每日吃瓜

Market dynamics
Although OEMs and organised companies like Ritchie Brothers, Quippo Construction Equipments Ltd Shriram Automall have a nationwide presence for selling or auctioning used equipment, almost 80 per cent transactions still take place through local brokers or word of mouth channel.

Majority of sellers are small localised companies who buy old equipment, refurbish them in their workshops, using either genuine or spurious parts and sell to their buyers. Usually, the price offered by localised vendors is very low as compared to prices offered by OEMs. The price difference can be up to 30 per cent depending on case to case.

Major players and competition
The major players in the market for 20 tonne and 30 tonne class excavators are small and medium size localised vendors. Some of them offer specific brands like used Caterpillar Tata Hitachi, L&T Komatsu, Volvo and Hyundai while others are not brand specific... Unlike overseas markets which have an organised pre-owned equipment sector, the Indian market is very fragmented.

Many OEMs are also dealing in used equipment. However, their market share is less than 20 per cent due to lower market reach and penetration.

Ritchie Brothers, Quippo Construction Equipment Ltd and Shriram Automall auction used excavators through their various outlets in the country and have gained some market share over the past several years.

Major buyers
The major buyers are small and medium sized local contractors and rental companies who leverage low-cost inputs to offer low affordable rates for their services. For the last few years, due to the downfall of economy, many large construction companies have also started procuring second-hand units.

Challenges
Both localised sellers and buyers of used excavators face major challenges. From the sellers? perspective, delivering consistent quality at minimum cost, inability to carry large work in progress and finished machine inventories, skilled technicians in various trades, arranging adequate working capital, absolute lack of marketing channels or organised selling platforms and intense competition in selling prices are major issues. While buyers are burdened with the dilemmas of acquiring reliable excavators delivering reasonable and economic second life cycle, absence of any price rationale, localised availability and after sales service.

Growth drivers
Small and medium contractors and local hirers regularly look for less expensive options. Banks are no longer lending additional funds for their projects on account of past NPAs. As such they are opting to acquire used equipment to meet their requirements, thereby driving the growth.

Other than NBFCs, even banks are financing used equipment. This option contributes to overall project cost control in terms of less interest cost and EMIs on investments.

Export potential
For the past 4-5 years, the Indian market situation has been very bad. Therefore, many companies have undertaken projects abroad at very competitive prices. The prevailing prices for new equipments in those countries are very high. Hence importing used equipment from India is a viable option for them, their local partners and also the local contractors. On the other hand, many Indian construction companies have offloaded their inventories providing the resellers to buy good quality, used equipments of popular brands in India and export them to Africa, South East Asia and even Middle Eastern countries at very attractive prices to their customers and lucrative margins for themselves. Some medium size exporters claim to have achieved annual exports of Rs 150 crore! Learning from such experiences some big overseas companies are reported to have also opened their India offices for exports.

Future outlook
Our internal research indicates that Indian market for used equipment will steadily grow at 20-25 per cent annually. The ?Make In India? campaign will also contribute to India becoming one of the biggest export hubs for new and used equipments within the next 3 to 5 years.