Poonawalla Fincorp to shut operations in high default areas

As a step towards clean up, Poonawalla Fincorp (PFL), erstwhile Magma Fincorp, will shut some products and operations that have shown defaults. Also, Adar Poonawalla, PFL chairman, will now have keener involvement in the company’s work following the departure of MD and CEO Abhay Bhutada after Sebi barred him from the securities market over alleged insider trading. The company is also conducting an independent probe into the entire episode.

Poonawalla said he has given directions on three-four matters to the entire team. These include focus on bringing down the cost of funds. The company has got a better credit rating and looks to diversify products and sources from which it borrows for the short term, as well as the long term. This will help bring down the cost of borrowings and improve PFL’S profitability, Poonawalla said.

The company also wants to discontinue products and close operations in geographies that are not giving “us right riskadjusted returns”. “We want to clean up all of that,” Poonawalla said in a conference call over the weekend against the backdrop of Bhutada's resignation. The PFL stock closed almost 5 per cent lower at ~168.15 per share on the BSE.

Poonwalla said: “The unfortunate incident is not going to affect business and vision. In fact, it expedited my direct interest and involvement in business which was perhaps more at chairman's level, because Sanjay Chamria was vice-chairman and Abhay Bhutada was MD”

The company is carrying out an independent investigation into recent events leading to the exit

of Bhutada. Poonwalla hoped Bhutada would also be cleared of the allegation, because “he actually hasn't done anything, as far as the lawyers and others (who have) given him the reports,” PFL said in a statement.

“…ABHAY WILL ALSO BE CLEARED OF WHAT HE HAS DONE, BECAUSE HE ACTUALLY HASN’T DONE ANYTHING AS PER LAWYERS AND THE OTHERS WHO HAVE GIVEN ME THE REPORTS”

ADAR POONAWALLA Chairman, Poonawalla Fincorp