Rental revolution

25 April 2008

Despite recent growth, construction equipment rental remains in its infancy in India, as Sarosh Ghandy, chairman of the Excon exhibition for the CII told IC, “In recent years the rental and leasing industry has seen an upturn. Still, only 5% of equipment is rented, compared to about 60% in parts of Europe or North America.”

The company doing the most to change that is Srei Infrastructure Finance. This specialist in equipment financing branched out into rental in 1999 with the establishment of its Indian Infrastructure Equipment Limited subsidiary, which is better known by its brand name &Quipo'. According to Srei managing director Memant Kanoria, the business is a spectacular success. “We see growth of +100% per year – that's if we're slow,” he said.

One of the interesting features of Quipo is that as well as carrying out traditional rental of its own equipment, it is taking idle machines from contractors and adding them to its fleet of hireable machines, with the two parties splitting the profits.

Although it is a young company, Quipo has a sizeable fleet. “We have close to 1400 pieces of equipment, and it is valued at US$ 55 million. We expect to double our fleet every year for the next three to four years. Our target is to have a fleet worth US$ 300 million by 2010,” said Quipo managing director and CEO, Arun Kapur.

According to Mr Kapur, part of the task of establishing Quipo has been to educate contractors about the potential benefits of renting rather than owning machines. “When we started it was a question of changing the mindset, but it's such a useful concept that customers have adopted it quickly. There are now several large companies that completely outsource their equipment to us. Today, nine out of ten of the top Indian construction companies are our customers,” he said

With annual sales revenues at US$ 20 million per year, Quipo could be said to have a 1% share of the US$ 2 billion Indian equipment market, and it is by far and a way the biggest player in the rental sector. But now the company is making significant inroads, it expects others to enter the market.

“The competition is bound to come in. We believe we will see two or three national players in the next four to five years. But at the moment everyone's watching us,” said Mr Kapur.

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