MAGMA FINCORP LTD.

COMMERCIAL VEHICLE FINANCE (SALES PROCESS)

A report on partial fulfillment of the training in Magma Fincorp Ltd.

Location: Lucknow Period: 27/05/2011 to 11/06/2011 Submitted by: Ravi Kant Summer Trainee

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RATIONALE: Sales is an integral part of any company. It is the face of the company. It makes the first interaction with the customer. When we are in service industry, where there is no physical product, the first responsibility of maintaining customer relationship and customer satisfaction levels comes on the shoulders of sales team. The responsibility of sales widens when they have to generate business through dealers. This training of ten days is basically to give an insight of sales process of commercial vehicle finance, i.e. what are the activities a sales person has to perform, while maintaining balance between companys policy and customer requirements. Also such training is important from the view of basic knowledge and understanding of the product, it helps to raise the understanding of product to certain levels.

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INDEX
S.No . HEADING 1 INRODUCTION COMMERCIAL VEHICLE 2 CLASSIFICATION 3 CUSTOMER CATEGORIZATION 4 POLICY SCREENS 5 SOURCES OF GENERATING BUSINESS 6 COMPETITORS 7 SALES PROCESS 8 CASE STUDY PAGE No. 4 6 7 10 13 14 15 17

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I.

INTRODUCTION:

Magma, being a renowned name in finance industry in India, has started CV finance in Northern India, so in Lucknow, around 1999-2000, when it has acquired Consortium Finance, dealing mostly in CV, CAR and CE. Commercial vehicle finance is an indispensable part of Magmas niche segment. With its effective working style and capable work force, today Magma has became a prominent player in Commercial Vehicle Finance. Our prime focus, in Commercial Vehicle, is on financing first time buyers and first time users owing 0-5 vehicles. We also finance big fleet owners and other business under strategic financing. The target market of Magmas commercial vehicle finance constitutes the entire Road Transport industry. The Road Transport industry is defined by the usage of Commercial Vehicles i.e. mechanized movables assets registered with R.T.O. and utilized for transportation of goods, material, people and for providing transportation services. The size of the customers in the industry depends on the revenues earned through deployment of assets. The revenue earning capacity, and hence the repayment capability of the customers in this segment, is directly dependent on the productive assets fleet owned by them. Commercial Vehicle finance is a product where we finance a very wide range of assets. The segmentation of commercial vehicles is very wide. Also the class of customer is very different. Magma has a wide geographical coverage financing the customers within 125k.m. from magma branch office.

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The policy of Commercial Vehicle finance is very finely and deeply defined, with a no. of screens defining the policy, according to customers and assets required. It is important for sales personal to understand the policy. Understanding the policy is also important as he has to make the ignorant customer aware of terms and conditions of the agreement in simple words. At SBU level, Magmas sales team comprises of State Product Head CV (Mr. Sanjay Bhatnagar in Lucknow), Relationship Managers and executives. Sales team in Commercial Vehicle finance is very responsible, effective, efficient and well trained (by the efforts of supervisors trying to provide training and information on every possible aspect). They believe in creating and maintaining healthy relationship with the customers on the basis of trust and transparency.

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II. COMMERCIAL VEHICLE CLASSIFICATION:

Magma finances almost all the commercial vehicles available in the market. The asset range includes SCV, LCV, M&HCV, Tractor Trailer, SCV pickup etc. It is also differentiated on the basis of the body of the vehicle, whether it is a bus, car carrier, container, goods, refrigerated container, scooter carrier, tanker, tip trailer, tripper etc. Major manufacturers of commercial vehicle assets in India are: Tata. Ashok Leyland. M&M. Force motors. Volvo. Man Force, etc. Magma has classified this wide range of commercial vehicles, for all the zones, for facilitating the finance process to make differentiation easier. The classification levels are defined as below: L1X. L1X*. L1Y. L1Y*. L2X. L2X*.

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 L2Y.

III. CUSTOMER CATEGORIZATION:

The customer type in commercial vehicle market ranges very wide. It includes those who are buying commercial vehicle for the first time to those who already owns fleet of vehicles. We have, in commercial vehicle market, those customers also whose business is not that of transportation, but purchasing the asset for servicing their own business. Magma has defined different stratum of customers, so as to make the categorization and differentiation easier. We have categorized basically two groups of customers: 1. Retail Category. a. FTB. b. Cat B. c. Cat C. d. Bus Operators. 2. Strategic Category. a. Large fleet operators. b. Freight Booking Companies. c. CAPTIVE USER CATEGORY.

