‘Construction gear seeing demand uptick’
Seeing infra revival: Srinivasaraghavan
Demand for financing purchases of construction equipment and small commercial vehicles (CVs) has seen an improvement in recent months, said T.T. Srinivasaraghavan, MD, Sundaram Finance Ltd. “We are seeing demand for construction equipment going up in several States,” Mr. Srinivasaraghavan told The Hindu.
“Our disbursements for construction equipment exceeded our disbursements on commercial vehicles. It is almost unreal,” he added. “A lot of projects are coming back on track. The government seems to be committed to infrastructure spending, primarily on roads. The small CV segment too has been robust.”
The lender’s total disbursements slumped 79% to ₹929 crore during the quarter ended June. Of this, disbursements to the construction equipment segment accounted for 22.4%, while that to the tractor segment was 24%. In the first quarter of the previous financial year, these two segments had accounted for 10.7% and 5.1% of the ₹4,414 crore in disbursements, respectively. Disbursements for CVs accounted for a mere 26% of the total in the last quarter, compared to 57.4% a year earlier.
Asked as to by when he expected clarity to emerge on the way forward in the wake of the COVID-19 pandemic, he said, “December, I feel, is a good timeline to aim for; by that time, hopefully, we should have some relief from the pandemic and something will happen to mitigate this. Only then will we know how deep and serious this is. Right now, it is surreal.”
Mr. Srinivasaraghavan also pointed out that the broader CV segment, an indicator of an economy’s health, was still not out of the woods.
Asked if he expected potential replacement demand for CVs kicking in any time soon, he said, “Excess capacity that has built up is very significant and therefore the corner that you speak of is still further away than all of us would like. I don’t see revival any time this financial year. Activity is still reviving very slowly. For the existing capacity to get soaked up, it will take another six months.”