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The key factor which will be a catalyst for the growth over the near- to medium-term is the availability and ease of finance
 Undeniably, the past few years have been very challenging for the construction equipment industry in India. Slowdown in Infrastructure spends on account of policy logjam, high interest regime and issues related to mining has affected the fortunes of this industry. However, Devendra Kumar Vyas, CEO at Srei Equipment Finance outlines that there are signs of green shoots signalled by an uptick in the macroeconomic environment and greater emphasis by the government on infrastructure development. “New project announcements are gaining traction and the government is emphatic on reviving stalled projects which have declined to 6.6 per cent of GDP in June 2015 compared to 8.4 per cent as on March 2014. The industrial output in August 2015 has grown by 6.4 per cent which is the highest in past three years,” he adds.
The construction equipment industry too is showing distinct signs of revival. The sales of excavators have grown by almost 20 per cent in the six-month ended September this year, compared to the same period in 2014. The September sales have grown by almost 26 per cent as compared to August. The sales for compactors too have grown by almost 18 per cent in the six month period ended September 2015 compared to 2014. Similar growth is visible for construction equipment like transit mixers, asphalt plants etc. “We expect the infrastructure equipment market to grow anywhere between 15-25 per cent in the next three years,” anticipates Vyas.
Whereas Sanjiv Jha, Vice President – CV/CE at Magma Fincorp foresees that the construction equipment industry will rise and see a positive growth with more players entering the industry. “The industry is going to witness significant changes in the next couple of years due to changes brought about in the infrastructure, construction and mining sectors in India,” Jha continues.
Challenges and road forwardThere are certain challenges in the construction industry which includes delay in the infrastructure projects due to time and cost factors. Delay in the clearance of projects, shortage of funds because of slow economic growth and concerns related to environmental are some of the challenges which are being faced by the industry. “Project delays have been caused by the land acquisition procedures having an impact on the major decisions by the various companies to invest,” observes Jha. He suggests that there is also a need to upgrade the technologies and to introduce new technologies which are the need of the hour.
The rising trend of stressed assets in the last two years has impeded the growth of finance to this segment, and the lenders’ today are wary of financing this segment. The banking and NBFC segment are still burdened with the stressed assets of the sector. However, Vyas believes, “The key factor which will be a catalyst for the growth over the near- to medium-term is the availability and ease of finance.”
NBFCs (non-banking financial companies), especially NBFC – Infrastructure Finance Companies (IFCs) which specialise in deployment of infrastructure loans, have a big role to play in financing the increment growth in this segment. “NBFC – IFCs are required to have a minimum of 75 per cent of their total assets deployed in infrastructure loans and given their concentration on infrastructure, these specialised NBFCs have better due diligence, monitoring and structuring skills. Going forward this class with its special provisions can be torchbearer for infrastructure financing,” opines Vyas.
Attractive finance options at EXCON!The Indian Construction Equipment Manufacturers’ Association (ICEMA) and the Confederation of Indian Industry (CII) are jointly organising EXCON 2015, the 8th international construction equipment and construction technology trade fair in Bengaluru between the 25th and 29th November. EXCON is one of the largest construction equipment exhibitions in Asia and the largest event for construction equipment in South East Asia. The exhibition will showcase a wide variety of equipment, technology and products with specific emphasis on efficiency, productivity, environment and safety. Considering the tremendous business opportunities, construction equipment finance companies have always participated at EXCON with great enthusiasm.
Like always SREI BNPP will have a big presence at the exhibition. The company has tied up with more than 20 reputed global equipment manufacturers and plans to come up with a lot of exciting schemes for its customers at the event. “We are organising a unique auction of rentals called ‘Paison ki Nilami’ where we will lease out select equipment to our customers at monthly rentals which will be decided by bidding. This innovative offering is probably the first in the industry,” informs Vyas.
SREI BNPP will also be offering a loyalty program called ‘Asset Power’ along with some of its global manufacturer partners where it plans to give away its preferred customers special offers on the rate of interest and higher loan to value. SREI BNPP also plans to offer a select group of its existing customers pre-approved limits under a scheme called ‘SREI Money Power’ which they can use to buy equipment from any of its manufacturer partners.
This year, SREI BNPP expects more than 3,000 unique visitors at its stall, modelled on the smart city theme. “EXCON has always been important to us in terms of new business done as well business enquiries generated and this year we expect to do business of more than Rs. 500 crore during the event,” concludes Vyas.
————–This year we expect to do business of more than Rs 500 crore during the event (EXCON).
Devendra Kumar Vyas, CEO, Srei Equipment Finance————–
————-Project delays have been caused by the land acquisition procedures having an impact on the major decisions by the various companies to invest.
Sanjiv Jha, Vice President – CV/CE, Magma Fincorp

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