Farrokh Bhathena, Director - Sales & Marketing, KSB Limited India spoke exclusively to Pravin Prashant and Rahul Koul of Indian Chemical News on global market size and trends, India market size and trends, company's market share, orders bagged, company's performance, company's USP, R&D initiatives, Capex investment, and future business outlook. Excerpts of the interview:
Global market size for pumps, valves and services in 2020 and market forecast for 2021? What are the Top 5 trends?
The global centrifugal pump market is projected to reach a size of Rs. 356.62 trillion by 2026, at a CAGR of 5.9%, from an estimated Rs. 267.51 trillion in 2021. And for valves for the year 2021, Global On/Off valve market size is Rs. 2.95 trillion. The top five growth markets that we see for pumps and valves are Oil & Gas Upstream and Downstream, Petrochemical, Chemical & Fertilizer, Standard Industrial segments like Pulp and Paper, Metals, Cement, Ethanol blending, Water and Wastewater, Agriculture, and Solar.
India market size for pumps, valves and services in 2020 and market forecast for 2021? What are the Top 5 trends?
The Indian pump market today is estimated at around Rs. 14,500 crores and is projected to grow at 7% CAGR with market share of agriculture at 27%, building segment at 19%, Water & Waste water management at 17%, Power generation at 12%, Oil and Gas at 8%, Metal and Mining at 4% and rest other industries about 13%. A similar trend is expected to be followed by the valves market. For the year 2021, the On/Off valve market size will be Rs. 8,600 crores.
What is KSB Limited India market share in pumps, valves and services in India? How are you planning to increase your market share in India in pumps, valves and services?
We are one of the dominant players in the market, and hold different market shares in the different segments in which we operate. We have undertaken various measures like improving product basket with introduction of new products, bringing more focus to the sectors like agriculture, solar, chemicals, water and waste water and digitalisation initiatives to improve our position in the various markets in which we are present.
Key orders bagged during FY 2020-21 and what are the plans for FY 2021-22? New verticals where you are focusing and how it will impact the company?
Some of the major orders received are for IOCL KGPL Project, IOCL Haldia Reactor Feed Pump Project, orders for various distillery projects from Excel Engineering, various paper industry projects, and orders like Andritz - UPM Taurus, Bangladesh Chemical and Fertilizer and Baltic Gas Chemical Complex Project.
There is an increased focus in the Oil and Gas business for valves, with the new latest qualification for Oil & Gas (ISO 16848-1, API RP591, API 600 13th edition). Apart from this we have introduced new products like Butterfly Valves, Dual Plate Check Valves etc. to boost our product basket for valves. Also, we have been directing our focus on the chemicals industry, Pharma, and Life Science applications.
Company's performance in terms of revenue and profit during FY 2020-21 and what is the forecast for FY 2021-22 and growth drivers?
The business outlook remains positive despite COVID, we are expecting double digit growth year-on-year. Monsoon has made a positive impact in increasing the demand, various government policies are fuelling the growth for pumps at large, government efforts towards controlling the emission of SOx has paved the way for the rise in the demand for the pumps required for Flue Gas Desulphurisation application. The ban on Chinese suppliers/contractors in India has opened up opportunities for Indian suppliers. Smart city projects will create demand for the housing sector and also for water and waste water management in these cities. Ethanol blending would bring in good opportunities for sugar production companies and the ethanol business which previously was a by-product will now become a main-stream product for the sugar industry.
To meet the government's target of 20 percent blending of gasoline, ethanol storage capacity of sugar companies needs to expand to three times the current level of about 300 crore litres. This will mean an investment of Rs. 41,000 crores. The shift from a coal based economy to gas based and renewable resources will bring in new opportunities in the sectors.
USP of your pumps and valves? What are new product offerings from KSB Limited India for the Chemical, Petrochemical, Oil & Gas and Pharmaceutical sector?
The USP of our products is the reliable German design, German technology and proven hydraulics and the large reference base that KSB has in India due to its presence of more than 60 years in India.
KSB Limited India offers the complete range of pumps for these markets in compliance with the latest edition of API 610. The products in KSB's range include the OH2 pumps, BB2 pumps, BB5 pumps, VS6, and VS1 pumps. KSB has also started manufacturing Axially split, multi-stage, between-bearings BB3 pumps from India. This pump type CHTRa finds applications in onshore and offshore production as an injection/re injection pump, in crude/refined products pipelines as a transfer pump, in refineries, petrochemical, chemical, gas and coal-to-gas/coal-to-chemical plants as a feed, process charge, process transfer, main wash pump as well as for boiler feed water pump applications.
