Financial Daily from THE HINDU group of publications
Monday, Jun 10, 2002
Sharp Tools plans white goods foray; IPO in 2 years
Mr Parthiban Ramaswamy
COIMBATORE, June 9
SHARP Tools is a well-known player in the domestic pumps segment with a sizable presence in the export market too.
Known for its innovation and product development, the company has chosen to shed its image of being just a water pump manufacturer and has decided to diversify into other products.
The first product to hit the market in the diversification effort will be the power generator for which it has floated a separate company Rugby Power Pvt Ltd.
The company also plans to launch white goods in the next few months, though it is not willing to disclose as yet the nature of the products.
The company, belonging to the privately-owned Sharp group, is planning to go public within the next two years.
It is also open to the idea of a tie-up with others, both from India and abroad - covering both technology and finance.
In an interview to Business Line, Mr Parthiban Ramaswamy, CEO, Sharp Tools (Pump Division), shares his views about the road-map he has drawn up for the company. Excerpts from the interview.
How has your company fared in the last two years in the midst of recession and cheaper imports?
We are basically catering to the needs of the household segment. Last year, the demand was steady compared to the previous year. We did not experience any tangible growth in demand last year.
But this financial year, the first quarter has definitely seen a substantial pick-up in demand for our pumps (sold under the `Fisher' brand name), which is a good sign for the industry.
What is the growth you are seeing?
The first quarter of the current fiscal is yet to end. But we are confident of achieving a 25-35 per cent growth in this quarter compared to the corresponding period last year. The pick-up in demand is from across the country, not restricted to any specific region.
Even within our range of products, we specialise in special pumps such as stainless steel pumps which sell at a premium and are exported.
What is the share of exports in your total sales?
Currently, export sales account for only about 20 per cent. But we wish to take it to 30 per cent this year, and in the next five years, we want our exports to contribute a minimum of 50 per cent.
What about your financial performance?
Last year, we (the Fisher pump division) clocked sales of Rs 25 crore.
There were fears that the Chinese dragon would devour domestic pump companies. Has the Chinese ghost been exorcised?
The entire pump industry has overcome the fear of being wrecked by cheaper Chinese imports. They have not been able to succeed in the Indian market. The earlier fears seem misplaced. They did not meet the expectations of the Indian public.
What is your marketshare in the domestic pump industry?
In the domestic segment, we hold about 20 per cent share. After being stagnant for about two years, we expect this sector to grow by about 20-25 per cent in the current year.
The industry has been brought under the excise net for the first time this year and we are unable to pass on this 4 per cent duty to the customers. But for this, the industry would have seen much faster growth.
We also face unfair competition from the unorganised sector and we survive by leveraging our brand name.
We are one of the few to come out with innovative products every year.
We have an exclusive R&D centre approved by the Department of Science and Technology.
Looking ahead, what are your plans?
We are planning to enlarge our product range by entering into power products business, for which a separate company Rugby Power Pvt Ltd has been floated and we are entering the white goods sector as well.
We have identified a niche market which is not served by the existing small genset producers.
We are targeting small shopowners and domestic users and our genset is cost-effective because it consumes half a litre of petrol for one hour of running. The entire product development has been done in-house and it will be launched in the next few days.
The pricing is low because of the technology. While others use conventional technology we have adopted hybrid technology. Our competitors may have this technology, but have not introduced it in the country.
And ours is the first two-stroke genset to conform to Indian pollution control rules. We have targeted to sell 20,000 gensets in the first year.
What about white goods?
I would not like to go into details of the products because we do not want to give our competitors an edge before our products actually hit the market.
Some of the established players in this field have powerful brand names.
We are targeting a niche segment in this line which has not been served by other big players.
Our strength has been design and product development and we would like to capitalise on that advantage.
What is the sales turnover you are targeting in the coming years?
We are eyeing a turnover of Rs 100 crore for the Fisher pump and Rugby group in the next two years. In two more years from that, our turnover should double to Rs 200 crore.
Are you trying to shed your image of being a pump manufacturing company?
We have been in pump production for 33 years. For the next three years, we would concentrate on pumps, power products and white goods.
We see growth opportunities in other businesses. We do not want to enter other segments of the pump industry like industrial or agricultural pumps, since it involves more time and effort.
We have chosen to enter areas where high technology is involved since our forte is design and product development and our size could provide a cutting edge as our overheads would be less.
You have remained a closely-held company for so long. Any plans of going public?
Yes. the maximum time we have given ourselves to go public is two years.
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