Everyone wants newer machines from rental companies

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Sai Infraaequipments Pvt Ltd works in the field of construction equipment hiring for the past 15 years. It deals with RMC Batching Plants, Transit Mixers, Concrete Pumps, Tower Cranes, Mobile and Hydra Cranes, Wheel Loaders and Passenger Hoist. It also holds the largest fleet of Tower Cranes in the hiring segment, and the third largest fleet in the overall construction industry in India.

K. Ilango

K. Ilango

K. Ilango, Managing Director – Sai Infraaequipments told Sandeep Menezes that the construction equipment industry will witness a growth of around 20 to 25 per cent over next two years.

Excerpts from the interview:

It’s been six months since the new government has taken over the nation’s reign, how do you foresee the construction equipment industry’s performance?

It will take more time. The announcements of new projects and its implementation will take some time. After the implementation of new projects, it will take minimum one more year for the finance flow to get improved. Currently the finance flow is very tight across the market – in fact we are not receiving payments. Therefore based on the markets current situation, we have not planned anything new yet.

Definitely, the market will turn successful I am confident about it but it will take some more time.

Going forward, how do you foresee the industry evolving?

We were expecting industry growth to happen in the first six months but it has not happened there have only been announcements.

In the coming financial year, the currently announced plans may start showing results. But over the next two years, I expect the construction equipment industry to witness a growth of around 20 to 25 per cent. Next year should witness an industry growth of around 8 per cent.

Tell us about the main demand drivers for the future growth across the construction equipment industry?

The current announcements will definitely be implemented in future – this will drive demand across the construction equipment industry.

Most of the construction equipment demand will come due to the massive infrastructure development needed nationwide.

The interest rates have not softened to the extent expected and most construction equipments are purchased on financing mode. Comment.

These days even if orders come in – the financing is not easily available. The main reason for this situation is tight money flow and market is not good. Therefore even financers are scrutinizing our accounts very deeply.

Earlier financiers used to only check our balance sheet and track record. But today, the financiers are checking our money flow, outstanding and client profile, even sectors wherein the machinery will be deployed. In fact they are checking everything.

What are the main challenges facing the construction equipment rental segment in India?
Infrastructure developers have multiple divisions involved for a construction project like planning, plant & machinery, engineering, site inspection and accounting. Adding an additional division is like adding an additional cost. Hence most companies prefer outsourcing their equipment division to hirers who have an in-depth knowledge of the technology trends in the equipment.

Everyday new technologies are coming. Now based on these technologies, new equipments are being launched. Therefore everyone wants only the newer machines. The older machines even if it’s in good condition and efficient – the clients are not ready to analyze it, they only want the newer machines for rental.

What is the future business strategy of Sai Infraequipments?

As the industry grows in the years ahead, we want to expand our services to more customers and emerge as the preferred choice for construction companies across India.

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