Quippo: Construction Equipment Rental Industry Holds Brighter Growth Prospects

H.S. Bhattacharjya
"In view of volatile economic scenario prevailing across the country, Quippo has taken multiple prong strategies on collection front, financial stability of the project, contractor's credibility and also carefully evaluating risk factors ensuring healthy flow of revenues. Although, Indian construction equipment rental industry is very small as compared to other parts of the world, but its growth prospects are immensely bright," says Mr. H.S Bhattacharjya, CEO, Quippo, in an interview with S.A Faridi.

Could you please give us an overview of the construction equipment rental business in India in the current recessionary phase?
In India, the construction equipment rental industry is very small as compared to other parts of the World, but its growth prospects are immensely bright. The earthmoving segment, in particular, has been driving the overall construction equipment industry in the country, with the strong demand emanating from the government-backed infrastructure projects.

Equipment renting has been introduced almost over a decade ago in this country and rising emphasis on infrastructure development has led to a steady growth in the demand for equipment rentals. Equipment Rental market comprises around 7-8 organized players with some OEM's also providing their equipment on rental and number of small players from unorganized sectors. Predominance of unorganized players has made the market erratic w.r.t Rental Rates, payments and terms of the contract.

Currently, there is a sluggishness prevailing in the market and the rental industry has also been affected with this recessionary phase. Quippo is however steering through this situation as:
  1. we have no brand affiliation.
  2. provide a bouquet of services to the customer tailor made to customer's requirements.
  3. Selective in Territory of Equipment deployment
  4. Careful analysis of the Customers, job site & related Credit Risk.
We are hopeful, that with $1 Trillion investment planned in infrastructure development during FY 2013-17, the construction equipment rental business in India is expected to be on the right track.

How difficult you are finding to stay on your marketing and business development strategy in this tough business scenario where rental price are going southward and contractors are delaying the payment by months, which is resulting in low profitability and liquidity?
It is true, that Rental rates are going downwards and this is mainly due to influx of equipment in the market. This factor is uncontrollable; however, Quippo has taken adequate steps for retaining its revenue levels through
Quippo Construction Equipment

  • Long-term deployment contracts;
  • Reduced operational costs;
  • Ensure machinery concentration at single site for better management,
  • Improved up-time of the machinery at Site,
  • Productivity-linked wages scheme for the crew.
  • Partnering the customer in their equipment needs.
On Collection front, meticulous risk minimization from factors like: financial stability of the project, the contractor's credibility, careful analysis of credit risk etc and to top it all, we also intensified the collection force, yielding better results in this tough economic scenario.

We have already embarked into other related activities in equipment services business, both in India and abroad, which will immensely supplement our restricted growth from core rental.

Thus the overall judicious strategic moves have kept us afloat and stable in today's economic scenario.

To stay a step ahead in the competition in the rental business, one has to continuously upgrade one's equipment fleet with newer and advanced equipment, offers some innovative solutions to the contractors and stay closer to the client are really important. What is your take on the same?
The customers have become extremely demanding with their equipment requirements w.r.t. age, condition, dependability and technical up-gradation. Hence the rental companies are under immense pressure as new equipment is not fetching additional Rental rates over and above the market price as compared to old equipment.

Boom Placer

Quippo has always maintained a system of continuous assessment of equipment and machineries, taking into consideration the fleet conditions. We have a systematic equipment disposal process and that is supplemented with the infusion of upgraded equipment, where needed.

Piling-Rig

We have equipped our machines with the latest GPS monitors and other advanced systems. This enables us in continuous equipment tracking which is useful for both the company as well as our customers.

As the road projects have been slow in the last one and half years which was the backbone to the rental business; are you trying to deploy machines in the areas where rental was not in demand or some newer applications areas to keep your machines engaged?
There has been a slowdown in execution of Road Projects majorly due to delay in obtaining land, forest and environmental clearances, coupled with a slowdown in overall macro economic conditions. Quippo is also being impacted due to slow- down in Road projects however we have been able to minimize the impact to some extent due to our deepest geographical reach and basket full of equipment which can serve various sectors other than roads. We have been serving equipment demand in Roads, Telecom, Power, Railways, Airports, Ports, Urban & Rural Infrastructure and many more.

How do you see Quippo progression in the market so far since inception? Please enumerate about the company's various offerings and USPs.
Quippo is the pioneer in Equipment Rental and Equipment Banking in India and has successfully retained itself as the market leader for over a decade.

The company initiated the business as a Pure Rental Company with few machines and yards. However today, company has deepest geographical reach through 35 plus yards across India, managing 1000 plus asset and more than 600 technically skilled manpower. Over the period of time, company has transitioned from a Pure Rental Company to a Holistic Equipment Service provider.

The service basket includes services like Equipment Rental, Operating Lease, Fleet Management, Used Equipment Purchase & Sale, Valuation & Auctioning and Equipment Banking.

There is a dearth of skilled man-power in the industry. How is Quippo addressing this issue pondering large equipment fleet of wide variety at its disposal?
In the equipment rental business training of manpower is a continuous process that needs to be imparted with adequate infrastructural support. As the market leader, we have addressed the issue by creating a training academy and following a rigorous annual training calendar for our resources. Training is being imparted to people at all levels and this is strictly monitored at highest levels in the organization. Also we have the Crew bank in place to supplement the above training strategies to mitigate the risk of man-power dearth.
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