Shakti Pumps (India) Ltd Management Discussions

Jul 23, 2024|03:32:41 PM

Shakti Pumps (India) Ltd Share Price Management Discussions


Somewhat reaching pre-pandemic levels, in FY2023, organisations all over the world have simultaneously experienced supply chain disruptions and sanctions. However, over the long term, escalating demand in the oil and gas sector will lead to numerous offshore deepwater projects to be planned across the world. This, in turn, is expected to drive the pump market over the next few years. Technological advancements in alternative options for conventional pumps, such as solar pumps, are expected to increase value of the pump market. Nevertheless, the pump manufacturing sector has witnessed the combination of technology and computer modelling. This has led to cutting-edge development in pump design, repair and replacement, which drives the pump market and provides opportunities for the market in the future. Globally, Asia-Pacific dominated the markets through FY2023, with the majority of the demand coming from China and India.

Asia-Pacific is projected to grow at the highest CAGR, becoming the worlds fastest growing region for pump markets, followed by North America and Europe.

Key trends in the global pump industry

•Waste Water Treatment

The 6th goal of United Nations Sustainable Development Goal (UN SDG) emphasizes universal and equitable access to clean water and aims to improve water quality by curbing pollution and eliminating the dumping of hazardous chemicals and materials by 2030. The mounting concerns regarding the environmental impact of wastewater and water scarcity and rigorous government regulations are expected to drive the water treatment industry and, in turn, increase demand in the pump market.

•Industrial Application

The pump industry has a wide range of applications in oil & gas, agriculture, metal & mining, water & wastewater treatment, textile, chemical, construction, manufacturing, and many other sectors. Pumps enable the transfer of process fluids from one place to another.


Pumps, in this sector, are used for irrigation, drainage, flood control, tanks and digestors, wastewater transport, wastewater treatment, water circulation and water supply.

•Increase in construction activities

Increasing population and the consequent urbanization has resulted in a rapid rise of construction activities, of both residential and infrastructural. Industrial pumps are used in construction to remove the excess water from sites.

• Product innovation

A key trend gaining popularity in the pump market worldwide, most major pump manufacturers are geared up for developing technological solutions and heavily investing in research and development.

The global pump market is valued at USD 96 billion in 2022 and is estimated to be at USD 119.39 billion by 2028, growing at a CAGR of 6.3%1.

The non-submersible sub-segment is expected to grow at a faster rate of 6.6%, compared to the submersible sub-segment. The non-submersible segment contributes almost 68.6% to total revenues of the industry. (Centrifugal pumps are non-submersible pumps in that they are used out of the water. Centrifugal pumps offer easy access and can provide a lot more pressure than what submersible pumps can offer).

The global agricultural pump market stood at USD 4.9 billion in 2022 and is expected to reach USD 5.7 billion by 2029. China has the largest agricultural pump market with about 65% market share followed by North America with 13% market share4.

The Asia-Pacific region is estimated to contribute almost 36.7% in 2022 with a growth rate of 9.3%2 CAGR.

In terms of industrial pumps, the global industrial pumps market is projected to reach USD 85 billion to 90 billion by 2025 and USD 120 billion by 20303.

1Source: SIEMA, Grandview Research

2Source: Data Feature

3Source: Polaris

4Source: Grand Research Store

Global solar industry was valued at USD 50 bn in 2019 and is estimated to grow by 26% to reach USD 200 bn by 2026.

Source: Zion market research INDIAN PUMP INDUSTRY

With a forecasted growth rate of CAGR 5.4%1 between 2023 and 2028, the India pump industry is a direct function of the progress of various sectors in the economy. The centrifugal pump segment grabs a significant share in the industry due to its virtues like energy efficiency, lesser maintenance, ability to withstand long hours of operations and capability to handle large volumes. The Indian economy is thriving due to the developing industrial, commercial, agricultural and residential sectors and consequently the centrifugal pump industry is getting a thorough boost due to its diverse applications in multiple areas.

In FY2022, Indias share in the USD 96 billion world pump

market has been around 1.5% estimated to rise to 4% by 20271. Exports from India have been growing at 10%-12% annually, with India exporting pumps and valves to 100+ countries, serving different segments.

The exports of pumps of all types were valued at USD 98.7 million in 2022, rising 25% to USD 123.5 million in 2023.

