How has the current spell of slowdown in road, power and mining sector affected the growth of rental industry as a whole and how do you visualize the growth prospect of the sector in coming years?
Currently, there is a sluggishness prevailing in the market as a result of the slowdown in infrastructure as well as mining sector in India. However, we are fairly hopeful that the coming year would reflect an upward turn and we will witness regained momentum in various Infra Projects and in turn facilitate growth in the equipment utilization as well as rental market.
Once the market shows up, project developers will surely opt to rent rather than invest huge capex, which could otherwise be channelized in their core business. Moreover, it is not a lucrative option to invest into high value equipment which is subject to wear & tear, more so in a short-term usage. As such rental is the only solution.
a) To bridge the gap of assets
b) To manage large sites with multiple usage of machinery
c) Handle multiple sites across large geographical spread
What was the business outlook of Quippo in 2012? What are the different propositions that you have for renting?
Quippo has played a very dominant role in repositioning the industry and 2012 saw the brand QUIPPO emerging as a holistic equipment service provider. We have a whole bouquet of services from rental to auctioning, from fleet management to Equipment Banking and trading of used equipment etc. In fact, Equipment Banking is a pioneering concept of Quippo that allows project developers to earn revenue from their idle or surplus fleet. Our service range can be briefly summarized as:
- Equipment Rental
- Equipment Banking – Accepting the deposits of idle/unused fleet from construction companies and deploying them further on rent on shared revenue basis.
- Fleet Management – We are also the pioneers in providing these services to the Infrastructure Industry. Under these services we up- keep & maintain the repossessed equipment of Banks/ NBFC's.
- Auctioning and valuation of used equipment – Through our separate arm Quippo Valuation and Auctioneers Private Limited, we assist out construction giants/ customers in valuation and disposal of their used fleet
- Used Equipment Trading
Rental business in India is still in nascent stage and despite sincere efforts of the renting companies like Quippo why the rental business is not taking off in India like in Europe and US?
In comparison to the international market the rental industry has not flourished in India. This is mainly due to absence of the major organized rental players, like QUIPPO, in the Industry. Though in the international scenario rental has a very high share, in India, the figure is roughly 7-10% out of the total equipment market.
To see an upward surge in the rental industry, the organized sector needs to discipline the industry and probably this is the time when the major rental organizations should form an association as prevalent in US or Europe.
Further the mindset of the construction fraternity will also have to change and they need to realize the value propositions of renting vs large capex investments.
It is reported that most of the organised players of the sector are in crane rental; what is the reason that a big name like Quippo is not there in the picture?
Quippo today manages nearly 1000 equipment of a wide variety and of varied makes and models. This enhances our capabilities to cater to all sectors of the infrastructure world be it road, railway, power or building. Therefore, we did not restrict ourselves to any particular equipment; rather our expertise has been in all types of construction equipment. Our multi skilled human capital has contributed immensely in maintaining a leading position in our segment of activities.
It seems that the benefits of renting equipment are not fully understood; can you please give us an example where renting is more beneficial than owning it?
Procurement and management of the construction equipment requires committed attention, which is obviously not the core interest of the Construction industry, rather these jobs should be left to the specialist like QUIPPO. The advantage of this proposition is immense. Project developers save hugely in CAPEX for their core business areas. Apart from repair, maintenance and storage the liability of manpower engaged for fleet management can be shifted to the rental partners. A prime concern on interstate movement of equipment with its complexities of taxations and cost implication is also taken over by rental companies. Much of these get smoothened where companies like Quippo, with PAN India presence, comes to their support, even in the remotest of locations. The construction companies can also remain unaffected from the factors like machine obsolesce, loss in disposal or deprecation.
Can you elaborate on the strengths of Quippo which has helped you to retain the Number one position for so long?
Quippo has retained its position as a market leader because of the value proposition that it brings on table. Today in India, we are probably the only rental company that has invested so much in people and on resources. Our focus is on continuous upgradion of our people, their knowledge base and to enrich our spectrum of activities thereby retaining our leadership position. We are in a service sector and here, more than renting, one needs to know the value of servicing. When you offer the proper services to the customer, the loyalty factor will always come into play. That has been one of our core competencies, where our customer centric services have been matchless. We will keep concentrating on that and not compromise with our basic ethics and principles which will help us to retain the position where we are today.
You are also auctioneers and valuers; how are these businesses of Quippo shaping up and their prospects in India?
Quippo is a pioneer in introducing a wide range of disposal tools like Live & E-auction, negotiated sales, Sale Mela which can be tailor-made to the customer's requirements. Equipment auctioning and valuation business in India, by organized private sector, are yet to be appreciated by the market. It has been our endeavour to promote the benefits of such services to both the buyers and sellers. We are hopeful...and once the market shows up, the business would grow to its desired level.
Please brief us about Quippo's equipment banks across the country, business concept and the facilities you offer to the contractors?
Quippo has 35 yards in strategic location across the country covering almost all states of India. With our decade long experience in the infra sector we have developed strong relationships through our unique value added services. Equipment Banking is such a pioneering proposition which enables different construction companies' project developers, EPC majors or even individual equipment owners to deposit their idle equipment with us which will be deployed on rent. Thus the owner stands to benefit as this allows to:
- generate revenue from idle equipment
- transfer the liabilities of storage and security to Quippo.
- Keep equipment in running condition
- avoid incurring administrative cost on manpower
With the emergence of new players in the field, what influence or affect you witnessed in your business and strategies adopted to capture more market share?
We are the Pioneers and undisputed Market Leaders not only in the Equipment Rentals but also in other allied services like Equipment Banking, Operating Lease, Fleet Management, Auctioning, Valuations etc. that we are providing to the Construction Industry. We are the only company which has been managing more than 1000 equipment on a PAN India basis. Majority of the new players in the market are holding some specific equipment range, business line or some specific sectors or geographies.