Amit Magia - On a mission to help people with affordable housing

Amit Magia is a chartered accountant and Harvard alumni, is a seasoned finance professional. He is currently a student of London Business School and glad to be recognised as a student always.

He has more than 20 years of experience in the field of Finance, Banking, Treasury Management, Real Estate Investments.

He has managed finances and treasury across sectors such as manufacturing, construction and finance.

He has exposure to Raising and Managing Funds, Forex operations, MIS, Budgeting, Internal Control, System Development, Taxations and banking for multinational operations for organisation of high repute.

He has widely travelled and privileged to have global experience in setting up and structuring companies.

He has been actively engaged in his charitable trust – HISWISH CHARITABLE TRUST, providing schooling, medical help to needy across sections of the society.

Q1. Can you describe your business initiative?

I had observed this at the beginning of my career, that many people are unable to avail their own house just due to lack of income documents though they had adequate source of income. Regular banks and financial institutions were not able to and sometimes don’t want to assess their incomes to provide them home loans.

These are hawkers, road side stall owners selling vegetables, fruits, snacks etc, there are also cab and auto rickshaw drivers. There are bakers, grocers, milk vendors and lot more.

In the rural region, there are small dairy owners, farmers and gardeners all with sufficient income but no income documents.

I observed that they do not fit in to the set parameters of credit policies, which could enable them to avail home loan.

As per recent statistics, only 1% of the Indian population had availed housing loan. Mortgage to GDP ratio of 9% indicates very very low penetration of mortgage compared to other developed nations, which is more than 80%.

It makes good sense to take such socially relevant business initiative in such circumstances by getting into the affordable housing finance business in the informal segment.

Q2. What problem does it solve? What is the market and why such an initiative can be successful?

The EWS and LIG segment always had informal source of income. People need house, houses are available too but people could not buy . They are compelled to live in shanties and unorganised colonies just because formal banks and FIs do not finance such people.

The market is huge, there are ample number of such people, living on rent in un organised colonies. Informal sector is more than 80% of the total population of 1.25 billion

Providing such housing loan will alleviate people to better standard of living. It would provide them hygienic conditions, a good environment for their children to grow.

Q3. Would you say it is disruptive, in which dimension?

Yes It is , reason being the financial institutions and banks look for formal source of income which is supported by valid documents. Less than 1% population has availed Home Loan till now, For that 1% , the competition among players is ferocious, almost 90% players fights for 25 bps

What I am doing now is creating all together a new market segment, which is untapped yet huge, massive

Q4. How did you start? What difficulties did you encounter at the beginning?

I knew about such market since beginning, studied it in depth for last 3 years. I formulated an initial business plan. After I was confident it is a good business to get into, I was also sure that it serves a noble social cause of providing formal settlement for a generation to grow, I took the plunge.

The initial challenge was to build an efficient team and raise debt funds. People were very enthusiastic and willing to invest in the equity but not the debt. Dilemma for me was to scale up at the cost of losing a value which is going to be created in future.

Q5. How LBS helped you to overcome the difficulties?

Interactions with people from various functional backgrounds, industries and geography provided altogether different perspective to the subject and eventually add lot more knowledge and depth for my thought process.

LBS helped me strengthen several skills like leadership, marketing, strategies, economics. It sharpened my fundamentals.

Q6. How is the business going now? What is your expected growth?

Though my business is doing well, I am consolidating the infrastructure, technology and processes. I expect the business to grow to the extent of 200% to 300% in its first five year of operations. Expecting at least 25000 satisfied customers at the end of five years.

Q7. What difficulties are you expecting for the future and how are you preparing to face them? How do you think LBS can help on this?

Expansions, raising the debt funds in time, scaling the infrastructure, the technology, human resources could be a challenge. I have kept my infra and technology which could be scalable to my expansion plans for the next ten years.

With my learning at LBS, now I am confident of my various skill sets such as marketing, business management, human resource management, business strategies, leadership and this should help me reach my set goals and further.