1. Retail Category: a. FTB (First Time Buyers): These are those transport operators who have limited prior experience in transportation asset usage. This segment includes

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customers who do not own or own only one commercial vehicle. b. CAT B or Small Fleet Operators: This segment comprise of operators with ownership between two to five vehicles having a couple of years of experience in operating and maintaining vehicles. c. CAT C or Medium Fleet Operators: This segment comprise of operators with ownership between six to nine vehicles with several years of experience in operating and maintaining vehicles. These are established operators owing a few assets in the fleet. d. Bus Operators: This target segment would comprise of owners and operators of buses with several years experience with fleet ownership between one to nine buses. This segment would address route bus operators, stage carriers, contractor operators and tours and travels operators. 2. Strategic Category: a. Large Fleet Operators: This target segment comprise of vehicle fleet owners who own ten or more vehicles and are established and seasoned market operators. These operators fleet would comprise of several free vehicles. b. Freight Booking Company (FBCs): Freight Booking companies have transportation contracts with a large number of principals and are involved in providing
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transportation services. They hire commercial vehicles from other transport operators to execute these contracts. c. CAPTIVE USER CATEGORY: Captive Users could be buyers of vehicles who will service the debt through cash flows of the existing business and not out of the earnings of the vehicles being procured. Ex- Cement dealer using the asset for distribution purpose. This is a broader categorization of the customer groups. These groups are further classified in the policy screens to filter them more appropriately.

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IV. POLICY SCREENS:

Magma has defined policy screens for every customer segment. Brief about different policy screens is given as under: 1. RETAIL CATEGORY: A. First Time Buyers Screen (FTB). This screen explains the customer eligibility and funding norms for FTBs. This screen has further categorized this group as FTB-0 and FTB-1. FTB-0 are the customers who own no CV asset. FTB-1 are the customers who own one CV asset, with an ETR or GTR. B. Tipper Financing Screen. These screens are applicable for FTB-0 and FTB-1 category of customers in CV. It explains the requirements for tipper financing. Funding of a tipper body on a goods chassis (LPT1613, 1510, 1512, 2515 etc.) is not permissible in the screen. C. CAT B Small fleet operators Screen. This screen explains the documentation and requirements for Cat B customers owing two to five vehicles, with a couple of years experience. D. CAT C medium fleet operators screen This is the screen for the customer group of CAT C, owing six to nine vehicles, with at least three years of experience. E.CAPTIVE USERS SCREEN.

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This screen explains the requirements for financing CV asset to the captive user customers. It further categorizes this segment as Captive 1, Captive 2 and Captive 3 group of customers. Captive 3 are the customers who have minimum experience of 5 years, with at least Rs. 200 lacs of turnover. Captive 2 are the customers who have minimum experience of 3 years, with at least Rs. 50 lacs of turnover. Captive 1 are the customers who have minimum experience of 2 years, with at least Rs. 5 lacs of turnover. 2. TATA ACE SCREEN. This screen defines the requirements for financing Tata Ace. It further categorizes the customer segment as under:

Customer with prior vehicle ownership of either 3wheeler (goods carrier) or any commercial vehicle. Customers with prior experience of driving either 3wheeler (goods carrier) or any commercial vehicle.

Agri Based (FTU) owing agricultural land/ asset based (FTU) owing house property. Own use category / captive w/o financials. 3. TATA MAGIC AND WINGER SCREEN. This screen explains the requirements and parameter for Tata Magic (4-7 seater) and Tata Winger (7-14 seater). 4. STRATEGIC CV POLICY SCREEN.

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This is a special screen for strategic commercial vehicle finance. Under this we have further categorized the customers as Grade Transporter 3, Grade Transporter 2 and Grade Transporter 1. Grade Transporter 3 are the customers who are having more than 10 years of experience in the business and are owing a fleet of more than 50 vehicles. Grade Transporter 2 are the customers who are having more than 8 years of experience in the business and are owing a fleet of more than 25 vehicles. Grade Transporter 1 are the customers who are having more than 5 years of experience in the business and are owing a fleet of more than 10 vehicles. Now the question is, Why we need such separate screen? Separate screens for Strategic Commercial Vehicle owner is needed due to following: 1. Intention to reduce % of Cat A customers in the portfolio. 2. To achieve this we have progressively reduced LTVs especially on Cat A. 3. Current screens address segment upto 9 vehicle owners.

