Grundfos Pumps India Pvt. Ltd (Grundfos India), based in Chennai, is a 100 per cent subsidiary of Grundfos Denmark, a global leader in advanced pump solutions and a trendsetter in water technology. Ranganath N. K., who established Grundfos India in March 1998, talks about developments in the company and its investment plans for the Indian pump market. Interview by Renu Rajaram
Grundfos is India’s largest manufacturer of pumps. Tell us about the production and export of your products?
Grundfos India’s manufacturing is based on make-to-order model. We keep components for various pump models and based on demand we assemble the products locally. All the pump systems are tested and delivered to customers in the shortest lead time.
With regard to the company’s exports, Grundfos India is responsible for Bangladesh, Bhutan and Maldives. In Maldives, we provide pumping solutions for commercial buildings (island resorts), water and wastewater pumps for municipality, and desalination and domestic water supplies. In Bangladesh, the markets that Grundfos covers include textile, chemical and pharma industries, solar pumps, and pumps for commercial buildings. The major market that Grundfos covers in Bhutan is focused on water supply projects.
In addition to the above three markets, Grundfos India also exports to African markets through Grundfos South Africa. All other markets are covered by the local Grundfos companies.
Can you tell us about your additional unit in Chennai with an investment of €30 million (Rs.210 crore)?
Grundfos India plans to set up a world-class manufacturing unit in Chennai on the land that it owns. This facility will have a manufacturing and assembly centre, distribution centre to distribute products across India, and an R&D centre. The India R&D centre plans to design and build products ‘in India for India’ and also plans to reengineer/re-specify the existing European products to make them suitable for the Indian market.
Through this facility Grundfos India will ensure that the level of localisation and local production will increase to 80 per cent or higher. Also, this move will strengthen Grundfos India’s capability to offer competitive and relevant solutions at the right lead time to the Indian customers.
What is the effect of commodity inflation rate and devaluation of rupee on the growth of your company?
The cost increase is around 15-20 per cent due to the depreciation of the rupee and the commodity inflation. Currently, we procure components both locally and from foreign countries. To reduce the impact of rupee depreciation, we need to increase the localisation of key components. Till then, our margins will be under pressure.
We have seen a lot of raw material pressure. What is your raw material margin outlook for the current fiscal?
Though major commodity prices like copper, aluminium and stainless steel are not in the increasing trend in recent months, due to currency fluctuation the commodity inflation rate will be around 10-15 per cent for the entire fiscal year.
Can you briefly talk about your company’s global alliances and infrastructure?
Grundfos has a presence in all the continents with 60 sales companies, 15 production sites of Grundfos, 12 productions sites of acquired companies, and four research and development sites across the globe. Grundfos produces 16 million pump units annually across these 15 production units. There are two production sites each in Asia, China and North America. Six production sites are in Western Europe and three are in Central Europe. The main R&D centre is located in Denmark, while the others are located in Hungary, China and USA.
Recently, Grundfos India has been declared as the Second Home Market for the Grundfos world, which means that Grundfos India will have its own manufacturing and R&D centre. Initially, the Indian development centre will look into designing and developing products for India.
Grundfos India is part of a subgroup which consists of emerging markets like South America, Africa, Middle East, Turkey and India. These are the focus markets for Grundfos globally and these emerging markets cover 40 per cent of world’s population and landmass. There is a special approach to these markets and this approach is different from the one applied in matured markets like Europe and North America.
Since there are many commonalities among these emerging countries/markets, alliances have been formed between these countries. Having similar markets and needs like India, Grundfos started sharing the concepts, products, designs and resources across these nations. The company also formed internal clusters with cross-country resources to support each other. Last quarter, Grundfos India supplied automation and instrumentation control panels for water treatment and supply to communities in different parts of Tanzania.
What were some of your company’s recent innovations?
Innovation is the essence of our business. Experts from Grundfos believe that for 80 per cent of all pump installations, intelligent pump systems mean large savings and can cut a business’s energy consumption by as much as half. The key to maximum efficiency is widely recognised as optimising the whole pump system and not only the pumps. Therefore, the company has launched ‘Grundfos iSOLUTIONS’, a holistic system approach with intelligent technology solutions that can be customised to system demands, creating optimal performance and the lowest possible energy consumption.
Grundfos iSOLUTIONS combines the full spectrum of the Grundfos offering, including standard and integrated pumps with controls, sensors, variable frequency drives, connectivity and software to create the ultimate intelligent solution. The company takes full responsibility from design, development to installation and maintenance throughout the service period of the pump system. This means that Grundfos iSOLUTIONS guarantees an intelligent solution tailored perfectly to the pump task at hand, leading to less downtime and lower failure rates.