Report on CV Sales

8/6/2019 Report on CV Sales

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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 theunderstanding of product to certain levels.

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INDEXS.No

. HEADING

PAGE

No.

1 INRODUCTION 4

2

COMMERCIAL VEHICLE

CLASSIFICATION 6

3 CUSTOMER CATEGORIZATION 7

4 POLICY SCREENS 105 SOURCES OF GENERATING BUSINESS 13

6 COMPETITORS 14

7 SALES PROCESS 15

8 CASE STUDY 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 providetraining 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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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 establishedoperators 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.





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.





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 Non-Direct 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.

India Bulls.

Citi corp. finance.

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

hypothecation of Magma Fincorp Ltd.).

Filling agreement, RTO and PDCs/ ECS. Collecting or receiving invoice.

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 : Mohd. Ismail.

Fathers Name : Mohd. Ibrahim.

Voter Id : GFB3456357

Resident of : H.No. 706 Nagaliya Akil Azim Nagar

Rampur U.P.

Asset Asked : Eicher 11.10

Value of Asset : 8.80 lacs.

Guarantor : Mohd. Sabir Ali.

Co-applicant : 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-applicantin 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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Documents

Report on CV Sales