Cars24, India's leading e-commerce platform for pre-owned vehicles and Poonawalla Fincorp Ltd (Formerly known as Magma Fincorp Limited), a non-deposit taking systemically important non-banking finance Company (ND-SI-NBFC), have announced their strategic partnership for quick and seamless consumer financing on vehicles bought from Cars24.
In this partnership, Poonawalla Fincorp Ltd will fulfill consumer loans originating through Cars24. Additionally, both parties will partake in the risk and rewards.
In an interview with CNBC-TV18, Vijay Deshwal, Group CEO at Poonawalla Fincorp, shed light on this partnership and the outlook.
He said, “We are looking at this as a strategic partnership. If we look at the overall landscape of pre-owned car financing, there are about 70 lakh pre-owned cars, which are sold every year. Out of this, only 17 percent goes through the organised channel. So this partnership, which is based on technology, product innovation, and financing capabilities, is aimed at creating a digitally enabled consumer lending platform, which will help the buyers and sellers of cars come to a single platform and have end-to-end digital journey.”
“For us, in terms of numbers, we have a pan-India, pre-owned car finance franchise through which, we disperse about 100 crore per month. We are looking at adding 15 percent volumes by way of this strategic partnership,” he mentioned.
On operating performance, Deshwal said, “We did a strategic acquisition of erstwhile Magma Fincorp, where we inherited a large branch distribution network and a large collections network, which is of about 290 branches odd pan-India."
"Last four to five months, after this acquisition have been a phase of consolidation and transformation for us, where we have significantly invested into tech capabilities. We have invested into building the senior leadership team. We also looked at realigning our debt financing franchise; we reduced our cost of funds significantly,” he further mentioned.
He added, “When you build capacity, OPEX to a certain point is likely to stay elevated. However, the business has started kicking in, as for the growth plans, you will see as the scale up happens, this OPEX ratio will start looking like what we have budgeted for ourselves. Clearly, we are looking at growing the AUM with a very clear focus on operating profits and credit costs.”
On loan growth, Deshwal said, “In terms of our growth trajectory, we have set an ambitious plan for ourselves- AUM target of 30 percent CAGR for the next three to four years and we are very much on track for that.”
On promoter holding, he said, “In terms of the erstwhile promoters, if I may call between Mr Chamria and Mr Poddar, they have a shareholding just below 7 percent now, and it will be entirely up to them. My sense is that looking at the growth trajectory for the company, they may want to hold on for a longer period."
Deshwal further mentioned, "However, if there are opportunities for the new promoters and they are offered, the promoters have already shared that they will be more than willing to buy more into that.”
(With text inputs from PTI)
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