Exports of Pumps of all types

Month in 2022/2023

USD million
April 98.7
May 108.63
June na
July 110.88
August na
September 113.2
October 101.2
November 107
December 133.4
January na
February 99.8
March 108.9

Source: Engineering Export Promotion Council of India (EEPC)

na = data not available

Key trends in the Indian pump market

The constant requirement of pumps by the core sectors of the economy have underlined the growing importance of the pump sector in the country. The agriculture sector is the highest consumer of pumps and building services industry comes next. The rest of the infrastructure sector - the highly technologically intensive sectors - like oil and gas, water and waste management treatments, metals and mining - also have high demand for pumps.2

•Rising applications of pumps in the sectors of agriculture and chemical industry, to pump water, solvents, organics, and acids and bases.

•Increasing domestic use of centrifugal pumps across domestic and residential sectors, due to its simple design, easy maintenance and smooth flow rate.

•Rising utilisation of pumps in the thriving oil and gas sector to perform a variety of tasks.

•Growing capacity expansion of various sectors like food and beverage, mining, pulp and paper and water treatment.

•Technological advancements in the power generation sector call for higher usage of pumps.

Improvising the product design with the aid of product and process innovation is another key trend governing the Indian pump market.

The states of Rajasthan, Haryana, Punjab, Madhya Pradesh, Maharashtra and Chhattisgarh are the largest consumers of pumps in India.

Based on application and usage, the agricultural sector has the highest contribution towards demand for pumps. A growing population, favourable regulatory policies and schemes supporting farmers and the vast availability of agricultural land is boosting the sectors growth and eventually the pump market. Agricultural pump sets are characterized by innovations and continuous product developments aimed towards improving their economics and efficiency.

The Indian pump industry is lined by both national (large companies as well as MSMEs) and international players. 90% of the countrys demand is met by local players, the balance 10% is imported. The sector is self-reliant in captive power generation and energy efficiency. Compliance with quality systems like ISO 9000, ANSI, API or EUNO series of standards, technologies based on intelligent process and equipment systems and high-end customised products are some of the prominent features of the pump industry in the past few years. 95% of the pumps manufactured are centrifugal pumps, while the remaining 5% are positive displacement pumps.

In FY2022, the manufacturing cost grew by around 45% but the product process could be raised by only 25%1, causing a slight decline in the pump industry.

India has the third largest regional market for water pumps after Middle East Asia and China and is the fastest growing region with an estimated CAGR of over 10% during 2017-274.

1 Source: Expert market research

2 Source: Indian Pump Manufacturers Association (IPMA)

3 Source: EEPC India, Ministry of Commerce and Industry, Government of India

4 Source: Source: Timesnow Jun 2022

Region wise exports of pumps and valves from India (as of 2019-20)


Percentage of Exports from India
North America 25
EU 21
Africa 15
Middle East 12
South Asia 6
NE Asia 5
Latin America 3
Others 5

Consumer Sectors


•Engineering, Procurement and Construction

•Industrial and domestic water supply and waste water treatment

•Process industry

•Oil and Gas



•Food and Beverages

•Mining Demand Drivers

•India, predominantly an agrarian economy, has a thriving agricultural sector. Agriculture and irrigation have a sustained demand for pumps.

•Declining ground water levels over the recent years.

•Proactive government policies to indirectly accelerate demand for pumps by offering

-subsidized electricity

-exemptions on use of solar water pumps

These policies have triggered the rise of independent irrigation facilities thus increasing the demand for water pumps.

•India GDP is projected at USD 15 trillion by the year 2030, of which 70% is accounted for by urbanization, which propels the demand for pumps. Thus, urbanization and population growth are major demand drivers.

•Along with increasing population is the need for better sanitation, which has increased the demand for pumps manifold.

•Awareness of the need for potable drinking water and the emphasis on recycling of water.

•Waste and waste water treatment activities.

•Growth of the Indian chemical and pharmaceutical market has also stimulated the demand for high quality industrial pumps.

•Government policies and regulations towards energy efficiency and promotion of agricultural sector.

•Escalating demand for exports.

-Overseas demand is high in steel, mining and oil & gas

-Global population growth

Key Strengths of Indian Pump Industry

The Indian pump market is a reliable and mature market since years and has been growing steadily. Its price competitiveness and technological consistency gives it a competitive advantage.

Many foreign players have extended technical collaborations and joint ventures with Indian manufacturers, thus enhancing the technical know-how within the country. The domestic pump sector exhibits both vertical and horizontal integration.

• The domestic market for pumps in India is one of the fastest growing.

• Currently, 16% of Indias pump manufacturing capacity is ready for exports.

• India has a ready-to-sell, export market, present in more than 100 countries.

