It comes as a pleasant surprise to see Sanjay Chamria, Vice-Chairman and MD of Magma Fincorp, sitting in a nondescript cubicle at the end of a huge hall that has a hundred young employees.

The shift to an ‘open office’ environment took a bit of time to adjust for Sanjay – it meant giving up the privacy of a cabin as well as having the entire office watch him through his work day. But there have been benefits, too – not the least being the feeling of getting closer to the buzz as well as letting the company staff know that he means business. This is only one of the more visible changes that have happened in the past two years at Magma Fincorp.

Since December 2015, a business process re-engineering (BPR) exercise is on. Like all such exercises, it has meant pain in the short term. At its core, it involved dismantling Magma Fincorp’s product verticals specialisation at branch offices. Typically, there were different salesmen for selling a tractor finance product or a commercial vehicle loan.

While this may have helped to some extent initially, it was not the optimum method of using human resources – especially in remote locations in the 2,000 taluks and rural towns where most of Magma’s customers reside. Besides, their presence was unevenly distributed and they often travelled from nearby towns, which affected the frequency of contact with customers.

One element of the BPR exercise involved getting its field staff to do cross-selling of products, or to put it simply, get them to sell everything. And not merely sell, but do the collections of loan repayments as well, which was handled by separate staff earlier. Along the way there was some tech-empowerment by providing all of them with tablets so that they could check the customer’s credentials (with a quick look at their credit bureau records) and let them know their eligibility.

Wider reach

The 5,000-strong field force will also be based in these taluks now, rather than travelling from nearby towns. This will enhance dealership and customer connect and will also enable them to cover a wider area than before. “These changes have made a tremendous difference in efficiency and effectiveness,” said Sanjay Chamria, MD & Vice-Chairman of Magma Fincorp. “The full benefits will be visible in the next two years,” he said.

There was, of course, some predictable resistance from the field force. Salesmen refused to do collections – those who did collections said that sales was not their bread and butter. There was some attrition, said Sanjay. He said that it was explained to the staff that this was the way chosen and those who could not adjust could leave.

Along the way, Sanjay has also beefed up capital, raising ₹500 crore last month from a bevy of institutional investors, such as mutual funds and insurance companies. The capital adequacy ratio is now at more than 25 per cent.

What was the need for capital now? Sanjay explained that the capital-raising exercise with institutional shareholders had helped improve the liquidity of the stock as well as provide the company with access to debt funds. Besides, he said, it is better to raise capital when it is available rather than go for it when one is in dire need. The company has primed itself for a growth path, having done a considerable bit of clean-up of its books and strengthening the processes and procedures during the past two years.

After 11 quarters of de-growth, which saw its assets under management (AUM) come down by ₹4,500 crore from ₹19,500 crore three years ago, the company showed a growth in the last quarter, and took its AUM up by ₹500 crore to ₹15,500 crore. It expects to grow its AUM by at least ₹2,000 crore this fiscal. There will be greater focus on three products (used assets, tractors and SME working capital), where both yields and net interest margins are high, said Sanjay. As part of the BPR exercise, Sanjay has also stepped back from day-to-day operations (which are now run by three CEOs) to focus more on strategy and improving customer connect.

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