Reliability, energy efficiency and aesthetic quality have set Grundfos apart and enabled it to forge a path of success
Grundfos Pumps India, a wholly owned subsidiary of Grundfos Holdings established in 1998, provides energy efficient pumps and smart pumping solutions in India, Bangladesh, Bhutan, Nepal and Maldives. With more than 400 employees, 200 distributors and dealers, and 26 offices across India, the Grundfos pumps have a variety of applications across domestic, industrial, commercial and renewable energy applications. The company’s mission is not so much increasing sales and market share as it is to pioneer solutions to address the world’s water and climate challenges and improve the quality of life for people.
In fact, its journey in India began because Ranganath NK, Grundfos Water Ambassador, Grundfos India, an entrepreneur manufacturing boilers prior to this, was awe-struck by the energy saving capabilities, efficiency and reliability of the pumps manufactured by the Danish parent. His keenness to bring the pumps to bring the pumps to the Indian market bore fruit and he joined the company in 1997 to set the business going in India.
Ranganath belonged to a business family that began by manufacturing submersible pumps in India in 1966 in partnership with an Italian company. Its first interaction with Grundfos was when they bought a booster pump for the house. The family also made boilers and burners, and in the mid-80s, Ranganath contacted Grundfos to see if they would be interested in the Indian market. Since the custom duties were high back then, Grundfos was not keen, nor again when he asked them in the 1990s. Even when he approached them again to buy some pumps for his boilers, they showed no interest and so he imported an equivalent from Europe.
But in 1996, Grundfos pumps started being imported some OEMs, which made Grundfos become aware of the potential India offered. So they advertised for people to lead the India operations, and Ranganath applied. Though he was an entrepreneur who had not worked for anyone except for a year, he was impressed with Grundfos, which was a trust and had no shareholders. Because of this, the family could not benefit from the company and had only three objectives –reinvestment, R&D and social work. “That was very intriguing to me and a value system that I really appreciate,” Ranganath explains. The rest, as they say, is history. Grundfos India started its commercial operations in August 1999 under his leadership and has since maintained a CAGR of a little over 27 per cent till 2019. The company, whose accounting year corresponds to the calendar year, has grown from 400,000 Euro in 1999 to 65 million Euro in 2019 despite two downward cycles in 2008 and 2013. In 2020, the company is wary of projecting a high figure due to the uncertainties surrounding Covid-19 hopes to achieve a 18-20 per cent CAGR in the next five years. “The industry is expected to grow at 5-6 per cent, so if we achieve the expected growth, we would have beaten industry growth,” he says.
Making It About Quality
This growth hasn’t come easy for Grundfos as the pumps are very good, but 200-300 per cent more expensive than what was available in the Indian market. Some pumps were new to the Indian market too. “Our entire focus was not to get the biggest turnover but to establish ourselves as a brand that was most respected and change the game that was being played in the Indian market, which was then reserved for the small scale sector,” explains Ranganath. It was a seller’s market. So they decided to make it customer-centric. Value addition became the differentiator as they approached industrial customers who spend more over the lifecycle of a pump”. We brought in the concept of lifecycle cost or cost of ownership for the first time in India and in the Indian pump industry,” says Ranganath. Over a life span of 10-15 years of the pump, the cost of the pump is only 10 percent but that of power is 80 per cent. They created awareness about how even after paying 100 per cent more for a Grundfos pump, they could recover the cost in 15 months and save more on energy, thereby saving money in the next 8.5 years. Grundfos talked of water conservation, power conservation, energy conservation and evangelised the concept of demand-side management before they became buzzwords. “We spoke about environment, sustainability 20 years ago when no one knew what it was about. The environment was our platform,” Ranganath says. Many forward-thinking companies as well as IT companies and large hotels became early adopters. They acted as a good reference for Grundfos to strengthen its presence. And Grundfos became an aspirational brand.