• India offers among the highest net value additions in the world (more than 20%).

• Adherence to the best quality standards - such as ISO 9000, ANSI, API or EUNO series.

• Lower cost of operation in India offers labour cost advantage.

With Indias tiny share in the exports of pumps in the world market, there lies a host of opportunities available to the Indian players. Many players have in fact ventured into the international markets with their high value pumps. However, realignment of value chain, optimal understanding of consumer demand, improvement of quality while managing costs and implementing energy efficient technologies are the need of the hour. The industry is gradually picking up pace, notwithstanding the global economic scenario and there is a requirement for exploring high-value, energy-efficient pumps.


Energy efficiency, reduction of carbon footprints and climate resilient approach to growth, sustainable development and the need to implement renewable energy are some of the action-oriented points of countries to run the world economy, and has attracted attention of pump manufacturers too, who are now relentlessly incorporating improvement in quality, service and products in their business strategy.

The global solar industry was valued at USD 50 bn in 2019 and is estimated to grow by 26% to reach USD 200 bn by 20265.

Solar water pumping market in India is estimated to grow at CAGR of more than 27% from FY2018 to FY20246.

Majority of the land in India is irrigated using Total for pumps is not matching - 20 million + 10 million + 3.9 million should be ~34 million pumps. are run using solar energy. These pumps have been deployed in the last 5 years and only a few states including Chhattisgarh, Rajasthan, Andhra Pradesh, Uttar Pradesh, Haryana and Bihar have implemented these solar- powered pumps for irrigation7.

Relentless efforts by the government of India have resulted in large scale implantation of solar pumps in the country. At present, the solar pumps are deployed either through the central government-led PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan) scheme or under some state schemes.

According to the Ministry of New and Renewable Energy, as of December 2022, a total solar capacity of 816 MW has been added through the installation of standalone solar pumps under Component B and solarisation of existing grid- connected agricultural pumps under Component C of the PM- KUSUM scheme. With the installation of about 0.47 million standalone solar pumps in the country, as of December 31, 2022, a reduction of 325 million litres per annum has been achieved in diesel consumption. It has been estimated that there is a reduction of around 0.53 million tonnes per annum in carbon dioxide emissions on account of the total solar capacity installed under the PM-KUSUM scheme.

The adoption of solar powered irrigation will not only help reduce the burden of over Rs 1 lakh crore towards electricity subsidy for agriculture but also reduce oil import bill by reducing diesel consumption by 1.38 billion litres per annum as per MNRE. Secondly, the total consumption of diesel by pumps in a year comes out to 5.52 billion litre per annum with an equivalent Co2 emissions of 15.4 million tonnes. The government, overall, through solarised irrigation aims to reduce the carbon emissions by 32 million tonnes. Furthermore, as per the report of World Irrigation Forum7, it is estimated that off-grid solarisation of pumps can help reduce transmission and distribution losses by up to 20%.

India is on a mission to reach Net Zero by 2070 and with appropriate approach, the agriculture sector could become a major contributor in meeting this objective.

5 Source: GlobeNewswire

6 Source: Business Wire

7 Source: Times of India

Key growth drivers of the solar energy market

? Government subsidies

? Tax rebates for solar panel installation

? Increased awareness of environmental degradation



Particulars I II
Size 1,50,000 3,17,000
Executed 78,940 1,65,433
SPIL 22,340 34,828


Market Mode

Particulars III
Size 8.57 Lacs *
Executed Yet to Start
SPIL Qualified for 21 states where it commands dominant share of



Shakti Pumps (India) Ltd. has been instrumental in changing the face of the pump industry since the past four decades. The “built to best” range of innovative, technologically enabled offerings of Shakti are created with customer-centric focus, suited to commercial as well as industrial usage.

Unswerving commitment as well as consistent investments towards research and development have been the backbone of our path till now.

Starting with the manufacture of pumps, the company moved into the space of stainless-steel pump manufacturing and then more recently into solar pumps, thus making it a pioneer in manufacturing ‘100% Energy Efficient Stainless-Steel Submersible Solar Pumps & Motors.


Solar pumps are a driving force behind the business. The prices of fossil fuels are sky rocketing, and farmers find irrigation through diesel pumps very expensive. This is where solar pumps play a dual role in mitigating costs for the farmers. When opting for solar pump installation, the financial burden on the farmer is limited to a mere 10% of the total cost, while the state government shoulders 60% and the Central Government covers 30%. Consequently, the irrigation expenses borne by the farmer experience a significant reduction. The implementation of solar pumps also yields advantages for the state government by diminishing the need to allocate funds for electricity infrastructure such as wires, transformers and electric poles. Additionally, this aids in alleviating the strain on the power grid. Remarkably, the investment incurred by the farmers in solar pump installation is recovered within a year.

