“Customers are looking for innovations in domestic pump category. They generally choose companies that are experienced, established, sturdy and offer value for money. Companies must focus on including smart pumps and solar pumps in their product range to obtain higher profit margins”- Shailesh Sahay, National Sales Manager at Varuna Pumps.
India Domestic Pump Market is currently positioned to be in the maturity stage. The Market registered year on year growth rate between 8-10% during the review period, FY’2015-FY’2020. Rapid Urbanization, Depleting Ground Water Level, Rapid Urbanization and Rise in the Number of Infrastructure Initiatives are some of major factors responsible for the surge in demand for domestic pumps (Less than 2.5 HP).
With an ever increasing need for sustainable development, companies and customers are moving towards adoption of sustainable products. There has been a significant increase in demand for energy efficient over the years.
In conversation with Shailesh Sahay, National Sales Manager at Varuna Pumps, we attempt to identify the key trends in the India Domestic Pump Market and how Varuna Pump differentiates itself from other service providers.
How has the Pump Industry evolved in India? What according to you is the current market situation of Domestic Pumps in India?
The domestic pump industry has drastically evolved in past 10-12 years. Customer’s requirements and expectations have changed in terms of usage of products. Earlier there was no concept of electric pumps as wells were widely used in all parts of the country. With increase in construction activity and population, the concept of well and tube well got eliminated and concept of electric pumps came into existence. Companies imported pumps from USA, UK , China and sold them under their brand name in India.
The total market for pump in India stood at ~20000 crores. Major applications for domestic pumps are individual house owners and multi storey building. In individual houses the major application is transfer of water from underground to overhead tank. 0.5, 1, 1.5 HP pumps are generally required for these applications. Pressure booster, self priming pumps and submersible pumps are majorly used in domestic applications.
As the urbanization has gone up and construction activity has increased, everything has a value of money attached to it. Even one inch of space is having a money value attached to it. In case of residential projects In Delhi, Pune, Noida, Gurgaon, Mumbai, currently water is stored in a overhead tank and utilized as per requirement, Now, the new revolution is taking place wherein, builders and companies are advising the customers to not use overhead tanks and instead use the pressure booster systems to fulfill household requirements through underground storages. This saves space & money against overhead tanks.
Depleting ground water, increasing demand for energy efficient pumps and increase in export to foreign countries have been major trends in India Domestic Pumps Market. What are the other factors facilitating the growth in the industry?
India is considered as the largest consumption market of any type of product. The primary reason for consistent growth in the industry is necessity. Urbanization is going up drastically. Gradually, Rural Market is shifting towards semi urban and semi urban markets are turning to urban markets, implying rise in demand for basic amenities. Replacement market constitutes25-30% of the total market. Depleting ground water level is also responsible for growing pump demand. Applications that were earlier fulfilled by 0.5 HP, now require 1.0 HP pumps.
What are the manufacturing hubs for Domestic Pumps in India?
The hub for manufacturing self priming pumps is Coimbatore, followed by Rajkot. Gujarat is the hub for Submersible pumps followed by Coimbatore. If you observe the geography of India, water level is going down in every region in India, except Bihar and West Bengal. Due to depletion of ground water level, the industry has shifted from 3 inch to 4 inch borewell submersible pumps. In West Bengal, they are still stuck at 3 inch submersible pumps, 95% of three inch submersible is consumed in West Bengal. ~2 lakh pumps submersible pumps are consumed in a year.
Online channel, direct sales channel and distributor channel have been the major channels adopted by the companies to distribute pumps across the country. Could you breakdown the sale of domestic pumps through these channels?
More than 85-90% sales in the industry is processed through dealers and distributors. The demand for online channel is growing and is further expected to grow in future. Online purchase is done by few. Most demanded product categories, self priming pumps and pressure booster.
In last 20 years, various international players have ventured in the India Pumps Industry. How has the entry of international players supported domestic pumps market? How has the entry of international players constrained the growth of regional players in the country?
There are various international players who have ventured in India pump market such as Wilo, KSB, Grunfos, Xylem, Franklin and others and have acquired a major market share in India. When KSB entered in India they started doing business in agriculture. Their major end user were Government, Panchayat, and Water Supply Corporations. Their major penetration was B2B segment, implying they gave very good competition to the local players in India Pump Sector. Other companies started improving quality of their products. In other words, entry of international players created healthy competition. Other companies such as Grundfos, Xylem, WILO, Franklin have been the major players in pressure booster pumps.
What is the future growth scenario that the industry would witness? What would be emerging trends or new technologies that would impact competition and business growth in the future?
The future of the industry would be driven by energy saving pumps. People are expected to shift to smart pumps and solar pumps. Few companies have already started manufacturing these products. The major aspect of using smart pump is their energy saving mechanism. The price for smart pumps is 50-60% higher than the regular pump set. The pumps will be accepted more in metropolitan cities. Major companies such as Crompton, Kirloskar, Lubi, Varuna and others have established smart pumps in agriculture sector. They are yet to introduce smart pumps for domestic pump category. In addition this, Solar pumps are also expected to increase in future but it could only happen with financial support provided by government as Solar panels and its infra constitutes major charges.
How has the demand for Domestic Pumps been impacted due to the COVID situation? What are the strategies that companies have adopted to mitigate losses?
Major companies adopted dealer network for sale of domestic pumps (Less than 2.5 HP) in India. At the end of financial year, companies provide an incentive of 2-5% on annual sales to the dealers. COVID -19 has made a huge dent on the year end targets for dealers due to lockdown being imposed in March. In response to this, companies gave relaxation to the channel partners and changed their annual targets for FY’2020. On the other hand, certain companies kept the target same but expanded the deadline for fulfilling target till May, 2020. In addition to this, incentive was provided on pro rata basis.
What are the Success Factors for a Company Operating in India Domestic Pump Market?
Customers are willing to experience innovative pumps in domestic pumps segment. Offering value of money, multiple channel of distribution, adopting new technological advancements, marketing activities, including elite products in the product range for instance, Crompton leverages its sales for fan and light segment to expand operations in Pump segment. Value for money, establishment, brand name, and experience are considered before choosing a company. It is a very dynamic industry as whole. Companies should focus on including smart pumps and solar pumps in their product range to obtain higher profits.
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