Grundfos bets on full production, localisation for India growth

G Balachandar Chennai | Updated on December 13, 2019

Kim Jensen, Regional MD, Asia-Pacific Region, Grundfos (Singapore) , with NK Ranganath, MD, Grundfos Pumps India, in Chennai   -  Bijoy Ghosh

Denmark-based world’s leading pump maker Grundfos is charting a new growth trajectory in India with more investments, shift from assembly into full-fledged manufacturing of products and entry into new business segments.

The company, which completed two decades of operations in India last year, has been growing at a CAGR of 20 per cent.

“Despite the slowdown across industries in India, we have seen growth this year, fuelled by a replacement category of the industrial segment and expansion of the network to tier-2 and tier-3 cities,” NK Ranganath, Managing Director, Grundfos Pumps India, said here.

The group, which has been shy of more investments in India till some years ago, has started investing more. Its new factory in Gujarat, started operations in 2017, is helping the company to emerge as a strong pan-India player.

The major focus now is the localisation of parts in order to be more cost-competitive in the Indian market where Grundfos is among the top 10 players with a strong reputation for its energy-efficient pumps. “We are now embarking on a localisation drive. Today, we have more of assembly operations which I don’t think will be sufficient going forward. More imports has been our main growth barrier though we have great products and strong brand value.” Kim Jensen, Regional Managing Director (Asia Pacific Region), Grundfos (Singapore) Pte Ltd, said here.

He added: “We are now trying to collaborate with manufacturers as partners to offer frugally-priced products and compete in a better way against the local players.”

While some of the pumps assembled at its Chennai facility have a higher local content, the average localisation is little less than 30 per cent. The company aims to increase local content to 80 per cent in its existing products going forward through partnerships with local manufacturers.

“The higher localisation strategy is also aimed at cutting down the lead time – which brings down the shelf life for dealers and customers. If we are able to deliver in a week’s time instead of making a customer wait for 3 months, it makes a huge difference to them,” said Saravanan Panneer Selvam, General Manager Grundfos India.

In India, industrial solutions is the largest business segment for the company with a share of about 60 per cent in its revenue. Though its share is small, residential is the fastest-growing segment.

Water treatment segment

The company expects to tap the growing opportunities in the water treatment segment due to the increased focus of governments on water harvesting and recycling of water.

Ranganath said that Grundfos had sold about 40,000 solar-powered pumps, of which about 35,000 pumps were running at various places, having a positive impact on society as about 7.5 million people who had no access to water earlier were getting drinking water. The company sees favourable growth potential in the solar-powered pump segment.

Published on December 13, 2019

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