Rural and Semi Urban Markets have Better Deployment Opportunities

Sunil Gupta,
Vice President and National Sales Head,
Construction Equipment and Strategic Construction Equipment, Magma Fincorp Ltd

The infra-construction sector has faced many hurdles. How has the volatility of the current situation impacted the sector?
Economic volatility and slowdown is being witnessed in most of the economic verticals. Impacts of the sector’s downturned performance are definitely witnessed upon the construction equipment industry as well. The other major hindrance being witnessed in the sector is the unavailability of funds and the clients’ ability for repayment. Delay in project execution is one of the major causes hinderi n g the ability of the clients or contractors in repayment of loans. Though the projects on build operate and transfer (BOT) modes are being awarded increasingly, the delays in gaining clearances from the authorities have put pressure on the contractors or developers executing them. The scenario has ultimately resulted in cancellation of projects or withdrawal of developers or bidders from the project. This has limited the opportunities for financial institutions or lenders involved in the sectors.

What are the major challenges faced by the equipment financiers today in the Indian market?
Lack of deployment of assets is one amongst the major hurdles faced, as this leads to lower cash-flows in the hands of customers. Delays in receipt of payments from main principals or contractors, due to delays in project execution or operational hurdles, has resulted in delays in payment of EMIs.
In addition, the liquidity crunch faced by the governing agencies has also led to the delays in project executions. Rising delinquencies and lower resale values of the repossessed asset, which can lead to higher loss, are also few among the major hurdles impacting upon the construction equipment sectors. All these facets ultimately affect the business verticals or operations of the equipment financiers.

What strategies has Magma Fincorp adopted to combat such operational hurdles?
We have moved our focus from large contractors to strategic or small contractors who are self operating their equipments. These contractors have low operating costs. We are also focusing more towards the rural and semi urban markets, where deployment opportunities are better due to the availability of small rural road contracts, irrigation, contracts and general construction contracts. In addition, we will be avoiding customers with multiple loans and have tightened our credit norms.

Which segments can be the major growth drivers for the equipment finance industry in India. How has Magma Fincorp planned to tap in these potentials?
We expect major opportunities from the road sector. Though much has not happened in road construction in the last two years and less than 25 percent is being achieved, the sector offers a wider scope of opportunities. Mining reforms in coal, iron ore and sand is also expected to introduce more prospective avenues for the equipment sector.
The positive market potentials of these segments will also draw robust opportunities for equipment financiers. We are very optimistic about the potentials from these sectors.
We are presently focusing on increasing and expanding our distribution and reach to our customers spread across the country. We will be also strengthening our operational presence in states like Bihar, Jharkhand, Orissa, Rajasthan etc, as we see higher business potentials from these regions for the construction equipment financing sector.

Eletsonline News
Show More

Related Articles

Back to top button