Manufacturing, Marketing and Distribution
Since the pumps came under small scale industry, Grundfos could only do assembly in India. They worked with the government to reclassify it as industry. It succeeded in achieving this sometime around 2004 and started manufacturing components and pumps, and assembling them in India at the same international quality level. It built a factory in Thuraipakkan and a second one in Ahmedabad in 2017. The plants together have a capacity to manufacture 120,000 units a year but currently does 80,000 units for sale in Indian and exports.
Grundfos built the brand with customised communication depending on whether it was being addressed to a buyer, within the company, the supplier, the finance people, the user, the manager or the consultant by addressing the question ‘what’s in it for you?’.
Grundfos knew it needed a distribution network and decided to focus on young people who were working for existing distributors or other companies, with fire in their bellies to start up on their own. It measured its success on the increase in the net worth of these entrepreneurs. In some cases, the next generation has also come into the business, helping or taking over from their fathers.
The company also runs on principles such as zero borrowing, zero credit, except in exceptional situations. It also believes in paying on time, which has added to its reputation in the market.
Currently it has a strong presence in south, west, especially Ahmedabad, and north. It is looking for other options such as building services to strengthen its presence in the east.
The design and development function is centralised in Denmark, and now in China, except in some cases where the Indian expertise may be sought. One such is going to be released shortly around the world. A small team in India develops software to enable our pumps to talk to each other.
From only sales and service, the team has grown over the years to include operations, shopfloor workers in Chennai and Ahmedabad and service.
Moving forward, the company expects to focus on the existing pumps rather than new ones and introduce ‘I’ solutions. Recently it introduced an energy efficient pump with IE 5 motors where the intelligence will play a key role in reducing operating costs. The other one is solar pump as the government is encouraging farmers to use that. So in 2020, Grundfos will be ramping up in these areas based on the feedback from the market about the new releases.
Being a signatory to SDG 6 and 13 in the UN, the company focuses on energy conservation and water conservation. Its entire office complex including the plants is platinum-rated and an inspiration to others.
The corona virus pandemic is not only a time for lockdowns and social distancing, business heads are also revisiting strategies so that when the world is ready for business again, they can make up for lost time. The Indian arm of the Denmark based Grundfos aims to focus on strengthening its presence in existing products rather than release new ones. Keeping in line with the SDG goals, it is integrating ‘I’ solutions in its pumps for lowering operational costs as well as promote water and energy conservation. Environmental protection as been its platform since its beginning in 1998 in India, and this will continue to be so. Meanwhile, it also hopes to beat the market growth of 8-10 per cent in the next 5 years by achieving 18-20 per cent.
1998 – Grundfos started its Indian operations
2000 – Grundfos India bought land for manufacturing in Chennai
2002 – Began assembly warehouse operations
2003 – The head office of Grundfos Pumps India was set up in Chennai
2005 – Its headquarters in Chennai was LEED certified by USGBC, becoming India’s first gold-rated green building
2006 – Grundfos India’s production site was ISO 9001 & ISO 14001 certified
2007 – The inauguration of Grundfos’ own training academy, The Poul Due Jensen Academy (PDJA), that is responsible for offering training and learning to the whole organisation, in helping employees acquire new skills to create high business impact and to drive change.
2010 – New facility at a special economic zone (SEZ) in near Kalpakkam, Tamil Nadu.
2013 – The building that houses the Grundfos India Headquarters was elevated to a LEED EB Platinum certification
2013 – Awarded the FICCI Sustainability Endeavours (SME category) & Manufacturing Today – Sustainability Award
2014 – The Grundfos Foundation along with Sunlit Future installed 100 solar pumps to provide clean water to 100 villages in rural India
2015 – Grundfos Lifelink enters the country, bringing clean drinking water to the millions of people in India
2016 – Grundfos launched Mobile Water Purification system & water ATM in India
2017 – Grundfos India unveils its new manufacturing facility in Gujarat in November 2017
2017 – Grundfos India wins ‘India’s Best Company of the Year 2017’ Award
2018 – Launch of ‘SmArt Serv’, an intelligent service based mobile application that enables its customers to connect with Grundfos team on a real-time basis
2020 – Grundfos India’s factory received the LEED re-certification from USGBC, making the entire Grundfos India Headquarters site Platinum rated