Disbursals for the construction equipment financing segment is likely to pick up this fiscal, feels Devendra Kumar Vyas, CEO, Srei Equipment Finance Ltd (SEFL). With 30 per cent market share, the Srei Infra subsidiary is one of the largest players in this category. In an interview to BusinessLine , Vyas spoke about industry expectations, and the growth prospects of new verticals like pre-owned construction equipment and healthcare equipment financing. Edited excerpts:

How is the construction equipment market faring this fiscal?

We thought the growth will come from September onwards, or after the monsoons. But surprisingly, in the last three months, sale of equipments – backhoe loaders and excavators – have seen over 50 per cent growth. This gives us an indication that the [equipment financing] market is poised for good growth.

Already, roads and irrigation projects are doing well, especially with government initiatives coming in. Now we look forward to the Railways and urban infrastructure segments picking up. The market is expecting at least 30 per cent growth in construction equipment financing.

Tell us about your foray into pre-owned equipment financing.

Right now, there is no organised market for pre-owned equipment financing. We are trying to create one with established price points. We had tied-up with JCB India for back-haul loaders, [albeit] only in Rajasthan. We will replicate the same in other States too.

This apart, we are looking to extend similar tie-ups with other manufacturers for excavators. Tie-ups are being explored with L&T Komatsu, Tata Hitachi and so on.

What has been its share to your revenues?

The used equipment market, we expect, will grow because of a demand–supply gap [in first-hand offerings] in the next three years.

In such a situation, the asset liability risk for SEFL goes down. This means that in case of default, we can re-deploy the equipment at a good price; because there are buyers for used equipment now; and at a standardised price.

Since good growth is expected in construction equipment financing, what will your strategy be for other verticals like IT and healthcare?

It’s been two-and-a-half years now since we entered the IT and healthcare equipment financing segment to offset a slowdown in our core businesses. This year (fiscal), we will expand the healthcare portfolio to [include] financing of smaller equipment.

For example, we will look to finance a small ECG machine at a diagnostic centre, or a dental chair. The average ticket size should be ₹15 lakh to ₹25 lakh. Earlier, our focus was only on large corporates, with the average financing size varying between ₹2 core and ₹5 crore. Our experience in the healthcare financing segment shows it to be a zero-risk one.

How will SEFL, being wholly-owned by Srei Infra, help you?

We can now we can offer holistic, end-to-end solutions like equipment financing, rentals, auctions and so on. It will help us provide integrated fund-based solutions.

What will be your NPA movement this year?

Last fiscal (FY-16), we were able to improve our asset quality. Gross NPAs came down from 5 per cent to sub three (per cent). Net NPAs was 1.99 per cent (down from 3.83 per cent in FY-15). There is still some room for improving NPAs by at least 50 basis points. But, I do not see that happening in the very short term.

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