Magma Fincorp Limited is a non-deposit taking non-banking finance company (NBFC). Here Sanjiv Jha, National Sales Manager – CV/CE and Suvidha, Magma Fincorp speaks about the borrowing factors of CE and CV finance.

Handle with care
In project finance sector, it has been reported that TPC estimated by private developers are often much higher than the cost worked out by the government. Commenting on this aspect Jha said, “Material procurement cost is going up fast along with inflation and on the other hand all projects are getting delayed resulting in high project cost and project estimate goes for a toss.  Estimate should cover inflation and conditional exigencies cost to take care of this gap.”

Increasing delinquency
Talking about the current trends in the procurement of CE or CV finance, Jha observed, “Off take is very low all across and is all most down by 30 at this point. We don’t see any improvement in procurement unless mining, infra and road projects take off. Even existing customers are facing deployment issues and as a result delinquencies are increasing.”

Borrowing factors
Drawing attention on the major factors a borrower should consider before making decision of availing CE and CV finance, Jha says, “Buyers need to ensure they have deployment in hand at least for finance tenure to ensure they manage instalments. Also, viability of product and resale should be considered to get good residual value. Buyer also needs to have sufficient cash flow to manage in case of down time.”

Why finance?
Today a CE or CV price is ranging between ` 20 lacs and ` 50 lacs now and its difficult for a buyer to manage so much cash hence have the only option to go for finance. Today, manufacturers also help in arranging finance through different financiers they have tie up. “A customer can built his fleet at faster pace through finance which he can’t do with own funds,” Jha said. 

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Buyers need to ensure they have deployment in hand at least for finance tenure to ensure they manage instalments.

Sanjiv Jha, National Sales Manager – CV/CE and Suvidha, Magma Fincorp