The Hindu Business Line : Shakti Pumps up on energy policy

The stock of Shakti Pumps India Ltd has seen a 30-per cent gain week on week, ending at Rs 122.75, up 5.32 per cent on the BSE today. Touted as a growth story, the counter has been witness to large volume of shares changing hands.

According to Mr Janish Shah, Head of Research, Networth Stock Broking, the Government's changing focus for reducing T&D losses in the power sector has opened up prospects for Shakti's energy efficient pumps.

"The company is also seeking Government approval to promote energy efficient pumps in the State and Central irrigation schemes. Any break through in this direction can open up a huge domestic market for Shakti Pumps," he said.

When contacted Mr Dinesh Patidar, Managing Director, Shakti Pumps, told Business Line that the company has been pushing the energy efficiency concept with the State Government for the past two years. "We have explained the benefits in the form of power savings and attractive payback period of the investments by replacing the existing pumps with Shakti's energy efficient pumps. There has been some interest generated. However, as it is something new it will take time," he added.

Shakti is currently formalising plans to expand capacity for catering to the domestic market. It recently bought some asset from Nirma near Pithampur.

New offices

"We are setting up five new offices in Pune, Lucknow, Indore, Jalandhar, Orissa and are looking at strengthening the distribution network across India by opening 20 branches in FY07," he said. The move is expected to back the product with service support, inspiring confidence in the brand.

"We expect the domestic sales to contribute 38 per cent and 41 per cent of total revenues in FY07 and FY08 respectively from 26 per cent at present. We expect Shakti Pumps to report 62 per cent and 35 per cent growth for FY07 and FY08," Mr Janish Shah commented.

According to Mr Patidar, more than 60-65 per cent of the company's revenues are from exports. In order to scale up its exports, the company is looking to expand its capacity from 50,000 pumps to 2,50,000 pumps by setting up a new unit in an SEZ in Pithampur. The company currently faces capacity constraint, which is expected to de-bottleneck with this expansion.

The entire cost of expansion at Rs 25 crore is likely to be funded through debt and internal accruals. The plant is expected to start commercial operation from December 2006.

"Our turnover so far has been around Rs 12.5 crore per quarter. With the increased capacity in place, we are looking at Rs 25 crore per quarter," Mr Patidar said.

Shakti Pumps currently exports to 50 countries and plans to expand its presence by setting up two wholly owned subsidiaries in Turkey and Australia. It also plans to increase its direct presence in 10 more countries over next two years. "We are looking at South America and would be interested in China and Taiwan as future markets," Mr Patidar added.

Shakti Pumps manufactures energy efficient stainless steel submersible pumps in India. It sells the products under `Shakti' brand in domestic as well as in international market. Globally, the market for pumps is pegged at $27 billion growing at 4-5 per cent. The global market is estimated to grow to $49 billion by 2016. Grundfos of Denmark is the largest manufacturer of energy efficient submersible pumps.