Ever since he took over the responsibilities of Indore-based Shakti Pumps from his father in 1986, chairman and managing director Dinesh Patidar has constantly re-invented the business. First, Patidar led the company to be one of the earliest stainless steel pump manufacturers in the country. Now, he has innovated solar pumping solutions to change its course again. Recently, it ventured into manufacturing of electronic controllers and motors for electric vehicles — two and three-wheelers. Next, he is preparing to offer similar products for the four-wheeler industry.
The rapid transformation is delivering growth. In 2020-21, the company’s revenue from operations increased 143% year-on-year to ₹929.66 crore. Net profit rose to ₹75.59 crore, from a net loss of ₹14.08 crore in the previous fiscal. Of the past year revenue, ₹560 crore came from the solar engineering, procurement and construction (EPC) business and ₹180 crore from exports. The company, ranked 305 on Fortune India’s Next 500 list this year, had a market cap of ₹1,000 crore in the second week of February.
The decision to manufacture fully stainless steel pumps was a major step in reforming the business, says Patidar. “Shakti Pumps has grown to become the largest manufacturer and supplier of stainless-steel submersible water pumps for borehole, water abstraction and other related works.” The pumps can save up to 45% power, he adds.
The other game-changer, according to Patidar, has been the foray into solar pumps. The company already has a 60-65% market share in the organised sector, with a focus on Rajasthan, Haryana, Punjab, Madhya Pradesh, Maharashtra and Chhattisgarh. It was the first to launch solar pumps in Andhra Pradesh, Telangana and Tamil Nadu. In Maharashtra and Haryana, the company claims to have installed about 60% of the solar irrigation pump sets that are in use. It is now looking at the US, Canada and other developed countries as potential markets.
“In the past three years alone, the core business area driving the financials has to be solar-powered pumps,” says Patidar. The company also offers end-to-end solutions, including control panels, high-end cables, pipes, drip irrigation systems and sprinklers. In fact, electronic control panels is turning out to be a major revenue generator.
“Our focus on manufacturing submersible pumps has shown results along with the recent venture of making rechargeable batteries, controllers and motors for electric vehicles,” adds Patidar.
The setting up of a separate unit in the Pithampur special economic zone (SEZ) in Madhya Pradesh and expanding the domestic tariff area (DTA) unit resulted in the company having a total capacity of 5 lakh pumps a year. The management is looking to more than double its topline to ₹2,000 crore in FY22 on the back of higher adoption of its products by farmers, driven by heavy Central and state subsidies that run up to 90%.
“There are several states that receive power for just 5-7 hours in a day for agriculture activities, which affects their crops. Water pump sets on fossil fuels are not a sustainable solution. Hence there will be massive scope for solar water pumps,” says Sunil Chandiramani, CEO, Nyka Advisory Services, a consulting firm.
According to company executives, Patidar is keen on designing and developing new products. He experiments with new ideas and is focused on finding solutions to complex engineering challenges. Someone who has never missed his yoga training in the last 20 years, Patidar has more plans to transition the pump business.
In the wake of Covid-19 and its subsequent impact, the pump manufacturer had to make sure that raw material prices were in control. Due to manpower shortage, it had to bring in R&D changes in products as well to cater to the changing demand scenario. “We met the challenges head-on and rose above the tide,” says Patidar.
Overall, the past three years have seen Shakti Pumps running several pilot projects involving solar-powered pumps. “The company has a 60% market share in these projects through the PM-KUSUM Yojana and state government schemes in Maharashtra and Chhattisgarh,” adds Patidar. Of the 55,000 pumps supplied under the KUSUM Yojana in FY21, Shakti Pumps sold the highest number of 15,000. The government is looking to install a total of around 30 million pumps under the scheme, of which around 0.3 million have been installed so far.
Also, with a larger focus on the agriculture sector in the Budget and expectation of a normal rainfall, the farming economy is expected to thrive this year with higher production, says Veerendra Jamdade, CEO of rural marketing firm Vritti Solutions. “Shakti Pumps seems to be well poised to cash in on the business potential,” he adds.
The pump maker is positive about the PM-KUSUM Yojana in the next three years. It plans to invest ₹500-600 crore to double its capacity to 10 lakh pumps from the current 5 lakh to leverage the opportunity. The company is looking to sell 60,000-70,000 under the scheme in FY22. “The adoption of solar pumps by farmers has been quite encouraging and by 2025, we aspire to be a ₹5,000-crore company with a profit of ₹500 crore,” says Patidar.
The company had earlier said it can ramp up capacity to cater to the increasing targets by setting up two additional assembly lines without significant capital expenditure.
The R&D division of Shakti Pumps is largely dedicated to the development of innovative products with new materials, applications and processes. The existing two plants in Madhya Pradesh have a combined installed capacity (solar and motorised) of 5 lakh pumps per annum in three shifts and 1.35 lakh units in a single shift.
Over the years, Shakti Pumps has also become one of the country’s leading pump exporters. The company exports its products to over 125 countries, with a portfolio largely catering to applications relating to agriculture, irrigation, industrial processes, pressure boosting in high-rise buildings, rural/urban community water supply schemes, waste and sewage treatment plants, fire-fighting operations and so on.
The company is also a channel partner for the Ministry of New & Renewable Energy. One solar pump unit costs an average ₹2.15 lakh and increases depending on the wattage and load capacity. Farmers recover the cost within a year, according to the management.
The Road Ahead
The company recently launched Shakti Green for manufacturing electronic controllers and motors for EVs. “We have also registered under the government’s Performance-linked Incentive (PLI) scheme,” says Patidar.
It has also invested in the manufacturing of energy efficient pumps and electric panels and controllers.
“Our focus has been on improving core competencies, understanding and learning the new areas we are exploring and spread within that rather than scouting anything outside the area,” says Patidar.
Next, the company wants to consolidate its position in the submersible pumps business. Solar pumps will be another thrust area besides Shakti Green, which is into R&D and manufacturing of electronic controllers and panels for EVs and a host of other areas.
“The market for electronic controllers and panels is vast and we are concentrating our energies on growing that. It is an area that we are trying to understand better and will continue to expand,” says Patidar. Solar pumps will be another focus area, he adds.
With over 260 pump models and more than 1,000 stock-keeping units with capacity ranging from 300 watts to 300 kilowatts, Shakti Pumps is betting on steady growth.