The Hindu Business Line : Srei inks deal with Tatas for 10,000 vehicles

SREI Infrastructure Finance Ltd (formerly Srei International Finance Ltd), with its associate company IIEL (Indian Infrastructure Equipment Ltd, popularly known as Quipo), has struck a deal with Tata Motors for 10,000 Tata vehicles. The pact is specific for the year-ended March 31, 2006.

According to corporate sources, it is Srei's biggest venture with Tata Motors till date. Srei had developed a specific programme with vendors before signing the deal with Tata Motors. This is also the first such deal for Tata Motors. As per the agreement recently signed in Delhi, the clients of both Srei and IIEL will now benefit from multiple offers of Tata vehicles and tippers. "The vehicles will now become more affordable and readily available with no risks and no problems of residual value." According to an official statement by the company, with the delivery of the vehicles throughout the country, the Quipo clients will now get numerous options. It is clarified that the mode of deployment of the vehicles would be through an operating lease (dry or wet lease) or rentals. This kind of financing of heavy-duty vehicles is now the emerging trend overseas, "and Srei is the only infrastructure equipment financing outfit in India to provide customers with such leasing and rental facilities."

The company has researched extensively the need to improve the affordability of infrastructure equipment currently available in the country, "in order to move the industry more efficiently."

Quipo is said to be the only end-to-end equipment bank in the country catering to projects across India through the infrastructure equipment rental route. The company has leading multilateral funding agencies like IFC, Washington, FMO-Netherlands, Swedfund - Government of Sweden and Ingersoll Rand India, a member of Ingersoll Rand, USA, as its equity partners. Srei at present has a pan-India network of 32 branches, and is also present in the UK, Germany and Russia.

Our Mumbai Bureau reports: Mr Shyam Mani, Vice-President (Sales and Marketing - Commercial Vehicles), Tata Motors, said each vehicle would cost between Rs 7-8 lakh. This puts the cumulative value of the deal with Srei and its associate outfit, Indian Infrastructure Equipment Ltd (IIEL) popularly called Quipo, at Rs 700-800 crore.

The order, spanning tippers and two and three-axle vehicles, follows a pilot project last year involving 500 commercial vehicles.

The vehicles would be procured through a straight sale transaction between Tata Motors and Srei and subsequently leased or rented to prospective users by Srei. The truck manufacturer has been given a monthly schedule for supplying the vehicles against payment.

Product support would be the onus of Srei backed most likely by an annual maintenance agreement with Tata Motors.

"Operating lease is going to be an avenue of business in the future. Any finance company that gets into it, we would be happy to work with them," Mr Mani said.

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