Page 108 - Constrution Opportunities December 2016 Digital Edition

INDUSTRY FOCUS: EQUIPMENT FINANCE EquipmEnt financE financing need to be integrated. Today, businesses are looking for the same service and financing options from equipment sellers. automation will take centerstage: Equipment fnancing companies to need to quickly take the automation route to sustain and survive in this tech-led market. Tey need to make the entire process foolproof and transparent to effectively manage payment terms and other important services associated with fnancing. Tere will be rise of next ‘Uber’: We are moving over to rental space very fast, though not at pace of our global counterparts. Yet the transformation is signifcant. Pretty soon, we would witness the next Uber in the making in construction equipment II and tier III towns, good times ahoy for companies over the next few years. space as well. Major reason riding this construction equipment in India. The Due to the availability of equipment growth is the entry of millennials in the ‘pay-as-use’ model is witnessing growth financing, construction companies can business. Millennials will use automation momentum as it substantially reduces costly easily find cost-effective loans. Online and customisation to ensure no borrower is breakdowns and eliminates storage costs. financing is another upcoming option lef behind, pushing for creative fnancing In this context, a recent study points out that available to customers, which would structures to get more small business owners the global construction equipment fnance ultimately help them use available working the equipment they need. Equipment fnance market to grow at a CAGR of 9.9 per cent capital efficiently. The scenario in the companies that embrace this mentality will during the period 2016-2020. Technavio’s construction equipment fnancing market succeed; those who don’t, will falter. market research analyst highlights that is quite complicated as many construction innovation is thy name of adversity: since many construction companies have to companies have money tied up with debtors Customer demand for greater fexibility and choose between buying or leasing equipment in inventory and receivables. Cash flow convenience will augment the use of non- or putting their funds into projects, lending management plays a very crucial role, and standard fnancing agreements. Shifs in companies offer them options to lease companies are looking for ways to increase customer preferences for managed services equipment. As renting helps construction cash fow. In this market, the lenders and (bundling equipment, services, supplies and companies to save in taxation and also borrowers work together to find viable sofware), pay-per-use leases and alternative allows them to pledge the equipment as solutions, which in turn will help to spur the financing will spur equipment finance collateral, it is increasingly being preferred prospects for market growth. All in all, it’s a companies to fnd innovative ways to fll over buying a new equipment as operators fortune cookie for construction equipment the demand. Tese deals would complement are exempt from depreciation charges. companies in India. standard lease options rather than replacing Te APAC region has the biggest market Says ramesh iyer, them. share in the construction equipment fnance VC and mD, market and is expected to generate close to mahindra & mahindra groWth FortUnes $118 billion by 2020. In this region, the Financial services Ltd With the growth of the rental market enormous demand for rental equipment “Te feedback from our picking up in India and specially in tier will boost the market demand for fnancing customers indicates that there is heightened activity in infrastructure and construction projects. Te government’s path-breaking initiatives such as Make in India, 100 smart cities and a liberalised FDI regime will further boost both these interrelated sectors. Infrastructure fnancing in de-marketed projects is the need of the hour. For instance, in the road sector, the government is already in the process of awarding 25,000 km of national highway projects in 2016- 17, as against 10,000 km awarded in 2015-16. Tis will drive demand for fnancing of construction equipment.” u 112 construction opportunities|DECEMbEr 2016