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V. SOURCES OF GENERATING BUSINESS:

Magmas sales personals are very efficient in their working. They use effective market approaches at their own levels. They target almost all the possible sources for generating business. They can be categorized as NonDirect and Direct sources. Some of such sources of business are given below: 1. Non-Direct: a. D.S.A.s. b. Dealers. 2. Direct:
a. Existing ETR customers.

b. CV Body Maker. c. Transporters. d. Transport Union Leaders.

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VI. COMPETITORS:
Finance sector is one of the most competitive sectors in the business world. Magma also has to compete with n number of competitors in order to retain its market share. Major competitors of MFL in todays scenario, in our region are: TATA Finance. HDFC. L&T Finance.

Sriram Finance. Citi corp. finance.

India Bulls.

IndusInd. Cholamandalam.

Other small financers. (Unorganized).

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VII. SALES PROCESS:

There are various activities that are being performed by sales personals can be alienated as under: Recognizing the customer type. The first most important thing is to recognize the customer as per the classification given in the policy. At this stage we also need to see whether he fits in the policy of the company or belongs to the caution or negative profile as defined by the company. Understanding customer requirements. A sales personal also needs to understand the requirements of the customer. We have to see what the customer is asking for is possible to provide or not. We see, how much loan he is asking for, what rate of interest he is expecting. Whether the vehicle he is asking is mentioned in the list or not, etc. Filling application, documentation and filing. After we find that it is possible to provide the finance to the customer on the vehicle asked, we ask the customer to fill up the application form. We also need to collect all the requisite

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documents from the customer and have to file them properly for their further processing. Login the case. As soon as we get the application filled and collected & filed the documents, we need to get the case login with the operation department for its further processing. Completing discrepancies. If operations department find any discrepancies, regarding documents, etc., at the time of login, we need to fulfill then as soon as possible. Disbursal & Post disbursal activities. Disbursal and post disbursal activities include:

Releasing delivery order. Receiving margin and insurance and RC (with Filling agreement, RTO and PDCs/ ECS. Collecting or receiving invoice.

hypothecation of Magma Fincorp Ltd.).

This process is followed in all the cases. Beyond this, special approval requests are been taken like for waiver of interest rates etc. if required and the customer is of good profile or is an ETR customer.

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IX. CASE STUDY:

MOHD. ISMAIL Basic Details:Name of the Applicant Fathers Name Voter Id Resident of Asset Asked Value of Asset Guarantor Co-applicant : : : : : : : : Mohd. Ismail. Mohd. Ibrahim. GFB3456357 H.No. 706 Nagaliya Akil Azim Nagar Rampur U.P. Eicher 11.10 8.80 lacs. Mohd. Sabir Ali. Mohd. Ibrahim (Applicants father)
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Case History: Mohd. Ismail, the applicant, was asking for an asset Eicher 11.10 costing Rs. 8.80 lacs. The LTV asked was 75%, amounting around Rs. 6.80 lacs for the tenure of 4 years. The asset comes under the category L1X. The case was booked under FTB-0 Screen. Mohd. Ismail, as said, was involved in the business of transportation from last 5 years. His father was an ETR customer of MFL. Vehicle financed to his father was also an Eicher 11.10, 2009 model. His father was co-applicant in the case. Guarantor in the case was Mohd. Sabir Ali, who also owns an Eicher 11.10, 2009 model. He was also an ETR customer of MFL. He was a business friend of proposed hirer. Status: Declined (by Credit). Reason: Father of the applicant had expired. Vehicle in the name of the applicants father needs to be transferred in the name of the applicant. Although the case of Mohd. Ismail looks sound at first glance, as his father and guarantor being existing customers of Magma with excellent track record. But when the case is being analyzed and processed further, it is found that the father of applicant has been expired and the vehicle in the name of the father is still running in his name.
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We will not consider financing another vehicle to the applicant as FTB-0 customer, until and unless the vehicle in the name of his father is transferred in the name of the applicant. Then only we can finance him considering the total exposure.

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