Srei Equipment Finance to fund medical, IT kit projects

Hyderabad: Srei Equipment Finance, a joint venture between Srei Infrastructure Finance and BNP Paribas, expects to start financing medical and IT equipment projects from next year.

“The plans are in the initial stages, but by the end of the current financial year, we expect to finance the first pilot project,” Mr D. K. Vyas, Chief Executive Officer, Srei Equipment, told reporters on the sidelines of an event here.

According to him, the medical equipment market in the country is estimated at $500 million and the IT equipment much more.

The joint venture was formed with an initial net worth of Rs 800 crore and currently has an asset base of Rs 8,000 crore.

Mr Vyas was in the city to conduct a unique Dutch-style reverse auction of interest rate called Paison ki nilami.

The company has conducted similar auctions in six cities earlier and apart from Hyderabad, plans to have them in Bhubaneswar and Kolkata over the next couple of days.

“This is the fourth year that the auction has been conducted and the total business raked in was to the tune of Rs 1,500 crore on the previous occasions. But this year alone, we expect to do Rs 1,500 crore through the nine events,” he said.

“We bring together construction equipment manufacturers on one side and contractors engaged in construction activities on the other. After which we offer the companies finance for the equipment being presented, for which the bidding will be done Dutch style.

That is, the interest rate will start high, and be lowered until a contractor bids to buy at that interest rate,” Mr Vyas said while explaining the concept.

He added that bids for the loan are allowed by only those contractors whose due diligence qualifies them to do so.

Mr Vyas also said that in the auctions so far, the interest rate ranged from zero per cent for one year finance to 12 per cent as against the general rate of 15-16 per cent that is offered outside.