While talking with infrabuddy.com, Devendra Kumar Vyas, Chief Executive Officer, Srei Equipment Finance Ltd., rightly pointed that this was the best construction equipment festival that was glittering and showing positive move in this sector. _
RESPONSE IN EXCON, 2017
Response to Excon 2017 has been good. I have not seen such a large number of customers in the last two editions. Customers came in large numbers and majority of them were serious buyers. It was looking like a grand festival of construction equipment, with buyers, manufactures all under one roof.
Financing is directly dependant on the sale of equipment. About 80-85% of the equipment purchase is done through financing in the construction equipment sector. As the equipment buying is increasing, we expect it to push our sector also. We had a 32.7% market share in the construction, mining and allied equipment (CME) financing segment in FY’17. Which means every third piece of equipment being sold is financed by us.
In the road segment, the stress has being coming down gradually because of the EPC work. There is a good amount of government spending on the EPC side. This has really created a good amount of cash flow in the hands of the customers, which has reduced the stress. Roads are a key growth driver for economic development. Spending towards the roads, irrigation, urban infra, contract mining, railways etc. is expected to go up, and so we should see a good growth in the equipment sector.
BANKING CREDIBILITY MOVING UP
As the cash flow of the contractors’ improves, the stress start reducing, and the bankability goes up which will help them to get further funding.
CONTRACTOR’S DEPENDENCE ON SPECIFIC MACHINERY
Historically, the major or bigger were work done by specialized equipment and general work given to the sub contactor, and the small contactor. With the infrastructure segment looking at a strong growth this trend will come back.
PROJECTION FOR 2020
The CME industry has witnessed a good revival in the last two financial years following the previous three year decline. The overall Indian CME industry grew by 32% in Fiscal 2017 compared to Fiscal 2016. The CME industry is expected to grow at a CAGR of 14%, in volume terms, for next three years.