Grundfos, the Danish pumps manufacturer, established India business in 1998 with only 2-3 people. Today, Grundfos India, which recorded annual turnover of around Rs 500 crores in 2016, has 337 employees in R&D, operations and sales. Steering the growth momentum of the company over the years is Ranganath NK, managing director, Grundfos Pumps India Pvt Ltd.
In conversation with Rakesh Rao, he discusses the emerging trends in pumps industry and challenges & opportunities in the solar-powered products market.
Grundfos is setting up a facility in Ahmedabad. What is the rationale behind it?
The Ahmedabad plant has started trial production in a 50,000 square feet, leased factory built to our requirement and design. The rationale was to ensure we cut down logistics time and costs and reduce lead-time for our customers in the West and North. We will assemble those pumps for which components are sourced in Gujarat, which till now, were being assembled in Chennai. This also helps us reduce our carbon footprint. We expect full production by September 2017.
What is the present status of pumps industry in India? What is driving the demand for this market?
At present, the country has a significant pump manufacturing industry, which is composed of both Indian and international players. Due to rapid development and urbanisation, the demand for pumps will continue to have a growth rate between 6 percent to 12 percent per annum, depending on the growth of the economy. Whether there is no water or too much water there is a need for pumps.
However, the market is fragmented and so is production with quite a significant portion being made by the unorganised sector. There are over 800 manufacturers of pumps in the borewell and domestic segment. The quality of many of the products available in the market are poor as customers are reluctant to pay a price for quality. For Grundfos the drivers are the customers’ need to have a low cost of ownership and the need for quality and reliability.
How is the demand for process pumps?
The demand varies with the growth of the industry, especially the process industries like pharmaceuticals, chemicals, petrochemicals, etc. The oil & gas industry is down a bit but pharmaceuticals did well last year. The market will grow but at a low rate as the demand may be a bit stunted in 2017.
What are key emerging trends in the pumps industry?
As is true of many other industries, digitalisation is the most talked about trend in the pump industry too. Pumps with embedded sensors and electronics that can learn user behaviour and adapt automatically, networked pumps running in tandem but based on the demand, centralised controls with remote management and operations of pumping systems are some of the initiatives in flavour today.
Grundfos has been the leading manufacturer of solar water-pumps in India. With government planning to give a push to renewable energy sector, are you seeing an increase in demand for solar-powered pumps in the country?
Yes, there is lot of focus on solar pumps today. With solar, power costs dropping and governments focusing on bringing the farmer off grid the demand today for these pumps are increasing. Solar powered or renewable energy powered DC devices may become the order of the day in future.
My only worry is that most investment is government driven based on the least cost method. Many unqualified players are entering the market driving prices down to unsustainable levels thinking that they can make money through these tenders. The whole effort may be short-lived if we do not see a change in this trend. The danger with this is after using the solar pumps provided by the government the user may revert to inefficient grid powered AC motors after the warranty period, as they cannot afford to replace the equipment. We need to think a bit more long term.
Government has announced initiatives such as investment to increase irrigation in the country, Clean India, etc. Will all these lead to boost in demands for pumps?
Of course, it will. The question is will it boost demand for energy efficient pumps? For that, our evaluation criteria must not be based on first cost method but on the life cycle costs with approved third part labs certifying efficiencies over the life of the pump.
How is Danish parent company using its Indian arm to serve its global customers?
To strengthen the quality, reliability and sustainability of drinking water supply in the developing world, Grundfos launched Grundfos Lifelink in India in 2015. It is a result of years of continuous research and studies.
These products are for community water supplies to people with little access to clean drinking water. These products can filter and disinfect contaminated surface water, pump water from wells and borewells and disburse water through a water ATM. The uniqueness of these products is that all of them can work on solar power and not just grid power and can be remotely managed.
Other than these products that are made in India for the rest of the world, the parent company also sources stainless steel machined castings from India and has set up an R&D hub which is a designated centre of competence to build communication software used in our pumps.
What are your expansion plans for this year?
We don’t need any further capacity addition. We have already added 40 percent more capacity this year in Ahmedabad and that will suffice for the next five years as we still run on a single shift.
We have launched two new domestic products – a pressure booster with an integrated variable speed drive (which is an international product) and a small 180 W solar driven self-priming pump (which is totally an Indian effort). Second product is aimed at semi urban and rural areas where power availability is inconsistent. It can also be used in farm houses, beach house or summer houses up in the hills.
What are your short-term and long-term targets for Grundfos India?
We go as per the calendar year. Our growth target for 2017 is modest and at best we want to grow 8 percent with a healthy bottom line. Long term we want to continue to be known as technically the best and innovative company. We want to be a significant player in the Indian market, not necessarily the biggest.