The Hindu Business Line : Magma Leasing clears preferential allotment

THE members of Magma Leasing Ltd, at a specially convened EGM here today, gave their approval to the company's proposed preferential allotment of 38,00,000 equity shares of Rs 10 each to five entities (a combination of institutional investors and high net worth individuals), at an issue price of Rs 96 per share (including premium of Rs 86), to raise Rs 36.48 crore.

The shareholders also okayed the resolutions to increase the authorised capital to Rs 100 crore, from the existing Rs 35 crore, and allowing the board to issue and allot shares/convertible securities to investors up to an amount not exceeding Rs 500 crore.

Talking to Business Line after the EGM, Mr Sanjay Chamria, Managing Director, said the allotments would be completed within the next 15 days, by August 6, as per SEBI guidelines on preferential issues.

He said post-allotment, the joint promoter holding (of Mayank Poddar-Sanjay Chamria) will come down from the existing 75.90 per cent to 56.89 per cent.

The paid up equity will go up by only Rs 3.8 crore, as the balance would be on the premium account, he pointed out. Magma has been advised by the Mumbai-based Enam Financial Consultants.

The five investors are the Mumbai-based Sonata Investments Ltd (a corporate investors), which will be allotted 25,50,000 shares, ICICI Bank Ltd (6,90,000), India Capital Fund (3,80,000), India Institutional Fund Ltd (80,000) and Lata Bhansali, high net worth individual (4,00,000).

Mr Chamria said the investor profile was a clear indication of investor community's faith in Magma's strengths as one of the fastest growing NBFCs in its chosen segment of retail financing. "Actually, this puts the onus on us to perform even better in this competitive environment, and further broadbase operations."

Magma, which in the last 10 years has not chosen this route to raise fresh capital, has planned to emerge as one of the top players in the retail finance (vehicles & construction equipment) space in the country by 2007, said Mr Chamria.

"We are hard-pressed for capital, even though comfortably placed on the capital-adequacy front as per RBI norms, especially with our new business model which entails substantial additions to our existing branch network, which now stands at 56."

The company achieved as an all time high disbursal of Rs 1,371 crore in 2004-05, up 58 per cent from the Rs 867 crore in the previous fiscal.

Mr Chamria said Magma had a large presence in the rural and semi-urban markets, as 66 per cent of the company's business was accounted for by this segment.

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