Sriram of IndusInd Bank: CE finance industry is a competitive marketplace
AG Sriram, Head – Consumer Finance Division, IndusInd Bank, speaks on the current portfolio in relation to construction equipment financing.
With the Indian government now fast-tracking infrastructure projects, the CE sector is expected to get increasingly busy. What's your take?
In the 2022-23 budget, the Government has increased its allocation to capital expenditure by an unprecedented 35 per cent, and recognised construction activities as a key driver of the economic engine. This budget has envisaged many initiatives that will spur growth like highway expansions, river linking projects, Nal se Jal scheme for delivery of drinking water, railways, digital healthcare etc.
AG Sriram, Head – Consumer Finance Division, IndusInd Bank, speaks on the current portfolio in relation to construction equipment financing. With the Indian government now fast-tracking infrastructure projects, the CE sector is expected to get increasingly busy. What's your take? In the 2022-23 budget, the Government has increased its allocation to capital expenditure by an unprecedented 35 per cent, and recognised construction activities as a key driver of the economic engine. This budget has envisaged many initiatives that will spur growth like highway expansions, river linking projects, Nal se Jal scheme for delivery of drinking water, railways, digital healthcare etc. It has also expanded the Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 50,000 crore. The government has also launched the PM Gati Shakti programme, providing for setting up 100 Gati Shakti multi-modal transport terminals in the next three years and making India’s transport infrastructure world-class leading to reduced travel time, transportation costs and job-creation. Underlying need for new product development in the high-end infrastructure space including in road building and real estate is likely to generate demand for hitherto niche construction equipment like tunnelling equipment, pumping and dewatering equipment, all-terrain cranes, tower cranes etc. We are hopeful for the launch of new products to meet these requirements. The theme of Excon 2022—Building India for a New World—is something we are excitedly looking forward to participate in actively. As a firm offering construction equipment finance, how do you look upon this scenario as an emerging opportunity? With the construction equipment industry likely to grow by 5 to 7 per cent as compared to 2021-22, we are confident of growing ahead of market in CE finance as well. We have tie-ups across all major industry players and OEMs. We are one of the earliest players in the segment and have a wide branch network of over 1,200 branches across India. We are optimistic and poised to convert this opportunity to our advantage. How has business been for your firm in the wake of the economic slowdown and what are your hopes for the forthcoming season? The industry has bounced back since September 2021 and the third wave of COVID-19 has had limited impact on the overall economy. Currently, our business graph in on an upward trend and at par compared to pre-COVID period. We will continue to maintain our wallet share in the industry. Tell us about your current portfolio in relation to construction equipment financing along with the details of the business model you follow? We have a considerable presence across the Indian geography and are leading player in this segment since the last 30 years. Our unparalleled expertise in the segment, superior underwriting abilities, significant market penetration and quality portfolio gives us considerable competitive advantages that we leverage to establish market leadership. We fund across the spectrum of customer categories including retail, captive and strategic. In keeping with our objective of being a one-stop shop for all financing needs, we also provide access to non-fund based solutions like letters of credit, buyers’ credit for imported machinery, cranes and high-value equipment including funding for custom duty in for imported equipment. Give us an idea of the current financing trends when it comes to construction equipment finance? The construction equipment finance industry is a very evolved and competitive marketplace. We have carved out our space in this industry based on our key value propositions and competitive differentiators like diversified portfolio, vast geographical access, broad customer spectrum and excellent customer service. We pride ourselves on being in sync with evolving customer needs and aspirations and offering products - both fund based (equipment and term loan) and non-fund based (letters of credit) - that satisfy specific requirements. As a modern bank, we also offer a seamless, quick and completely digital approval process that allows us to deliver extremely short TAT to our customers. In addition, our branches are equipped to make decisions that aid the customer more swiftly as compared to other players. What is the support you are offering to the rental equipment segment?? Increased input costs coupled with slow economic growth in the last two years has made renting equipment a safer choice vis a vis buying a new equipment. While the rental equipment market is still relatively small as compared to other parts of the world, it is becoming a viable alternative for construction firms, builders and sub-contractors who intend to reduce their overhead costs. A significant segment of our customer base hail from rural areas, are first time buyers, have low exposure to the construction/infrastructure industry and are mostly new to finance as well. However, they are quite focussed, committed, have a high payback propensity and are cautious about their credit worthiness. As we have a deep understanding of their business models and repayment track, we support this cohort with our range of easy financing solutions.