CEW Features

Guest Column

Indian Pumps & Valves Industry: Time to Go Global

The global economy has started to show signs of recovery. Fresh investments are being planned in the process
industry worldwide. Indian pumps and valves manufacturers can thus expect opportunities to grow in the export
markets, especially in the Middle East and North Africa (MENA) and NAFTA regions. But it is essential that they
first get their house in order by building robust processes, say Shripad Ranade, Senior Principal, TSMG and
Yogesh Shivani, Associate Consultant, TSMG.

he global economy has had subdued

growth for the last few years with
global output contracting by 0.6
per cent in 2009. However, it is expected
to embark on a growth trajectory going
forward largely on the back of developing
economies, and the IMF expects global
output to grow by 3.8 per cent in 2015.
The Indian economy seems poised for
the next phase of growth after sluggish
performance over the past few years. The
recent data on the composite performance
of eight core industries coal, crude, oil,
natural gas, refinery products, fertilisers,
steel, cement and electricity is seen to
be encouraging. Assuming such trends
are sustained in the coming months, there
would be much better industrial growth in
H2 of FY15.

Shripad Ranade

Yogesh Shivani
40 January 2015

The pumps and valves manufacturers

are significant suppliers to the process
industry and also cater to other end use
sectors such as automation for discrete
manufacturing and pumps for agricultural
use. The pumps and valves market in India
provides an opportunity of `17,500 crore

Fig 1: Indian pump market (` Cr).

and is expected to grow at an annual rate

of 7 to 10 per cent over the next few years.
The new government in the centre is
expected to take policy initiatives that
will help the Indian industry. The signs of
recovery in the global economy also bode
well for pumps and valves manufacturers. It
is thus time for domestic manufacturers to
strive to overcome current challenges and
gear up for the next phase of growth.
Indian Pumps Industry
Global pump market is estimated at USD
47 billion in 2014 and is estimated to
reach USD 56 billion by 2017. The Indian
pump market is close to 2 per cent of
the global market and was estimated at
` 8,500 crore in FY14. Agriculture and
Building services are the two largest
end use segments, as depicted in the
figures 1 and 2.
The pump industry is classified into
centrifugal and positive displacement
pumps, with centrifugal pumps being 95 per
cent of the market, within which single stage
radial flow pumps and submersible pumps
together make up 70 per cent. Rotary

Fig 2: Key end use segments

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positive displacement pumps account for
the largest share of positive displacement
pumps. Key manufacturers of centrifugal
pumps in India are: Kirloskar Brothers
Limited (KBL), KSB, Grundfos, CRI and
Aqua Group.
India exports pumps to nearly 70 countries.
In FY14, exports stood at `1,280 crores,
having more than doubled over three
years. As much as 16 per cent of Indian
pump manufacturing capacity is geared
for exports. Key export destinations are
the Middle East, North Africa and other
more developed economies such as USA,
Germany and Russia. The emerging markets
of China and Latin America also provide
attractive opportunities.
Our discussions with industry players
reveal that succeeding in global markets
will require increased focus on quality
along with low cost positioning and active
marketing. India is well positioned to grow
into a much larger manufacturing base for
pumps driven by attractive factor conditions.
It is very likely that India will be a significant
exporter of pumps in the coming years.
Indian Industrial Valves Industry
Industrial valves market is divided into
two segments - On-Off valves and Control
valves. On-off valves accounts for 98 per
cent of the valves market by volume and
80 per cent by value. About 88 per cent of
the demand is from projects, while 12 per
cent is replacement demand. Global market
for industrial valves is expected to reach
USD 75 billion by 2017 with China, Africa,
Middle East and India expected to propel
the demand. Figure 3 shows the Indian
market which constitutes ~2.5 per cent of
the global market. Oil and gas followed
by power, petrochemicals, chemicals and
fertilisers are the major end use sectors, as
shown in figure 4.
The Indian valve industry is highly
fragmented with around 600 valve
manufacturers, of which more than 95 per
cent are in the micro, small and medium
enterprise (MSME) category. Top 10
players service 40 per cent of the market.
Demand for high end customised valves
is bound to grow in the MENA region with
42 January 2015

Fig 3 : Indian industrial valve market (INR Cr.)

Fig 4: Valves demand by end-use sectors (FY14).

Fig 5: Key focus areas for Indian manufacturers.

their shift from upstream oil and gas based

economy to supply of refined petroleum
products. Large addition of refining capacity
is underway in the MENA region. Investment
in desalination plants will further increase
demand for valves. The NAFTA region will
account for about 18 per cent of total valve
demand by 2017. Discovery of shale gas
and huge investment for its extraction has
turned USA into a net exporter of oil and
gas. These investments will drive demand
for valves in the future.
Way Forward
Indian pumps and valves manufacturers
must capitalise on the anticipated growth
opportunities that the domestic as well
as the export markets present. With the
global industry becoming more and more
competitive, it becomes imperative for any
manufacturer to strive for excellence with
both inward and outward focus.
Inward Focus: Bulk of manufacturing in
the Pumps & Valves industry is project
based which necessitates the need
for having strong but flexible business
processes in organisation. Domestic

companies face growing complexity in

terms of product portfolio, geographies,
customer expectation etc. as they grow
in revenue. Symptoms such as high and
erratic lead time, underutilisation of plant
and people and tapering of profit margin
point to current processs inability. Those
companies which will embrace evolved
business processes will remain competitive
and grow further.
Outward Focus: With a substantial part
of future opportunities expected to come
from the export market, it has become
inevitable for the Indian manufacturers to
be at par with their global peers. While
Indian products fare well on the quality
front, there exists a lacuna in branding and
service delivery.
While a few forward looking companies
have already felt the need to address
these challenges and are reorienting
themselves, a large section of the
industry has significant work to do in this
regard. These point towards the need to
gear up with robust processes to ensure
relationship building with global customers
and hence profiting from global growth.
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