How does the scientific team ensure that pumps designed by it are of highest quality to withstand the harsh conditions during industrial applications?
We adopt our designs from our parent company in Germany and as and when demanded localise the same to cater to the need.
How have the company's R&D initiatives shaped its product basket with respect to lower maintenance and energy needs?
As mentioned earlier our R&D activities are conducted by our parent company in Germany and the products are manufactured under license by KSB Ltd. These initiatives have led to the manufacturing of high efficiency and high reliability pump sets for the FGD market for the supercritical power plant market and the nuclear pumps market. KSB also has a design centre located in Pune called KSB Tech which provides design support.
Capex invested in FY 2020-21 and what is the plan for FY 2021-22? What are the plans related to digitalization and automation in the pump and valves sector?
Revenue for 2020 fell by 6.6% over 2019 mainly on account of the COVID-19 lockdown. This was due to complete lockdown for almost one month and partial lockdown during the rest of the year from May-December. Effectively almost around 20% time was lost, however the drop-in sales could be restricted to 6.6%. Profit before tax increased by 12.6%. This was driven by an improvement in margins and a reduction in fixed costs. In 2021, we hope to recover the lost revenues in 2020 and go over 2019 level. The Indian economy has been resilient during this COVID-19 period and is expected to continue the trend. Accordingly, all the market areas are forecasted to contribute towards this recovery.
Capex for 2020 was Rs. 50.4 crore during 2021 and it will increase to around Rs. 85 crores. Major contributors to this increase are a new shed at our Sinner plant, Nuclear business-related Capex, automation and digitalization projects etc.
Would you talk about a new energy plant in Shirwal and its utility for KSB India Limited?
In 2017, our Energy Pumps Division at Shirwal was established. This is a planned extension of the Power Projects Division at Chinchwad where because of space constraints there was no scope for further expansion. This is a huge plant with a total area of 10,0000 square meter.
This plant is equipped with a special aerodynamic roof for effective cooling as well as a special evaporative cooling system with HVLS fans for air circulation and to keep the shop pressurised. The plant has 1 MW rooftop solar installed for use of green energy and the plant is equipped with rain water harvesting for ground water recharge.
Shop layouts are designed in such a way that they ensure linear flow of movement for material for each product line. We can handle packages up to 60 MT weight and 13-meter height. This plant can test pumps with power of 6 MW which can be extended up to 10 MW, if required.
We also have separate shops for test beds where we can carry out tests such as hot water, thermal shock, NPSH, axial thrust measurement, etc. This testing is controlled and monitored from a remote cabin for advanced safety and all test parameters are monitored on PC with special pump test software which can also be used for virtual testing for clients.
For our new pumps for FGD plants we have set up a special coating facility which needs controlled temperature and humidity environments.
For our Nuclear pumps production, we have installed a specialized machine for Hirth gear grinding which is required for PCP PUMP rotor. We have also installed state of the art machines for EDM and mechanical seal manufacturing.
We also have a separate store facility for raw and finished parts. Automated shuttles like Kardex are installed for space saving and fast retrieval of material. Products produced at this plant are CHTD, CHTC/R, HG, HD A, WKT and pumps required for Flue Gas Desulphurisation and nuclear applications.
What is the future business outlook for KSB India during FY 2021-22?
In 2020, despite COVID-19, KSB had an order intake of Rs. 1,300 crores and we are quite hopeful that with the improving situation we would improve and register a double-digit growth for the year.
For the 1st half of 2021, we have achieved sales of Rs. 684 crores and we already have orders on hand for almost 7 to 8 months. Both the first wave and the second wave has had an effect on our business operations, however despite these challenging situations our employees have risen to the occasion and navigated the operations to deliver good results for the Company in 2020 and in the first half of 2021.
The company is continuing to invest in new products, increase the manufacturing capacity, enhance the skills of the employees with learning and development as well as in the digitalisation. With measures on a drive for innovation, additions to product basket, a complete digitisation to improve our operational efficiency, market entry into new segments, KSB continues to focus on a profitable growth Strategy. Aftermarket area also looks positive as production ramping up will call for scheduled maintenance of equipment.
About the exports business, currently around 18-19% of our business is contributed by exports and in the coming years we shall be focusing upon increasing the exports contribution.
Company is focusing upon making conscious efforts to increase its ESG score. And as a step towards the same we have installed Solar panels on the rooftops on our plants for captive electricity consumption. We will be obtaining green building certification for our offices, undertaking measures to reduce our carbon footprint, hiring diverse employees, and also are focused on improving employee engagement.
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