Digital marketplaces are making asset disposals quick and simple, delivering higher return on investment due to transparency. Anant Raj Kanoria, CEO, iQuippo, explains the importance of digital platform for faster equipment sourcing which helps in time-bound project execution.
With markets being overcrowded and competition more intense than ever, coupled with a flurry of information in this digital age creates a lot of distractions. As a result, the need for platforms have become more important than ever, where one can get concise and relevant information, visibility and get connected to the ones needed. Similarly, in developing countries like India, infrastructure is the benchmark for progress and multiple economic activity and an indicator of quality of life.
In this context, it has become the mandate for the government to plug its infrastructure gaps and consolidate the approach to become a 'cyber-connected highway networked nation'.
Recently initiated series of revamping measures by the Government of India to remove the bottlenecks hindering the progress of the infrastructure sector, have brought a new era of developmental aggressiveness amongst the infrastructure industry participants. Harmonising policy measures and structural reforms such as the arbitration act, enactment of insolvency and bankruptcy code, and providing strategical support to revitalise public-private partnership (PPP) projects, is accelerating the pace of infrastructure development in the country. All these measures, along with fast-tracked awarding of projects are enabling construction equipment industry to prepare itself for the next phase of economic growth. Therefore, in terms of overall infrastructure development, India's rank has improved from 81st in 2015-16 to 68th in 2016-17 due to improvement in overall quality of roads, railways, ports and electricity supply. Government's increasing focus on augmenting its power generation capacity, enhancing connectivity through roads, railways, ports and also on ramping up the urban infrastructure have brought in new opportunities for construction equipment industry to scale up its pace towards delivering better support in the country's infrastructure development journey.
With considerable change happening in the infrastructure industry, the actions required to be successful are also becoming highly dynamic. The essence of being time-bound in projects is getting more imperative due to the incorporation of stringent penal clauses in course of non-compliance with the terms. EPC players are facing new industry-wide expectations to improve margins/shareholder returns and improve operational efficiency, all in an environment where project complexity is increasing. Although increased mechanisation over the years has increased the equipment demand even in rural areas, but utilisations need to increase to create higher efficiencies and margins. Now on an average, every 100 million rupees spent on a specific infrastructure project in India, 25 to 30 million is increasingly getting earmarked for equipment and mechanisation assets. Therefore, in these ever competitive times, strong alignment on procurement and utilisation of equipment have become exceedingly significant for contractors to deliver a project in accordance with the time and cost efficiencies.
On the other hand, digital channels and Internet of Things (IoT) have opened up new contours of industry practices across the stages in terms of procuring, deploying, operating, disposing and also monitoring performance of an asset. Integrated technology platform has the capability to empower the user to identify the best suited equipment for a particular job and also monitor the performance and efficiency at the touch of a button. Data-driven financing engine brings in transparent and personalised financial products for efficient capital structuring to give the best returns to the EPC contractor. Through crowd sourcing of manpower with the skill required for the job would also create time efficiencies in an industry plagued with labour and skill challenges. Today, digital marketplaces are making asset disposals quick and simple, delivering higher return on investment due to transparency. A digital platform for equipment and related services is getting more relevant as it augments a contractors' or users' ability to leverage scale and increase asset utilisations. This would lead to an efficient capital utilisation and generate higher shareholder returns. Most large firms operated on a decentralised basis, in terms of procuring or disposing equipment that adds costs and under utilisation of resources and equipment. Now, through IoT-driven software, fair integration and visibility of data centrally can enable in taking corrective actions and increase asset utilisations. Digital channels have made it easier and faster for managers to bring efficiency in their systems without piling up their costs. Therefore, with each passing day, these technologically driven tools are moving from 'good to have' to becoming 'critical differentiating factors', thereby creating immense value for industry participants.
Growing equipment market
With the government's Make in India campaign and huge earmarked investments for infrastructure development, we are witnessing strong inflows of FDI and relaxed regulatory framework for construction equipment manufacturing in India. In the last two years, more than 80 new equipment manufacturers across the globe have vividly shown interest in the Indian market and started accumulating their presence for future business opportunities in the sub-continent. These developments have indispensably pushed established OEMs to substantially evangelise the aftermarket activities of their assets class particularly in the used equipment trade.
The construction and mining equipment (CME) space being a low-volume high complexity business, optimising equipment lifecycle for large fleet owners have become the need of the hour in terms up-keeping their fleet to remain profitable. Retaining a balance between the costs of ownership of a fleet against the costs of operations is only possible when huge set of information around the asset is directly sourced from the field and synthesised accordingly producing impeccable insights. This requires symbiotic relationship between the hardware and software of an asset. Therefore, the phrase, 'data is the new fuel' is also highly applicable to equipment industry. For instance, at iQuippo, we are witnessing that users are procuring equipment online without physical inspection - particularly for commoditised asset class such a tippers, excavators and backhoe loaders. The only predominant reason for this transition in buying patterns is the availability of exhaustive set of verified information around the assets accessible to end-customers digitally in the form of reports, which wasn't even thought of in the earlier formats of trade.
With so much focus of the government creating world-class cities and providing enhanced mobility and connectivity to even rural areas, it will be imperative to have efficient and reliable contractors to complete these projects. To be efficient users and contractors, would need to rely on platforms for information and if these platforms allow them an ability to source equipment efficiently and increase their utilisations then they would be able to meet their targets. A study suggests that 75 per cent of any procurement research today starts with simple search on Google, and India with one billion smartphones and drive for a digital India, technology-based platforms will assist and aid users and contractors to expand their bandwidth and deliver state-of-the-art infrastructure.