Magma Fincorp appoints Adar Poonawalla as chairman, to be rebranded as Poonawalla Group company

Magma Fincorp has appointed Adar Poonawalla as its chairman as part of a management overhaul following the Poonawala-controlled Rising Sun Holdings acquiring a controlling stake in it.

Rising Sun invested Rs 3,456 crore 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, currently a 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 on Monday also reported widening of net losses to Rs 626 crore in the March quarter compared with Rs 35 crore loss in the year ago period on account of aggressive provisioning to cover stressed assets. The company's revenue also shrunk to Rs 446 crore from Rs 524 crore over the same period.

It cleaned 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% provisions against these accounts, leading to a rise in provision coverage ratio to 68.6% from 36.5% last year.

"The balance sheet has been strengthened significantly through the equity infusion, with the Tier1 capital adequacy ratio standing at 66.8%, and leverage at 1.3 times as on 15 May," the company said in a note.

Apart from one-time incremental write-off impact of Rs 274 crore, the company has created management overlay provisions of Rs 621 crore, aggregating to a one-time profit and loss charge of Rs 895 crore.

The Company said it has created capital buffers and opted for aggressive write off policies in line with a bank structure.