KSB Ltd. Improving Exports and Leveraging Technology

KSB Ltd. manufactures and sells power-driven pumps and industrial valves in India and overseas. It operates through Pumps and Valves segments. The Pumps segment manufactures and trades in industrial pumps, submersible pumps, effluent treatment pumps, etc.; and offers related spares and services. The Valves segment manufactures and trades in industrial valves and related spares and services. It also produces castings for captive consumption. 

The company secured the highest ever order inflows of Rs.1,500 crore in CY21 (Rs.13,300 crore in CY20) despite the challenges posed by the COVID pandemic. KSB Ltd. is seeing good demand traction in agriculture, nuclear power, smart cities, oil & gas, and wastewater management. For CY24, it targets an order inflow of Rs.2,500 crore and sales of Rs.2,200 crore. KSB Ltd. expects both standards as well as engineered pumps to contribute to growth. In the standard pumps, expansion of dealer network (addition of 100 dealers per year) and launch of new products is likely to lead to market share gains. For instance, it expects to sell 500-600 gamma pumps per annum. which is a big market of over 10,000 pumps a year.

The size of Nuclear Power Corporation of India Ltd. (NPCIL)’s bulk tender for pumps and motors is expected to be around Rs.1500 crore, which is to be executed at three sites with two units each and four pumps per unit. The first order of Rs.500 crore should be finalized by March/April 2022. However, the order for the other two sites (16 pumps) could extend up to 2024 and beyond. Although slow-moving, nuclear power orders are recurring and offer a huge opportunity going forward. Further, the company is eyeing orders for highly specialized slurry recirculation pumps for flue-gas desulphurization (FGD)plants. The management expects these orders to contribute significantly to its long-term order book. 

The company is now focusing on improving its exports by leveraging its technological know-how and plans to position its new products such as gamma and solar pumps in the export markets. Further, the company plans to grow its aftermarket and services business as the installed base of its pumps increases, particularly FGD pumps (these typically require repair and maintenance after 2-3 years); which is expected to contribute 50% to the after-market sales from CY24E onwards. Further, exports and aftermarket are high-margin businesses, which shall help the company mitigate commodity price fluctuations and sustain its margins.