Sunday, September 27, 2020
Home Business Primary Focus of New Age Leasing Businesses to Provide Greater Access to...

Primary Focus of New Age Leasing Businesses to Provide Greater Access to Trade, Technology

Generally speaking, the primary focus of the new age leasing businesses must be to provide greater access to trade, technology

Steps taken to boost the Indian economy, especially with a view to providing a fillip to the credit markets, have lately dominated the news headlines. This is an excellent time to look at the need for the more significant role that the leasing companies must play to relieve the pressure on credit markets. Generally speaking, the primary focus of the new age leasing businesses must be to provide greater access to trade, technology and high capital expenditure for Indian companies, especially with a view on high capital expenditure but movable assets such as sea containers and aircraft. Assets such as large-scale sea containers and planes have movability in terms of the asset user being changed, which helps in the utilisation of the asset when regional trends change or individual company fortunes vary.

The critical advantage of changes in asset ownership is that while the assets being utilised are exposed to macroeconomic trends, the exposure to the fortunes of individual companies is significantly reduced. Even as an industry is seen to perform well, a particular company can be in trouble due to a variety of reasons. The ability of an efficient leasing business to reallocate and manage assets creates significant value for the entire ecosystem. Companies benefit since they have greater flexibility regarding assets and leasing businesses create value through access to a broader market.

While the focus on new-age businesses through technology usage and asset-usage is crucial, so is innovation utilising more efficient leasing models that can help improve capital usage and asset utilisation for businesses, leasing companies and capital allocators. The applicability of leasing solutions, especially on high capital expenditure movable assets, can help boost trade and exports as further focus on businesses such as sea containers picks up.

As the government looks for the Sagarmala project to provide a boost to the ports related business in India, efficient leasing businesses that have a focus on high capital expenditure movable assets in the maritime space will be vital. Especially, to create an ecosystem that can genuinely help the Sagarmala port assets generate the required returns and deliver the economic value foreseen.

Primary, Focus, Leasing Businesses
Steps taken to boost the Indian economy, especially with a view to providing a fillip to the credit markets, have lately dominated the news headlines. Pixabay

To further boost new-age leasing businesses, the two driving factors will be access to low-cost funds and efficient asset management on the part of the leasing businesses. For capital looking at India as a business opportunity, financial innovation to provide leasing businesses that can be astute asset managers with the assets and yet borrow for long is the way forward.

Efficient asset management and aggregation of assets will help reduce the cost of capital. A leasing business that can have a more extensive regional focus with access to more potential customers will help diversify the risk and hence reduce the cost of capital. Risk-pooling both through geographical and customer diversification is precisely why leasing businesses should be able to utilise relatively inexpensive balance sheets to reduce the cost of capital expenditure for the economy. While this applies to leasing businesses in general, for assets that are high capital expenditure and yet movable, efficient asset management should help reduce the cost of capital further. Lower cost of capital is a much-needed requirement as Indian businesses face a capital crunch. The problems faced are two-fold and inter-related, i.e., low access to capital and high cost of the available capital if any. A robust leasing business

that focuses significantly on the movable high capital expenditure assets helps reduce both the issues mentioned above.

The leasing businesses mentioned are also a more efficient economic model for the economy than individual companies borrowing from banks to make capital expenditures for high Capex movable assets. The advantages mentioned above of risk-pooling and asset management allow the leasing company to reduce the cost of capital. The companies benefit through lower cost of capital and the dependence on purely bank financing is reduced.

Also Read- Exhibition Marking 100 Years of First Display of Korean Anti-Colonial Resistance to Open in Delhi

Additionally, when individual companies face issues such as unfavourable business conditions and bankruptcy, a visible concomitant of a rapidly changing economy, leased assets can be pulled out by the leasing company and utilised elsewhere. Alternatively, assets backed by bank loans must go through a cumbersome and long bankruptcy process with precious capital tied up unproductively for extended periods. The efficient deployment of capital is a crucial factor that must be kept in mind while promoting new-age leasing businesses in India.

As India looks to tide over the current economic slowdown to generate significant economic growth in the decades to come, it would be sagacious to have a renewed focus on new-age leasing businesses to reduce the cost of capital and improve asset access. (IANS)

STAY CONNECTED

19,135FansLike
362FollowersFollow
1,776FollowersFollow

Most Popular

I Am a Good Listener to Good Singing: Manoj Bajpayee

National Award-winning actor Manoj Bajpayee, who has tried rapping for the first time in the recent song, Bambai main ka ba, admits he is...

Pandemic Negatively Affecting Our Dreams, Women More Vulnerable: Study

The anxiety, stress and worry brought on by Covid-19 is not only limited to daytime hours as it is affecting our dreams as well,...

The Modern Bride

Lockdown may have forced the Big Fat Indian Wedding to become a leaner affair but a bride's approach to fashion is more discerning than...

Leading change in India’s Remote Areas: Nutrition Month

When Bihar's Kurmaha village-based Lalmati Devi, a rural laborer from an impoverished background, attended sessions on health and nutrition through a self-help group she's...

76% Marathi Singles Take Their Own Decision on Marriage

Data revealed fascinating insights on Maharashtrians and their partner preferences while choosing for their marriage. Marathi Matrimony one of the leading matchmaking services for Marathis,...

Playback Singer Asha Bhosle Says- “Do Your Riyaz Daily”

When she turned 88, Asha Bhosle reinvented herself. She launched her YouTube channel, shared anecdotes about her life with audiences spanning three generations or...

Know if Natural Medicines Can Heal Coronavirus Symptoms

In the last eight months of the Coronavirus pandemic, enough cases have been made for supplementing Covid-19 treatment with natural medicine. Data emerging from...

Having Pets Linked to Reduced Psychological Stress During Lockdown

Sharing a home with a pet appeared to act as a buffer against the psychological stress during the lockdown, say researchers adding that keeping...

Recent Comments