Sudarshan Singh, CEO, and Sanjay Khanna, COO, Quippo Valuers & Auctioneers, in conversation with EQUIPMENT INDIA, explain the various factors involved in equipment auction and the current market trend in India.
Could you elaborate on Quippo´s concept, business model and processes for equipment auction business?
It takes special expertise to get the best value to owners from the sale of surplus assets. Quippo has designed an auction platform to buy and sell construction and mining equipment, commercial vehicles, industrial assets, plant and machinery, scrap and more, ensuring our customers and clients get the best asset valuation and highest return from auctions.
What are the CE categories being auctioned by Quippo? What about application-specific high-tech and high-value equipment? What are the fastest selling categories as of now and what can be expected in the near future?
We have proven and trusted live, online auction model and private treaty for sale of CE categories: earthmoving, road, and mining machinery. Our fastest selling surplus asset categories are backhoe loaders, excavators and tippers. We add more surplus assets to our inventory everyday, making it easy to inspect and bid.
In light of: a) BS VI emissions being implemented with effect from 2020 and b) Compulsory retirement of HCVs more than 15 years old, what will be the impact on the auctioning of used HCVs, which are one of the largest selling items during equipment auctions in India?
The Government of India has announced the BS-VI time line in 2020; however, the policy is not clear yet to set the availability of fuel across India, OEM´s commitment to roll out BS-VI compliant engines and after-sales network upgradation. Hence, till the time these are defined, then only the government can plan how to retire HCVs which are more than 15 years old. If implemented as per the GoI plan, users of HCVs will have to sell those vehicles and the market for auction companies may see major impact on sales. Quippo´s presence and expertise in the domestic market has shown proven conversion of surplus assets into cash.
What is your take on the emission compliance norms being considered by the government for construction equipment in the country, to start with in urban areas, to your business?
Presently, wheel loaders, motor graders, and compactors adhere to BS-III emission norms, whereas the rest of the construction machinery has BS-II norms against automobile industry at BS-III and BS-IV (40 cities having 50 ppm sulphur fuel). We understand government bodies like ARAI and MOST are working with construction/mining machinery OEMs - both domestic and international - to decide norms when emission norms change in 2020.
What are the challenges faced by the industry?
The auction industry serves as an effective means to control the distribution of material whose flows are irregular or occasional. It still remains/is seen to be unorganised and shows the sign of immaturity. Our auction system is also educating customers about familiar markets, convenience and benefit of auctions.
There´s unwillingness to accept the commission fees/charges to be paid to auctioneer companies after acceptance of auction. As prevailing rates charged are 2-5 per cent as compared to overseas market of 10 per cent, customers need to understand the value addition of auction companies in terms of transparency, trust, valuation and better price realisation of assets sold, instead of conventional methods. Quippo is an efficient auction platform converting surplus assets into cash.
The globally adopted unreserved price model is not yet accepted in the domestic market. At present, construction companies do not have fixed rollout policies for their machinery where they can get maximum resale price. Secondly, machines are run till they are not economical to operate. Book values are high, so there are a lot of different prices at the time of disposal, which most of the time is not acceptable to sellers. Users need to realise the time that the best resale values happen is when a machine is in working condition, as per the approach followed and adopted by overseas construction companies. This approach will get them better prices and lead them to have young machines for higher productivity and low maintenance.