Ritchie Bros. Auctioneers, the world's largest industrial auctioneer, sells used and unused industrial equipment and other assets to major industries. Sameer Malhotra speaks to Harish Rao about the company's plans for India.

Tell us about your India operations. What is gross auction sales revenue and at what rate is it growing?
Ritchie Bros. Auctioneers was established in 1958 in Canada. Today it is the world's largest auctioneer of industrial equipment, selling more than $3.18 billion of trucks and equipment at over 350 unreserved auctions around the world in 2007 alone. We have offices in 27 countries and 38 auction sites worldwide.
There is a great need for construction equipment as a result of the infrastructure boom currently taking place. With increasing demand for equipment causing the price of new machines to rise, many people in the industry are looking for a reliable source of good quality, used machines at fair market prices. We offer one of the best sources of used and unused equipment in the world, which is why we attract an increasing number of bidders to our auctions each year. In 2007, we sold more than 261,000 equipment items and processed more than 254,000 bidder registrations.
An average Ritchie auction features more than 1,400 equipment items for the construction, transportation and other industries. At our unreserved auctions every item sells to the highest bidder on auction day, regardless of price. There is a great need for this type of fair, transparent system for buying and selling equipment in India, which is why we're looking forward to introducing our unreserved auction methods here.
How many unreserved auctions you have conducted in India so far? How is the response?
Ritchie Bros. has not yet conducted an auction in India, but we are looking forward to conducting our first unreserved auction here before the end of 2008. For many years we have been welcoming bidders from the Indian subcontinent to our auctions around the world (especially to our auctions in the US, Dubai and Singapore). Many of our Indian customers choose to travel to the auction site to bid in person; others bid over the internet using our real-time internet bidding service, rbauctionBid-Live. We now have thousands of customers in India, and were excited to establish an office in New Delhi in 2007 to better serve their needs.
Why are you concentrating only on unreserved auctions? Whether this type of auction is useful to find fair market value for new machineries?
We have conducted almost 3,800 auctions since it was established in 1958 - and every single one has been strictly unreserved. That means there are no minimum bids and no reserve prices on any item in the auction; everything sells to the highest bidders on auction day, regardless of price. We also forbid owners from bidding on or buying back their own equipment in the auction, which means that every item is sold to a new owner on auction day.
Our commitment to strictly unreserved auctions, with no bid-ins or buy-backs, ensures that the bidders set the prices at our auctions - not the owners or Ritchie Bros. As a result, our customers know that they are paying fair market value for the equipment they buy at our unreserved auctions. We sell both used and unused equipment and trucks at our auctions - and even the new machines are sold unreserved, which means the market sets the price, not the manufacturer.
Have you set any minimum quality standard for equipment to be auctioned? How can a prospective buyer ensure that equipment offered is of good quality and free from encumbrances?
Every item in every Ritchie Bros. auction is sold "as is, where is." We make no guarantees about the condition of the equipment, but we do make any information we have about the machines available to prospective buyers. We post photos and details of every item we sell on our website, www.rbauction.com. We also display the equipment at our auction sites for weeks, sometimes months in advance of an auction and we encourage our customers to visit the auction site to inspect, test and compare the items before the auction day.
Our customers are free to bring their mechanic to the auction site, climb in the machine, turn it on and use the controls. Allowing our customers to see and test the equipment helps them determine exactly how much they are willing to pay, which makes them more comfortable when it's time to bid on auction day. Ritchie Bros. also has a dedicated title search department. We guarantee clear title on every item we sell: if it doesn't have clear title, the buyer will get their money back.
Ritchie Bros believes that growth from the company will come mainly from USA and Western Europe. What needs to be done for India and China to occupy this space?
We have been serving customers in Asia, including India and China, for many years, establishing our offices in New Delhi in 2007 and Beijing in 2004. We have not yet held an auction in either country, although we are planning to conduct our first unreserved auction in India before the end of 2008.
The size and scale of our operations in India and China are much like our operations in the US in the late 1960s and in Europe in the 1980s, when we were first establishing our presence there. When we enter a new region, whether it's USA or India, we spend a lot of time educating our new customers. Most of our customers start as bidders and buyers at our auctions; when they are familiar and comfortable with our auction processes, they often choose to sell equipment at our auctions. After a period of time in a new region we will conduct an offsite auction, later establishing our own auction site.
We have been conducting unreserved auctions in US and Western Europe for a long time; people in those areas are familiar with our auctions. Every year we attract more bidders to our auctions in those areas, which encourages more people to sell at our auctions, which bring in more equipment consignments, which brings in more bidders. As a result, we find that we grow quite rapidly after we become established in a region. We believe this type of rapid growth is likely to happen in countries like India, after we have been established here for a number of years. We are ready to conduct our first unreserved auction here - and we are looking forward to growing our operations here, as we have elsewhere in the world.
With material price is increasing cost of new equipment is galloping. Also, demand for equipment is increasing due to booming construction activities in India, China and Gulf. Keeping these points in mind how do you foresee market for used equipment in coming days?
In our experience, demand for used equipment increases during boom construction periods. When prices for new machines rise and demand outpaces supply, many people choose to purchase good quality used equipment instead of new machinery. Ritchie Bros. sells more used equipment than anyone else in the world - more than 261,000 items in 2007 alone - making our unreserved public auctions one of the best sources of good quality used equipment in the world.
But in our experience, demand for used equipment remains strong during tougher economic times. Many people will choose used equipment over new in an effort to control their business costs - and an increasing number of people will have idle equipment that they choose to sell, which keeps supply strong.
Will climbing inflation and domestic interest rate have an impact on your business?
Inflation and rising interest rates definitely impact our customers, reducing their spending power. Rather than paying interest on machines that are idle or underutilised, many people will choose to sell—which brings more equipment to our unreserved auctions. At the same time, an increasing number of people in the construction industry will buy used equipment rather than new. As a result, we tend to see more equipment consignments and more bidders at our auctions when rising interest rates put pressure on businesses.