An online platform for certified construction equipment across India will increase utilisation rates of machinery and reduce the payback period for all stakeholders, says Debnil Chakravarty, Chief Business Officer, iQuippo.
With the rise in Internet and mobile phone penetration, India has witnessed digitalisation in almost all walks of life and business. While some sectors have embraced the digital economy as the new way of life Ã¹ for example, movie ticket bookings – others in the e-commerce domain like online pharmacies and grocers, are unduly taking time to make this shift.
And while technology has been disrupting the way most businesses operate, the construction and mining sectors continue quietly with traditional practises of conducting business. All this, however, is set to change. Firms like iQuippo, which is a recent start-up based out of Kolkata, seek to revolutionise the construction and mining equipment industry by customising construction and mining equipment services to become available at the click of a mouse.
This kind of an online platform for buying/selling/renting heavy equipment and allied services follows an open marketplace model, and allows users to register and list their assets and services to end-users across India. In addition to buying and selling of equipment, users can also purchase genuine spare parts and avail services like asset valuation and certification, financing and insurance, parking and yard management, manpower, logistics and equipment servicing – thereby making it a one-stop shop for all equipment-related needs that results in substantial time and cost savings for the users.
However, each sector comes with its unique set of challenges and problems, and the construction equipment industry is no exception. One of the key issues plaguing the sector is its highly fragmented nature and information asymmetry. This means that most of the transactions happening in the used equipment space happen in a localised manner and without any means to ascertain fair market price of the asset. The solution to this lies in digitalising the entire lifecycle of construction and mining equipment, and bringing information on asset availability and valuation within the reach of end users.
A fully ‘Digital India’ should have its nation-wide audience of buyers and sellers on the same platform, thereby fetching the best possible price for assets and services. Going forward, this will not only help consolidate this highly fragmented market, but also facilitate fair price discovery of used equipment by eliminating information asymmetry by providing a wider market access to users.
Low rental penetration
Secondly, when compared to their counterparts in developed economies, CE owners in India have traditionally seen very low machinery utilisation rates Ã¹ primarily due to low rental penetration. Logistical agencies offering services of renting and sale of equipment will make things easy and hassle free for both the parties. An easy access to certified equipment across the country will increase the utilisation rates of machinery across the board, thereby reducing the payback period for all stakeholders.
Another problem plaguing the used equipment industry is the lack of transparency. Most transactions currently go through local brokers, without the requisite paperwork that would safeguard interests of both, the buyer and seller. An in-house generated research report suggests that a huge portion of transactions in the used equipment space are unaccounted for cash payments.
Domain knowledge helps start-ups leverage customised and legally vetted sale contracts for all transactions which are then carried out through the platform. This safeguards the interests of both the parties. The platform also provides integrated valuation and certification services to ensure fair and transparent dealing. Manpower crunch
With the infra and construction sector witnessing huge growth, lack of certified and qualified manpower is another key issue plaguing industry. There is a need to address this issue. The need therefore, is to develop a dedicated platform that promotes skill development and aids the process of recruitment and hiring of manpower. Tie-ups up with multiple operator training schools serve as an avenue for students of these schools to gain meaningful employment. Considering the demand supply mismatch in the operators’ space, there is a huge requirement for skill development and manpower recruitment that the Union Government has emphasised as a strategic priority.
Certified opera-tors can register themselves on online platforms and upload information like experience, certifications, expected salary and availability. The digital space can be actively used by prospective employers to contact and hire candidates who meet their specific requirements.
Deep industry experience should be aimed at leveraging technology to usher in a new tomorrow for the very-grounded construction equipment industry. Our start-up, the iQuippo platform, within two weeks of its launch, got more than 1,000 assets listed for sale and rent, and given the kind of response garnered, the number is set to touch 10,000 pretty soon.
E-auctions can be offered to all stakeholders, big or small, in the construction equipment industry – including manufacturers, dealers, corporates, end-users, operators and mechanics. Digital India seems to have hit the spot with the construction and mining equipment industry and seems to be within reach of disrupting the way the CE industry functions.
About The Author
Debnil Chakravarty is Chief Business Officer, iQuippo, SREI Equipment Finance Ltd (A joint venture company between SREI and BNP Paribas).