The installation of solar pumps enables the farmer to adopt micro-irrigation, due to which the yield of the crop increases manifold, resulting in an increase in the income of the farmer.

Combining the efficiency of drip irrigation with the reliability of a solar-powered water pump will lead the way with drip-irrigation and micro irrigation. Solar-powered pumps also conserve labour. Solar-powered automation and mechanisation to agriculture will enable farmers to become self-sufficient and live an empowered life.

The state government of Haryana has also started a special campaign called ‘Har Khet Ko Pani to promote irrigation and supply adequate water to the farm. Through this scheme, the government wants to make people aware about the benefits of drip irrigation or sprinkler irrigation instead of relying on rain-fed irrigation, in which Shakti Pumps is playing a crucial role.

Solar Energy Corporation of India Limited (SECI) has sanctioned the issuance of new tenders for approximately 8.57 lakh solar pumps under the PM-Kusum scheme III, and Shakti Pumps has qualified in 21 states to provide Off Grid Solar Photovoltaic Water Pumping Systems.

SPIL had received an order from the Government of Uganda represented by the Ministry of Water and Environment for supplying a solar powered water pumping system in 2021 at a total contract price of USD 35 million funded by Indian EXIM Bank in Uganda. In FY2023, the Company received the pending USD 1 million from EXIM Bank on behalf of Government of Uganda.

SPIL had already commenced operations in Uganda under this project and it is expected to provide safe and sustainable water supply to half a million Ugandans across 20 rural districts.


In addition to the manufacturing of submersible pumps, the company has recently ventured into the making of controllers and motors designed for electric vehicles.

One cannot deny the hazardous effects of the transportation sector operating through fossil fuel. This heralded the arrival of electric vehicles and with their advent, rose the need for organisations to setup manufacturing plants of the ancillary parts. Shakti Pumps once again assumed responsibility, considering it as a contribution to a sustainable, greener and cleaner future. Through its wholly owned subsidiary Shakti EV Mobility Private Limited the company has been involved in the manufacturing of motors, chargers, controllers and multiapplication component variable frequency drives (VFDs) for electric vehicles.

With an experience of 30 years in manufacturing electric motors and 5 years of manufacturing power electronics equipments, SPIL has gradually penetrated the newly growing market.


Shakti is also the part of International Solar Alliance (ISA)

which consists of:

• Aggregated demand for more than 2,70,000 solar pumps across 22 countries.

• More than 1 GW of solar rooftop across 11 countries.

• More than 10 GW of solar mini-grids across 9 countries under its respective programmes.

ISA is a treaty-based intergovernmental organisation, aimed towards making solar energy available 24x7 at affordable cost to all in the 121 tropical countries. It is an action oriented,


member driven platform, where massive solar energy deployment is the focus area, ensuring energy security. The ISA is guided by its ‘Towards 1000 strategy which aims to mobilise USD 1,000 Bn of investments in solar energy solutions by 2030, while delivering energy access to 1,000 Mn people using clean energy solutions and resulting in installation of 1,000 GW of solar energy capacity. This would help mitigate global solar emissions to the tune of 1,000 Mn tonnes of CO2 every year.

ISA is perceived as a critical organisation working towards achieving the 2030 Sustainable Development Goals and objectives of the Paris Agreement on Climate Change.


Shakti has the following business segments:

1. Solar EPC

2. Solar OEM

3. Domestic and Industrial Consumption

4. Exports

The revenues generated from the above segments are as follows: (in Lacs)


The analysis in this section relates to the consolidated financial results of the year ended March 31, 2023.

The financial statements of the company and its joint venture are prepared as per the Indian Accounting Standards (referred to as ‘Ind AS) prescribed under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, as amended from time to time.

Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements.

During FY23, the company encountered adverse business conditions like an increase in raw material cost and holding some orders of PM KUSUM - II due to lower margin) impacting both the top and bottom lines. Thus, in FY23 the total revenue of Rs. 97,093.62 lakhs is 17.9% lower than the \previous years Rs. 1,18,467.65. Net profit decreased 62.8% to Rs. 2,413.18 lakhs from Rs. 6,481.60 earned in FY22. An analysis of revenue and expenditure is provided below.

