has approximately 290 branches across India. “

“The last four to five months after this acquisition have been a phase of consolidation and transformation for us, during which we have made significant investments in technological capabilities. We have invested in building the management team. We also considered realigning our debt financing franchise; we have significantly reduced our cost of funds, ”he added.

He added, “When you build your capacity, OPEXs, up to a point, are likely to stay high. However, the business has started to take off, when it comes to growth plans you will see as the increase occurs this OPEX ratio will start to look like what we budgeted for on our own. Obviously, we are looking at increasing assets under management with a very clear focus on operating profits and credit costs. “

Regarding loan growth, Deshwal said, “In terms of a growth trajectory, we have set ourselves an ambitious plan – an AUM target of 30% CAGR for the next three to four years and we are on the right track. for that.

Regarding the ownership of the promoters, he said: “Regarding the former promoters, if I can call between Mr. Chamria and Mr. Poddar, they now have a slightly less than 7% stake, and it will be entirely at them to decide. I have a feeling that as they look at the company’s growth trajectory, they might want to hold on longer. “

Deshwal added, “However, if there are opportunities for new developers and they are available, developers have already shared that they would be more than willing to buy more.”

(With text entries from PTI)

For a full management commentary, watch the video.

(Edited by : Dipikka Ghosh)

First publication: STI


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