Quippo has played a very dominant role in repositioning the industry. The rental industry being a highly operation-centric business, you cannot survive unless you increase or ramp up your operational efficiency. And my objective would be to see that this company focuses more on service aspect, as everything else is secondary, says HS Bhattarcharjya, CEO, Quippo Construction Equipment and Quippo Valuers & Auctioneers. Excerpts from an interview with Equipment India.

How do you assess the performance of CE rental industry in today's scenario?
Given the current scenario of tight financing, the CE rental segment should have got a boost. However, it did not happen mainly because of two reasons:
i) Most of the unexecuted projects, where machines have already been mobilised, are getting priority for investments;
ii) While the rental demand is high, payment uncertainties continue to plague the market.

So, it is a combination of factors and you have to be very particular when to rent, how to rent and where to rent.

What about the road sector which seems to be on track?
It is not really on track. Even the road sector has been impacted badly. NHAI projects and a majority of state highway projects have not steered off. Hopefully, after October things should improve slightly. With conservative GDP growth, there should be conservative spending trends. Naturally, we are not cut out from the overall economic scenario of the country. Ideally, with cost of borrowings going up, rental propositions should look better. Rental enquiries will be higher but we are apprehensive whether it will be backed up by sufficient fund resources.

Compared to the international rental industry how transparent is our industry?
In India, the rental business is still in its nascent stage. The rental players have not been able to join hands to bring in a sort of discipline in the rental industry. There are very few organised players, only some OEMs renting out their own set of machines and some construction companies who rent out their idle machines. But largely, it is in the hands of the unorganised sector.
Therefore, what is happening is, there is an element of predetermined pricing and hidden terms and conditions which is killing the discipline of the market. If you see the European market or other Western markets, their rental industry has an established norm. The rental industry needs to be regulated properly and it would be our endeavour in the days to come, to organise the rental industry and bring it on a common platform, largely in the interest of business rather than a few individuals.

But there is an association...
We had tried to form one but it broke away. We will try to reorganise it and revitalise it.

The ownership-mode is prevalent here. Is it a factor in hindering CE rentals from taking off?
The scenario is changing. Previously that used to be the mindset but now people have started to realise that owning the machine will involve manpower and hidden risks with regard to maintenance of machines and spares; and ultimately, at the end of the day when you complete the cycle, you need to get a better residual value of the machine. This is where Quippo has played a very dominant role in repositioning the industry. The rental industry being a highly operation-centric business, you cannot survive unless you increase or ramp up your operational efficiency. After all, we are in the service sector. So it all depends on how smartly we serve the customers. Quippo has been able to reposition the rental business with a gamut of services which have revolutionised the rental set-up in India. It is just a matter of time before the rental industry will attain a dominant position in the infrastructure sector.

Do you think the entry of global players is going to be a challenge?
Not at all. I think it will be rather an encouraging factor for us as these global players need companies like Quippo to learn more about the market. Rental business is nothing but staying close to the ground. It is the knowledge of the ground which helps you understand the model of the business. Global players can only bring in their machines but the rental knowledge will have to be acquired here. In Europe, people might get machines by swiping a credit card. That formula will not work in India. You need to know the ground realities. India is a multilingual country; what is good in Bengal is not good in Tamil Nadu, where business is not done the same way. We are in an advanced stage to extend our hand to any global player who comes in. We are probably the only company who has knowledge of managing 1,000 machines at any point in time, under various activity segments.

What about the market of used equipment?
The used equipment industry should be the backbone of rental industry because that reduces the cost of the machine and that benefit can be passed on to the end-user. Unfortunately, in India, we do not see that pattern emerging. The users of used equipments typically belong to a particular segment. Therefore, used equipment industry in India needs to be promoted. We, as an organisation, are trying our best to promote it. It requires technical skill and capability to multi-manage the various aspects of a machine; I am happy to say Quippo has mastered this knack over the years.

How strong is Quippo in the refurbishment area?
It would be wrong to say that we are only into the rental segment, rather we are an equipment service provider; from rental to valuation to disposal to maintenance and refurbishment of equipment. As an efficient rental player, we are very strongly into equipment refurbishing, though we are not commercially doing it at this point of time. We are into large scale asset management for repossessed assets of NBFCs, thus enhancing the residual value for them. As a group, we are present very strongly in the equipment market and we would like to leverage that. I can say that we have exciting days ahead in the next two to three years.

Brief us about the total size of rental business.
Equipment rental market overall is an unmapped industry. Since the industry is unorganised, it is very difficult to map figures. But from whatever data and records we have from OEMs and various sources, the market size roughly looks like Rs 300-400 crore. There is a vast untapped area.

What is your forecast for the next few years?
A couple of years down the line, our endeavour is to see the overall rental industry in India gain its rightful place. So my focus would be to bring some discipline and position the rental business in a manner that it deserves to be in. As far as Quippo is concerned, my objective would be to see this company focuses more on the service aspect, as everything else is secondary. We try to remain as close to customers as possible, and understand their needs. The rental industry is so huge, you can package, and repackage a transaction in so many ways. You are limited only by your imagination. Quippo has grown out of a beautiful imagination and I expect the family of Quippo will take the banner very high in the future.