(INR in lakhs)

FY23 FY22 Change%
Operating revenue 96,768.33 117,853.51 -17.9%
Other income 325.29 614.14 -47.0%
Total revenue 97,093.62 1,18,467.65 -18.0%

Segment-wise revenue is as follows:

(INR in lakhs)

FY23 FY22 Change%1
Customers under Government Projects 62,320.04 81,484.21 -23.51
Industrial Customers 1589.62 1,551.96 2.44
OEM Customers 1133.96 3,123.00 -63.69
Export Customers 23254.06 18,511.19 25.62
Other Customers 8470.44 13,183.14 -35.75

Operating revenue

96,768.33 117,853.51 -17.89

During FY23, Other income came down by 47%. This was the result of lower Interest income as the erstwhile fixed deposits and other bank balances have been used for business purposes.

Cost of materials

(INR in lakhs)

FY23 FY22
Cost of materials consumed 74,460.52 95,445.60
Changes in inventories (123.95) (4,981.15)
Total materials 74,336.57 90,464.45
Operating revenue 96,768.33 117,853.51
Cost of materials / Operating revenue 76.8% 76.8%
No Significant change during the year.


Employee benefits expense

(INR in lakhs)

FY23 FY22 Change
Employee benefits 5,340.11 5,241.19 1.9%
% of Total Revenue 5.5% 4.4%

The increase in employee costs during FY23 is because of the recruitment of new employees and annual increments for the year. Increase in the expenditure together with decreased revenue led to higher proportion of employee cost to total revenue.

Finance costs

(INR in lakhs)

FY23 FY22 Change
Finance costs 1,916.39 1,567.62 22.2%
% of Revenue 2.0% 1.3%

Finance costs increased due to high utilisation of working capital facility.

Depreciation and Amortisation

(INR in lakhs)

FY23 FY22 Change
Depreciation and Amortisation 1,840.21 1,857.46 -0.9%
% of Revenue 1.9% 1.6%

No significant change in the amount of depreciation and amortisation.

Other expenses

(INR in lakhs)

FY23 FY22 Change
Other expenses 10,435.61 11,102.73 -6.0%
% of Revenue 10.8% 9.4%

The decrease in other expenses by 6.0% is mainly on account of the lower spend on selling and distribution.

Income tax

(INR in lakhs)

FY23 FY22 Change
Income tax 811.55 1,752.60 -53.7%
Profit before tax 3,224.73 8,234.81 -26.0%
Tax as % of Profit before tax 25.2% 21.3%

No change in the effective tax rate during the year.

Balance sheet items (Assets)

•Increase in the gross block of PPE to Rs. 29,992.86 lakhs from Rs. 28,517.38 lakhs, after the addition of Rs. 2,362.79 lakhs and disposal of Rs. 887.31 lakhs.

•Other non-current financial assets increased to Rs. 1,081.39 lakhs from Rs. 243.79 lakhs. The increase is on account of Security Deposits and Fixed Deposit with Maturity more than 12 months.

•Receivables significantly decreased to Rs. 24,368.22 lakhs from Rs. 38,277.58 lakhs due to lower sales and close monitoring of the collection.

•Decrease in Cash and cash equivalents to Rs. 1,104.52 lakhs from 3,124.99 lakhs represents on account of fixed deposits and other bank balance have been used for business purpose.

•Bank balances decreased from Rs. 636.75 lakhs to Rs.1,335.12 lakhs due to non-renewal of fixed deposits on maturity.

•Increase in Other current assets to Rs. 7,857.50 lakhs from Rs. 6,455.72 lakhs is on account of advances to suppliers.

Balance sheet items (Liabilities)

•The non-current borrowing decreased to Rs. 242.87 lakhs from Rs. 930.37 lakhs due to the repayment of rupee term loans and foreign currency loans.

•Decrease in current borrowings to Rs. 7,097.20 lakhs from Rs. 9,570.75 lakhs is on account of lower utilisation of working capital facilities upon receipt of substantial amount as advances from customers.

•Trade payables decreased to Rs. 12,694.87 lakhs from Rs. 28,399.18 lakhs in line with the decreased procurement of raw materials and other items for lower production.

•Other financial liabilities decreased to Rs. 3,567.20 lakhs from Rs. 5,187.01 lakhs. The decrease mainly represents the repayment of installation charges outstanding at the end of FY22.

•Other current liabilities increased to Rs. 5,604.51 lakhs from Rs. 1,538.78 lakhs. The increase represents the receipt of advances from customers.

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