Leasing will be a good tool where our strategic customers can acquire the asset without taking loan in the balance sheet.
Devendra Kumar Vyas, CEO of Srei BNP Paribas

Srei BNP Paribas, the largest player in the construction and mining equipment financing business, aims to renew its focus on leasing. According to Devendra Kumar Vyas, CEO of Srei BNP Paribas, “Today most of the large customers are stressed due to the challenges of the PPP model. In such scenario, leasing will be a perfect product where our strategic customers can use the asset without taking loan in their balance sheet.”

Over the past 5 to 6 years, around 60 per cent of construction equipment market was towards strategic customers and 40 per cent was retail. Small and medium contractors are now obviously back into the execution work and will be needing lot of equipment. “With the changing trend, the same may get revised, where in 60 per cent in Retail & SME and 40 per cent is strategic,” he said.

In the recent past, Srei BNP Paribas has added more than 1,000 people to serve retail and SME customers.

The company has not just consolidated its position over the years but also demonstrated the grit to survive through turbulent market conditions. Commenting on the innovative solutions the company is offering to deal with the ongoing slowdown, Vyas said, “We have been offering customised solutions for our customers in construction equipment and mining equipment domain.” He considers leasing as the best tool going forward. Leasing had not been progressively used by the industry for some time now.

Looking at reforms
The Indian industry is eagerly waiting for the implementation of GST and ICE finance is not an exception. “Once the proposed GST is through, leasing will be key growth driver for financing of construction equipment as it would address many taxation anomalies being experienced,” Vyas said.

Srei BNP Paribas has designed leasing as a product by partnering with the original equipment manufacturers (OEMs). “Over a period of 25 years we have developed a business model where to take care of the entire asset lifecycle; namely, Procurement, Deployment, Maintenance and Exit. Leasing will be a key factor in this plan and are rightly placed to use leasing as a key growth driver for the financing solutions,” he declared.

Optimistic outlook
The Indian government announced target of building 30-km road a day from the current pace of 17-km a day. This brings huge opportunity for the road equipment market, said Vyas.

He also believes that, sectors like mining, irrigation and urban infrastructure will provide much-needed impetus for the overall construction equipment market.

According to the Vision 2020 report by Feedback Business Consulting assigned by ICEMA for the study, the construction equipment market size which is of about $2.8 bn will become $ 5 bn by 2020. “The construction equipment market is expected a growth rate of 15 to 20 per cent CAGR. We are in the right direction and the market is picking up. We should be experiencing 20 to 25 growth year-on-year post September 2016,” anticipates Vyas.

USP of Srei
Commenting on what makes Srei a preferred destination for construction equipment finance Vyas said, “Our understanding of the drivers of this business, our ability to manage the asset life cycle, our flexibility in understanding customer business models, our customised solutions and our enduring relationships with customers and manufactures are the strengths that make us a preferred finance partner.”